Deputy Commissioner of Taxation v Coco

The Deputy Commissioner of Taxation applied for summary judgment against Coco, a director of a company, for penalties under the Income Tax Assessment Act 1936 (Cth) for PAYG withholdings not remitted by the company. Coco argued he had no real prospect of successfully defending the claim as he claimed he never received the penalty notice given under s222AOE, and alternatively, that he took reasonable steps under s222AOJ(3) to ensure the withholdings were remitted. The case was heard in the Federal Court of Australia.

The court had to decide whether Coco had no real prospect of successfully defending all or part of the claim. It also had to determine whether Coco’s assertion of non-receipt of the penalty notice displaced the presumption that the notice was delivered and whether the reasonable steps defence was arguable on the facts. The court found that the presumption of delivery of the notice was not displaced by Coco’s assertion of non-receipt, and the reasonable steps defence was arguable on the facts. Therefore, the court held that Coco had a real prospect of successfully defending the claim.

The court dismissed the Deputy Commissioner of Taxation’s application for summary judgment. The court found that Coco had raised a genuine issue for trial in relation to the reasonable steps defence, and therefore, the claim could not be determined as a matter of law. The court also held that the assertion of non-receipt of the penalty notice did not displace the presumption of delivery, and therefore, the claim was not frivolous or vexatious.

The court ordered that the application filed on 24 December 2002 be dismissed, and the application filed on 21 February 2003 be dismissed. The case will proceed to trial to determine whether Coco is liable for the penalties under the Income Tax Assessment Act 1936 (Cth).