Deputy Commissioner of Taxation v Saunig

The Deputy Commissioner of Taxation (the Commissioner) sought to recover from Mr. Saunig, a director of a company, amounts representing unpaid PAYE tax instalments deducted from employees' wages. The company had failed to remit these instalments to the Commissioner, thereby breaching its statutory obligations under s 221F of the *Income Tax Assessment Act 1936* (Cth). The Commissioner relied on ss 222AOB and 222AOJ(3) of the Act to impose personal liability on Mr. Saunig for the company's default. The matter came before the Court of Appeal of New South Wales.

The central legal issues before the Court were whether Mr. Saunig was personally liable for the company's unpaid PAYE tax instalments, and if so, whether he could avail himself of a defence that his actions were "reasonable" within the meaning of the relevant provisions of the *Income Tax Assessment Act 1936* (Cth). The Court was required to construe the statutory provisions imposing personal liability on directors and the scope of any available defence.

The Court of Appeal affirmed the personal liability of directors for their company's failure to remit PAYE tax instalments. It was held that the defence of "reasonable action" was not available to Mr. Saunig in the circumstances. The Court reasoned that the statutory scheme imposed a strict obligation on directors to ensure that tax instalments were remitted, and the defence of reasonableness was narrowly circumscribed. The Court found that Mr. Saunig had not demonstrated that he took all reasonable steps to ensure the company complied with its obligations, particularly in light of the company's financial difficulties and his knowledge of the outstanding tax liabilities.

The Court of Appeal dismissed Mr. Saunig's appeal and affirmed the orders made by the primary judge.