Deputy Commissioner of Taxation v Zammitt

The Deputy Commissioner of Taxation (the appellant) appealed to the Court of Appeal of New South Wales against a decision of the primary judge who had dismissed its claim against Mr Zammitt (the respondent) for recovery of a director's penalty. The dispute concerned the effect of legislative amendments on the Commissioner's ability to recover a director's penalty notice previously issued.

The central legal issues before the Court of Appeal were whether the repeal of Division 9 of Part VI of the *Income Tax Assessment Act 1936* (Cth) and the subsequent transitional provisions in the *Tax Laws Amendment (Transfer of Provisions) Act 2010* (Cth) extinguished the Commissioner's right to recover the penalty. Further, the Court considered whether the *Acts Interpretation Act 1901* (Cth) operated to preserve this right, and the impact of Schedule 7 of the *Tax Laws Amendment (2011 Measures No 7) Act 2011* (Cth) on the validity of the original director penalty notice, specifically whether a fresh notice was required.

The Court of Appeal found that the repeal of Division 9 did not extinguish the Commissioner's right to recover the penalty. It held that the transitional provisions, read in conjunction with the *Acts Interpretation Act 1901* (Cth), preserved the Commissioner's accrued right to recover the debt. Furthermore, the Court determined that Schedule 7 of the *Tax Laws Amendment (2011 Measures No 7) Act 2011* (Cth) did not require a fresh director penalty notice to be served. Consequently, the appeal was allowed, the primary judge's orders were set aside, and judgment was entered for the appellant. The matter was remitted for determination of interest and costs at first instance, with each party bearing their own costs of the appeal.