Hamilton v Commission for Taxation (Cth) - [2007] SASC 165

Supreme Court of South Australia
(Magistrates Appeals: Criminal)
HAMILTON v COMMISSION FOR TAXATION (CTH)
[2007] SASC 165
Judgment of The Honourable Justice White (ex tempore)
8 May 2007
CRIMINAL LAW - JURISDICTION, PRACTICE AND PROCEDURE - JUDGMENT AND PUNISHMENT - SENTENCE - RECOGNISANCES, PROBATION AND OTHER NON-CUSTODIAL ORDERS - DISCRETION TO NOT RECORD CONVICTION
Appeal against sentence - failure to lodge tax return - guilty plea - magistrate refused to exercise discretion under s 19B of Crimes Act 1914 to order that no conviction be recorded - whether magistrate's decision affected by error - no sentencing error demonstrated - appeal dismissed.
Taxation Administration Act 1953 (Cth), s 8C; Income Tax Assessment Act 1936 (Cth), s 162; Crimes Act 1914 s 19B, referred to.
HPS Transport Pty Ltd v Australian Taxation Office (Unreported, Supreme Court of South Australia, Martin J, 12 December 2003); Kelton v Uren (1981) 27 SASR 92; Commissioner for Taxation v Doudle (2005) 195 FLR 76, applied.
Parente v The Commonwealth (2002) 220 LSJS 126; Talisco Pty Ltd v Sarney (1987) 18 ATR 420, distinguished.
Commissioner of Taxation v Baffsky (2001) 192 ALR 92, discussed.

HAMILTON v COMMISSION FOR TAXATION (CTH)
[2007] SASC 165
Magistrates Appeal
WHITE J (ex tempore):

The appellant pleaded guilty in the Magistrates Court to an offence of failing, contrary to s 8C of the Taxation Administration Act 1953 (Cth), to lodge an income tax return within the time required. By the terms of a final notice issued to the appellant pursuant to s 162 of the Income Tax Assessment Act1936 (Cth), the Australian Taxation Office had directed the appellant to lodge his personal income tax return in respect of the financial year ending on 30 June 2005 by no later than 15 May 2006. The appellant did not comply with that direction. The appellant was convicted and fined $150 in addition to court and service fees.
By his notice of appeal, the appellant complains of the recording of the conviction. His complaint is that the magistrate should have acceded to a submission that s 19B of the Crimes Act1914 (Cth) be invoked and that a conviction should not have been recorded. On the hearing of the appeal Mr Quinn submitted, in addition, that the magistrate had erred in not dismissing the complaint, but in the substance of the submissions, the appellant confined himself to the ground stated in the notice of appeal, namely, that a conviction should not have been recorded.
Circumstances of the Offence
The appellant is a legal practitioner. On 24 April 2006 he was served by the Australian Taxation Office with a final notice requiring him to lodge his personal taxation return for the 2004/2005 financial year by 15 May 2006. That would have allowed the appellant some 10½ months from the end of the financial year in which to lodge his return. As already noted, the appellant did not lodge the return by the stipulated date and, indeed, the return was not lodged until 6 December 2006.
On 30 August 2006, an employee in the Australian Taxation Office warned the appellant orally that his return was overdue and that a prosecution would be instituted. On 10 November 2006 the Commissioner of Taxation issued a complaint and summons in the Magistrates Court. Some difficulty was experienced in serving the complaint and summons and it was not served until 12 December 2006, that is, six days after the appellant had lodged his return.
In accordance with what I understand to be the Pay As You Go (“PAYG”) arrangements which were applicable, the appellant had prepaid his income tax liability in respect of the 2004/2005 financial year. He had in fact overpaid his liability and in due course received a tax refund of over $14000. Had his return been lodged on time he would have received his tax refund much sooner.
The maximum penalty for an offence contrary to s 8C of the Taxation Administration Act is a fine of $2200.
Section 19B
Section 19B of the Crimes Act, as in force as at 16 May 2006, provides (relevantly):
(1)     Where:
(a)     a person is charged before a court with a federal offence or federal offences; and
(b)     the court is satisfied, in respect of that charge or more than one of those charges, that the charge is proved, but is of the opinion, having regard to:
(i)the character, antecedents, cultural background, age, health or mental condition of the person;
(ii)    the extent (if any) to which the offence is of a trivial nature; or
(iii)the extent (if any) to which the offence was committed under extenuating circumstances;
that it is inexpedient to inflict any punishment, or to inflict any punishment other than a nominal punishment, or that it is expedient to release the offender on probation;
the court may, by order:
(c)     dismiss the charge or charges in respect of which the court is so satisfied; or
(d)     discharge the person, without proceeding to conviction in respect of any charge referred to in paragraph (c), upon his giving security, with or without sureties, by recognizance or otherwise, to the satisfaction of the court, that he will comply with [specified conditions]: …
Section 19B involves a two-stage process. The first involves identifying the factor or factors listed in paragraphs (i), (ii) and (iii) of s 19(1)(b) which are relevant. The second is determining, having regard to the factor or factors which have been so identified, whether it is inexpedient to inflict any punishment on the offender or whether some other conclusions for which the paragraph provides should be reached.
Ordinarily, s 19B will be invoked only in those cases in which the circumstances of the offending are atypical, or when there are circumstances of an unusual kind which are personal to the offender.[1]
[1] Kelton v Uren (1981) 27 SASR 92 at 93; Commissioner of Taxation v Baffsky [2001] NSWCCA 332 at [71]-[72]; (2001) 192 ALR 92 at 104-5.
It is to be remembered that the question for this Court presently is not whether s 19B(1) could appropriately be invoked in relation to the appellant. Instead, the issue of whether the magistrate erred in not invoking s 19B(1) in this case. It is the magistrate’s discretion. This court will interfere with its exercise only if satisfied that the magistrate has erred in sentencing principle, or if he has failed to have regard to a relevant consideration, or has had regard to an irrelevant consideration or if, despite the inability to identify any specific error, it can be said that the decision to record a conviction in this case was not reasonably open.
The Magistrate’s Decision
The magistrate recounted the factual circumstances to which I have already referred, and then said:
The defendant here simply did not respond in time to the notice or the follow-up telephone call. This is a very strict regime obviously designed to ensure that tax returns are lodged in a timely fashion. True, it is found that the defendant enjoyed a credit of about $14000 for the relevant year, and I bear that in mind. But the essence of the offending is the failure to lodge the return in response to the notice.
I do not believe that any of the considerations in s 19B(1)(b) apply here. The offence is not of a trivial nature. It is rather a typical example of its kind, as a perusal of the taxation lists in this court over many years will demonstrate.
Nor was the offence committed under extenuating circumstances, being “circumstances which excuse (removes) to an appreciable degree, the commission of the offence charged”: O’Sullivan v Wilkinson (1952) SASR 213.
True, the defendant is of good character with no prior convictions but then so are many others who commit such offences. Sitting in this Court over recent months I have noticed that a significant number of solicitors have been charged with this type of offending.
The submissions on appeal emphasised the appellant’s good character, the absence of any criminal record, the absence of any likelihood of re-offending, the fact that the income tax return had been lodged prior to service of the complaint and summons, and the fact that the delay in lodging the return had not involved any avoidance of a taxation liability. It was submitted that it was those circumstances, together with the appellant’s explanation for the delay in lodging the return, in combination, which made this matter atypical and which constituted relevant circumstances for the purposes of s 19B(1).
Each of these matters was put to the magistrate. With the exception of the explanation for the delay each was referred to by him in the sentencing remarks. It was submitted that the magistrate had failed to give sufficient weight to these matters.
Consideration of Submissions
I do not regard the fact that the appellant had lodged the taxation return before being served with the summons, or the fact that he had overpaid in advance his taxation liability, as being very significant. The offence was comprised of a failure to lodge the return by 15 May 2006. The fact that it was lodged nearly seven months later, on 6 December 2006, is not mitigatory of an offence constituted in that way.
Prepayment of tax, pursuant to the PAYG regime, is a normal effect of the taxation system and not one which I would regard as making this case atypical. It was not suggested that any of the prepayment by the appellant in this case had been in addition to that required by the PAYG regime.
The significance of a taxpayer’s entitlement to a refund, in circumstances such as the present, was discussed by Martin J in HPS Transport Pty Ltd v Australian Taxation Office,[2] in terms with which I agree. Martin J said:
While the existence of the entitlement to a refund does not negate the essence of the offending under consideration which centres on the failure to file or provide the appropriate returns and the administrative difficulties that such failures occasion, the existence of the entitlement does demonstrate that this was not a case in which the appellant was seeking to evade the appellant’s liability. If the prosecution establishes, in a prosecution of this type, that an offender was seeking to evade liability, that fact would be a relevant circumstance of aggravation. Such a circumstance does not exist in the matter under consideration.[3]
[2] (Unreported, Supreme Court of South Australia, Martin J, 12 December 2003).
[3] Ibid at 5.
The remarks of Martin J were made in the context of a failure to lodge GST returns - as I understand it, business activity statements - but the observations apply, in my opinion, with as much force in the present circumstance as they did in that case.
The magistrate was pressed with the decision of Bleby J in Parente v the Commonwealth.[4]The magistrate distinguished the circumstances considered in that case from the present and I did not understand the appellant to submit that the magistrate’s reasoning in that respect was in error. The factual circumstances of the present case are quite different from those considered by Bleby J in Parente to be of such an unusual kind as to warrant the invoking of s 19B.
[4] [2002] SASC 212; (2002) 220 LSJS 126.
It was submitted, in addition to the features which I have already mentioned, that the reason for the taxation return not being lodged in a timely way was relevant. It was submitted that the appellant’s taxation return had not been lodged until 6 December 2006 because of the inability of the appellant’s accountant to meet the deadlines imposed by the Australian Taxation Office. That is, the effect of the submission was that the delay in lodgement did not result from any act or omission of the appellant himself but, rather, from that of his tax agent.
The respondent accepted that a submission to this effect had been made to the magistrate. It is not a matter to which the magistrate referred in his sentencing remarks. However, I am not prepared to accept that this consideration was overlooked by the magistrate. The explanation for the delay which was proffered to the magistrate was provided in response to a question by the magistrate himself. That makes it unlikely that it was overlooked by him. In addition, I take account of the fact that the magistrate’s remarks appear to have been delivered only very shortly after the completion of the submissions.
In any event, I do not regard the fact that the delay may be due to conduct or omission of an accountant as very mitigatory. In this respect, I agree with the statement of Olsson J in Talisco Pty Ltd v Sarney,[5] to the effect that, in the ordinary case of a tax agent being dilatory and letting its client down, it would largely tend to defeat the efficacy of the legislation to absolve the taxpayer who is primarily responsible for the lodgement of the return.[6] It is true that, in the factual circumstances of Talisco, Olsson J was satisfied that s 19B should have been invoked, but the circumstances of this case are very different from those considered in Talisco.
[5] (1987) 18 ATR 420.
[6] Ibid at 422.
The magistrate accepted, as do I, that the appellant is a person of good character. He is now 58 years old and has no prior convictions. However, it was open to the magistrate to conclude that this consideration did not make it expedient for a conviction not to be recorded. A similar view was taken, in analogous circumstances, by Jacobs J in Kelton v Uren[7] and by Debelle J in Commissioner for Taxation v Doudle.[8]
[7] (1981) 27 SASR 92 at 94.
[8] [2005] SASC 442 at [15]-[16]; (2005) 195 FLR 76 at 80-1.
This is an offence in which the offender will commonly be a first offender and a person of good character. It is also an offence in which considerations of general deterrence are important. As was pointed out by Jacobs J in Kelton v Uren,[9] and by Debelle J in Commissioner of Taxation v Doudle,[10] the intent of the offence could commonly be frustrated if convictions were not recorded in the case of first offenders.
[9] (1981) 27 SASR 92 at 94.
[10] [2005] SASC 442 at [16]; (2005) 195 FLR 76 at 80-1.
I have considered the combined effect of the various matters advanced by the appellant. I am not satisfied that, considered in that way, any error which would warrant this Court interfering with the magistrate’s exercise of the discretion has been shown, nor am I satisfied that, despite the inability to identify a particular error, the magistrate’s decision can be said to be so unreasonable that it should not be allowed to stand. The magistrate’s decision to record a conviction in the circumstances was, in my opinion, one which was reasonably open to him.
For these reasons, the appeal is dismissed.