Kolistasis & v Deputy Commissioner of Taxation; Wade & Anor v Deputy Commissioner of Taxation

The case of Kolistasis & v Deputy Commissioner of Taxation; Wade & Anor v Deputy Commissioner of Taxation concerned appeals by directors against penalties imposed by the Deputy Commissioner of Taxation for unremitted Pay As You Go (PAYG) instalments. The dispute arose when companies, of which the appellants were directors, failed to remit PAYG instalments. The Commissioner issued notices to the directors regarding these unremitted amounts. The companies were subsequently placed into liquidation or administration within 14 days of the last notice. The directors argued that the penalties should be remitted because the companies entered liquidation or administration within the prescribed timeframe. The appeals were heard by the Full Court of the Federal Court of Australia.

The central legal issue before the Court was the interpretation and application of sections 222AOB and 222AOC of the *Income Tax Assessment Act 1936* (Cth). Specifically, the Court had to determine whether the protection from penalty, afforded to directors when a company enters liquidation or administration within 14 days of a notice, applied to all unremitted amounts, or only to those amounts for which the notice was given within that 14-day period. The appellants contended that the protection extended to all outstanding unremitted amounts, regardless of when the notices were issued for those specific periods.

The Court reasoned that section 222AOB imposes an obligation on directors to ensure the company either remits amounts, enters into an agreement with the Commissioner, or appoints an administrator or begins winding up by the due date. Section 222AOC establishes director liability for penalties if section 222AOB is not complied with. The Court found that the protection from penalty under section 222AOC(1A) and (2) is triggered by the company entering liquidation or administration within 14 days of a notice being given *in relation to a specific unremitted amount*. The Court held that the notices issued to the directors in this case related to distinct periods of unremitted PAYG instalments. While the companies entered liquidation within 14 days of the *last* notice, this protection did not retroactively apply to earlier unremitted amounts for which separate notices had been issued more than 14 days prior to the liquidation. Therefore, the penalties for the earlier periods remained payable.

The Court dismissed the appeals, upholding the Commissioner's imposition of penalties. The appellants were ordered to pay the costs of the Deputy Commissioner.