Lee v Deputy Commissioner of Taxation; Silverbrook v Deputy Commissioner of Taxation

The appellants, Mr Lee and Silverbrook Holdings Pty Ltd, appealed to the Full Federal Court against a decision of a single judge of that court. The dispute concerned the validity of Director Penalty Notices issued to the appellants by the Deputy Commissioner of Taxation (the Commissioner) in relation to unpaid Pay As You Go (PAYG) amounts that had been withheld by a company, Silverbrook Research Pty Ltd. The appellants argued that these Director Penalties were remitted by operation of law when the company was placed into liquidation.

The primary legal issues before the Full Federal Court were whether the Director Penalties were remitted pursuant to s 269-30(1) of Schedule 1 to the *Taxation Administration Act 1953* (Cth) (TAA), and alternatively, whether the trial judge erred in finding that s 269-30(2) Item 2 of Schedule 1 to the TAA applied to the Director Penalties. A further issue concerned the sufficiency of averments made by the Commissioner under s 255-50 of Schedule 1 to the TAA as evidence that the company had withheld PAYG amounts and failed to pay them to the Commissioner.

The Full Federal Court dismissed the appeal, upholding the trial judge's findings. The Court reasoned that the Director Penalties were not remitted under s 269-30(1) because the company had not paid the amounts specified in the Director Penalty Notices to the Commissioner. Furthermore, the Court found that the trial judge had correctly applied s 269-30(2) Item 2 of Schedule 1 to the TAA, which provides for the remission of director penalties in certain circumstances where the company has been placed into liquidation and the Commissioner has not taken certain recovery steps. The Court also held that the averments made by the Commissioner under s 255-50 of Schedule 1 to the TAA were sufficient evidence of the company's failure to pay withheld PAYG amounts.

Consequently, the appeal was dismissed, and the appellants were ordered to pay the respondent's costs.