McIntyre v Deputy Commissioner of Taxation
[2002] VSC 62
•20 March 2002
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 7935 of 2001
| GEOFFREY McINTYRE | Appellant |
| v | |
| DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA | Respondent |
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JUDGE: | Balmford J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 1 March 2002 | |
DATE OF JUDGMENT: | 20 March 2002 | |
CASE MAY BE CITED AS: | McIntyre v Deputy Commissioner of Taxation | |
MEDIUM NEUTRAL CITATION: | [2002] VSC 62 | |
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APPEAL FROM MAGISTRATES’ COURT – appeal dismissed – liability to remit group tax under Income Assessment Act 1936 as at 7 January 1997 – Magistrate’s finding of fact not reviewable.
Income Tax Assessment Act 1936 – sections 221C(1A), 221F(5)(c), 222AOB, 222AOC, 222AOD
Magistrates’ Court Act 1989 – section 109
Supreme Court (General Civil Procedure) Rules 1996 – rule 58.13
Buckman v Barnawatja Abattoirs (unreported, 14 July 1994)
DPP v Hinch (unreported, decided 5 August 1994)
Popovski v Ericsson Australia Pty Ltd [1998] VSC 61
Spurling v Development Underwriting Inc [1973] VR 1
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APPEARANCES: | Counsel | Solicitors |
| For the Appellant | Mr J Ribbands | Grundy Maitland & Co |
| For the Respondent | Ms H Riley | ATO Legal Practice |
HER HONOUR:
This is an appeal on a question of law under section 109 of the Magistrates’ Court Act 1989 from a final order made on 13 September 2001 by the Magistrates’ Court of Victoria at Melbourne constituted by Mr B Coburn, Magistrate, whereby it was ordered that the appellant, as a director of Haulage Management Services Pty Ltd (“HMS”), pay to the respondent in respect of unremitted group tax a penalty of $30,083.55 together with interest at $2,963.04 and costs of $4,555.00.
On 12 October 2001 Master Wheeler ordered the following questions of law to be decided:
(a)did the learned Magistrate err in concluding that “use and enjoyment of the business assets of the vendor’s business” from 2 December 1996 by HMS created a liability to remit group tax as at 7 January 1997 (see exhibit “GMH5” 7A)?
(b)did the learned Magistrate err in law in concluding that the primary liability for the payment of group tax as at 7 January 1997 was that of HMS?
The relevant statutory provisions are sections 221C(1A), 221F(5)(c), 222AOB, 222AOC and 222AOD of the Income Tax Assessment Act 1936 (“the Act”), which read as follows in the 1996-1997 taxation year:
221C. Deductions by employer from salary or wages
(1A)Where an employer pays to an employee salary or wages, the employer shall, at the time of paying the salary or wages, make a deduction from the salary or wages at such rate (if any) prescribed in accordance with subsection (1) as is applicable.
Penalty: $1,000.
221F. Group employers, group certificates etc.
(5)An employer must pay to the Commissioner the amount of any deductions that the employer makes:
(a)if the deductions were made during the first 14 days of a month and the employer is an early remitter (see section 221EC) in relation to that month-not later than the 21st day of that month; and
(b)if paragraph (a) does not apply and the employer was a small remitter (see section 221EDA) when the deductions were made-not later than the 7th day after the end of the quarter in which the deductions were made; and
(c)in any other case-not later than the 7th day after the end of the month in which the deductions were made.
222AOB. Directors to cause company to remit or to go into voluntary administration or liquidation
(1)The persons who are directors of the company from time to time on or after the first deduction day must cause the company to do at least one of the following on or before the due date:
(a)comply with Division 1AA, 2 [in which sections 221C and 221F appear], 3A, 3B or 4, as the case may be, in relation to each deduction:
(i)that the company has made for the purposes of that Division; and
(ii) whose due date is the same as the due date;
(b)make an agreement with the Commissioner under section 222ALA in relation to the company's liability under a remittance provision in respect of such deductions;
(c)appoint an administrator of the company under section 436A of the Corporations Law;
(d)begin to be wound up within the meaning of that Law.
(2)This section is complied with when:
(a)the company complies as mentioned in paragraph (1) (a); or
(b)the company makes an agreement as mentioned in paragraph (1) (b); or
(c)an administrator of the company is appointed under section 436A, 436B or 436C of the Corporations Law; or
(d)the company begins to be wound up within the meaning of that Law;
whichever first happens, even if the directors did not cause the event to happen.
(3)If this section is not complied with on or before the due date, the persons who are directors of the company from time to time after the due date continue to be under the obligation imposed by subsection (1) until this section is complied with.
222AOC. Penalty for directors in office on or before due date
If section 222AOB is not complied with on or before the due date, each person who was a director of the company at any time during the period beginning on the first deduction day and ending on the due date is liable to pay to the Commissioner, by way of penalty, an amount equal to the unpaid amount of the company's liability under a remittance provision in respect of deductions:
(a)that the company has made for the purposes of Division 1AA, 2, 3A, 3B or 4, as the case may be; and
(b) whose due date is the same as the due date.
222AOD. Penalty for new directors
If:
(a)after the due date, a person becomes, or again becomes, a director of the company at a time when section 222AOB has not yet been complied with; and
(b)at the end of 14 days after the person becomes a director, that section has still not been complied with;
the person is liable to pay to the Commissioner, by way of penalty, an amount equal to the unpaid amount of the liability referred to in section 222AOC.
Those provisions can be conveniently summarised as follows:
(i)Employers were required by section 221C(1A) to deduct tax from salary or wages paid to employees.
(ii)By virtue of section 221F(5)(c), those deductions were to be remitted to the Commissioner of Taxation on the due date, which in this case was the seventh day of the month following the month when the deductions were made.
(iii)Where the employer was a company, the directors were required by section 222AOB(1) to cause the company to do one of four things on or before the due date, namely:
(a)remit the deductions to the Commissioner;
(b)arrange with the Commissioner pursuant to section 222ALA to remit the deductions by instalments;
(c)appoint an administrator of the company; or
(d)begin to be wound up.
(iv)If section 222AOB(1) was not complied with, each person who was a director of the company at any time during the period beginning on the day when the first deduction was made and ending on the due date became, by virtue of section 222 AOC, personally liable to a penalty equal to the amount of the unremitted deductions.
(v)By virtue of section 222AOD, the penalty was payable by any person who became a director after the due date if section 222 AOB(1) was not complied with within fourteen days of that person becoming a director.
HMS purchased a trucking business from another company. The agreement for sale was executed on 14 January 1997. Deductions from salary and wages paid to employees of the business were made in December 1996, the due date for remission of those deductions to the Commissioner being accordingly 7 January 1997. They had not been remitted by that date. The appellant became a director of HMS on 8 January 1997, and section 222AOB(1) was not complied with until more than fourteen days after that date.
The submission of Mr Ribbands was that at 7 January 1997 HMS had not purchased the business, because the agreement for sale of the business had not been entered into. Thus HMS was not the “employer” and accordingly did not have the statutory obligation to remit the deductions, which was imposed on the “employer” by section 221F(5)(c) of the Act. Accordingly the appellant was not liable for any penalty resulting from the failure of HMS to remit the deductions. If, he submitted, the question “Who is responsible to remit the deductions?” had been asked on that date, the answer would have been that HMS was not responsible, because it did not own the business.
The Magistrate found, however, on the extensive material before him, that HMS owned the business as from 2 December 1996, and that what the agreement of 14 January did “was to formalise and confirm that as from 2 December ’96, Haulage Management Services owned the business.”. That is a finding of fact which is amply supported by the evidence and accordingly is not reviewable on this appeal. The submissions of Mr Ribbands went only to that finding of fact and not to the conclusion which follows from that finding of fact by virtue of the legislative provisions to which I have referred.
As Stephen J said in Spurling v Development Underwriting Inc[1]:
In the case of decisions of magistrates the position in Victoria is well established by a line of decisions culminating in Taylor v Armour and Co. Pty Ltd, [1962] VR 346, in which the Full Court of this State held that in the case of any question of fact the Court should treat the matter as an appeal from the verdict of a jury and should not make up its own mind upon the evidence but rather confine itself to seeing whether there was evidence upon which the magistrate might, as a reasonable man, come to the conclusion to which he did come. In saying this the Full Court stated that it was following the view of Herring, CJ, in Young v Paddle Bros. Pty Ltd, [1956] VLR 38; [1956] ALR 301. The Chief Justice, in that case, adopted as the test whether "on any reasonable view of the evidence that decision can be supported"; a party aggrieved can thus only succeed if a decision contrary to the view of the magistrate is "the only possible decision that the evidence on any reasonable view can support" (see at VLR p. 41).
[1][1973] VR 1 at 11
Neither of the questions in the Master’s order accurately describes the conclusions of the Magistrate. On other occasions Judges of this Court have expressed the view and acted upon the principle that in a situation of that kind a Judge is not authorised to amend an order made by the Master; but that Rule 58.13 of the Supreme Court (General Civil Procedure) Rules 1996 empowers the Court in the words of Mandie J in DPP v Hinch [2]:
to direct, in an appropriate case, that the appeal be decided upon the questions of law identified and canvassed in the arguments advanced, where this is necessary to achieve the effective, complete and economic determination of the appeal and is otherwise just and convenient.
See also, Buckman v Barnawatha Abattoirs [3], and Popovski v Ericsson Australia Pty Ltd [4].
[2]Unreported, decided on 5 August 1994
[3]Unreported decision of Smith J, decided on 14 July 1994
[4]1998 VSC 61 (Ashley J)
However, as the appeal was argued for the appellant solely on a question of fact, there is no question of law on which the appeal can be decided, and it must be dismissed with costs.
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