Newcombe and Inspector-General in Bankruptcy
[2004] AATA 1320
•10 December 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 1320
ADMINISTRATIVE APPEALS TRIBUNAL )
) Nos S2003/615
GENERAL ADMINISTRATIVE DIVISION ) & S2004/96 Re JOHN RICHARD NEWCOMBE Applicant
And
INSPECTOR-GENERAL IN BANKRUPTCY
Respondent
DECISION
Tribunal Deputy President D G Jarvis Date10 December 2004
PlaceAdelaide
Decision 1. The Tribunal sets aside the decision under review in matter number S2003/615, and in place of that decision, directs that the matter be remitted to the Inspector-General for reconsideration in accordance with the Tribunal’s findings.
2. The Tribunal affirms the decision under review in matter number S2004/96.
3. The Tribunal reserves liberty to the parties within 10 days of the date of this decision to apply in relation to the quantification of its findings as set out in the schedule to the Tribunal’s reasons for decision.
D G Jarvis
(Signed)
Deputy President
ADMINISTRATIVE APPEALS TRIBUNAL )
) Nos. S2003/615 & S2004/96
GENERAL ADMINISTRATIVE DIVISION )Re: JOHN RICHARD NEWCOMBE
Applicant
And:INSPECTOR-GENERAL IN BANKRUPTCY
Respondent
CORRIGENDUM TO DECISION [2004] AATA 1320
TribunalDeputy President D G Jarvis
Date7 January 2005
PlaceAdelaide
In the decision of the Tribunal in this matter handed down on 10 December 2004 the text of the last sentence of paragraph 40 be amended by inserting the following after the words “used in Dr Newcombe’s practice,”:
“(not being the items of plant and equipment referred to in paragraph 13(c) above, being items that the parties agreed could not be the subject of a claim for depreciation)”
(Signed)
D G JARVIS
(Deputy President)
CATCHWORDS
BANKRUPTCY – assessment of bankrupt’s income – deduction of expenses from income – deduction of income tax paid or payable – deduction of amount paid or payable for child support – deduction for depreciation of plant and equipment not permitted – income contribution liability – receipt by trustee of proceeds of sale of shares beneficially owned by self-managed superannuation fund – deduction of professional development expenses – decision under review set aside.
BANKRUPTCY – review of trustee’s objection to discharge from bankruptcy – failure to pay income contribution – reasonable excuse for failure to pay income contribution – withdrawal of trustee’s objection to discharge from bankruptcy – meaning of “income” – meaning of “liable to pay” – decision under review to confirm trustee’s objection to discharge from bankruptcy affirmed.
Bankruptcy Act, 1966 (Cth), s 139L, s 139N, s 139ZF, s 149N
Income Tax Assessment Act 1936 (Cth), s 204(1)(b)
Taxation Administration Act 1953 (Cth)
Re Ansett; Pattison and Inspector-General of Bankruptcy (1994) 32 ALD 679
Nette v Howarth (1935) 53 CLR 55
Deputy Commissioner of Taxation v Kavich (1996) 68 FCR 519
REASONS FOR DECISION
10 December 2004 Deputy President D G Jarvis 1. John Richard Prehn Newcombe was made bankrupt on the petition of the Deputy Commissioner of Taxation on 21 August 2000, and Hilary Elizabeth Orr was appointed his trustee. At the time of his bankruptcy he was carrying on business as a psychiatrist, and continued to do so until 31 December 2003. After that, his entitlement to practice was withdrawn by the Medical Board for four months commencing on 1 January 2004. However, he has not resumed practising as a psychiatrist because of certain ongoing inquiries by the Board.
2. The trustee of Dr Newcombe’s estate calculated his assessed income for each year (a contribution assessment period, or “CAP”) following his bankruptcy. On 4 August 2003 she determined the contribution which Dr Newcombe was liable to pay to his estate in respect of each of the three CAPs following his bankruptcy in accordance with Division 4B of the Bankruptcy Act 1966 (Cth) (the “Act”), and notified Dr Newcombe of the amounts concerned.
3. Dr Newcombe disputed the trustee’s calculations of his liability for each of the three CAPs on various grounds to which I will refer below. He sought a review of the trustee’s assessment of his contribution liability in respect of each CAP. On 10 November 2003, following receipt of further information from Dr Newcombe’s accountant, Mr Randall, the Inspector-General in Bankruptcy recalculated the contribution liability in respect of each of the CAPs, and varied the trustee’s determination as follows:
Period Trustee’s
DeterminationInspector-General’s Determination CAP 1 21.08.00 – 20.08.01
CAP 2 21.08.01 – 20.08.02
CAP 3 21.08.02 – 20.08.03
$10,243.10 $18,175.75 14,155.43 11,186.69 20,753.43
$45,151.96
4,320.41
$33,682.85
Totals for CAP 1, CAP 2 and CAP 3
4. Dr Newcombe has applied to this Tribunal for review of the Inspector-General’s determination pursuant to s 139ZF of the Act.
5. Following the hearing of this matter, the Inspector-General recalculated his assessment in the light of further matters agreed between the parties or substantiated during the hearing. The calculation made on behalf of Dr Newcombe of his contribution liability, and the amended calculation by the Inspector-General were as follows:
Period Dr Newcombe’s
ContentionInspector-General’s Contention CAP 1
CAP 2
CAP 3
$2,800.00 $17,188.00 2,721.00 9,735.00 Nil
$5,521.00
2,136.00
$29,059.00
The manner in which the parties arrived at these figures appears in a schedule to these reasons, and I will refer to this below.
6. The parties were agreed that Dr Newcombe had made two contributions to the trustee totalling $8,122.22, but as mentioned below, there was a dispute as to whether Dr Newcombe should be credited in addition with the proceeds of sale of certain shares in Normandy Mining Ltd amounting to $3,200.00 as a contribution to his estate.
7. Section 149 of the Act provides for the automatic discharge of a bankrupt at the end of three years from (relevantly) the date on which the bankrupt filed his or her statement of affairs. However, this is subject to an extension of the bankruptcy up to eight years after that date if the trustee objects to the discharge on certain specified grounds, including a failure by the bankrupt to pay to the trustee a contribution amount assessed by the trustee in respect of the CAPs. In the present matter, Dr Newcombe did not pay the total of the contribution amounts of $45,151.96 assessed by the trustee, and the trustee lodged an objection to his discharge from bankruptcy.
8. Dr Newcombe then applied to the Inspector-General to review the trustee’s objection to his discharge from bankruptcy. The Inspector-General subsequently confirmed the trustee’s objection based on Dr Newcombe’s failure to pay the total of the assessed contribution amounts. Dr Newcombe has applied to this Tribunal for review of the Inspector-General’s decision. The trustee had also objected to Dr Newcombe’s discharge from bankruptcy on certain further grounds, but following Dr Newcombe’s application to the Inspector-General to review the trustee’s objection, the Inspector-General cancelled the trustee’s objections on those further grounds. Those matters are not relevant to the present proceedings.
9. When the applications for review referred to in paragraphs 4 and 8 above came on for hearing before me, I directed that both applications should be heard together, and that the evidence in each application should be treated as evidence in the other.
10. At the outset of the hearing, the parties advised that they had agreed that the relevant figures in respect of the financial years ended 30 June 2001, 30 June 2002 and 30 June 2003 would apply to CAP 1, CAP 2 and CAP 3 respectively, because the figures for the financial years were readily available and would closely reflect the figures for the corresponding CAPs. This seemed an appropriate approach in the present matter, having regard to the close correlation of the dates of the CAPs to the financial years in question, and the cost, difficulty and inconvenience of having to recalculate figures for the actual CAPs, which did not correspond with the end of a particular month or other accounting period. The application therefore proceeded on the basis that the figures for the above financial years equated to the figures for the nearest CAPs.
Issues
11. The issues before the Tribunal are as follows.
(a)When assessing the income that Dr Newcombe was likely to derive during CAP 1, CAP 2 and CAP 3, should there be a deduction for:
·the amount of income tax actually paid by Dr Newcombe during each CAP, or alternatively, if the amount of his liability to pay income tax during each CAP was not discharged in that CAP, the amount of that liability;
·the amount actually paid for child support by Dr Newcombe during each CAP, or alternatively, the amount for which Dr Newcombe was liable to pay for child support during each CAP;
·depreciation on items of plant and equipment, comprising both pre-bankruptcy items and also items purchased by Dr Newcombe during each CAP and used for the purposes of his professional practice;
·the cost of certain items of plant and equipment purchased by Dr Newcombe during each CAP for the purposes of his practice as a psychiatrist, and deducted from his income as an expense; and
·certain travel expenses claimed by Dr Newcombe as a deduction from his assessed income in CAP 3 as necessary for his professional development.
(b)Whether the proceeds of sale of certain shares in Normandy Mining Ltd should be applied in reduction of his income contribution liability.
(c)Whether the trustee’s objection to Dr Newcombe’s automatic discharge from bankruptcy three years after the date when he filed his statement of affairs should be cancelled pursuant to s 149N of the Act.
(d)Whether Dr Newcombe has established that he had a reasonable excuse for his failure to pay his income contribution for each of CAP 1, CAP 2 and CAP 3 by the respective due dates.
12. Dr Newcombe had also claimed a deduction for certain contributions he had made to his self-managed superannuation fund, but this claim was withdrawn during the hearing before me.
13. Prior to the commencement of the hearing, certain additional matters were in issue between the parties. At my suggestion, the parties further discussed these issues, and as a result the following matters were agreed during the hearing. The parties’ agreement is reflected in exhibit A11.
(a)A credit to Dr Newcombe’s bankrupt estate from a Commonwealth Bank account in his name, amounting to $2,922.22, constituted an income contribution.
(b)70% of petty cash expenses of Dr Newcombe’s practice should be allowed as deductions against the income assessed by the trustee during each of CAP 1, CAP 2 and CAP 3, and accordingly, as Dr Newcombe’s taxable income was used as the basis of the trustee’s assessment of his income, 30% of the petty cash expenses in each CAP should be added back to his taxable income in each CAP in order to arrive at the assessment of his income for the purpose of calculating his contribution liability.
(c)Of the expenses claimed by Dr Newcombe in each of the CAPs, it was agreed that certain items of plant and equipment which he had purchased were of a capital nature, and should not be deducted from his assessed income. The cost of these items was as follows:
CAP 1 $1,091.00
CAP 2 $1,864.00
CAP 3 $1,729.00Total $4,684.00
(d)It was further agreed that if Dr Newcombe was entitled to claim depreciation on certain items of plant and equipment acquired after he became bankrupt, the relevant items should be treated as having a life of four years, so that depreciation should be calculated at 25% per annum on a straight line basis.
14. In addition, the parties reached agreement on Dr Newcombe’s liability for income tax and child support payments, and on the amounts actually paid for income tax and child support payments (which included certain college fees paid by him pursuant to a maintenance order or agreement involving his former wife), during each of the relevant CAPs. Dr Newcombe’s liability in each CAP for child support was agreed at the amount of the assessed liability for child support payments in that CAP.
15. The agreement reached by the parties in relation to the matters referred to in paragraphs 13 and 14 above was arrived at in part (and regrettably, only after quite some delay) after the hearing had been substantially completed, and the matters agreed are reflected in exhibit A11. This exhibit also records the agreed quantum of Dr Newcombe’s taxable income in each CAP, the claimed adjustment for depreciation (on pre-bankruptcy assets and also assets acquired post-bankruptcy), petty cash expenses, professional development expenses, Medicare payments, child support payments made, and Dr Newcombe’s child support liability. It also records an acknowledgment by both parties that there should be no deduction for school building fund payments. It also includes certain competing contentions of the parties on issues where they are not in agreement. (Exhibit A8 was prepared at an earlier stage of the proceedings to reflect the matters that had been agreed at that stage, and has been superseded by exhibit A11).
Consideration
16. It is necessary to consider the provisions of Division 4B of the Act in order to determine the issues which arise in the present matter. The objects of this Division are relevantly to require a bankrupt who derives income during the bankruptcy to pay contributions towards his or her estate (s 139J(a)).
17. Section 139P of the Act provides for an assessment to be made by the trustee in bankruptcy of the income that a bankrupt is likely to derive during a CAP. The expression “income” in relation to a bankrupt has its ordinary meaning, subject to a number of qualifications which are not relevant in the present matter (s 139L). Section 139P also imposes a liability on the bankrupt to pay to the trustee a contribution in respect of that period if the likely income as assessed exceeds the “actual income threshold amount” (“AITA”) applicable in relation to the bankrupt when the trustee’s assessment is made. The expression “actual income threshold amount” is defined in s 139K of the Act, and the relevant figures are agreed at $45,777.00 for CAP 1, $40,913.00 for CAP 2 and $40,913.00 for CAP 3 (exhibit A11). The contribution payable by the bankrupt in respect of a CAP is 50% of the difference between the income assessed by the trustee and the AITA (s 139S). Any liability of a bankrupt under s 139P is not affected by his or her discharge from bankruptcy after the making of the assessment that gave rise to the liability (s 139R). Provision is made in s 139W for the trustee to make subsequent assessments in relation to a CAP, taking into account probable or actual changes in the bankrupt’s income compared to the trustee’s assessment of the income likely to be derived by a bankrupt during the relevant CAP, changes to the base income threshold amount from which the AITA is derived, or changes in relation to the bankrupt’s dependants during the relevant CAP.
18. Section 139T provides for the Official Receiver to vary the contribution payable by a bankrupt if he or she suffers hardship. Dr Newcombe lodged an application under this section on 28 July 2004, but his advisor, Mr Randall, was apparently unable to provide any information to the Official Receiver in support of that application. The Official Receiver therefore did not make a decision on the application within 30 days from when it was lodged, and was taken to have refused the application at the end of that period by virtue of s 139T(5) of the Act. Shortly before the day which had then been fixed as the final day of the hearing of the within proceedings, Dr Newcombe applied to join his new application with the within proceedings. That application was opposed by the Inspector-General, on the basis that the respondent in the new application was a different party, the documents required to be lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (Cth) were not due to be lodged until a date approximately three weeks later, and had not at the time of the joinder application been prepared or lodged, and the issues under s 139T were different from the issues raised by the within proceedings. I decided that it was not appropriate in the circumstances to join the new proceedings with the within proceedings, or to make any order for the joinder of parties for that purpose. The new application will accordingly be considered on its merits in due course, after the necessary formal procedures have been followed in accordance with the practice of this Tribunal (unless, of course, the issues that have arisen between Dr Newcombe and the trustee are resolved following the conclusion of these proceedings).
Adjustment to Assessed Income in Respect of Income Tax
19. Provision is made in s 139N of the Act for the income that is likely to be derived by a bankrupt during a CAP to be reduced to take account of income tax and liability for child support. The section provides relevantly as follows.
139N(1) The income that is likely to be derived, or was derived, by a bankrupt during a contribution assessment period:
(a) is taken to be reduced by:
(i)any amount that the bankrupt pays or is likely to be liable to pay, or paid or was liable to pay, as the case may be, during that period in respect of income tax; and
…
(iii)if the bankrupt pays or is likely to be liable to pay, or paid or was liable to pay, as the case may be, during that period an amount for the support of a child pursuant to a maintenance agreement entered into under the Family Law Act 1975 or under a maintenance order – so much of that amount as does not exceed the maximum amount that, but for that agreement or order, the bankrupt could be, or could have been, liable to pay during that period in respect of child support under the Child Support (Assessment) Act 1989;… .”
Sub-sections 139N(2) and (3) make special provision for the treatment of refunds, depending on whether they relate wholly or partly to a year of income which ended before the date of the bankruptcy. The words “income tax” are defined in s 139K to include the Medicare levy.
20. It appears that the contribution liability assessed by the trustee on 4 August 2003, and also the contribution liability assessed by the Inspector-General on 10 November 2003, were adjusted by reference to the income tax assessment notices issued by the Deputy Commissioner of Taxation in respect of each CAP. The assessment notices notified Dr Newcombe of the amount of income tax assessed in respect of each CAP, the amount of tax previously paid, and the date when the balance of the tax was due to be paid. Mr Randall submitted on behalf of Dr Newcombe that his assessed income for the purpose of calculating his contribution liability should be reduced by the tax assessed in respect of each CAP. However, Mr Prince for the Inspector-General contended, on the basis of the decision of this Tribunal in Re Ansett; Pattison and Inspector-General of Bankruptcy (1994) 32 ALD 679, that income tax assessed against Dr Newcombe, but not paid by him during a subject CAP, should not be deducted against his income.
21. The relevant figures and due dates, according to the notices of assessment and the agreed figures referred to in exhibit A11, are as follows:
Period Tax Paid Tax Assessed Due Date CAP 1 $6,837.00 $26,950.00 24 December 2001 CAP 2 18,172.00 22,124.00 21 February 2003 CAP 3 15,501.00 13,194.00 (As previously advised) Total $40,510.00 $62,268.00
Having regard to s 204(1)(a) of the Income Tax Assessment Act 1936 (Cth) (“ITA Act”), the due date for payment of the balance (if any) of the tax assessed in respect of CAP 3 would be 21 days after the giving of the notice of assessment to Dr Newcombe, or 21 days after the due date for lodgement of the 2003 income tax return. This date must therefore have been after the expiration of CAP 3.
22. Section 139N(a)(i) provides for four alternative methods of reducing the assessed income of a bankrupt, namely:
·any amount that the bankrupt pays during the CAP in respect of income tax;
·any amount that the bankrupt is likely to be liable to pay during the CAP in respect of income tax;
·any amount that the bankrupt paid during the CAP in respect of income tax; and
·any amount that the bankrupt was liable to pay during the CAP in respect of income tax.
The sub-section does not indicate which of the four alternatives should be applied in a particular case. The second reading speech when the 1991 amending Bill providing for the income contribution regime was introduced in the Senate does not assist in determining which of the alternatives is to apply, and the examples of the application of the section in that speech merely refer to the “after tax income” of a bankrupt. The explanatory memorandum in respect of the amending Bill also does not assist in interpreting s 139N.
23. It appears that the purpose of s 139N of the Act was that a bankrupt’s income should be assessed on an after-tax (and after-child support) basis in order to calculate his or her contribution liability. The reduction for tax is calculated not by reference to the tax assessed in respect of a CAP (which was the effect of the contention made on Dr Newcombe’s behalf), but by reference to the amount of tax paid or the liability to pay tax “during” the relevant CAP. In Deputy Commission of Taxation v Kavich (1996) 68 FCR 519 the Full Court of the Federal Court decided that income tax only becomes a debt due when it is assessed and notice is served of that assessment, and it does not become payable before the date fixed by s 204 of the ITA Act. Following the introduction of the Pay As You Go (“PAYG”) instalments system as from 1 July 2000, which is provided for in Part 2-10 Division 45 of Schedule 1 to the Taxation Administration Act 1953 (Cth), taxpayers are also required to pay tax on a quarterly or annual basis. Liability to pay tax also arises pursuant to that system within a short period after the end of the relevant quarter or annual period, as well as on the date for payment fixed by s 204.
24. Dr Newcombe was not liable to pay the tax assessed on his taxable income in CAP 1 (or more precisely, the balance of the tax assessed in respect of that CAP) until 24 December 2001, being a date after the expiration of CAP 1 on 30 June 2001 (see the notice of assessment of income tax in respect of CAP 1, which is included in exhibit A7). However, he paid PAYG instalments during CAP 1, and I consider that I can infer from this that he was liable in CAP 1 for those instalments, which totalled $6,837.00. Section 139N of the Act deems the bankrupt’s tax to be reduced by the amount of income tax that the bankrupt paid or was liable to pay during the applicable CAP. In the case of CAP 1, on my findings, the same figure, namely $6,837.00, applies whether the reduction is calculated by reference to the amount of tax paid or the liability to pay tax (being Dr Newcombe’s PAYG instalments liability) during CAP 1.
25. In the case of CAP 2, Dr Newcombe was liable to pay the amount of the tax assessed in respect of CAP 1, less a small rebate, and he had previously paid PAYG instalments (see the notice of assessment for the year ended 30 June 2001, included in exhibit A7). As mentioned above, the liability referred to in the notice of assessment was due for payment on 24 December 2001, and was as follows:
Tax assessed on income in YE 30.06.01
$28,297.00
Less rebate $1,347.00 Less PAYG instalments paid $6,837.00 8,184.00 Balance payable on 24.12.01 $20,113.00
He also actually paid PAYG instalments of $18,172.00 in CAP 2, according to exhibit A11 and the notice of assessment for the year ended 30 June 2002, which is also included in exhibit A7. Once again, I consider that I can infer from this that he was also liable for those PAYG instalments during CAP 2.
26. In the case of CAP 3 (being the year ended 30 June 2003), Dr Newcombe was liable to pay the tax assessed on his income for the year ended 30 June 2002, less PAYG instalments which he had previously paid on 21 February 2003. The balance payable during CAP 3 was $5,061.00 (see the notice of assessment included in exhibit A7). It is agreed that he also actually paid PAYG instalments of $15,501.00 during CAP 3. Again, I infer that he was liable for these instalments totalling $15,501.00, and his liability for tax during CAP 3 also included that amount, and also constituted the agreed amount of tax he actually paid in CAP 3, according to exhibit A11.
27. On the above analysis, the reduction for tax may be summarised as follows, according to whether the reduction is based on tax actually paid during each CAP or on the liability to pay tax during each CAP.
Tax Paid
during CAP
Liability to pay Tax
during CAP
CAP 1 $6,837.00 $6,837.00 CAP 2 18,172.00 38,285.00 (ie $20,113 +$18,172) CAP 3 15,501.00 $20,562.00 (ie $5,061 + $15,501) Total $40,510.00 $65,684.00
28. In Ansett, (supra) the Tribunal was reviewing an assessment of the bankrupt’s income in the financial year ended 30 June 1993. The trustee made an assessment on 27 October 1992 of the bankrupt’s anticipated income in that year, based on a projection of the bankrupt’s income in the first three months of the year. On review of the trustee’s decision, the Inspector-General issued a new lower assessment on 18 February 1993, based on a projection of the first six months’ income. By the time the proceedings came before this Tribunal, a notice of assessment had been issued by the Deputy Commissioner of Taxation of the bankrupt’s liability for income tax in respect of the previous financial year (i.e. the year ended 30 June 1992), and this included his liability for provisional tax in respect of the 1993 financial year. There is no reference in the Tribunal’s decision to any assessment of income or contribution liability having been made for the next succeeding CAP, but the tax due had not been paid in the 1993 CAP, and the Tribunal was concerned that there should not be another reduction for income tax in a future CAP because the bankrupt did not pay the tax when due during the 1993 CAP. The Tribunal said (at [72(n)]):
“It would not promote the purpose or object underlying Div 4B to construe s 139N(a)(i) in such a way as to permit a bankrupt to obtain the benefit of a reduction of his assessed income in successive CAPs in respect of the same liability for income tax. So that, if the bankrupt in one CAP is given the benefit of a reduction for an amount of tax for which he became liable in that period, he should not be able to obtain the same reduction in another CAP simply by not paying the tax when due. To permit such a state of affairs would be an abuse of both the bankruptcy and income tax legislation.”
The Tribunal decided that the payments of income tax actually made during the year ended 30 June 1993 should be treated as payments of income tax made during that CAP for which the bankrupt was liable, and that his income for assessment purposes should be reduced by that amount. The Tribunal then further decided that as part of the amount of tax paid was a benefit provided to the bankrupt by a third party, it should be treated as a fringe benefit within the meaning of the definition of “income”, and so as required by that definition should be added to the bankrupt’s income for the period in question. The Tribunal did not give reasons for basing the bankrupt’s liability on the payments actually made during the relevant CAP, apart from expressing its concern that the deduction made in respect of income tax should not lead to double counting in a future CAP. Further, the Tribunal said (at [72(q)]) that there may well be other approaches that could be adopted, and the facts of each particular case would dictate the manner most appropriate to that case.
29. In my opinion, Ansett (supra) is not authority for the proposition that in all cases, the deduction from a bankrupt’s income in respect of income tax under s 139N of the Act should be calculated by reference to the income tax actually paid in a particular CAP, as opposed to the bankrupt’s liability to pay income tax. Whilst that was the outcome on the facts of Ansett, the Tribunal reached that conclusion in order to ensure that the bankrupt would not be given a deduction for liability for income tax in the CAP under consideration, and then another deduction in the next CAP when the bankrupt paid the amount of the liability in question, resulting in a double counting.
30. In the present matter, the Tribunal is making an assessment of Dr Newcombe’s income for the purpose of calculating his contribution liability after the expiration of the three CAPs in question. The amount of his liability to pay income tax during each of the three CAPs is known, because he has received assessments of income tax in respect of each of the CAPs. In this respect, the present matter is distinguishable from Ansett (supra). The reduction for tax can be made in such a way as to ensure that double counting is avoided over the three CAPs concerned.
31. The alternative references to the reduction for income tax in s 139N(a) are expressed in the present and past tense, and the second alternative contemplates a prospective liability. In considering the possible relevance of these alternatives, it is necessary to take into account that under s 139W of the Act, as soon as possible after the start of each CAP, the trustee is to make an assessment of the income “that is likely to be derived, or was derived,” by the bankrupt during that CAP, but as the year progresses, if circumstances change, the trustee may make fresh assessments, and this can be done both during and after the end of the CAP. The reference to income “derived” in s 139W and to income tax “paid” in s 139N in circumstances where the trustee makes the initial assessment of the bankrupt’s income in a CAP (being the assessment required to be made as soon as practicable after the beginning of the CAP) would accommodate situations where a bankrupt might:
(a) receive all of his or her income for a particular CAP; and
(b) pay all of the tax he or she will be liable to pay in that CAP
at the beginning of the CAP concerned, and before the assessment of the bankrupt’s income has been made by the trustee. Section 139W(2) contemplates that the trustee can re-assess the bankrupt’s earning position both during and after a CAP, and the use of the past tense in s 139W(2) and in s 139N(1)(a)(i) would apply to a retrospective assessment by the trustee under s 139W(2).
32. However, there may be other situations (such as the present) where a bankrupt is liable to pay tax during a CAP, but does not do so, or does not discharge the liability in full. If in these circumstances the contribution liability is calculated on the basis of the amount of tax paid instead of the amount that the bankrupt is liable to pay, this would advantage the bankrupt’s creditors, because the income contribution would be higher than would otherwise be the case. If the bankrupt pays the contribution liability, this in turn would impact on the bankrupt’s ability to meet his or her liability for income tax; and if the bankrupt does not pay the income tax assessed, interest and additional penalty tax will accrue under the ITA Act, to the detriment of his or her financial position. I further note the liability to make the contributions payable by virtue of s 139P of the Act is not affected by the bankrupt’s discharge from bankruptcy (s 139R of the Act).
33. In the present matter, Mr Prince submitted that Dr Newcombe could avoid his unpaid liability for income tax by becoming bankrupt again following his discharge from his current bankruptcy, and that would mean that if his liability for income tax were used to reduce his liability to make contributions in his present bankruptcy, his creditors would have been prejudiced because they would have received lower contributions than would have applied if the liability for contributions had been calculated by reference to the income tax actually paid. However, in the absence of evidence to this effect, I consider it inappropriate to interpret s 139N of the Act on the basis of an assumption that Dr Newcombe will not meet his liability for tax, and will become bankrupt again following his discharge from his current bankruptcy.
34. The assessment of Dr Newcombe’s income in order to calculate his income contribution liability involves determining the appropriate deduction retrospectively, and the liability for income tax during of each CAP is known. I consider that in the circumstances of the present matter, the appropriate deduction in each CAP should be the amount of income tax which Dr Newcombe is liable to pay in each CAP, and not the amount actually paid by him in each CAP.
35. Perhaps a better legislative formula for arriving at the after-tax income of a bankrupt might have been to require the trustee to estimate the bankrupt’s liability for tax in respect of his income in a particular CAP, and to give a deduction for the amount so estimated. However, that approach would raise practical difficulties where (as would almost invariably be the case) a CAP did not correspond with a tax year, and where the bankrupt was self-employed. Under the section as it stands, I think that a calculation of a bankrupt’s after-tax income (which is the apparent purpose of s 139N of the Act) should be made by reference to the bankrupt’s liability for tax and not the tax actually paid, provided this approach is used consistently in successive years, so that it does not result in double counting. A calculation of the amount of tax actually paid might perhaps be an appropriate approach for a trustee to adopt when assessing the tax deduction for a bankrupt who is an employee from whose salary PAYE deductions are being made, as the amount of tax paid would generally closely approximate the bankrupt’s liability for tax. However, in my view this would often not generally be the appropriate approach for a self-employed bankrupt, as there could be a significant disparity (up or down) between the amount actually paid by a bankrupt (including PAYG payments) and the amount of his or her liability for tax.
Child Support
36. Counsel for the respondent also submitted on the authority of Ansett (supra) that Dr Newcombe’s assessed income should not be reduced by his unpaid liability for child support in a past CAP, but only by the amount actually paid during that CAP.
37. Section 139N(a)(iii) is in terms which correspond with s 139N(a)(i) in respect of income tax. That is, the sub-paragraph (iii) provides for the same four alternative methods of calculating the deduction. As corresponding language is used in each sub-paragraph, I think that sub-paragraph (iii) should be interpreted in the same way as sub-paragraph (i). In the present matter, the liability for contribution is being calculated retrospectively, that is after the expiration of the three CAPs. The amount of Dr Newcombe’s liability is known, as the parties have agreed on the amount of the liability. Once again, by virtue of s 139R, Dr Newcombe’s liability for child support accruing during the currency of his bankruptcy is not affected by his discharge from bankruptcy. I consider that s 139N(a)(iii) should be interpreted on the assumption that the bankrupt will meet his or her liability for child support, and that the section should not be interpreted in such a way as would impede a bankrupt’s ability to meet that liability by increasing his income contribution liability as a result of his failure to pay his liability for child support.
38. Mr Prince contended on behalf of the Inspector-General that a bankrupt might apply for an amendment to an assessment of his or her liability for child support after the trustee had made an assessment of income and liability for contribution, to the disadvantage of creditors. However, there would need to be proper grounds for any such application for an amendment to the child support assessed. Further, if the application were granted, the trustee could make a fresh assessment of the bankrupt’s income and contribution liability under s 139W of the Act. In my opinion, the possibility of an application to vary the assessment of liability for child support does not support an argument that the deduction for child support to be made under s 139N(a)(iii) should be based on payments made as opposed to liability for child support.
39. For the above reasons, I consider that the deduction in respect of child support should be calculated by reference to Dr Newcombe’s liability for child support during each of the CAPs, and not the amounts actually paid in each of the CAPs, provided of course that this approach is adopted in respect of each CAP, so that the resulting assessment will not be distorted by double counting as might follow if different bases of determinations were used in different CAPs.
Depreciation
40. As mentioned above, under s 139L of the Act, the word “income” in relation to a bankrupt has its ordinary meaning, subject to the various qualifications referred to in that section. Dr Newcombe was not receiving salary or wages, but was carrying on his profession as a psychiatrist. Both parties accepted that his expenses in conducting his practice could be deducted from his gross billings in order to arrive at his income. Relevant expenses were set out in the annexures to Dr Newcombe’s income tax returns which were included in exhibit A7, and included such items as wages, motor vehicle expenses, telephone, rent and stationery expenses. The expenses also included depreciation on items of plant and equipment used in Dr Newcombe’s practice, and it was submitted on his behalf that depreciation should be deducted from the income assessed by his trustee in order to determine his liability for contributions.
41. Counsel for the Inspector-General argued by reference to Nette v Howarth (1935) 53 CLR 55 that the reference to “income” involved simply calculating the bankrupt’s surplus income over and above outlays incurred in deriving that income. He referred in particular to the dictum of Dixon J in Nette at page 65, where his Honour said:
“… the English and Australian provisions alike appear to be directed at revenue receipts. Indeed, they are reminiscent of the rule long established in bankruptcy, that the personal earnings of a bankrupt do not pass to his trustee except to the extent that they are not required for the support of himself and his family.”
However, in that case, Dixon J was considering whether the nature of the monies received was capital or income, but in the present matter, the issue is whether depreciation can properly be regarded as an expense.
42. The argument in support of Dr Newcombe’s claimed deduction from his assessed income for depreciation was as follows.
·The ordinary concept of income includes profit or gain made in the ordinary course of carrying on a business, undertaking or profession.
·Under Australian Accounting Standard AAS4, depreciation is to be taken into account as an expense to reflect that capital items are consumed or used in a business, and requires the calculation of an amount with reference to the life expectancy of an item.
·In order to determine the profit of Dr Newcombe’s practice, a deduction should therefore be made for depreciation, as that was an inherent aspect of determining the profit of a business.
·It was acknowledged that capital expenses could not be deducted, but depreciation was not of the same character as a capital expense; rather, depreciation was an expense item.
43. The meaning given to “income” by s 139L of the Act does not make express provision for deductions in respect of the expenses of deriving income except in s 139L(a)(vii). This provision deals with circumstances where a third party derives income as a result of the personal services of a bankrupt, as would be the position if the bankrupt were employed by a company or trust, which then contracts with a third party to provide the services of the bankrupt to perform the contract. Section 139L(a)(vii) provides that the following item is included in the concept of income:
“(vii) the amount of any money, or the value of any other consideration, received by a person other than the bankrupt from another person as a result of work done or services performed by the bankrupt, less expenses (other than expenses of a capital nature) necessarily incurred by the first-mentioned person in connection with the work or services; … .”
44. The above provision recognises that the amount received is to be reduced by expenses necessarily included in connection with the work or services, but excludes a deduction for expenses of a capital nature. I consider that the above exclusion from the concept of income referred to in the particular situation dealt with in this paragraph of s 139L(a) provides an indication that the concept of income is intended to involve making a deduction for expenses necessarily included in connection with the bankrupt’s work or services, but not a deduction for expenses of a capital nature. In my opinion, depreciation is such an expense, and should not therefore be deducted from Dr Newcombe’s assessed income.
45. Quite apart from the above considerations, it is significant that under s 58 of the Act, the property of a bankrupt, including after-acquired property, vests in the bankrupt’s trustee. Further, under s 116 of the Act, the plant and equipment owned by a bankrupt at the commencement of bankruptcy or acquired after bankruptcy is divisible amongst the bankrupt’s creditors. This is subject to an exclusion under s 116(2)(c) of property that is used by the bankrupt in earning income by personal exertion and:
(a)does not have a total value greater than the limit prescribed by regulation (namely $3,000.00); or
(b) is identified by resolution passed by his creditors; or
(c) is identified by an order made by the Court.
There is no evidence before me that Dr Newcombe’s creditors have passed a resolution identifying particular items of plant and equipment which should not be divisible amongst his creditors, or that an order has been made to this effect by a Court (although even now it would presumably be open to Dr Newcombe to request that his creditors or the Court identify the items of plant and equipment used in the course of his practice so as to exempt it from being divisible amongst his creditors).
46. Even if I am wrong in the conclusion referred to in paragraph 44 above, there could in any event be no deduction for depreciation in respect of plant and equipment which is vested in Dr Newcombe’s trustee (and therefore not owned by him), and which is divisible amongst his creditors by virtue of s 116(1) of the Act. And even if (contrary to this further conclusion) it were possible for Dr Newcombe to claim depreciation on the property which was excluded from division amongst his creditors by virtue of s 116(2)(c), then any deduction for depreciation would be limited to plant and equipment having a value of $3,000.00 (or a potentially greater amount, if Dr Newcombe were to secure a resolution of his creditors or an order of the Court to identify the plant and equipment used in his practice of a greater value than $3,000.00).
47. In an attempt to avoid the above consequence of s 116, Mr Randall, on behalf of Dr Newcombe pointed out that s 116 was prefaced with the words “(s)ubject to this Act”, and submitted in effect that the formula in s 139S contemplates that any 50% of the difference between a bankrupt’s assessed income and his or her AITA in respect of each CAP is required to be paid to the trustee as an income contribution; that Division 4B accordingly contemplates that the remaining 50% can be retained by the bankrupt; that consistently with that entitlement, any items purchased by the bankrupt out of this remaining 50% should remain his or her property, and should not be divisible amongst creditors; and that in the present matter, Dr Newcombe had, during his bankruptcy, purchased capital items for use in his practice, and should be entitled to claim depreciation on them. I do not accept this submission. I do not think that the result contended for follows from the preface to s 116, because the Act does not expressly exempt property purchased by a bankrupt from his or her 50% share of assessed income in excess of the AITA from the effect of s 116. As mentioned in paragraph 46 above, s 116(2)(c) makes provision for property used by a bankrupt in earning income by personal exertion to be excluded from division amongst creditors. If a bankrupt has tools of trade (or in this case computer and other equipment) of a value exceeding $3,000.00 which he or she wishes to exclude from being divided amongst creditors, the bankrupt should seek an appropriate resolution of creditors or order of the Court under s 116(2)(a).
Professional Development Expenses
48. Dr Newcombe claims a deduction of $6,654.00 for professional development expenses in CAP 3. Of this amount, $2,120.00, described as “discretionary travel”, and petty cash withdrawals totalling $550.00 are disputed by the Inspector-General. Dr Newcombe gave evidence that in April 2003, he attended a conference at the Marriott Hotel, Sydney on the diagnosis and treatment of post-traumatic stress disorder, a psychiatric condition which he encountered in the course of his practice. The amount disputed by the respondent is the amount of a tax invoice from Harvey World Travel, which is recorded in an invoice dated 9 April 2003 from that company for a total amount of $2,119.18 including GST. This amount includes a business class airfare. Dr Newcombe said that he only decided late in the piece to go to the conference, and the relevant flight was full except for a business class ticket which he was then obliged to take up.
49. I find that it was reasonable for Dr Newcombe to participate in the conference, but he should have arranged matters so that he could have travelled on an economy fare. Further, I find that the amount of petty cash withdrawn was somewhat more than what should reasonably have been necessary, having regard to the payments for accommodation at the Marriott Hotel and for the conference registration fee. I think it appropriate to reduce Dr Newcombe’s claim for professional development expenses in CAP 3 for this conference by say $400.00.
Proceeds of Sale of Shares in Normandy Mining Ltd
50. Dr Newcombe gave evidence that he inherited certain shares in Normandy Mining Ltd, and he later purchased additional shares in this company in 1989. However, in about 1992 or 1993 there had been a shortfall in his contributions to his self-managed superannuation fund, and on his accountant’s advice, he decided to transfer these shares to his superannuation fund. No transfer was ever prepared or executed to vest the legal ownership of the shares in the trustee of the fund. However, exhibit A9 comprises extracts from the income tax returns of the fund for years ended 30 June 1992, 1993, 1995 and 1996, and these extracts show that as from the financial year ended 30 June 1992, the shares were consistently recorded as assets of the superannuation fund.
51. On the evidence before me, I find that the shares in Normandy Mining Ltd were beneficially owned by the superannuation fund, and not by Dr Newcombe. The proceeds of sale of those shares, which amounted to $3,200.00, should not be treated as a contribution by Dr Newcombe to his bankrupt estate, and Dr Newcombe’s trustee should return the proceeds of sale to the trustee of the superannuation fund.
Calculation of Contribution Liability
52. I have referred above to exhibit A11. In addition to recording certain figures agreed between the parties, this exhibit also quantifies the effect in monetary terms of the parties’ competing contentions, and includes provision for this Tribunal’s findings to be quantified so as to arrive at the income contribution required for each of CAP 1, CAP 2 and CAP 3. I have attached to these reasons a schedule which reproduces the parties’ quantification of the effect of the matters agreed between them, as well as their competing contentions, and also incorporates the figures that reflect my findings. This shows that Dr Newcombe’s contribution liability is as follows:
CAP 1 $14,822.00
CAP 2 Nil
CAP 3 ____Nil__Total $14,822.00
Should Trustee’s Objection to Automatic Discharge from Bankruptcy be Cancelled?
53. As mentioned in paragraph 7 above, the trustee lodged an objection to Dr Newcombe’s discharge from bankruptcy at the end of three years from the date he filed his statement of affairs, on the grounds that Dr Newcombe failed to pay an amount that he was liable to pay under s 139ZG of the Act. That is a ground of objection under s 149D(1)(f).
54. Mr Randall submitted on behalf of Dr Newcombe that the liability of Dr Newcombe to make contributions had been based on incorrect income assessments, that the trustee had failed to acknowledge the income contributions already made by Dr Newcombe, and that there was accordingly insufficient evidence to support the objection based on his failure to pay the contribution payable as set out in the trustee’s notice of contribution assessment.
55. Section 149K(1) of the Act provides in effect that the Inspector-General may review a decision of the trustee to file a notice of objection on the Inspector-General’s own initiative, or if requested to do so by the bankrupt for sufficient reasons. If the Inspector-General decides to review the decision, then s 149N provides relevantly that on making that review, the Inspector-General must cancel the objection if he or she is satisfied that:
“(a) the ground or grounds on which the objection was made was not a ground or were not grounds specified in subsection 149D(1); or
(b) there is insufficient evidence to support the existence of the ground or grounds of objections; or
(c) the reasons given for objecting on that ground or those grounds do not justify the making of the objection; … .”
56. As mentioned in paragraph 3 above, the trustee assessed the contribution amount payable by Dr Newcombe in respect of the three CAPs at $45,151.96 (and that figure was subsequently reduced on review by the Inspector-General to $33,682.85). The due date for payment of the contribution assessed by the trustee was 24 February 2004.
57. Section 139ZG provides relevantly that a contribution that a person is liable to pay under s 139P(1) or s 139Q(1) is payable at such time as the trustee determines. Under s 139ZG(2)(b) and (c), that liability is not affected by the bankrupt making a request to the Inspector-General for a review of the decision of the trustee to make the assessment that gave raise to the liability, nor is the liability affected by the making of an application to this Tribunal for review of the decision of the Inspector-General. As a result, and as it is conceded that the contribution liability has not been paid, the trustee was entitled to object to his discharge from bankruptcy on this ground. I consider that there is no basis under s 149N(1)(b) of the Act to cancel the trustee’s objection to the discharge from bankruptcy.
58. Mr Randall also relied upon the same facts in support of an argument, by reference to s 149N(c) of the Act, that the reasons given for objecting on the ground that the contribution liability had not been paid by Dr Newcombe did not justify the making of the trustee’s objection to his discharge from bankruptcy. A copy of the trustee’s notice of objection is included in exhibit A2 as T14, at pages 87-163. Paragraph 1 of this document identifies the ground relied upon by the trustee now under consideration, namely the bankrupt’s failure to pay the contribution for which he was liable under s 149D(1)(f). It traces the history of the trustee’s advice to Dr Newcombe of his liability to make income contributions, provides details of correspondence relating to amended assessments of Dr Newcombe’s income during the relevant CAPs, and further advises that she would object to his automatic discharge from bankruptcy should the liability for income contributions not be met. Paragraph 1 of the notice of objection concludes with the statement: “To date the bankrupt has not made any contributions to his estate.” In my opinion, the notice gives reasons for objecting on the ground of non-payment of the liability for contributions, and the reasons given justify the making of the objection.
59. The remaining paragraph of s 149N(1) of the Act has no application in the present matter. Section 149N(3) provides in effect that if the Inspector-General (or this Tribunal standing in the shoes of the Inspector-General) is not satisfied of the matters mentioned in s 149N(1), the decision to object to the discharge from bankruptcy must be confirmed. Accordingly, as required by s 149N(3), I confirm the decision of the trustee to object to Dr Newcombe’s discharge from bankruptcy.
60. Mr Randall also argued that Dr Newcombe had a reasonable excuse for the failure to meet his liability for the contributions assessed by the trustee. In this regard, Dr Newcombe gave evidence that he thought the trustee’s assessments of his income were so vastly wrong as to be invalid, and his actual level of income was such that he had no capacity to meet the liability assessed. He said that he had endeavoured to calculate what he thought was the correct figure, and that he had already contributed in excess of $11,000.00, and he thought that the amount contributed represented a correct assessment of his liability. He said further that he was loath to pay any more to the trustee because he would not be able to get any excess back, and in any event, he did not have sufficient money to contribute any more. He also referred to being very distressed because he was unable to resolve matters with the trustee, and he felt frustrated as a result of his communications with her. He also referred to a period of uncertainty arising from delays in the liquidation of his former practice company and in receiving an assessment by the Australian Taxation Office of the company’s tax liability. This delayed the finalisation of his own income tax returns, and he could not determine his financial position until these matters had been resolved.
61. Dr Newcombe also referred to substantial liabilities which were continuing to accrue following his bankruptcy, including liability for income tax, child support, school fees, continuing liability for wages, rent and other business expenses of maintaining his business practice, and his personal and private expenses of maintaining a house for his children when they resided with him. In addition, he said that he incurred substantial legal costs of the order of $18,000.00-$19,000.00 in connection with Family Court proceedings.
62. He also gave evidence as to his reduced earning capacity. He said that he had a lumbar spinal disc prolapse in 1997, necessitating an operation in May 1998, a second operation some 18 months later and a third operation in January 2002 involving an anterior fusion. Dr Newcombe described this operation as a fairly massive one, and his period of recuperation from the operation, and the analgesics which he took, adversely affected his capacity to practise his profession. In addition, following the Medical Board’s suspension of his entitlement to practise as a psychiatrist, he has only been able to offer counselling services, for substantially reduced fees compared with the fees he was previously able to earn.
63. Section 149N(1A) of the Act provides that an objection must not be cancelled under s 149N(1) if (relevantly) “the bankrupt fails to establish that the bankrupt had a reasonable excuse” for the failure to pay the contribution assessed (s 149N(1A)(c)). I accept Dr Newcombe’s evidence in relation to the matters referred to in paragraphs 60 to 62 above, which the respondent did not seek to contradict. Whilst not all of the matters asserted by Dr Newcombe might satisfy the requirements of s 149N(1A)(c), I am satisfied, and find, that Dr Newcombe has not failed to establish that he had reasonable excuse for failing to pay the liability assessed by the trustee. However, this finding merely eliminates the proscription under s 149N(1A) of the Act on cancelling the trustee’s objection; it does not positively require me to cancel the objection, and for the reasons referred to above, I have already found that I must confirm the trustee’s decision to object to Dr Newcombe’s discharge from bankruptcy.
64. In summary, on my findings, Dr Newcombe’s contribution liability for CAP 1, CAP 2 and CAP 3 amounts in total to $14,822.00 (compared to his trustee’s assessment of $45,151.96), and he has made contributions (not including the proceeds of sale of the shares in Normandy Mining Ltd) of $8,122.22. As I have mentioned above, the effect of s 139ZG(2)(b) and s 149N of the Act is that the trustee’s objection to Dr Newcombe’s discharge from bankruptcy cannot be cancelled notwithstanding that on my findings, the trustee’s assessment of his contribution liability very substantially exceeds the amount which I have found to be the correct figure. Further, in CAP 2 and CAP 3, his assessed income on my findings was significantly less than the AITA, and the reason for the significant contribution liability in CAP 1 is that his liability to pay the balance of his tax on his income in CAP 1 did not arise until during CAP 2. Indeed, if this liability had arisen in CAP 1, my assessment of Dr Newcombe’ total contribution liability for CAPs 1, 2 and 3 would be only $4,766.00, which is less that the amount which Dr Newcombe has already paid to the trustee.
65. I note that under s 149 of the Act, the trustee can withdraw her objection to the cancellation of Dr Newcombe’s discharge from bankruptcy. Of course, any possible withdrawal by the trustee of her objection is not an issue before me in these proceedings. However, it seems to me that it would now be appropriate for the trustee to consider the basis on which she would be prepared to withdraw her objection to the discharge from bankruptcy, taking into account the additional amount required to meet the contribution liability I have arrived at, as well as the matters to which I have referred in the preceding paragraph, and the matters on which Dr Newcombe relied in support of his contention that he had a reasonable excuse for his failure to pay the amount of his contribution liability.
decision
66. For the above reasons, I set aside the decision under review in matter number S2003/615, and in place of that decision, I direct that the matter be remitted to the Inspector-General for reconsideration in accordance with my above findings. I affirm the decision under review in matter number S2004/96. I reserve liberty to the parties within 10 days of the date of this decision to apply in relation to the quantification of my findings as set out in the schedule to these reasons.
I certify that the 66 preceding paragraphs are a
true copy of the reasons for the decision herein
of Deputy President D G JarvisSigned: .....................................................................................
N. Quirke AssociateDate/s of Hearing 23-24 August, 7 September and 7 December 2004
Date of Decision 10 December 2004
Agent for the Applicant Graham J Randall
Solicitor for the Applicant N/A
Counsel for the Respondent Rodger Prince
Solicitor for the Respondent Australian Government Solicitor
RE NEWCOMBE AND INSPECTOR-GENERAL IN BANKRUPTCY - AAT Nos S2003/615 and S2004/96
SCHEDULE TO REASONS FOR DECISION
CAP 1 (Y.E. 30.06.01) CAP 2 (Y.E. 30.06.02) CAP 3 (Y.E. 30.06.03) Applicant’s Contentions Respondent’s Contentions Tribunal’s Findings Applicant’s Contentions Respondent’s Contentions Tribunal’s Findings Applicant’s Contentions Respondent’s Contentions Tribunal’s Findings Total Business Income 154,459 154,459 154,459 141,440 141,440 141,440 140,944 140,943 140,945 Expenses 67,402 67,402 67,402 67,516 67,516 67,516 86,625 86,625 86,625 Taxable Income 87,057 87,057 87,057 73,924 73,924 73,924 54,319 54,318 54,320 Add back: Depreciation (273) 2,352 2352 (697) 4,331 4,331 (1,135) 3,751 3,751 School Building Fund 600 600 600 600 600 600 300 300 300 Superannuation 5,008 5,008 5,008 6,000 6,000 6,000 Petty Cash (unsubstantiated) 540 540 540 889 889 889 534 534 534 Plant and Equipment (capitalised) 1,092 1,092 1,092 1,694 1,694 1,694 1,750 1,750 1,750 Professional Development (discretionary travel) 0 2,120 400 Sub Total Add Backs: 1,959 4,584 4,584 7,494 12,522 12,522 7,449 14,455 12,735 Deductions: Medicare Paid vs Medicare Assessed 1,306 0 0 1,109 0 1,109 815 0 815 Tax Paid vs Tax Assessed 26,950 6,837 6,837 22,124 18,172 38,285 13,194 15,501 20,562 Child Support Paid vs Child Support Assessed 9,383 4,750 9,383 11,831 7,892 11,831 15,114 8,086 15,114 Sub Total Deductions: 37,639 11,587 16,220 35,064 26,064 51,225 29,123 23,587 36,491 Total Assessed CAP (a) 51,377 80,054 75,421 46,354 60,382 35,221 32,645 45,186 30,564 AITA (b) (as at 20/9/2004) 45,777 45,777 45,777 40,913 40,913 40,913 40,913 40,913 40,913 Sub Total (a-b) 5,600 34,277 29,644 5,441 19,469 (5,692) (8,268) 4,273 (10,349) Contributions Liability 50% 2,800 17,138 14,822 2,721 9,735 0 0 2,136 0
0
2
0