Quantum Electrical and Data Pty Ltd v Deputy Commissioner of Taxation

[2013] VSC 660

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

CORPORATIONS LIST

S CI 2013 4405

IN THE MATTER of Quantum Electrical & Data Pty Ltd (ACN 153 917 938)

BETWEEN

QUANTUM ELECTRICAL & DATA PTY LTD (ACN 153 917 938)	Plaintiff
v
DEPUTY COMMISSIONER OF TAXATION	Defendant

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JUDGE:	Gardiner AsJ
WHERE HELD:	Melbourne
DATE OF HEARING:	28 November 2013
DATE OF JUDGMENT:	29 November 2013
CASE MAY BE CITED AS:	Quantum Electrical & Data Pty Ltd v Deputy Commissioner of Taxation
MEDIUM NEUTRAL CITATION:	[2013] VSC 660

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CORPORATIONS – External administration – Application to set aside statutory demand pursuant to section 459G of the Corporations Act 2001 (Cth) by reason of alleged genuine dispute in respect of taxation liabilities the subject of Running Balance Account generated upon filing of BAS for self assessed liability – No genuine dispute established – Application dismissed.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M. Harris (solicitor)	Impex Lawyers and Advisers
For the Defendant	Mr S. Linden	Australian Taxation Office Legal Section

HIS HONOUR:

1. The Plaintiff (“Quantum”) makes application by an originating process filed 23 August 2013 pursuant to s 459G of the Corporations Act 2001 (Cth) (“the Act”) to set aside a statutory demand dated 30 July 2013 served on it by the Defendant (“the Deputy Commissioner”) on 3 August 2013.

1. Quantum contends in its originating process that the demand should be set aside on the basis of the existence of a genuine dispute with the Deputy Commissioner as to the amount of the debt. 

1. Quantum relies on an affidavit of Mark Harris sworn 22 August 2013 in support of its application.  Mr Harris is not a director of Quantum, rather he makes the affidavit in his capacity as the solicitor for Quantum. 

1. The Deputy Commissioner relies on an affidavit of Tim Manton, an officer of the Australian Taxation Office, sworn 17 October 2013. 

1. On 11 September 2013, directions were made for the further conduct of the proceeding.  This included an order that Quantum serve any additional affidavit material upon which it intended to rely by 2 October 2013.  No such affidavit material has been filed.  Both parties were given opportunity by the orders to file any additional affidavit material upon which they intended to rely by 4pm on 6 November 2013, but again this has not occurred. 

1. The demand claims that the sum of $231,916.13 is owing by Quantum to the Deputy Commissioner.  The schedule to the demand describes the debt as follows:

Running Balance Account deficit debt as at 30 July 2013 in respect of amounts due under the BAS provisions as defined in sub-section 995-1(1) of the Income Tax Assessment Act 1997 (“the ITAA 1997”) … , administrative penalties due under Part 4-25 of Schedule 1 of the Taxation Administration Act 1953 (“the TAA 1953”) and the general interest charge payable under section 8AAZF of the TAA 1953, being a debt due and payable by the company pursuant to section 8AAZH of the TAA 1953.

1. The demand is verified as required by s 459E(3) of the Act by Peter Groves, an employee of the Australian Taxation Office.

1. In his affidavit Mr Harris recites his instructions from Quantum which had been obtained through its office manager, Violetta Carter.  He states that Ms Carter has instructed him that Quantum’s accountant lodged amended end of year 2012 financial documents for the company with the Australian Taxation Office in June 2013.  The documents are not put into evidence, he does not state what the documents disclosed and he has not quantified the amount which is said to be disputed.  He is instructed that there were telephone conversations between Ms Carter on behalf of Quantum and a Giselle Bonsu of the Australian Taxation Office on or about 27 and 29 June 2013 in which she informed Ms Bonsu that Quantum’s dispute in respect of the taxation liabilities had not yet been dealt with by the Australian Taxation Office.

1. Mr Harris states that he is instructed by Ms Carter and believes that the basis of the dispute is that the payments made by Quantum to Shane Kennedy and Graeme McNichol on 1 July 2012 have been incorrectly assessed for Pay as You Go Withholding Tax.  He exhibits a letter from Shane Kennedy, apparently a director of Quantum, to a Mr Rowan Siepen of Elite Accounting and Wealth Management which states as follows (omitting formal parts):

RE.  Accounting instructions – PAYG

Please note that all payments being made to both Shane Kennedy and Graeme McNicoll are not to be treated as PAYG for accounting purposes as they are receiving income from the Quantum Trust as dividends. 

This is to be effective as of 1 July 2012 and all entries made on BAS should be amended accordingly. 

1. Mr Harris asserts that as at the date the demand was issued, the Deputy Commissioner knew that there was a genuine dispute as to the “debt on the running balance” that was then due and payable and that Quantum had taken appropriate steps to enable a determination of the correct amount and that process was not concluded.  There has been no factual elaboration of that assertion.

1. No explanation has been provided as to why Mr Harris has sworn the affidavit in support of the application and not Ms Carter or indeed a director of the company.  The evidence is of the vaguest kind and despite the opportunity to do so there has been no elaboration of the assertions made in Mr Harris’ affidavit as contemplated by the orders of Efthim AsJ made on 11 September 2013. 

1. In his affidavit, Mr Manton describes his familiarity with the record systems maintained by the Australian Taxation Office for the Deputy Commissioner including the computer system that records the tax liabilities, additional tax and penalties incurred by tax payers, and the payments made by tax payers in reduction and extinguishment of their tax liabilities. The affidavit describes the process by which a Running Balance Account was established for Quantum and how primary tax debts were allocated to it pursuant to the TAA 1953. Mr Manton exhibits a Running Balance Account statement account in respect of Quantum’s RBA deficit debt generated pursuant to s 8AAZI of the TAA 1953 dated 30 July 2013. That statement describes all of the transactions on Quantum’s running balance account for the period 1 July 2012 to 30 July 2013, the date the statutory demand was issued, and culminates with a balance at that latter date of the amount demanded in the demand.

1. The Running Balance Account statement reveals that between 27 November 2012 and 29 May 2013, Quantum disclosed self-assessed amounts of Goods and Services Tax (“GST”) liabilities and Pay As You Go Withholding (“PAYGW”) liabilities for the tax periods 31 August  2012 to 31 May 2013.  These were allocated to the Running Balance Account.  The account records that on 28 June 2013 the Deputy Commissioner processed amended self-assessed GST credit amounts for $7,389 for the period ended 31 March 2012 and $25,780 for the period ended 30 June 2012.  It reveals that as at 30 July 2013, the running balance account was in deficit in the amount of $231,916.13. 

1. Section 8AAZH(1) of the TAA 1953 provides:

If there is an RBA deficit debt on an RBA at the end of a day, the tax debtor is liable to pay the Commonwealth the amount of the debt.  The amount is due and payable at the end of that day.

1. Section 8AAZI provides:

(1)       The production of an RBA statement:

(a)       is prima facie evidence the RBA debt was duly kept; and

(b)is prima facie evidence that the amounts and particulars in the statement are correct.

(2)RBA statement includes a document that purports to be a copy of an RBA statement and is signed by the Commissioner or a delegate of the Commissioner or by a second Commissioner or Deputy Commissioner. 

1. The RBA statement exhibited to Mr Manton’s account is prima facie evidence of the liability of Quantum to the Deputy Commissioner.

1. Mr Harris’s affidavit contains very vague unsubstantiated assertions.  The primary amounts owing on the Running Balance Account arose by reason of self-assessments by Quantum of its liabilities and the filing of documents with the Deputy Commissioner. 

1. I do not consider that Quantum, which has the onus of establishing that it has a genuine dispute in respect of the debt the subject of the demand, has discharged such onus.  The relevant tests to be applied in this application require Quantum to demonstrate that its alleged dispute has sufficient objective existence and prima facie plausibility to distinguish it from a merely spurious claim, bluster or assertion, and sufficient factual particularity to exclude the merely fanciful or futile.  Something “between mere assertion and the proof that would be necessary in a Court of law” may suffice.[1]  There has been no displacement of the prima facie evidence in the form of the running balance account and Quantum has not discharged the onus. 

   [1]See TR Administration Pty Ltd v Frank Marchetti & Sons Pty Ltd (2008) 66 ACSR 67 at 56-57.

1. The application is dismissed with costs.