Ripamz Pty Ltd and and Commissioner of Taxation
[2012] AATA 153
•9 March 2012
[2012] AATA 153
Division TAXATION APPEALS DIVISION File Number(s)
2011/4961
Re
Ripamz Pty Ltd
APPLICANT
And
Commissioner of Taxation
RESPONDENT
File Number(s)
2011/4984
Re
Copy Group Pty Ltd
APPLICANT
And
Commissioner of Taxation
RESPONDENT
DECISION
Tribunal Deputy President P E Hack SC
Date 9 March 2012 Place Brisbane (heard in Darwin) A. In application 2011/4961 the application by Ripamz Pty Ltd for an extension of time is refused.
B. In application 2011/4984,
1. The time for the making by Copy Group Pty Ltd of an application for a review of the respondent's objection decision of 4 May 2011 is extended to 21 November 2011.
2. The Tribunal directs that,
(a) the respondent lodge in the Tribunal and serve on the applicant a statement of facts, issues and contentions at or prior to the lodgement of the s 37 documents;
(b) the applicant file in the Tribunal and serve on the respondent its statement of facts, issues and contentions within 28 days of receipt of the s 37 documents;
(c) the matter be listed for a telephone directions hearing at 9.30 a.m. on 25 May 2012.
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Deputy President P E Hack SC
Catchwords
PRACTICE AND PROCEDURE – extension of time to lodge application for review –superannuation – superannuation guarantee charge – review of objection decisions – inadequate explanation for considerable delay – application refused.
Legislation
Administrative Appeals Tribunal Act 1975 (Cth) s 29(7)
Cases
Brown v Commissioner of Taxation [1999] FCA 563; (1999) 42 ATR 118
Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 344
Zizza v Commissioner of Taxation [1999] FCA 848; (1999) 42 ATR 371REASONS FOR DECISION
Deputy President P E Hack SC
9 March 2012
There are two applications before the Tribunal for an extension of time within which the applicants, Ripamz Pty Ltd (Application 2011/4961) and Copy Group Pty Ltd (Application 2011/4984), might seek review of objection decisions made by the respondent, the Commissioner of Taxation. Mr Colin Rohde is the sole director and controlling mind of each company.
Copy Group seeks an extension of some months. There is an explanation, although it is not particularly compelling. However an extension of time is not opposed by the Commissioner and it seems appropriate to grant the application. I will however make the directions for the future conduct of the proceedings, discussed with the parties on 2 March 2012, to ensure that further, unnecessary, delay in resolving the proceedings is avoided.
The application by Ripamz is in a different category. There is a substantial delay and the application is opposed by the Commissioner who asserts the existence of prejudice from the loss of relevant records.
It is material to note at the outset that the matter was first the subject of a directions hearing on December 2011 when a direction was made that the applicant file and serve affidavits in support of its application on or before 15 February 2012 (and a requirement for the respondent to lodge and serve affidavits by 22 February 2012) in anticipation of a hearing later that month. The matter was listed for hearing in Darwin on 29 February 2012. The applicant was then represented by its sole director, Mr Rohde. An affidavit of Mr Rohde sworn 15 February 2012 was relied upon. Mr Reeve, for the Commissioner, objected to paragraphs 3 to 21 of that affidavit on the grounds of relevance. I uphold the objection as to paragraphs 3 to 16. They deal with matters that have no possible bearing on the matters in issue in these proceedings, a fortiori an application to extend time to bring those proceedings. The matters in paragraphs 17 to 21 have a marginal relevance given that they touch upon the service of the statutory demand and the application to set it aside, matters deposed to in the Commissioner’s material.
The Commissioner relied on an affidavit of Ms Kellie Grant deposing to matters involving the records of the Commissioner.
It emerged that the applicant was under a misapprehension about the hearing date and had not arranged for its legal representative to appear on 29 February 2012. After a brief hearing on 29 February 2012 the matter was adjourned to the following day. In the course of the hearing of the application on 1 March 2012 it became apparent that the affidavit of Mr Rohde did not deal with several matters that appeared to be material and, at the request of Mr Loizou, counsel for the applicant, the application was adjourned for further hearing the following day with a direction that a further affidavit be lodged later the same day. A further affidavit of Mr Rohde was lodged as directed and the hearing was resumed on 2 March 2012.
I will start with a chronology.
In February 2003 the Commissioner commenced an audit of the compliance by the applicant, then known as Copytime Pty Ltd, with its obligations under the superannuation guarantee legislation. On 23 July 2003 the Commissioner made an assessment of the superannuation guarantee charge payable by the applicant for the year ended 30 June 2002 and evidenced by a notice of assessment of that date. Then in May 2004 an amended assessment was made requiring the applicant to pay an amount in excess of $48,000. The applicant sought an extension of time to object to that assessment by letter dated 23 July 2004.
In September 2005 the extension of time was granted and the objection decision allowed in part with the result that liability was reduced to $32,542.70. The making of that decision was communicated to the applicant by letter of three pages dated 7 September 2005. That letter noted that the company, if dissatisfied with the objection decision, could request the Tribunal to review the decision or appeal the decision to the Federal Court and that it had 60 days from the date of service of the letter within which to appeal or seek a review. On the Commissioner’s case that letter was accompanied by a detailed explanation of the rights of appeal to the Court and review by the Tribunal and 15 pages of reasons for decision. One of the factual controversies is whether the applicant, by Mr Rhode, received the reasons for decision at that time. His submissions proceeded on the footing that they were not then received although the evidence, in my view, falls well short of demonstrating that to be the case.
Thereafter between 2005 and 2010, according to Mr Rohde, he had a number of telephone conversations with officials employed by the Commissioner in which he “denied responsibility of payment on the basis that full payment had been made of all Superannuation entitlements to all employees and that my records indicated payment in full as calculated monthly in accordance with the requirements”[1]. There is no particularity given to this assertion by Mr Rohde however the Commissioner has produced from his records a note of a conversation of 30 October 2009[2]. According to that note an officer in the employ of the Commissioner contacted Mr Rohde on that date regarding the superannuation guarantee charge debt and was told by Mr Rohde that “he shouldn’t have to pay”. Reference was made by the official to the objection letter sent in 2004 (in fact it was 2005) outlining the reasons for decision. The note continues,
I offered to forward him another copy of the letters via e-mail, on these letters it contains advice that he may wish to go to Administrative Appeals Tribunal to have the ATO Decision reviewed, other than that the debt is still collectable He confirmed understanding I have told him GIC will continue to accrue on all debts (CAC and SGC), and that I will put the case in Dispute for a period of 6 weeks until 11th December. If he does not respond with a payment arrangement or a letter advising that he is disputing the debt further, the ATO will start proceedings to legally wind up the company He said winding up/liquidating might be the ATO’s only choice placed in disputed debts on RMS with review date 11/12/2009 [punctuated as per original]
[1] Exhibit 1, paragraph [36].
[2] Annexure KG7 to Exhibit 2.
Neither the fact of the conversation nor its recorded content was challenged by the applicant.
There was a subsequent conversation between Mr Rohde and an official in the respondent’s office on 15 February 2010. That conversation resulted in a letter from the respondent to the applicant dated 15 February 2010[3]. That letter enclosed blank Australian Taxation Office forms described as “Superannuation guarantee charge statement – quarterly”. The applicant was requested to “complete the form for each employee” and to return it to the respondent by 1 March 2010. Mr Rohde appears to have completed four such statements[4] – one for each quarter of the 2001/2002 financial year – and forwarded then to the Australian Taxation Office on or after 10 March 2010[5]. The documents, which are designed to bring to account superannuation payments by employee, provided no detail beyond the somewhat opaque comment “nil underpayments” in the “employee details” section and, on the statement for the fourth quarter, a suggestion that no payment was required.
[3] Annexure CRA2 to Exhibit 4.
[4] Annexure CRA3 to Exhibit 4.
[5] The text of Mr Rohde’s affidavit refers to the statements having been completed and sent “On [sic] or about February” 2010 however they each bear the date 10 March 2010 as the date that they were signed by Mr Rohde.
The documents appear to have been treated by the respondent as a request for the amendment of the superannuation guarantee assessment for the year ended 30 June 2002. So much emerges from a letter from the respondent to the applicant dated 12 April 2010[6]. That letter pointed out that a request for amendment of a superannuation guarantee assessment “must be lodged within four years of the date the original assessment was issued” and that the applicant’s request could not be accepted as it had not been lodged within that time. The applicant was informed of the right to object to an assessment within four years “but the law does allow for an extension of time in some circumstances”. Mr Rohde’s response of 15 April 2010[7] asserted that no amendment was required as the documents “are originals as completed and they are the first time we have submitted them”.
[6] Annexure CRA4 to Exhibit 4. I infer that the reference in that letter to the lodging on 18 March 2009 of the request to amend in an error and that the statements were lodged on 18 March 2010.
[7] Annexure CRA5 to Exhibit 4.
Subsequently on 16 November 2010, the Commissioner served a statutory demand on the applicant. It is material to note, given one of the arguments raised by the applicant, that the debt claimed included[8] superannuation guarantee charge for the year ended 30 June 2002 of $32,542.70 i.e. the amount in the amended assessment of September 2005, together with general interest charge of $39,010.95 payable on that amount, a total of $71,553.65. The applicant filed an application to set aside that demand in the Federal Court on 7 December 2010. The application also sought an order that,
the Respondent be ordered by the Court to acknowledge and respond to the formal correspondence and formal objections to assessments of the Applicant in accordance with the Charter of the respondent.
[8] The balance was made up of running balance account deficit debt in respect of amounts due under the business activity statement provisions.
On 28 July 2011 the statutory demand was varied by a Registrar of the Court to $71,553.65 in accordance with a concession by the Commissioner.
In the meantime, on 21 April 2011, the applicant wrote to the respondent on 21 April 2011, referring to the respondent’s letter of 12 April 2010. The letter[9] included the following,
[9] Annexure CRA8 to Exhibit 4.
We write to formally apply for an extension of time to list an objection to an assessment of our objection to your assessment for Superannuation payments for the financial year 2001/2002…
…
Primarily we believe that a mistake has occurred initially by Ripamz Pty Ltd (the entity) in supplying data used for an Assessment that further mistakes were made by the ATO in applying Superannuation liabilities. It is apparent that the ATO continue to insist that superannuation liabilities are payable for employees that were and never have been employees of Ripamz Pty Ltd. It is apparent that the ATO continue to insist upon superannuation liabilities greater than 9% of the Ordinary Times Earnings of the registered employees of Ripamz Pty Ltd. For the financial year 201/2002 [sic]
Further mistakes have been made by the ATO in calculating alleged superannuation guarantee shortfalls, any payments made to numerous superannuation entities by parties other than Ripamz Pty Ltd. The ATO is making a mistake in not abiding by their own Affidavits dated April 2007.
The applicant alleges continued objections both formally and personally to alleged assessments based on inaccurate and misinformed information.
The applicant alleges continued alleged miscalculations of Superannuation liabilities of the above entity that calculates Superannuation in a manner other than the nominated award that the employees were employed.
The applicant alleges continued alleged Assessment based on duplication of staff members for 2001/2002 year with separate and distinct legal entities. In other words the ATO superannuation calculations allege employees and gross wages greater than PAYG summaries submitted by Ripamz Pty Ltd.
The applicant alleges a continued insistence that all superannuation liabilities were and have been paid by the above Ripamz entity or by alternative entities, for all employees of the Ripamz entity. For the 2001/2002 year [sic]
The application for an extension of time is bases on the discovery of further ATO documentation and affidavits dated 16th April 2007 as evidence of transfer of all employment liabilities to other entities effective at the 30th June 2002 which conforms with the applicants insistence that all superannuation liabilities have been fully paid.
The above affidavits of the ATO, we believe also prove that as the contribution rate is greater than 9% of the ordinary times earnings of the employees of the applicable entity, then such additional payments must be applied as payments on behalf of the applicant. As an affidavit was lodged by the ATO for particular sums of monies for the 2002/2003 financial year and the affidavits alleges zero contributions made on behalf of the entities, then any payments made in the 2001/2002 financial year and 2002/2003 financial year to any superannuation entity is proof positive and indisputable that contributions as a matter of priority are allocated to the relevant employees in chronological priority.
That letter led to a telephone call from an officer in the employ of the respondent in early June 2011. Mr Rohde asserts that that official “said the ATO would agree to an extension of time”[10] but that the application of 21 April 2011 “was not in the correct format”. Thereafter Mr Rohde received a letter from the respondent dated 15 June 2011[11]. That letter includes the statement that,
if a request for an extension of time is lodged without an objection …the request cannot be considered until a valid objection is lodged.
…
As per the above and in accordance with your telephone conversation with case officer … on 6 June 2011, we cannot consider your extension of time request in isolation. However, we are prepared to consider your extension of time request provided it is lodged with a valid objection.
[The letter then set out the respondent’s criteria for a valid objection]
You have advised that you do not wish your correspondence of 5 May 2011[[12]] to be treated as an objection. In light of this we will take no further action with respect to this matter.
However, if you do wish to object to the SGC assessment please complete and return the enclosed objection form, detailing in full the reasons why the objection is being lodged after the required 60 day time frame allowed and provide any relevant evidence or documents to support your objection to the following address …
[10] Exhibit 4, paragraph [24].
[11] Annexure CRA10 to Exhibit 4.
[12] No letter of this date has been produced by the applicant. In the absence of any other explanation from the applicant, I infer that this was the date of receipt of the applicant’s letter of 21 April 2011.
The applicant responded with a letter of 20 June 2011[13]. It must be said that much of the letter is couched in language that is difficult to understand. Materially, the letter notes,
[13] Annexure CRA11 to Exhibit 4.
As this matter is currently before the Federal Court of Australia No. NTD43 of 2010, we confirm that we advised that we are unable to withdraw our separate application for an extension of time and raise a new objection as it would prejudice those proceedings.
…
We therefore formally reply and write to confirm:
A) That we request a copy of all assessments/reviews 23 July 2003, 18th May 2004 and 21st September 2005 complete with any justifications, and reasonings/pleadings. We did receive a copy of the summary sheets dated on the 18th March 2011. but simply have no pleadings on which to base our detailed objection.
B) That we accept the offer of the ATO to extend and justify any submissions relating to Superannuation Guarantee Charge statements of the 15th February 2010 to be part of our submission for a fair and equitable assessment of Superannuation responsibilities for Ripamz for the 2001/2002 year.
C) That we accept your offer to submit documentation available with respect to a formal objection to the above assessments/reviews. We do intend to submit as much additional documentation that can be found as per the additional requirements that you now request in your correspondence of the June 15th. but received by fax on the 17th June 2011.
D) That we accept your suggestion to again submit a copy of our correspondence dated the 21st April 2011 as a request for an Extension of Time. Together with additional objection information.
E) That previous assessments relating to Superannuation Responsibilities of Ripamz Pty Ltd. be held in escrow or adjourned/removed until such time as this matter is resolved.
F) That we guarantee the submission of all documentations discovered and pleadings within a period of 30 days from receipt of the information in item A) above.
G) That we would be given the opportunity to full recourse in accordance with the Taxpayers Charter.
We trust that the above communication confirms both our conversations and a recommended course of action for both parties.
Subsequently the respondent forwarded further correspondence to the applicant on 8 July 2011[14]. That included a worksheet detailing the individual shortfall amounts, listing the employees, and the statement of reasons for the objection decision of 7 September 2005.The letter noted,
Furthermore, please be advised that an objection decision has already been determined in respect of your SGC assessment for the financial year ended 30 June 2002. If you wish to object again to this assessment you will need to have new grounds or new information to support your objection.
[14] Exhibit 6.
The applicant’s material does not suggest that it took any steps to pursue the matter following the receipt of this information.
This application was lodged on 21 November 2011 following service on the applicant of the Commissioner’s application for an order for its winding up.
The principles that guide the exercise of the discretion to extend time are not controversial and need not be recited. The Commissioner’s submissions made reference to the well-known decisions in Hunter Valley Developments Pty Ltd v Cohen[15], Zizza v Commissioner of Taxation[16] and Brown v Commissioner of Taxation[17]. The question is whether, in the language of s 29(7) of the Administrative Appeals Tribunal Act 1975 (Cth), it is reasonable in all the circumstances to extend the time for the making of the application.
[15] (1984) 3 FCR 344.
[16] [1999] FCA 848; (1999) 42 ATR 371.
[17] [1999] FCA 563; (1999) 42 ATR 118.
There are, in my view, four matters that require particular consideration – the extent of the applicant’s delay in seeking a review, the explanation for that delay, the apparent merit, or absence of merit, of the proposed application and the potential of prejudice to the respondent or other parties.
It is common ground that the delay is one of six years – a very considerable delay given that ordinary time for lodging an application is 60 days.
There is no real explanation for a delay of that length. On the first day of hearing the case for the applicant was put on the basis that whilst it received the Commissioner’s letter of 7 September 2005 it did not receive the Commissioner’s reasons for decision at that time and did not, in fact, receive those reasons until July 2011. But Mr Rohde’s first affidavit does not say that. The omission was explicitly raised in the course of argument and eventually the hearing was adjourned to enable a further affidavit to be lodged. In that affidavit Mr Rohde says[18] that the letter of 7 September 2005 was received by him. He then goes on to say,
…the material detailed in that letter is not familiar to me. I do not recognise it.
In relation to Ms Kellie Grant Affidavit of 21 February 2012. Pages 22-42 [the reasons for decision] are not familiar to me, which are meant to encapsulate events and correspondence from that time.
I am unable to comprehend what is intended to be conveyed by the latter part of that statement but am unable to read any part of the affidavit as an assertion that the reasons for decision were not received with the letter of 7 September 2005.
[18] Exhibit 4, paragraph 10.
It seems most unlikely that the reasons were not received with the letter of 7 September 2005 however, and despite the absence of any cogent evidence to that effect, I am prepared to assume that that was the case. There is still no explanation for the applicant’s failure to seek a review of the objection decision at that time. The letter, which Mr Rohde accepts was received, explained to right to appeal, or seek a review of, the decision and the need to do so within 60 days. Moreover Mr Rohde does not explain why he did not seek a copy of the reasons which were referred to on page 1 of the letter as being attached to it if, in fact, those reasons had not been attached.
The first occasion where it can be demonstrated that the applicant disputed the debt is the telephone conversation of 30 October 2009. The file note, on one reading, suggests that a copy of the reasons were sent out at that time. It is not clear whether this was done but, in any event, it seems plain from the terms of the note that an offer was made to send a copy of the reasons and Mr Rohde was reminded of the possibility of a review in the Tribunal if the debt was disputed.
But even when the applicant received the reasons in July 2011 it did nothing. It did not, as its letter of 20 June 2011 suggested it would, “submit as much additional documentation that can be found as per the additional requirements that [were requested] in … correspondence of the June 15th [sic]”.
The applicant did nothing about seeking a review of the objection decision until the Commissioner had sought the winding up of the company. It appears never to have sought advice about the steps that it might take to contest the respondent’s claims and does not explain why no advice was sought. It suggests[19] that there is confusion on the respondent’s part about the amount claimed however it appears to ignore the fact that outstanding SGC debts attract the general interest charge, thus increasing the debt over time.
[19] Exhibit 4, paragraph 15.
The only other reference in Mr Rohde’s affidavit[20] to the cause for delay is this passage,
I say that Ripamz has conducted itself well in all the circumstances. Where there has been delay I say this has been due to being the sole director, suffering from psychological effects of stress and anxiety and depression. These will be dealt with in a report being prepared by a qualified psychologist.
However, I say that the unwieldy ATO procedures and the demands placed upon me by their conduct have been a large contributor to my state of mind.
[20] Exhibit 1, paragraphs 59 and 60.
No report by a psychologist is in evidence. There is, in my view, an entirely inadequate explanation for a very considerable delay. In reality Mr Rohde took no appropriate steps to put the amended assessment in issue until after the commencement of winding up proceedings. Beyond his unparticularised assertions, there is no evidence that he did anything after receipt of the objection decision until he was contacted by the respondent in October 2009. Even when again told of the possibility of seeking a review in the Tribunal he did nothing.
It is neither possible nor permissible to undertake any detailed examination of the merits of the proposed application however some matters may be noted. Mr Rohde baldly asserts that there is merit in the proposed proceedings but does not explain why that is so. Even on his case he has had the Commissioner’s detailed reasons and a worksheet setting out the basis of the amended assessment (including the names of all employees used in the calculation) since July 2011. In the letter of 21 April 2011 he makes reference to the respondent calculating superannuation on “employees that were and never have been employees of Ripamz Pty Ltd”, “duplication of staff members for the 2001/2002 year” and to other errors in the Commissioner’s approach. No attempt has been made to identify, from the worksheet, the duplicated employees or those who were not employees of the applicant. No attempt has been made to suggest why the factual and legal conclusions set out in the reasons for decision are wrong.
This failure to engage with the respondent’s reasons for decision was explicitly raised in the course of argument of the first day of hearing and the matter adjourned to allow the applicant additional time to lodge a further affidavit. But that affidavit makes no attempt to descend into detail as to the merits of the proposed case. The applicant had the opportunity to demonstrate apparent merit in its proposed case but did not do so. I infer that it was unable to do so.
This is not the occasion to do any more than gain an impression whether proposed proceedings have apparent merit (or an apparent absence of merit). In the circumstances I am not satisfied that there is apparent merit in the proposed proceedings.
According to Ms Grant the Commissioner’s audit file was destroyed in accordance with normal policy in August 2010 with the consequence that the Commissioner does not have available the documents – correspondence from the applicant and from superannuation funds – on which the amended assessment was based. But it is the case that the applicant has the onus of demonstrating that the assessment was excessive; any deficiency in underlying records would prejudice it more than the Commissioner who has, at least, the benefit of detailed reasons for decision to explain the basis of the assessment.
In the result I am not satisfied that it is reasonable in all the circumstances to grant the extension of time sought by Ripamz. I would refuse that application.
I certify that the preceding 36 (thirty six) paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC.
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Associate
Dated 9 March 2012
Date(s) of hearing 29 February, 1 March & 2 March 2012 Counsel for the Applicant Mr B Loizou Solicitors for the Applicant Directly briefed Respondent In person Advocate for the Respondent Mr S Reeve, ATO Legal Services Branch
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