Simpson v Deputy Commissioner of Taxation Judgment No. 5598 Number of Pages 6 Group Tax (1996) 33 ATR 139, (1996) ATC 4661

The appeal in Simpson v Deputy Commissioner of Taxation was brought before the Supreme Court of South Australia, with the appellants contesting a finding by a magistrate that they, as directors of a company, were liable to pay a penalty to the Deputy Commissioner of Taxation due to the company's failure to remit tax instalment deductions. The legal issues before the court centred on whether the appellants had fulfilled their duty under the Income Tax Assessment Act 1936 (Cth) to ensure the company remitted tax deductions on or before the due date, and if not, whether they had a valid defence under s.222AOJ(3) of the Act.

The court found that the appellants had not met their obligations under s.222AOB(1) of the Act, which required them to cause the company to either remit the tax deductions or to go into voluntary administration or liquidation by the due date. The court rejected the appellants' argument that their defence under s.222AOJ(3) should be considered from the time they received notice from the Commissioner, asserting that the obligation to comply with the Act arises from the first deduction day and continues until compliance. The court held that the appellants could not ignore the period before the due date when proving their defence and that their obligation to comply with the Act did not commence upon receiving the notice.

The court further found that the appellants' affidavits did not establish that they took reasonable steps to ensure compliance with s.222AOB(1) before the due date, nor did they show that no steps could have been taken during that period. The court concluded that the appellants' obligations under the Act had not been met and that they had not brought themselves within the defence provisions. Consequently, the appeal was dismissed.