Starbrake Holdings Pty Ltd v Deputy Commissioner of Taxation
[2014] WASC 123
•8 APRIL 2014
STARBRAKE HOLDINGS PTY LTD -v- DEPUTY COMMISSIONER OF TAXATION [2014] WASC 123
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 123 | |
| 08/04/2014 | |||
| Case No: | COR:233/2013 | 6 MARCH 2014 | |
| Coram: | MASTER SANDERSON | 6/03/14 | |
| 5 | Judgment Part: | 1 of 1 | |
| Result: | Application to set aside demand dismissed | ||
| B | |||
| PDF Version |
| Parties: | STARBRAKE HOLDINGS PTY LTD DEPUTY COMMISSIONER OF TAXATION |
Catchwords: | Corporations law Application to set aside a statutory demand Objection lodged but not yet determined Whether part of objection shows there is a 'genuine dispute' Turns on own facts |
Legislation: | Nil |
Case References: | Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd [2008] HCA 41 Deputy Commissioner of Taxation v Chemical Trustee Ltd [2010] FCA 1297 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
DEPUTY COMMISSIONER OF TAXATION
Defendant
Catchwords:
Corporations law - Application to set aside a statutory demand - Objection lodged but not yet determined - Whether part of objection shows there is a 'genuine dispute' - Turns on own facts
Legislation:
Nil
Result:
Application to set aside demand dismissed
Category: B
Representation:
Counsel:
Plaintiff : Mr J R Marzec
Defendant : Ms S E Russell
Solicitors:
Plaintiff : Wilson & Atkinson
Defendant : Australian Taxation Office
Case(s) referred to in judgment(s):
Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd [2008] HCA 41
Deputy Commissioner of Taxation v Chemical Trustee Ltd [2010] FCA 1297
1 MASTER SANDERSON: This is the defendant's application to set aside a statutory demand. After hearing argument, I indicated to the parties I would dismiss the application. I indicated I would publish reasons at a later date. These are those reasons.
2 A copy of the statutory demand appears as attachment ABC 5 to the affidavit of Allen Bruce Caratti sworn 21 November 2013 and filed in support of this application. In the schedule to the demand under the heading 'description of debt' there appears the following:
[A] running balance account deficit debt as at 30 October 2013 in respect of amounts due under the BAS provisions as defined in 995-1(1) of the Income Tax Assessment Act 1997 (the ITAA 1997) [BAS provisions include, generally: the goods and services tax provisions, the PAYG withholding provisions, the PAYG instalments provisions, the fringe benefits tax instalment provisions and the deferred company instalment provisions]: administrative overpayments due under s 8AAZN of the Taxation Administration Act 1953 (the TAA 1953) administrative penalties due under Part IV-25 of Schedule 1 of the TAA 1953 and the general interest charge payable under s 8AAZF of the TAA 1953 being a debt due and payable by the company pursuant to s 8AAZH of the TAA 1953.
3 The amount of the debt is said to be $3,110,02.54.
4 The relevant facts are uncontroversial and can be simply stated. On 4 October 2005 the plaintiff was appointed as the trustee for the Starbrake Holdings discretionary trust. On or about 22 August 2013 following an audit of the tax affairs of the plaintiff the defendant issued to the plaintiff Notice of Assessments of net amount of GST (GST assessments) and a Notice of Assessments and Liability to Pay Penalty (GST penalty notice) in its capacity as trustee of the trust in relation to the goods and services tax for the tax periods between 1 July 2009 and 30 June 2010 and 1 January 2011 to 30 June 2011.
5 The plaintiff does not dispute the amount of $82,973.00 is due and payable to the defendant. However, the plaintiff otherwise objected to the GST assessments and the GST penalty notice. These objections were lodged on 21 November 2013. Without going into detail it is the plaintiff's argument there was no 'taxable supply' in respect of certain services such that would trigger the tax liability as assessed by the defendant. As at the date of the issue of the statutory demand the plaintiff had not been advised of the outcome of its objections.
6 There is no doubt there is a genuine dispute between the plaintiff and the defendant as to the plaintiff's liability to pay the goods and services tax. That might be said to be a sub stratum dispute. The defendant does not deny the plaintiff is entitled to have its objections considered. If the plaintiff's argument is rejected, then it has certain rights of appeal. It is the defendant's position none of these matters are of any moment. It is able to rely on the so called 'conclusive evidence' provisions of the Taxation Administration Act 1953 (Cth). As a consequence of these provisions on the defendant's case the plaintiff must make payment of the tax and penalties as assessed even while the plaintiff's objections and any appeal from a rejection of those objections is being considered. It is the defendant's position that the plaintiff simply has no answer to the statutory requirement that it make payment of the amount assessed as owing and any penalties.
7 Both parties relied upon the decision of the Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd [2008] HCA 41. In that case the High Court, reversing the Full Court of the Federal Court, held the issue of the assessments was conclusive evidence and the fact there existed a sub stratum dispute did not mean there was a 'genuine dispute' in terms of s 459G of the Corporations Act 2001 (Cth). Essentially the court held the liability to pay rested upon the conclusive evidence provisions of the Tax Administration Act.
8 It was the plaintiff's submission the High Court's decision in Broadbeach rested upon three assumptions. First the relevant notices of assessment and penalty notices were issued according to the law. Second, there is a tax related liability in existence. Third, the amount of the tax debt is 'due and payable' in accordance with s 459E(1) of the Corporations Act. For present purposes the submission made by counsel for the plaintiff can be accepted. It can be further accepted the Commissioner is not empowered to recover a tax related liability which is not payable: s 255-5(2) sch 1 div 255 of the Tax Administration Act.
9 Against that background, counsel framed his argument in this way. A 'taxation objection' as defined by s 14ZQ of the TAA is not within the meaning of a 'taxation decision' as that term is defined in the same section. It was submitted it follows that the combination of s 14ZQ, s 14ZZM and s 14ZZR of the TAA do not operate in relation to an objection against a notice of assessment. It was said the code established by pt IVC of the TAA includes s 14ZZM in div 4 and s 14ZZR in div 5, both of which especially provide for the recovery of tax despite an appeal being pending in relation to a taxation decision and these sections must be taken to serve some purpose. Counsel pointed out there is no equivalent provision in div 2 of s 14ZZM and s 14ZZR, meaning that prior to a pending review or appeal it is open to the court to determine whether or not a tax related liability may be recovered under a statutory demand procedure by reason of the existence of the objection which has been lodged by the plaintiff but not yet determined by the defendant. Counsel pointed to the fact that in the Broadbeach case the High Court relied solely on s 14ZZM and s 14ZZR to that extent it was said that this case was distinguishable.
10 Counsel was not able to rely on any authority to support his submission. He did draw to my attention the decision in Deputy Commissioner of Taxation v Chemical Trustee Ltd [2010] FCA 1297 where a similar argument was rejected. In my view, the argument must be rejected in this case.
11 Given the clear terms of the decision of the High Court in the Broadbeach case, departure from the principles established in that position would only be proper in the clearest of cases. In my view, here, while the argument is ingenious it is of no merit. What is clear from the legislative scheme is a tax payer is obliged to make payment on the assessment issued by the Commissioner. That is the case whether or not objections raised have been considered and despite any assessment which might be made of the strength or otherwise of the parties respective positions. A tax payer in the position of the plaintiff is indebted to the defendant and there can be no genuine dispute about that indebtedness. Accordingly, there is no basis upon which the statutory demand can be set aside.
12 As a secondary argument the plaintiff submitted the demand should be set aside 'for some other reason' under s 459J(2) of the Corporations Act. This argument was considered in detail by the High Court in the Broadbeach decision and was comprehensively rejected. There is nothing in this case which sets it apart from the Broadbeach decision. There is no basis for setting aside the demand under s 459J.
13 For these reasons I dismiss the plaintiff's application. The plaintiff should pay the defendant's costs of the application including the reserve costs.
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