Crystal Point Pty Ltd v Deputy Commissioner of Taxation
[2010] QSC 154
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- Unreported Judgment
- Crystal Point Pty Ltd v Deputy Commissioner of Taxation[2010] QSC 154
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Crystal Point Pty Ltd v Deputy Commissioner of Taxation[2010] QSC 154
Crystal Point Pty Ltd v Deputy Commissioner of Taxation[2010] QSC 154
SUPREME COURT OF QUEENSLAND
CITATION: | Crystal Point Pty Ltd v Deputy Commissioner of Taxation [2010] QSC 154 |
PARTIES: | CRYSTAL POINT PTY LTD |
FILE NO/S: | BS14361 of 2009 |
DIVISION: | Trial Division |
PROCEEDING: | Application |
ORIGINATING COURT: | Supreme Court at Brisbane |
DELIVERED ON: | 14 May 2010 |
DELIVERED AT: | Brisbane |
HEARING DATE: | 26 February 2010 |
JUDGE: | Martin J |
ORDER: | APPLICATION DISMISSED |
CATCHWORDS: | CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – APPLICATION TO SET ASIDE – SUPPORTING AFFIDAVIT – REQUIREMENTS FOR – Corporations Act 2001 (Cth), ss 459G(3), 459J – where the Applicant has made an application to set aside the statutory demand – what are the requirements for a supporting affidavit – whether the supporting affidavit set out the material facts upon which the application was based CORPORATIONS – WINDING UP – WINDING UP IN INSOLVENCY – STATUTORY DEMAND – APPLICATION TO SET ASIDE – Corporations Act 2001 (Cth), ss 459G(3), 459J(1)(b) – what can constitute “some other reason” under s 459J(1)(b) – whether an objection to an assessment can constitute “some other reason” A New Tax System (Goods and Services Tax) Act 1999 (Cth), ss 38-325, 75-5 Corporations Act 2001 (Cth), ss 459G, 459H, 459J Federal Court Rules, r 36B Income Tax Assessment Act 1936 (Cth), s 177 Income Tax Assessment Act 1997 (Cth) Taxation Administration Act 1953 (Cth), ss 8AAZA, 8AAZF, 8AAZH, 14ZZM, 14ZZR Uniform Civil Procedure Rules 1999 (Qld), Schedule 1A, rr 2.4, 2.4A Cadiz Waterworks Company v Barnett (1874) LR 9 Eq 182 Clem Jones Pty Ltd v International Resources Planning and Development Pty Ltd [1970] Qd R 37 Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473 Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452 Hansmar Investments Pty Ltd v Perpetual Trustee Co Ltd (2007) 61 ACSR 321 John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250 Rapcivic Contractors Pty Ltd v Mapol Nominees Pty Ltd t/as Amalgamated Painting Services [2009] 1 Qd R 21 Re Clem Jones Pty Ltd [1970] QWN 6 Saferack Pty Ltd v Marketing Heads Australia Pty Ltd (2007) 214 FLR 393 |
COUNSEL: | L Harrison QC for the applicant B G Cronin for the respondent |
SOLICITORS: | HWL Ebsworth Lawyers for the applicant Australian Taxation Office Legal Services for the respondent |
- This is an application by Crystal Point Pty Ltd (“the Applicant”) under ss 459G and 459J of the Corporations Act 2001 (Cth) to set aside a statutory demand served on it by the Deputy Commissioner of Taxation (“the Respondent”) on 27 November 2009. The statutory demand was based on a default assessment for GST.
- Section 459G provides:
“459G Company may apply
(1) A company may apply to the Court for an order setting aside a statutory demand served on the company.
(2) An application may only be made within 21 days after the demand is so served.
(3) An application is made in accordance with this section only if, within those 21 days:
(a) an affidavit supporting the application is filed with the Court; and
(b) a copy of the application, and a copy of the supporting affidavit, are served on the person who served the demand on the company.”
- Section 459J provides:
“459J Setting aside demand on other grounds
(1) On an application under section 459G, the Court may by order set aside the demand if it is satisfied that:
(a) because of a defect in the demand, substantial injustice will be caused unless the demand is set aside; or
(b) there is some other reason why the demand should be set aside.
(2) Except as provided in subsection (1), the Court must not set aside a statutory demand merely because of a defect.”
Background
Applicant’s business
- The Applicant is engaged in residential property development. On 20 October 2008 the Applicant settled on the purchase of a partly completed residential property development from Breezes on Broadwater Pty Ltd (“the Vendor”). The property (“Silvershore”) was valued at $44.5 million as a GST-free going concern under s 38-325 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (“the GST Act”), which provides:
“38-325Supply of a going concern
(1) The supply of a going concern is GST-free if:
(a) the supply is for consideration; and
(b) the recipient is registered or required to be registered; and
(c) the supplier and the recipient have agreed in writing that the supply is of a going concern.
(2) A supply of a going concern is a supply under an arrangement under which:
(a) the supplier supplies to the recipient all of the things that are necessary for the continued operation of an enterprise; and
(b) the supplier carries on, or will carry on, the enterprise until the day of the supply (whether or not as a part of a larger enterprise carried on by the supplier).”
- Both the Applicant and the Vendor were registered for GST purposes at the time of the purchase. From 1 November 2008 to September 2009, the Applicant commenced settlements on the properties. As at 25 February 2010, 51 units at Silvershore had yet to settle. Twenty units were under contract, and 31 were not subject to any contract of sale.
- The Applicant is a subsidiary of Raptis Group Ltd (“Raptis”), for which receivers were appointed on 9 September 2008. Operation of the development project was taken over by the first registered chargee of Raptis, Equitrust Ltd (“Equitrust”). Consequently, the Applicant did not lodge Business Activity Statements for the periods 1 November 2008 to 30 September 2009 on time.
The statutory demand
- A Form 509H Creditor’s Statutory Demand for Payment of Debt dated 26 November 2009 was issued by the Respondent to the Applicant on 27 November 2009. The Statutory Demand was for the amount of $3,217,858.99 being for:
“Running Balance Account deficit debt as at 26 November 2009 in respect of amounts due under the BAS provisions as defined in subsection 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 instalment provisions, the fringe benefits tax instalment provisions and the deferred company instalment provisions], 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.”
- Section 995-1(1) of the ITAA 1997 defines ‘BAS Provisions’ as:
“(a)Part VII of the Fringe Benefits Tax Assessment Act 1986; and
(b) the indirect tax law; and
(c) Parts 2-5 and 2-10 in Schedule 1 to the Taxation Administration Act 1953 (which are about the PAYG system).
Note: BAS stands for Business Activity Statement.”
- “Indirect tax law” is relevantly defined in that provision to mean GST law.
- Section 8AAZF of the TAA 1953 states:
“8AAZFGeneral interest charge on RBA deficit debt
(1) If there is an RBA deficit debt at the end of a day, then general interest charge is payable by the tax debtor on that RBA deficit debt for that day.
(2) The balance of the RBA is altered in the Commissioner's favour by the amount of the general interest charge payable.”[1]
- Section 8AAZH of the TAA 1953 states:
“8AAZHLiability for RBA deficit debt
(1) If there is an RBA deficit debt on an RBA at the end of a day, the tax debtor is liable to pay to the Commonwealth the amount of the debt. The amount is due and payable at the end of that day.
Note:For provisions about collection and recovery of the amount, see Part 4-15 in Schedule 1.
(2) If there are several tax debtors, their liability for the debt is of the same kind as their liability for the tax debts that were allocated to the RBA.
Example: If the tax debtors are jointly and severally liable for the tax debts that were allocated to the RBA, they will also be jointly and severally liable for the RBA deficit debt.”
- On 10 December 2009 an Objection was lodged by the Applicant with the Australian Taxation Office (“the ATO”) with respect to a Notice of Assessment for a tax shortfall amount for the monthly periods from 1 November 2008 to 30 September 2009 (“the Assessment”). The Assessment was made under s 105-5(1) of Schedule 1 of the TAA 1953 which permits the Commissioner to make assessments of indirect tax.
- The Objection argued that the Assessment was a nullity and thereby excessive for the following reasons:
“(i) The Taxpayer is entitled to utilise the margin scheme provisions under the A New Tax System (Goods and Services Tax Act 1999) (“the GST Act”) as it read at the time;
- The Commissioner has erred in his calculation of the GST liability by denying the Taxpayer the use of the margin scheme provisions under the GST Act;
- The Commissioner did not take into account relevant considerations. In particular, the Commissioner failed to consider the fact that the Taxpayer acquired a partly completed residential property development from Breezes on Broadwater Pty Ltd (“the Vendor”) under a sale contract with settlement on 20 October 2008 as a GST-free going concern.”
Margin scheme
- In order to determine the GST liability on the sale of the residential units, the Applicant sought to apply the then applicable margin scheme provisions under Division 75 of the GST Act. Section 75-5(1) relevantly sets out when the margin scheme will apply:
“75-5Applying the margin scheme
(1) The margin scheme applies in working out the amount of GST on a taxable supply of real property that you make by:
(a) selling a freehold interest in land; or
(b) selling a stratum unit; or
(c)granting or selling a long-term lease;
if you and the recipient of the supply have agreed in writing that the margin scheme is to apply.”
- In each of the Contracts of Sale used for the units, clause 23(a) provides:
“The Margin Scheme under the GST Law is to apply (with the result that no input tax credit for GST paid for the acquisition of the land will be claimable by the Buyer) and the Seller will not provide a tax invoice at or after settlement.”
- The practical effect of the margin scheme is that a taxpayer would have the GST calculated as one-eleventh of the purchase price and the sale price of a property – or, as in this case, each individual unit sold – as opposed to it being calculated on the gross sale price.
- In its assessment, the Respondent did not apply the margin scheme and GST was charged at one-eleventh of the sale price. The Applicant argued that the assessment should have been for $1,336,284.00, that is, one-eleventh of the difference between the sale price and the purchase price. The TAA 1953 has relevant provisions in this regard:
“14ZZMPending review not to affect implementation of taxation decisions
The fact that a review is pending in relation to a taxation decision does not in the meantime interfere with, or affect, the decision and any tax, additional tax or other amount may be recovered as if no review were pending.
…
14ZZRPending appeal not to affect implementation of taxation decisions
The fact that an appeal is pending in relation to a taxation decision does not in the meantime interfere with, or affect, the decision and any tax, additional tax or other amount may be recovered as if no appeal were pending.”
- Notwithstanding the admission by the Applicant that it owed $1,336,284.00 to the Respondent, it has not paid that or any other relevant amount.
Threshold issue
- The Respondent raised a threshold issue in relation to s 459G(3), namely that the affidavit filed in support of the Applicant’s application (“the supporting affidavit”) did not meet the requirements of s 459G(3), in that it did not set out the material facts upon which the application was based. Apart from the supporting affidavit, the Applicant also filed other affidavits but they were not filed until after the expiration of the 21 day period in s 459G(3) (“the other affidavits”).
- The nature and requirements of a supporting affidavit have been the subject of consideration in many cases:
- A complying affidavit is a pre-condition to the exercise of jurisdiction. Graywinter Properties Pty Ltd v Gas & Fuel Corporation Superannuation Fund (1996) 70 FCR 452 at 459C.
- A supporting affidavit must “as a minimum, contain a statement of the material facts on which the applicant intends to rely to show a genuine dispute -- it might read more like a pleading than a story.” Graywinter Properties at 459G. But it need not be set out like a pleading.
- The statement in Graywinter Properties that a supporting affidavit must “contain a statement of the material facts on which the applicant intends to rely to show a genuine dispute” also applies where the challenge is under s 459J. Saferack Pty Ltd v Marketing Heads Australia Pty Ltd (2007) 214 FLR 393 at [25].
(d)“It is clear that what is required in all cases is something between mere assertion and the proof that would be necessary in a court of law. Something more than mere assertion is required because if that were not so then anyone could merely say it did not owe a debt.
“On the other hand, if proof of a claim was required then one would be doing the very thing that one is not to do, and that is to try this sort of dispute in the Companies Court. What more than assertion is required is something that may differ from case to case.” John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd (1994) 14 ACSR 250 at 253.
(e)The affidavit does not have to set out all the evidence supporting the contention of the applicant. John Holland Construction and Engineering Pty Ltd v Kilpatrick Green Pty Ltd at 251-252; Graywinter Properties at 460.
(f)It will be enough if the grounds of challenge appear by an available inference from the affidavit and its exhibits: “it is not necessary for the applicant to expressly articulate the grounds in the affidavit, or to do so by necessary inference, as distinct from available inference”. Hansmar Investments Pty Ltd v Perpetual Trustee Co Ltd (2007) 61 ACSR 321 at [33].
- So far as these requirements are concerned, Mr Harrison QC submitted:
- The principle in Graywinter Properties is, at least in part, founded on the requirements of the Federal Court Rules – Order 71 Rule 36B – which, at the time of the decision, contained an unqualified requirement that the application be accompanied by an affidavit “stating any material facts relied upon by the applicant in support of the application”. The relevant rule in the Uniform Civil Procedure Rules (Schedule 1A, rr 2.4(1) and 2.4A(2)), is qualified by the words “[u]nless the court otherwise directs …”. It was submitted that the Court should give a direction relieving the Applicant from the strictness of the ordinary requirement.
No argument of any substance was advanced to support this application for a direction. I decline to make it.
- Sections 459H and 459J support the view that less particularity is required for applications under s 459J(1)(b) than in other cases.
This submission is contrary to the authorities above, particularly Saferack Pty Ltd v Marketing Heads Australia Pty Ltd (2007) 214 FLR 393 at [25]. I do not accept it.
- The supporting affidavit is quite brief. It was sworn by a solicitor in the employ of the Applicant’s solicitors. The relevant paragraphs are:
“2.Exhibited to this affidavit and marked "GMLK-I" is a true copy of an organisational search on the Applicant obtained on the date of this affidavit.
- Exhibited to this affidavit and marked "GMLK-2" is a true copy of a Form 509H Creditor's Statutory Demand for Payment of Debt issued by the Respondent to the Applicant and dated 26 November 2009 (Statutory Demand).
- I understand that Moore Stephens Accountants & Advisors (Moore Stephens) are the accountants for the Applicant. I have been instructed by Mr Tusar Mia, the Executive Director of Moore Stephens, and verily believe, that the Statutory Demand was served on the Applicant on 27 November 2009.
- The Statutory Demand claims that the Applicant owes the Respondent the amount of $3,217,858.99 for a "Running Balance Account deficit debt as at 26 November 2009 in respect of amounts due under the BAS provisions as defined in subsection 995-1 (1) of the Income Tax Assessment Act 1997..." (Alleged Debt).
- Exhibited to this affidavit and marked "GMLK-3" is a true copy of an objection lodged with the Australian Taxation Office (ATO) by Mr Mia on behalf of the Applicant, in relation to the Alleged Debt, on 10 December 2009.
- Exhibited to this affidavit and marked "GMLK-4" is a true copy of a letter from Mr Mia to Ms Raelene Vivian of the ATO dated 17 December 2009. The letter states that there is a genuine dispute as to both the existence of the Alleged Debt, and the amount of the Alleged Debt.
- Exhibited to this affidavit and marked "GMLK-5" is a true copy of a letter from Ms Vivian of the ATO to Mr Mia dated 17 December 2009, stating that the lodging of an objection does not constitute a genuine dispute in terms of section 459H of the Corporations Act 2001 (Cth).
- HWL Ebsworth Lawyers were instructed by the Applicant in relation to the Statutory Demand for the first time today. The Applicant therefore has not had sufficient time to obtain proper legal advice with respect to the ATO's contention in its letter dated 17 December 2009, and any affidavits to be filed in support of the Applicant's application for an order that the Statutory Demand be set aside. I am instructed by Mr Mia, and verily believe, that the Applicant intends to file and serve another affidavit in support of its application as soon as reasonably possible.”
- Exhibit GMLK-3 is the objection against the assessment lodged with the Respondent. The gist of the objection has been set out above.
- Exhibit GMLK-4 is a letter from the Applicant’s accountants to the Respondent. It refers to the Applicant’s objection and asserts that there is a genuine dispute with respect to both the existence and the amount of the claimed debt and requests the immediate withdrawal of the statutory demand.
- Exhibit GMLK-5 is a letter from the Respondent referring to Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473.
- Mr Harrison QC submitted that the grounds which would constitute the reason for setting aside the statutory demand under s 459J(1)(b) were:
- The unfairness of requiring payment of an amount of $3 million when the total liability after the Applicant’s objections have ultimately been determined is likely to be very much less than that.
- The fact that experience suggests that if the company is wound up, it is unlikely that the erroneous assessments would be corrected.
- The loss that is likely to be caused to the Applicant and its creditors by reason of the lower price likely to be realised for the sale of the units if a winding-up application is made, or putting it another way, there is likely to be more for the creditors if the demand is set aside. (This ground is referred to in the other affidavits.)
- He then argued that those grounds could be drawn from the supporting affidavit because:
- The third paragraph of GMLK-4 shows that there is to be a contention along the lines that the demand should not have been made until the underlying dispute has been determined.
- The material about the damage which would be caused by the bringing of a winding-up application (contained in the other affidavits) was merely fleshing out a self-evident fact that would be inferred in any event and, therefore, was always necessarily “in play”. The damage which was alleged to be likely to occur was the reduction of the amount obtained for the realisation of the Applicant’s assets.
- Although “it is not necessary for the applicant to expressly articulate the grounds in the affidavit, or to do so by necessary inference, as distinct from available inference” (Hansmar Investments Pty Ltd v Perpetual Trustee Co Ltd (2007) 61 ACSR 321 at [33]), an applicant should not be entitled to expect that a reader of a supporting affidavit will go through the entrails of every paragraph in every exhibit in an effort to decipher what the grounds of the application might be. An available inference is one that can be drawn by someone who has some familiarity with the matter, the legislation and the relevant law; not some latter-day haruspex attempting to discern the grounds upon which the application is made.
- The paragraph relied upon in GMLK-4 reads:
“This basis is incorrect as the Taxpayer certainly has a genuine dispute in terms of both the existence and amount of the claimed debt which is the subject of the Demand. As a result of this fact, an essential element of the basis upon which the Demand was made cannot be relied upon and the Taxpayer therefore requests that the Demand be immediately withdrawn to provide the opportunity for the terms of the dispute to be properly reviewed and considered through the appropriate process established for the dealing with such matters.”
- The “basis” said to be incorrect is the belief, deposed to by the deponent of the affidavit supporting the statutory demand, that there is no genuine dispute about the existence or the amount of the dispute. The inference sought to be drawn by the Applicant is one which is arguably open and so the first ground referred to above is available.
- So far as the second ground is concerned, there is no material in the supporting affidavit to support even the thinnest inference in those terms. If, indeed, there is experience that it is unlikely that the erroneous assessments will be corrected if a company is wound up, then that should be stated or sufficient facts should be said or exhibited to support that inference. The second ground is not available.
- It is acknowledged that the third ground is not contained within the supporting affidavit, but it is said that this is not necessary as the claim that a winding-up will lower the price likely to be realised is “self-evident”, and thus should be inferred in any event. Reliance was placed on the decision of Wanstall J in Clem Jones Pty Ltd v International Resources Planning and Development Pty Ltd [1970] Qd R 37 where, at 40-41, where his Honour considered Cadiz Waterworks Company v Barnett (1874) LR 9 Eq 182 and said:
“It is my view that to adopt a method of obtaining payment of a debt which could do irreparable harm to a company which, on the evidence, is otherwise able to pay its debts, should be regarded as an improper use of the procedure provided by the Companies Act and an abuse of process of this Court.” (emphasis added)
- In Re Clem Jones Pty Ltd [1970] QWN 6 Matthews J referred, at 16, to “the damage which seems to be presumed to flow from continuance of winding-up proceedings.”
- Thus, the Applicant argues that it is unnecessary to say anything about damage caused by the winding-up process because it is assumed to occur. But that ignores the simple requirement that such a matter should be contained in the affidavit. If it is the Applicant’s case that damage will occur then that can be deposed to in the affidavit. There is no need to set out the evidence to support such a claim, only that the claim is made.
- The Applicant sought to extend the application of the principles relevant to the contents of the affidavit which supports a statutory demand in Rapcivic Contractors Pty Ltd v Mapol Nominees Pty Ltd t/as Amalgamated Painting Services [2009] 1 Qd R 21 to the concept of the harm done to a business through the bringing of a winding-up application. In that case, the affidavit accompanying a statutory demand did not state the facts which entitled the deponent to make the affidavit and further did not state the source of the deponent’s knowledge of the matters relating to the debt as set out in the affidavit. Chief Justice de Jersey relevantly held at [11]:
“Mr Campbell S.C., appearing for Mapol, challenged the entitlement of Rapcivic to rely on that deficiency, on the basis that it was not the point flagged by the affidavit of Mr Raptis supporting the application. In relation to the deficiency presently advanced, the affidavit of Mr Raptis did no more than exhibit the affidavit of Ms Poletto, from which the deficiency may be drawn: the affidavit of Mr Raptis did not go to the length of expressing what that deficiency was. Mr Campbell relied on Graywinter Properties Pty Ltd v Gas and Fuel Corporation Superannuation Fund (1996) 70 FCR 452 for the so-called “Graywinter principle”, requiring that an affidavit in support of an application to set aside a statutory demand must disclose facts that evidence a genuine dispute between the parties. But this is not a case of a dispute as to the debt. It is a case of a deficiency in the supporting affidavit, and that deficiency emerges on the face of that affidavit when read against the statutory requirement.”
- That case dealt with an affidavit (in support of a statutory demand) which was deficient on its face. It did not comply with the rules. The decision was based on a defect which was apparent in the creditor’s own material. It was not a case in which the alleged debtor relied upon some assumption which was not expressed or implied in its own material. The third ground is not available.
Ground to set aside the statutory demand
- The ground available to the Applicant was expressed by it as:
“The unfairness of requiring payment of an amount of $3 million when the total liability after the applicant’s objections have ultimately been determined is likely to be very much less than that.”
- The Applicant submitted that until the internal processes of the ATO have been completed, that is, the determination of the objection, there has been no final assessment. It was contended that the decision in Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473 did not apply because an assessment had not issued. The essential principles in that decision are well expressed in the headnote:
(a)The existence of proceedings under Pt IVC of the TAA 1953 did not give rise to a “genuine dispute” as to the amount or existence of a debt for the purposes of s 459H(1)(a) of the Corporations Act. Outside Pt IVC proceedings, the effect of s 177(1) of the Income Tax Assessment Act 1936 (Cth) and s 105-100 of Sch 1 to the TAA 1953 was that production by the Commissioner of the notices of assessment and GST declarations conclusively demonstrated that the amounts and particulars in the assessments and declarations were correct.
(b)The material considerations to be taken into account in determining the existence of “some other reason” under s 459J(1)(b) included the legislative policy manifested in ss 14ZZM and 14ZZR of the TAA 1953 regarding the recovery of tax debts notwithstanding the pendency of Pt IVC proceedings.
- It is the latter part of the decision which bears upon this case.
- The assessment relied upon by the Respondent was made pursuant to s 105-5 of the Schedule to the TAA 1953 (Cth):
“105‑5 Commissioner may make assessment of indirect tax
(1)The Commissioner may at any time make an assessment of:
- your net amount, or any part of your net amount, for a tax period; …”
- The affidavits from the Respondent demonstrate that such an assessment was made. It is, of course, the assessment which is the subject of the Applicant’s objection which is made under s 105-40. It provides:
“105‑40 Reviewable indirect tax decisions
(1)You may object, in the manner set out in Part IVC, against a decision you are dissatisfied with that is a reviewable indirect tax decision relating to you. …”
- Part IVC of the TAA 1953 deals with taxation objections, reviews and appeals. It allows for: an objection to be made, applications to the Administrative Appeals Tribunal for the review of certain types of decisions, and appeals to the Federal Court against objection decisions.
- So far as assessments of indirect tax are concerned, s 105-100 is of most relevance :
“105‑100 Production of assessment or declaration is conclusive evidence
The production of:
(a)a notice of assessment under this Part; or
…
is conclusive evidence:
(c)that the assessment or declaration was properly made; and
(d)except in proceedings under Part IVC of this Act on a review or appeal relating to the assessment or declaration—that the amounts and particulars in the assessment or declaration are correct.” (emphasis added)
- It is important to note that, in providing for the conclusivity of assessments, s 105-100 does not make the same exception for objections which it makes for reviews (by the AAT) or appeals (to the Federal Court). This is consistent with the policy identified by the High Court in Broadbeach Properties:
“[57] … Section 459G applications by taxpayers are not Pt IVC proceedings and production by the Commissioner of the notices of assessment and of the GST declarations conclusively demonstrates that the amounts and particulars in the assessments and declarations are correct. That being so, the operation of the provisions in the taxation laws creating the debts and providing for their recovery by the Commissioner cannot be sidestepped in an application by a taxpayer under s 459G of the Corporations Act to set aside a statutory demand by the Commissioner.
…
[61] … The “material considerations” which are to be taken into account [under s 459J], on an application to set aside a statutory demand, when determining the existence of the necessary satisfaction for para (b) of s 459J(1) must include the legislative policy, manifested in ss 14ZZM and 14ZZR of the Administration Act, respecting the recovery of tax debts notwithstanding the pendency of Pt IVC proceedings.”
- There is conclusive evidence that the Respondent’s assessment was properly made, and that the amounts and particulars in the assessment are correct. The fact that there is an objection before the Respondent is not a “material consideration” for the purposes of s 459J(1)(b). Therefore, there is no ground available to set aside the statutory demand.
Damage to the Applicant
- Although I have held that the third ground advanced by the Applicant is not available I observe that, had it been available, then I would have held that it had no weight in the light of the analysis of a similar contention in Broadbeach Properties:
“[60] Both the primary judge and the Court of Appeal emphasised the importance of the disruption to the taxpayers, their other creditors and contributories that would ensue from a winding up, together with the absence of any suggestion that the revenue would suffer actual prejudice if the Commissioner were left to other remedies to recover the tax debts. But these considerations are ordinary incidents of reliance by the Commissioner upon the statutory demand system.” (emphasis added)
Orders
- The application is dismissed.
- I will hear the parties on costs.
Footnotes
[1] ‘RBA’ is defined in s 8AAZA of the TAA 1953 to mean “…a running balance account…” and ‘RBA deficit debt’ is defined in that section as:
“in relation to an RBA of an entity, means a balance in favour of the Commissioner, based on:
(a)primary tax debts that have been allocated to the RBA and that are currently payable; and
(b)payments made in respect of current or anticipated primary tax debts of the entity, and credits to which the entity is entitled under a taxation law, that have been allocated to the RBA.”