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Insolvency (Tax Priorities) Legislation Amendment Act 1993 (32 of 1993)

Part 2 AMENDMENTS OF THE INCOME TAX ASSESSMENT ACT 1936

16 After Division 7 of Part VI of the Principal Act the following Divisions are inserted

"Division 8 - Prompt recovery, through estimates and payment agreements, of amounts not remitted under Divisions 2, 3A, 3B and 4

"Subdivision A - Object and interpretation

Object and outline

"222AFA. (1) The purpose of this Division is to enable the Commissioner to take prompt and effective action to recover amounts not remitted as required by Divisions 2, 3A, 3B and 4.

"(2) It does so by empowering the Commissioner to make an estimate of the amounts, and to recover the amount of the estimate.

"(3) Although an estimate creates a liability distinct from the underlying liability to remit amounts, the person liable can ensure that the Commissioner does not keep more than those amounts.

"(4) This Division also empowers the Commissioner to agree to a person paying off over a period liabilities under Division 2, 3A, 3B or 4 or under this Division.

"(5) Sections 221R, 221YHN, 221YHZJ and 221YR provide for the recovery of amounts payable under this Division.

Interpretation

"222AFB. (1) In this Division, unless the contrary intention appears:

'director', in relation to a company:

(a) means someone who is a director of the company for the purposes of the Corporations Law; and

(b) in the case of an unincorporated company - includes an officeholder of the company;

'due date', in relation to a deduction, means the day on or before which the person making the deduction must pay to the Commissioner an amount equal to the deduction, or affix tax stamps of a face value equal to the amount of the deduction, as the case requires;

'government body' means the Commonwealth, a State, a Territory or an authority of the Commonwealth or a State or Territory;

'person' includes:

(a) an employer as defined in subsection 221A (1); and

(b) a person as defined in subsection 221YHA (1); and

(d) a person who is taken because of subsection 221YHZA (4) to be the investment body in relation to an investment; and

(e) a company within the meaning of Division 4 (see, for example, subsections 102L (10), 102T (11) and 221YK (2)); and

(f) a government body; and

(g) a partnership;

Note: Subsections (2) and (3) deal with obligations imposed on partnerships.

'relate', in the case of a reference to the liability to which an estimate relates, includes purport to relate;

'remittance provision' means any of the following provisions:

(a) in Division 2 - section 221F (except subsection 221F (12)) and section 221G (except subsection 221G (4A));

(b) in Division 3A - subsection 221YHDC (2);

(d) in Division 4 - subsection 221YN (1);

'statutory demand' has the same meaning as in the Corporations Law;

'statutory minimum' has the same meaning as in the Corporations Law;

'trustee', in relation to a person, means:

(a) a trustee (as defined in section 6) in whom the person's property is vested, or who has control of the person's property; and

(b) if the person is a partnership - includes someone who is a trustee of any of the partners because of paragraph (a);

Note: Subsection (4) deals with the case where there are 2 or more trustees of a person.

'underlying liability', in relation to an estimate, means the liability to which the estimate relates;

'unpaid amount' has the meaning given by section 222AFC.

"(2) If a partnership is liable under this Division to pay an amount, the partners are jointly and severally liable to pay the amount.

"(3) Any other obligation that this Division imposes on a partnership may be discharged by any of the partners.

"(4) If there are 2 or more trustees of a person, anything this Division provides for to be done by or in relation to the person's trustee may be done by or in relation to any of them.

Unpaid amount

"222AFC.(1) The unpaid amount of a liability to pay amounts is:

(a) if the liability remains undischarged to the extent of a particular amount - that amount; or

(b) otherwise - a nil amount.

"(2) The unpaid amount of an estimate is:

(a) if the liability to pay the estimate remains undischarged to the extent of a particular amount - that amount; or

(b) otherwise - a nil amount.

Subdivision B - Making, reducing and revoking estimates

When Commissioner may make estimate

"222AGA. (1) If the Commissioner has reason to suspect that:

(a) a person ('the person liable') has become liable under a remittance provision to pay to the Commissioner amounts equal to deductions by the person from payments made during a period; and

(b) the liability to pay those amounts remains undischarged after the due date of those deductions;

the Commissioner may make what he or she thinks is a reasonable estimate of the unpaid amount of that liability.

"(2) In making the estimate, the Commissioner may have regard to anything he or she thinks relevant, for example, information about amounts deducted by the person during earlier periods.

Notice to person liable

"222AGB. (1) If the Commissioner makes an estimate, he or she must send written notice of it to the person liable or to the person's trustee.

"(2) The notice must:

(a) identify the liability to which the estimate relates; and

(b) specify the day as at which the estimate is made; and

(d) state that the amount of the estimate is due and payable; and

(e) state that:

(i) if the person or the person's trustee gives the Commissioner a statutory declaration substantiating the actual unpaid amount of the liability to which the estimate relates, the estimate will be reduced accordingly; and

(ii) the estimate will be revoked if the person or the person's trustee gives the Commissioner a statutory declaration to the effect that the person made no deductions for the purposes of Division 2, 3A, 3B or 4, as the case requires, during the period concerned; and

(iii) the statutory declaration must comply with section 222AGF; and

(f) state the effect of section 222AGF.

"(3) To avoid doubt, a single notice may relate to 2 or more estimates, but must comply with subsection (2) in relation to each of them.

Reducing amount of estimate

"222AGC. (1) If:

(a) the Commissioner makes an estimate; and

(b) the person liable or the person's trustee gives the Commissioner a statutory declaration that complies with section 222AGF; and

(c) the declaration is to the effect that a specified amount is the unpaid amount of the liability to which the estimate relates; and

(d) the specified amount is less than the unpaid amount of the estimate;

the amount of the estimate is reduced by the amount by which the unpaid amount of the estimate (immediately before the reduction) exceeds the specified amount.

Note 1: The effect of subsection (1) is to reduce the unpaid amount of the estimate to the specified amount.

Note 2: Sections 222AHD, 222AIC and 222AIG also provide for the automatic reduction of an estimate.

"(2) The Commissioner may at any time reduce the amount of an estimate, but is not obliged to consider whether or not to do so.

"(3) If the Commissioner reduces under subsection (2) the amount of an estimate, he or she must send to the person liable or to the person's trustee a written notice that:

(a) identifies the liability to which the estimate relates; and

(b) sets out the reduced amount of the estimate.

The reduction takes effect when the notice is sent.

Revoking estimate

"222AGD. (1) This subsection revokes an estimate if:

(a) the person liable or the person's trustee gives the Commissioner a statutory declaration that complies with section 222AGF; and

(b) the declaration is to the effect that the person made no deductions for the purposes of Division 2, 3A, 3B or 4, as the case requires, during the period concerned.

Note: Sections 222AHD, 222AIC and 222AIG also provide for the automatic revocation of an estimate.

"(2) The Commissioner may at any time revoke an estimate, but is not obliged to consider whether or not to do so.

"(3) If the Commissioner revokes an estimate under subsection (2), he or she must send to the person liable or to the person's trustee a written notice that:

(a) identifies the liability to which the estimate relates; and

(b) states that the estimate has been revoked.

The revocation takes effect when the notice is sent.

Matters for Commissioner to consider under sections 222AGC and 222AGD

"222AGE. In exercising a power under subsection 222AGC (2) or 222AGD (2), the Commissioner is to have regard to the following:

(a) an estimate is of the unpaid amount of a liability as at a particular time;

(b) the purpose of reducing the amount of the estimate is to bring it closer to the unpaid amount of the underlying liability as at that time, and so bring the unpaid amount of the estimate closer to the unpaid amount of the underlying liability as at the time of the reduction;

(c) reductions in the unpaid amount of the underlying liability that happen after the time as at which the estimate was made are dealt with by section 222AHA and so should not be taken into account in exercising such a power;

(d) the effects of Subdivision F.

Requirements for statutory declaration under section 222AGC or 222AGD

"222AGF. (1) This section sets out the requirements for a statutory declaration for the purposes of section 222AGC or 222AGD.

"(2) The declaration must be a statutory declaration made under the Statutory Declarations Act 1959.

"(3) It must be given to the Commissioner within 7 days, or a longer period allowed by the Commissioner, after the Commissioner sends notice of the estimate to the person liable or to the person's trustee.

"(4) The declaration must:

(a) specify the total of the deductions that the person made, for the purposes of Division 2, 3A, 3B or 4, as the case requires, during the period concerned; or

(b) state to the effect that the person made no deductions for the purposes of that Division during that period;

as the case requires.

"(5) For each amount (if any):

(a) paid or applied for the purpose of complying with that Division in relation to the deductions (if any) that the person so made; or

(b) spent on buying tax stamps that have been affixed for the purpose of so complying;

the declaration must specify the amount and the day on which it was so paid, applied or spent.

"(6) The declaration must specify, as the unpaid amount of the liability to which the estimate relates, the difference between:

(a) the total (if any) specified under paragraph (4) (a); and

(b) the total of the amounts (if any) specified under subsection (5).

"(7) The declaration must be made by:

(a) if the person is a company that has directors, a secretary or both – a director or secretary; or

(b) if the person is an individual - the person; or

(d) if the person consists of 2 or more persons including one or more individuals and is neither a company nor a government body - that individual or one of those individuals; or

(e) in any case - the person's trustee.

Further estimate after previous estimate revoked or discharged

"222AGG. (1) While an estimate is in force, the Commissioner cannot make under section 222AGA another estimate relating to the same liability.

"(2) An estimate is in force if the Commissioner has given notice of it to the person liable or to the person's trustee and:

(a) the estimate has not been revoked; and

(b) the person's liability to pay the estimate has not been discharged.

"Subdivision C - Recovering unpaid amount of estimate

Nature of liability created by notice

"222AHA. (1) If the Commissioner makes an estimate and sends notice of it to the person liable or to the person's trustee, the person must pay to the Commissioner the amount of the estimate. This liability is called a liability to pay an estimate.

"(2) A liability to pay an estimate is separate and distinct from the liability to which the estimate relates. It is separate and distinct for all purposes. For example, the Commissioner may take proceedings to recover the unpaid amount of the estimate, proceedings to recover the unpaid amount of the liability to which the estimate relates, or both.

"(3) However, the following are parallel liabilities:

(a) a liability to pay an estimate;

(b) the liability to which the estimate relates;

"(4) This means that if, at a particular time:

(a) an amount is paid or applied towards discharging one of the parallel liabilities; or

(b) because of section 222AOH or 222APG, one of the parallel liabilities is discharged to the extent of a particular amount;

each of the others that is in existence at that time is discharged to the extent of the same amount. However, this section does not discharge a liability to a greater extent than the amount of the liability.

Refund if estimate exceeds underlying liability

"222AHB. (1) If:

(a) an amount is paid or applied towards discharging a liability to pay an estimate; and

(b) the amount exceeds the unpaid amount of the underlying liability as at the time ('the liability time') immediately before the payment or application;

the Commissioner must either refund the excess or:

(c) apply the excess against any liability of the person to the Commonwealth that arises under or because of an Act of which the Commissioner has the general administration; and

(d) refund so much of the excess as is not applied under paragraph (c).

"(2) If the Commissioner refunds or applies an amount under subsection (1), he or she must also reduce the amount of the estimate by the amount by which the unpaid amount of the estimate as at the liability time exceeded the unpaid amount of the underlying liability at that time.

Defences in recovery proceedings

"222AHC. (1) This section has effect for the purposes of proceedings, in so far as they relate to the recovery of the unpaid amount of an estimate.

"(2) The Commissioner or Deputy Commissioner is not entitled to recover if the person liable or the person's trustee files an affidavit that complies with section 222AHE and verifies facts sufficient to prove that the underlying liability never existed or has been discharged in full.

"(3) If the person liable or the person's trustee files an affidavit that complies with section 222AHE and verifies facts sufficient to prove that the unpaid amount of the underlying liability is a specified amount that is less than the unpaid amount of the estimate, the court is to enter judgment in favour of the Commissioner or Deputy Commissioner for the specified amount.

"(4) The court is to make whatever orders are necessary because of subsection (2) or (3).

"(5) If a judgment under subsection (3) is in effect, the Commissioner or a Deputy Commissioner is not entitled to recover the balance of the estimate (in the same or different proceedings or otherwise).

"(6) However, the judgment does not prevent the Commissioner or a Deputy Commissioner from recovering (in the same or different proceedings or otherwise) the amount (if any) by which the unpaid amount of the underlying liability exceeds the amount specified in the affidavit.

"(7) Except as provided in subsection (2) or (3), it is not a defence that:

(a) the underlying liability never existed or has been discharged in full; or

(b) the unpaid amount of the underlying liability is less than the unpaid amount of the estimate.

Effect of affidavit on estimate

"222AHD. (1) This subsection revokes an estimate if subsection 222AHC (2) prevents recovery of the unpaid amount because an affidavit verifies facts sufficient to prove that the underlying liability never existed.

"(2) If subsection 222AHC (2) prevents recovery of the unpaid amount of an estimate because an affidavit verifies facts sufficient to prove that the underlying liability has been discharged in full, the amount of the estimate is reduced by the unpaid amount of the estimate (immediately before the reduction).

Note: The effect of subsection (2) is to reduce to a nil amount the unpaid amount of the estimate.

"(3) While a judgment for an amount is in effect under subsection 222AHC (3), the amount of the estimate is reduced by the amount by which the unpaid amount of the estimate (immediately before the reduction) exceeds the first-mentioned amount.

Note: The effect of subsection (2) is to reduce the unpaid amount of the estimate to the amount of the judgment.

Requirements for affidavit under section 222AHC

"222AHE. (1) An affidavit for the purposes of section 222AHC must comply with this section.

"(2) The affidavit must be filed with the court, and a copy served on the Commissioner or Deputy Commissioner, as the case requires, within 14 days after the first day on which the person liable or the person's trustee takes a procedural step as a party to the proceedings (for example, entering an appearance, filing a notice of intention to defend, or applying to set aside judgment entered in default of appearance).

"(3) However, the court may extend the period for compliance with subsection (2).

"(4) The facts that the affidavit must verify include:

(a) the total of the deductions made for the purposes of Division 2, 3A, 3B or 4, as the case requires, during the relevant period, or the fact that no deductions were so made;

(b) what has been done to comply with that Division in relation to the deductions (if any) so made;

"(5) The affidavit must be sworn by:

(a) if the person is a company that has directors, a secretary or both – a director or secretary; or

(b) if the person is an individual - the person; or

(d) if the person consists of 2 or more persons including one or more individuals and is neither a company nor a government body - that individual or one of those individuals; or

(e) in any case - the person's trustee.

"Subdivision D - Insolvency proceedings

Effect on statutory demand if estimate reduced or revoked

"222AIA. (1) If:

(a) the Commissioner serves on a company a statutory demand relating to the company's liability to pay the unpaid amount of an estimate; and

(b) the amount of the estimate is later reduced or the estimate is later revoked; then:

(d) the demand is taken to have had effect (as so changed) from the time when it was served on the company.

"(2) This subsection sets aside the statutory demand if subsection (1) reduces below the statutory minimum the amount of the debt, or the total of the amounts of the debts, to which the demand relates.

Defences on winding up application

"222AIB. (1) This section has effect for the purposes of:

(a) an application under section 260, 459P, 462 or 464 of the Corporations Law of a State or Territory; or

(b) an application for leave to make an application under section 459P of the Corporations Law.

"(2) The court is not to presume, merely because the company has failed to comply with a statutory demand, that the company is insolvent if:

(a) the demand relates only to a liability in respect of an estimate and the sworn amount of the liability to which the estimate relates is less than the statutory minimum; or

(b) the demand relates only to liabilities in respect of 2 or more estimates and the total of the sworn amounts of the liabilities to which the estimates relate is less than the statutory minimum; or

(i) one or more liabilities in respect of one or more estimates; and

(ii) one or more liabilities none of which is a liability in respect of an estimate; and the total of:

(iii) the sworn amount of the liability to which the estimate relates, or the total of the sworn amounts of the liabilities to which the estimates relate, as the case may be; and

(iv) the amount of the liability, or the total of the liabilities, referred to in subparagraph (ii);

is less than the statutory minimum.

"(3) The sworn amount of a liability to which an estimate relates is:

(a) if the company has filed an affidavit that complies with section 222AID and verifies facts sufficient to prove that the liability never existed or has been discharged in full - a nil amount; or

(b) if the company has filed an affidavit that complies with section 222AID and verifies facts sufficient to prove that the unpaid amount of the liability is a specified amount that is less than the unpaid amount of the estimate - the specified amount; or

"(4) Except as provided in subsection (2), the company is not entitled to oppose the application on the ground that:

(a) a liability to which an estimate relates never existed or has been discharged in full; or

(b) the unpaid amount of such a liability is less than the unpaid amount of the estimate.

Effect of affidavit on estimate

"222AIC. If the unpaid amount of an estimate exceeds the amount that is the sworn amount of the underlying liability for the purposes of section 222AIB because of an affidavit filed for the purposes that section, the amount of the estimate is reduced by the excess.

Note: The effect is to reduce the unpaid amount of the estimate to the sworn amount of the underlying liability.

Requirements for affidavit under section 222AIB

"222AID. (1) An affidavit for the purposes of section 222AIB must comply with this section.

"(2) The affidavit must be filed with the court, and a copy served on the applicant, within 14 days after notice of the application was served on the company.

"(3) However, the court may extend the period for compliance with subsection (2).

"(4) The facts that the affidavit must verify in relation to a liability to which an estimate relates include:

(a) the deductions made for the purposes of Division 2, 3A, 3B or 4, as the case requires, during the relevant period, or the fact that no deductions were so made;

(b) what has been done to comply with that Division in relation to the deductions (if any) so made;

"(5) The affidavit must be sworn by a director, secretary or trustee of the company.

Defences under section 222AIB not available on application to set aside statutory demand

"222AIE. A court is not to set aside or vary a statutory demand on a ground referred to in subsection 222AIB (4).

Estimate provable in bankruptcy or winding up

"222AIF. (1) A liability to pay the unpaid amount of an estimate is provable in a bankruptcy or winding up of the person liable, even if the estimate was made after the date of the bankruptcy, or after the relevant date within the meaning of the Corporations Law, as the case may be.

"(2) However, the liability is so provable only in so far as the underlying liability would be so provable if the unpaid amount of it were the same as the unpaid amount of the estimate.

Note: Subsection (2) prevents proof of an estimate if the underlying liability could not be proved because, for example, of when it arose.

"(3) Subsections (1) and (2) do not apply if the underlying liability has already been admitted to proof and the proof has not been set aside.

"(4) If the liability in respect of the estimate has been admitted to proof at a particular amount ('the admitted amount'), the underlying liability is provable only in so far as the unpaid amount of it exceeds the admitted amount.

"(5) In so far as a liability is provable because of this section, it is taken for the purposes of the Bankruptcy Act 1966 to be provable in bankruptcy under that Act.

Rejection of proof of debt relating to estimate

"222AIG. (1) This section applies if the Commissioner lodges a proof of debt relating to the unpaid amount of an estimate.

"(2) The trustee of the person liable may reject the proof in whole on the ground that the underlying liability never existed or has been discharged in full, but may only do so if the trustee has given the Commissioner a statutory declaration that complies with section 222AIH and verifies facts sufficient to prove that ground.

"(3) The trustee may reject the proof in part on the ground that the unpaid amount of the estimate exceeds the unpaid amount of the underlying liability, but may only do so if the trustee has given the Commissioner a statutory declaration that complies with section 222AIH and verifies facts sufficient to prove that the unpaid amount of the underlying liability is a specified amount that is less than the unpaid amount of the estimate.

"(4) If the Commissioner appeals from, or applies for review of, the trustee's decision, nothing in subsection (2) or (3) prevents evidence being adduced to contradict statements in the declaration.

"(5) This subsection revokes the estimate if:

(a) the trustee rejects the proof under subsection (2) on the ground that the underlying liability never existed; and

(b) the Commissioner does not appeal from, or apply for review of, the trustee's decision, or the result of all appeals from, and applications for review of, the decision being finally determined or otherwise disposed of is that the proof is rejected in whole on that ground.

"(6) If:

(a) the trustee:

(i) rejects the proof under subsection (2) on the ground that the underlying liability has been discharged in full; or

(ii) rejects the proof under subsection (3); and

(b) the Commissioner does not appeal from, or apply for review of, the trustee's decision;

the amount of the estimate is reduced by so much of the unpaid amount of the estimate (immediately before the reduction) as is rejected.

Note: The effect of subsection (6) is to reduce the unpaid amount of the estimate to nil if the proof is rejected in whole, and otherwise to the amount admitted to proof.

"(7) If:

(a) the trustee rejects the proof under subsection (2) or (3); and

(b) the Commissioner appeals from, or applies for review of, the trustee's decision and the result of all appeals from, and applications for review of, the decision being finally determined or otherwise disposed of is that the proof:

(i) is rejected in whole on the ground that the underlying liability has been discharged in full; or

(ii) is rejected in part;

the amount of the estimate is reduced by so much of the unpaid amount of the estimate (immediately before the reduction) as is rejected.

Note: The effect of subsection (7) is to reduce the unpaid amount of the estimate to nil if the proof is rejected in whole, and otherwise to the amount admitted to proof.

Requirements for statutory declaration under section 222AIG

"222AIH. (1) A statutory declaration for the purposes of section 222AIG must comply with this section.

"(2) The declaration must be a statutory declaration made under the Statutory Declarations Act 1959.

"(3) The facts that the declaration must verify include:

(a) the total of the deductions made for the purposes of Division 2, 3A, 3B or 4, as the case requires, during the relevant period, or the fact that no deductions were so made;

(b) what has been done to comply with that Division in relation to the deductions (if any) so made;

"(4) The declaration must be made by:

(a) if the person liable is a company that has directors, a secretary or both - a director or secretary; or

(b) if the person liable is an individual - the person; or

(d) if the person liable consists of 2 or more persons including one or more individuals and is neither a company nor a government body - that individual or one of those individuals; or

(e) in any case - the trustee of the person liable.

Provisions altering effect of Corporations Law

"222AII. This Subdivision has effect despite any provision of the Corporations Law of a State or Territory.

"Subdivision E - Penalty for late payment of estimate

Liability to penalty

"222AJA. (1) This section applies if a liability to pay an estimate remains undischarged at the end of 7 days after the Commissioner sends notice of the estimate to the person liable or to the person's trustee, unless the person liable is the Commonwealth.

"(2) The unpaid amount of the estimate, as at the end of the 7 days, continues to be payable and is called the principal amount.

"(3) In addition, the person is liable to pay to the Commissioner, by way of penalty:

(a) if the person is a government body or the estimate relates to a liability under subsection 221YN (1) - an amount at the rate of 16% per annum on so much of the principal amount as remains unpaid, computed from the due date of the underlying liability; and

(b) otherwise:

(i) an amount equal to 20% of the principal amount; and

(ii) an amount at the rate of 16% per annum on the total of:

(A) so much of the principal amount as remains unpaid; and

(B) so much of the amount referred to in subparagraph (i) as remains unpaid;

computed from the due date of the underlying liability.

"(4) The due date of the underlying liability is the due date referred to in paragraph 222AGA (1) (b).

"(5) If paragraph (3) (b) applies, the amount referred to in subparagraph (3) (b) (i) is not taken for the purposes of subparagraph (3) (b) (ii) to have ceased to be payable merely because a judgment has been given by, or entered in, a court.

Effect of paying penalty under this Subdivision or paying late payment penalty under Division 2, 3A, 3B or 4

"222AJB. (1) If a person is liable to a penalty payable under a provision of subsection 222AJA (3) in relation to an estimate, the following are parallel liabilities:

(a) the person's liability to the penalty;

(b) a liability of the person to a penalty payable, under a corresponding provision of Division 2, 3A, 3B or 4, as the case requires, because the underlying liability remained undischarged;

(d) if the penalty is payable under paragraph 222AJA (3) (a) - a liability of the person to pay interest carried by a judgment debt, so far as the judgment is based on the liability to pay the estimate;

(e) if the penalty is payable under subparagraph 222AJA (3) (b) (ii) – a liability of the person to pay interest carried by a judgment debt, so far as the judgment is based on:

(i) the liability to pay the estimate; or

(ii) liability to a penalty payable under subparagraph 222AJA (3) (b) (i) in relation to the estimate.

"(2) This means that if, at a particular time, an amount is paid or applied towards discharging one of the parallel liabilities, each of the others that is in existence at that time is discharged to the extent of the same amount.

However, this section does not discharge a liability to a greater extent than the amount of the liability.

"(3) If, because a judgment debt carries interest, a provision of Division 2, 3A, 3B or 4, as the case requires, reduces the amount of a penalty payable as mentioned in paragraph (1) (b), the amount of the reduction is taken for the purposes of subsection (2) to have been applied towards discharging the person's liability to the penalty.

Remission of penalties under this Subdivision

"222AJC. (1) If an amount is payable under a provision of subsection 222AJA (3) in relation to an estimate relating to a liability under a remittance provision, the Commissioner has the same powers to remit the amount as he or she or would have under Division 2, 3A, 3B or 4, as the case requires, if:

(a) the liability to pay the estimate were a liability under the same remittance provision; and

(b) the amount payable under that provision of subsection 222AJA (3) were payable under a corresponding provision of that Division.

Note: This Subdivision does not provide expressly for a penalty to be remitted if the unpaid amount of an estimate exceeds the unpaid amount of the underlying liability. The provisions about recovery of the unpaid amount of the estimate provide for reduction of the estimate in such a case. Subdivision F adjusts accordingly a liability under this Subdivision.

"(2) If the Commissioner decides to remit only part, or to remit no part, of an amount payable under subparagraph 222AJA (3) (b) (i), the Commissioner must give written notice of the decision to the person by whom the amount is, or but for the remission would be, payable.

"(3) If the person is dissatisfied with the decision, the person may object against it as set out in Part IVC of the Taxation Administration Act 1953.

"Subdivision F - Effect on liabilities under this and other

Divisions if estimate reduced or revoked

Liabilities adjusted with effect from when they arose

"222AKA. (1) If the amount of an estimate is reduced, or an estimate is revoked, section 222AHA, Subdivision E and Division 9 have effect, and are taken always to have had effect, as if:

(a) the original amount of the estimate had been the reduced amount, not the amount set out under paragraph 222AGB (2) (c); or

(b) the estimate had never been made;

as the case may be.

"(2) If because of subsection (1) an amount is taken to have been overpaid by a person, the Commissioner must either refund it or:

(a) apply it against any liability of the person to the Commonwealth that arises under or because of an Act of which the Commissioner has the general administration; and

(b) refund so much of it as is not applied under paragraph (a).

"(3) If the amount of an estimate is reduced again, or an estimate is revoked after its amount has been reduced on one or more occasions, subsections (1) and (2) apply again accordingly.

Reduction or revocation does not prejudice Commissioner's rights in relation to underlying liability

"222AKB. Reduction of the amount of an estimate, or revocation of an estimate, does not affect the Commissioner's rights or remedies in relation to the underlying liability, except so far as this Division expressly provides.

"Subdivision G - Payment agreements

Commissioner may make agreement

"222ALA. (1) The Commissioner may make with a person a written agreement under which the person is to pay specified amounts, on specified days, for the purpose of discharging one or more specified liabilities of the person, each of which is:

(a) a liability under a remittance provision; or

(b) a liability to pay an estimate.

"(2) An agreement may contain other provisions.

"(3) An agreement may also provide that, if the person contravenes specified provisions of it, so much of the total of the specified amounts as remains unpaid becomes due and payable on the day of the contravention. If an agreement so provides, the specified provisions are called special conditions.

"(4) The amounts specified in an agreement are due and payable on the specified days.

"(5) However, if:

(a) a specified amount is not paid on or before the specified day; or

(b) the person contravenes a special condition;

so much of the total of the specified amounts as remains unpaid:

(d) is called the balance payable under the agreement.

"(6) Subsections (4) and (5) have effect despite Divisions 2, 3A, 3B and 4 and the other provisions of this Division, but are to be ignored:

(a) in calculating a penalty under any of those Divisions; and

(b) for the purposes of this Division (except this section) and Division 9.

"(7) The Commissioner may make with a person a written agreement varying or terminating an agreement with the person that is in force under this section.

"(8) Nothing in Division 9 obliges the Commissioner to enter into an agreement with a company.

Effect of certain payments

"222ALB. (1) If an amount is paid under an agreement relating to 2 or more liabilities at least one of which is:

(a) a liability to pay an estimate; or

(b) a liability to which an estimate relates;

the Commissioner may apply the amount, in whatever way he or she thinks appropriate, towards discharging any one or more of those liabilities.

"(2) If, because of a determination under subsection 221R (1B), 221YHN (5) or 221YHZJ (4), an amount is taken to have been applied towards discharging a liability to pay an amount under an agreement:

(a) the Commissioner may determine in writing how he or she would have applied the amount under subsection (1) of this section if it had been paid under the agreement; and

(b) if the Commissioner does so - section 222AHA has effect as if the amount had been paid under the agreement and then applied as set out in the determination under paragraph (a) of this subsection.

"(3) If, because of section 222AOH or 222APG, a liability to which an agreement relates is discharged to the extent of a particular amount, the liability to pay the amounts specified in the agreement is discharged to the extent of the same amount.

"Subdivision H - Miscellaneous

Effect of judgment on liability on which it is based

"222AMA. (1) The unpaid amount of an estimate, or of a liability to which an estimate relates, does not cease to be payable merely because a judgment has been given by, or entered in, a court.

"(2) The provisions of this Division (except sections 222AHA, 222AIF and 222AIG) apply in relation to liability under a judgment, so far as it is based on:

(a) a liability to pay an estimate; or

(b) a liability to which an estimate relates;

in the same way as they apply to the liability referred to in paragraph (a) or (b) of this subsection.

"(3) Nothing in this Division affects the conclusiveness of a judgment as to the amount of a liability on which it is based.

Notices under this Division where trustee has control of affairs of person liable

"222AMB. (1) If:

(a) the Commissioner has given a notice to a person under this Division; and

(b) there is a trustee of the person;

the person must give a copy of the notice to the trustee as soon as practicable, and in any event within 7 days, after:

(c) if the Commissioner gave the notice to the person before the day when the person's property vested in, or control of the person's property passed to, the trustee - that day; or

(d) otherwise - the day when the Commissioner gave the notice to the person.

"(2) If the Commissioner sends a notice at different times to a person and to the person's trustee, each notice is taken to have been sent at the later or latest of those times.

"Division 9 - Penalties for directors of non-remitting companies

"Subdivision A - Object and interpretation

Object and outline

"222ANA. (1) The purpose of this Division is to ensure that a company either meets its obligations under Division 2, 3A, 3B, 4 or 8, or goes promptly into voluntary administration under Part 5.3A of the Corporations Law or into liquidation.

"(2) The Division imposes a duty on the directors to cause the company to do so. The duty is enforced by penalties. However, a penalty can be recovered only if the Commissioner gives written notice to the person concerned. The penalty is automatically remitted if the company meets its obligations, or goes into voluntary administration or liquidation, within 14 days after the notice is given.

"(3) A penalty recovered under this Division is applied towards meeting the company's obligations under the relevant Division. Conversely, amounts paid by the company reduce the amount of a penalty.

"(4) Sections 221R, 221YHN, 221YHZJ and 221YR provide for the recovery of amounts payable under this Division.

Interpretation

"222ANB. (1) Except so far as the contrary intention appears, an expression has the same meaning in this Division as in Division 8.

"(2) A deduction purporting to be made for the purposes of a Division is taken to be made for the purposes of that Division.

"Subdivision B - Company failing to remit under

Division 2, 3A, 3B or 4

Application

"222AOA. (1) This Subdivision applies if a company incorporated under the Corporations Law of a State or Territory has made, for the purposes of Division 2, 3A, 3B or 4, one or more deductions having a particular due date.

"(2) The earliest day on which the company made for the purposes of that Division a deduction that has that due date is called the first deduction day.

"(3) That due date is called the due date.

Directors to cause company to remit or to go into voluntary administration or liquidation

"222AOB. (1) The persons who are directors of the company from time to time on or after the first deduction day must cause the company to do at least one of the following on or before the due date:

(a) comply with Division 2, 3A, 3B or 4, as the case may be, in relation to each deduction:

(i) that the company has made for the purposes of that Division; and

(ii) whose due date is the same as the due date;

(b) make an agreement with the Commissioner under section 222ALA in relation to the company's liability under a remittance provision in respect of such deductions;

(d) begin to be wound up within the meaning of that Law.

"(2) This section is complied with when:

(a) the company complies as mentioned in paragraph (1) (a); or

(b) the company makes an agreement as mentioned in paragraph (1) (b); or

(d) the company begins to be wound up within the meaning of that Law;

whichever first happens, even if the directors did not cause the event to happen.

"(3) If this section is not complied with on or before the due date, the persons who are directors of the company from time to time after the due date continue to be under the obligation imposed by subsection (1) until this section is complied with.

Penalty for directors in office on or before due date

"222AOC. If section 222AOB is not complied with on or before the due date, each person who was a director of the company at any time during the period beginning on the first deduction day and ending on the due date is liable to pay to the Commissioner, by way of penalty, an amount equal to the unpaid amount of the company's liability under a remittance provision in respect of deductions:

(a) that the company has made for the purposes of Division 2, 3A, 3B or 4, as the case may be; and

(b) whose due date is the same as the due date.

Penalty for new directors

"222AOD. If:

(a) after the due date, a person becomes, or again becomes, a director of the company at a time when section 222AOB has not yet been complied with; and

(b) at the end of 14 days after the person becomes a director, that section has still not been complied with;

the person is liable to pay to the Commissioner, by way of penalty, an amount equal to the unpaid amount of the liability referred to in section 222AOC.

Commissioner must give 14 days' notice before recovering penalty

"222AOE. The Commissioner is not entitled to recover from a person a penalty payable under this Subdivision until the end of 14 days after the Commissioner gives to the person a notice that:

(a) sets out details of the unpaid amount of the liability referred to in section 222AOC; and

(b) states that the person is liable to pay to the Commissioner, by way of penalty, an amount equal to that unpaid amount, but that the penalty will be remitted if, at the end of 14 days after the notice is given:

(i) the liability has been discharged; or

(ii) an agreement relating to the liability is in force under section 222ALA; or

(iii) the company is under administration within the meaning of the Corporations Law; or

(iv) the company is being wound up.

How notice may be given

"222AOF. (1) If it appears from ASC documents that a person is, or has been within the last 7 days, a director of the company, the Commissioner may give the person a notice under section 222AOE by leaving it at, or sending it by post to, an address that appears from such documents to be, or to have been within the last 7 days, the person's place of residence or business.

Note: Sections 28A and 29 of the Acts Interpretation Act 1901 are also relevant to giving a notice under section 222AOE.

"(2) In this section:

'ASC document' means a return:

(a) lodged with the Australian Securities Commission under section 242 or 335 of the Corporations Law of a State or Territory; or

(b) lodged with a person under a law that, for the purposes of the Corporations Law of a State or Territory, is a previous law corresponding to section 242 or 335 of that Law.

Remission of penalty if section 222AOB complied with before notice period ends

"222AOG. If:

(a) a penalty is payable by a person under this Subdivision; and

(b) section 222AOB is complied with at a time when the Commissioner has not yet given the person a notice under section 222AOE, or within 14 days after the Commissioner gives the person such a notice;

the penalty is remitted because of this section.

Effect of director paying penalty or company discharging underlying liability

"222AOH. (1) If one or more persons are liable to a penalty under this Subdivision, the following are parallel liabilities:

(a) the liability of that person, or of each of those persons, to the penalty;

(b) the liability referred to in section 222AOC;

"(2) This means that if, at a particular time:

(a) an amount is paid or applied towards discharging one of the parallel liabilities; or

(b) because of section 222AHA, one of the parallel liabilities is discharged to the extent of a particular amount;

each of the others that is in existence at that time is discharged to the extent of the same amount. However, this subsection does not discharge a liability to a greater extent than the amount of the liability.

Director's rights of indemnity and contribution

"222AOI. A person who pays an amount under section 222AOC or 222AOD has the same rights:

(a) whether by way of indemnity, subrogation, contribution or otherwise; and

(b) against the company or anyone else;

as if the payment had been made under a guarantee:

(d) under which the person, and every other person who has paid, or from

whom the Commissioner is entitled to recover, a penalty under this Subdivision, were jointly and severally liable as guarantors.

Defences

"222AOJ. (1) This section has effect for the purposes of:

(a) proceedings to recover from a person a penalty payable under this Subdivision; or

(b) proceedings under section 222AOI against a person of the kind referred to in paragraph 222AOI (d).

"(2) It is a defence if it is proved that, because of illness or for some other good reason, the person did not take part in the management of the company at any time when:

(a) the person was a director; and

(b) the directors were under the obligation to comply with subsection 222AOB (1).

"(3) It is also a defence if it is proved that:

(a) the person took all reasonable steps to ensure that the directors complied with subsection 222AOB (1); or

(b) there were no such steps that the person could have taken.

"(4) In subsection (3):

'reasonable' means reasonable having regard to:

(a) when, and for how long, the person was a director and took part in the management of the company; and

(b) all other relevant circumstances.

"Subdivision C - Company failing to pay estimate under Division 8

Application

"222APA. This Subdivision applies if a company incorporated under the Corporations Law of a State or Territory becomes liable under section 222AHA to pay an estimate.

Directors to cause company to pay estimate or to go into voluntary administration or liquidation

"222APB. (1) The persons who are directors of the company from time to time on and after the day when the Commissioner sent to the company notice of the estimate must cause the company to do at least one of the following within 14 days after that day:

(a) pay to the Commissioner the amount of the estimate;

(b) make an agreement with the Commissioner under section 222ALA in relation to the company's liability to pay the estimate;

(d) begin to be wound up within the meaning of that Law.

"(2) This section is complied with when:

(a) the company's liability to pay the estimate is discharged; or

(b) the company makes an agreement as mentioned in paragraph (1) (b); or

(d) the company begins to be wound up within the meaning of that Law;

whichever first happens, even if the directors did not cause the event to happen.

"(3) If this section is not complied with before the end of the 14 days, the persons who are directors of the company from time to time after the 14 days continue to be under the obligation imposed by subsection (1) until this section is complied with.

Penalty for directors in office within 14 days after notice of estimate

"222APC. If section 222APB is not complied with before the end of the 14 days, each person who was a director of the company at any time during the 14 days is liable to pay to the Commissioner, by way of penalty, an amount equal to the unpaid amount of the estimate.

Penalty for new directors

"222APD. If:

(a) after the end of the 14 days, a person becomes, or again becomes, a director of the company at a time when section 222APB has not yet been complied with; and

(b) at the end of 14 days after the person becomes a director, that section has still not been complied with;

the person is liable to pay to the Commissioner, by way of penalty, an amount equal to the unpaid amount of the estimate.

Commissioner must give 14 days' notice before recovering penalty

"222APE. (1) The Commissioner is not entitled to recover from a person a penalty payable under this Subdivision until the end of 14 days after the Commissioner gives to the person a notice ('the penalty notice') that:

(a) sets out details of the unpaid amount of the estimate; and

(b) if the penalty notice is given within 14 days after the Commissioner sent to the company notice of the estimate - states that at the end of those 14 days the person will become liable to pay to the Commissioner, by way of penalty, an amount equal to that unpaid amount unless:

(i) the company's liability to pay the estimate has been discharged; or

(ii) an agreement relating to that liability is in force under section 222ALA; or

(iii) the company is under administration within the meaning of the Corporations Law; or

(iv) the company is being wound up; and

(c) if the penalty notice is given more than 14 days after the Commissioner sent to the company notice of the estimate - states that the person is liable to pay to the Commissioner, by way of penalty, an amount equal to that unpaid amount; and

(d) states that the penalty will be remitted if, at the end of 14 days after the penalty notice is given:

(i) the company's liability to pay the estimate has been discharged; or

(ii) an agreement relating to that liability is in force under section 222ALA; or

(iii) the company is under administration within the meaning of the Corporations Law; or

(iv) the company is being wound up.

"(2) Section 222AOF applies to a notice under this section in the same way as to a notice under section 222AOE.

Remission of penalty if section 222APB complied with before notice period ends

"222APF. If:

(a) a penalty is payable by a person under this Subdivision; and

(b) section 222APB is complied with at a time when the Commissioner has not yet given the person a notice under section 222APE, or within 14 days after the Commissioner gives the person such a notice;

the penalty is remitted because of this section.

Effect of director paying penalty or company discharging liability in respect of estimate

"222APG. (1) If one or more persons are liable to a penalty under this Subdivision, the following are parallel liabilities:

(a) the liability of that person, or of each of those persons, to the penalty;

(b) the company's liability to pay the estimate;

"(2) This means that if, at a particular time:

(a) an amount is paid or applied towards discharging one of the parallel liabilities; or

(b) because of section 222AHA, one of the parallel liabilities is discharged to the extent of a particular amount;

Director's rights of indemnity and contribution

"222APH. A person who pays an amount under section 222APC or 222APD has the same rights:

(a) whether by way of indemnity, subrogation, contribution or otherwise; and

(b) against the company or anyone else;

as if the payment had been made under a guarantee:

(d) under which the person, and every other person who has paid, or from whom the Commissioner is entitled to recover, a penalty under this Subdivision, were jointly and severally liable as guarantors.

Defences

"222API. (1) This section has effect for the purposes of:

(a) proceedings to recover from a person a penalty payable under this Subdivision; or

(b) proceedings under section 222APH against a person of the kind referred to in paragraph 222APH (d).

"(2) It is a defence if it is proved that, because of illness or for some other good reason, the person did not take part in the management of the company at any time when:

(a) the person was a director; and

(b) the directors were under the obligation to comply with subsection 222APB (1).

"(3) It is also a defence if it is proved that:

(a) the person took all reasonable steps to ensure that the directors complied with subsection 222APB (1); or

(b) there were no such steps that the person could have taken.

"(4) In subsection (3):

'reasonable' means reasonable having regard to:

(a) when, and for how long, the person was a director and took part in the management of the company; and

(b) all other relevant circumstances.

"Subdivision D - Company contravening payment agreement under Division 8

Directors to ensure that company complies with payment agreement

"222AQA. (1) If a company incorporated under the Corporations Law of a State or Territory makes an agreement with the Commissioner under section 222ALA of this Act, the persons who are directors of the company from time to time must cause the company to comply with the agreement.

"(2) If the company contravenes the agreement by failing to pay a specified amount on or before the specified day, or by contravening a special condition, each person who was a director of the company at any time during the period beginning on the day when the agreement was made and ending on the day of the contravention is liable to pay to the Commissioner, by way of penalty, an amount equal to the balance payable under the agreement.

Effect of director paying penalty or company discharging liability

"222AQB. (1) If one or more persons are liable under section 222AQA to a penalty equal to the balance payable under the agreement, the following are parallel liabilities:

(a) the liability of that person, or of each of those persons, to the penalty;

(b) the company's liability to pay that balance;

However, this subsection does not discharge a liability to a greater extent than the amount of the liability.

"(3) If, because of subsection (2), the company's liability to pay that balance is discharged to the extent of a particular amount:

(a) the Commissioner may determine in writing how he or she would have applied the amount under subsection 222ALB (1) if it had been paid under the agreement; and

(b) if the Commissioner does so - section 222AHA has effect as if the amount had been paid under the agreement and then applied as set out in the determination.

Director's rights of indemnity and contribution

"222AQC. A person who pays an amount under section 222AQA has the same rights:

(a) whether by way of indemnity, subrogation, contribution or otherwise; and

(b) against the company or anyone else;

as if the payment had been made under a guarantee:

(d) under which the person and every other person who was a director of the company as mentioned in subsection 222AQA (2) were jointly and severally liable as guarantors.

Defences

"222AQD. (1) This section has effect for the purposes of:

(a) proceedings to recover from a person a penalty payable under section 222AQA; or

(b) proceedings under section 222AQC against a person of the kind referred to in paragraph 222AQC (d).

"(2) It is a defence if it is proved that, because of illness or for some other good reason, the person did not take part in the management of the company at any time, during the period referred to in subsection 222AQA (2), when the person was a director.

"(3) It is also a defence if it is proved that:

(a) the person took all reasonable steps to ensure that the company complied with the agreement; or

(b) there were no such steps that the person could have taken.

"(4) In subsection (3):

'reasonablemeans reasonable having regard to:

(a) when, and for how long, the person was a director and took part in the management of the company; and

(b) all other relevant circumstances.

"(5) If the person was a director of the company at the time when the agreement was made, he or she is not entitled to rely on a defence under subsection (2) or (3) unless it is also proved that, at that time, the person had reasonable grounds to expect, and did expect, that the company would comply with the agreement.

"Division 10 - Miscellaneous

This Part not to limit or exclude Chapter 5 of the Corporations Law

"222ARA. To avoid doubt, this Part is not intended to limit or exclude the operation of Chapter 5 of the Corporations Law of a State or Territory, in so far as that Chapter can operate concurrently with this Part.".

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Insolvency (Tax Priorities) Legislation Amendment Act 1993 (32 of 1993)

Part 2 AMENDMENTS OF THE INCOME TAX ASSESSMENT ACT 1936

16 After Division 7 of Part VI of the Principal Act the following Divisions are inserted

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