Decision impact statement

Deputy Commissioner of Taxation v Meredith

Venue: Supreme Court
Venue Reference No: CA 40251 of 2007
Judge Name: Giles JA, Ipp JA, Basten JA
Judgment date: 10 December 2007
Appeals on foot:
No

Impacted Advice

Relevant Rulings/Determinations:

• None

Subject References:
EVIDENCE
presumption of delivery in course of post
relationship of Evidence Act 1995 (Cth) to other Acts
Evidence Act 1995 (Cth), ss 160 and 163
NOTICE
service by post
letter from Commonwealth agency
evidence of non-delivery or non-receipt
Acts Interpretation Act 1901 (Cth) s 29
Income Tax Assessment Act 1936 (Cth) s 222AOF
Evidence Act 1995 (Cth) ss 160 and 163
TAXATION
liability for failure to remit tax withheld from salary entitlements
Income Tax Assessment Act 1936 (Cth) s 222AOE
"contrary intention" in statute
"give", "serve", "send" a notice
"sending it by post"

Précis

Outlines the Tax Office's response to this case which concerned whether the giving of a Director Penalty Notice (DPN) by post under s222AOF of the Income Tax Assessment Act 1936 (Cth) could be rebutted by evidence of non-receipt or non-delivery.

Decision Outcome

Favourable

Brief summary of facts

1. A company of which the taxpayer was a director withheld amounts on account of tax from the salary entitlements of its employees, but failed to remit those amounts to the Commissioner of Taxation ("the Commissioner"). Upon the company failing to make such payments, the taxpayer, as a director, became automatically liable to a penalty equal to the amount which the company had failed to remit: s 222AOC of the Income Tax Assessment Act 1936 (Cth) ('ITAA 36')

2. On 27 July 2004, the Commissioner gave notice by way of director penalty notice ("DPN") to the taxpayer of her liability and setting out ways in which it might be remitted. The Commissioner was required to take this step at least 14 days before commencing proceedings to recover the amount of the penalty: s222AOE of the ITAA 36. By way of defence, the taxpayer stated that she had not received the notice and was therefore not liable.

3. At the hearing of the matter in the District Court of NSW, it was accepted by the Deputy Commissioner that the defence could succeed (if at all) only on the basis that the taxpayer proved non-delivery of the notice. In a judgment delivered on 27 October 2006, Quirk DCJ of the District Court found on the balance of probabilities that the DPN had not been delivered and dismissed the Commissioner's claim. The Deputy Commissioner appealed to the NSW Court of Appeal.

Issues decided by the court or tribunal

The New South Wales Court of Appeal decision:

In a judgment delivered on 10 December 2007, the NSW Court of Appeal, by majority (Basten JA with whom Ipp JA agreed, Giles J dissenting), held as follows:

1.

Section 222AOF provides for a method of service of a DPN such that, if the procedure set out by the provisions is followed, service is deemed to have been effected and this deemed service may not be rebutted by any evidence of non-receipt or non-delivery.

2.

Section 222AOF reveals a clear intention that the Commissioner will satisfy the precondition to the entitlement to recover the penalty if a DPN is sent by post to the director's address as found in Australian Securities & Investments Commission (ASIC) records. Section 222AOF provides a self-contained means of satisfying the precondition to recovery specified in s 222AOE, and is not subject to the operation of s 29 of the Acts Interpretation Act. If it had applied, the effect of s29 would be that the DPN would be taken to be served when it would have been delivered in the ordinary course of post.

3.

As the statutory precondition to recovery under s222AOE was satisfied by sending the DPN by post to the relevant address and there was no challenge to the Commissioner's evidence that the notice had been sent, s222AOE was satisfied in this case.

Tax Office view of Decision

Before the Court of Appeal's decision in the Meredith matter, the Commissioner accepted that a DPN under s222AOE or s222APE sent to a director by ordinary pre-paid post was 'given' to the intended recipient at the time the DPN would have been delivered in the ordinary course of post and that the director had 14 days after the day of delivery in the ordinary course of post to cause the company to comply with s222AOB and achieve remission of the penalties.

The Commissioner now accepts the decision of the Court of Appeal that a DPN under s222AOE or s222APE sent to a director by ordinary pre-paid post will be 'given' to the intended recipient at the time the DPN is posted.

Administrative Treatment

Implications on current Public Rulings & Determinations

The decision is limited to the giving of a s222AOE or s222APE DPN pursuant to s222AOF. Section 222AOF prescribes a method for giving such a DPN to a director who is registered with the ASIC as a current director.

In the case of DPNs given by the Commissioner pursuant to s222AOF, the Commissioner will calculate the time for compliance with the DPN from the date on which the DPN was posted, irrespective of whether or when the DPN was received or delivered. Accordingly, where compliance with the DPN does not occur within 14 days after the DPN is posted to the current director, the Commissioner will regard the relevant s222AOC or s222APC penalties as being recoverable from that director.

Implications on Law Administration Practice Statements

None

Court citation:
[2007] NSWSCA 354
2007 ATC 5353
69 ATR 876
(2007) 245 ALR 150
(2007) 229 FLR 243

Legislative References:
Acts Interpretation Act 1901 (Cth)
2
28A
29
40

Acts Interpretation Act 1956 (Qld)
13
39

Corporations Law
109Y

Civil Procedure Act 2005 (NSW)
100

District Court Act 1973 (NSW)
127

Evidence Act 1995 (Cth)
4
5
160
163
182

Income Tax Assessment Act 1936 (Cth)
222ANA
222AOC
222AOE
222AOF
Division 9 Pt 6

Income Assessment Act 1997 (Cth)
950-100

Insolvency (Tax Priorities) Legislation Amendment Act 1993 (Cth)
16

Interpretation Act 1987 (NSW)
76

Hire-Purchase Act 1959 (Qld)
42

Justices Act 1886 (Qld)
56

Local Government Act 1919 (NSW)
628

Local Government Act 1993 (NSW)
710

Migration Act 1958 (Cth)
494A
494B

Supreme Court Act 1970 (NSW)
75A

Supreme Court Rules 1970 (NSW)
Pt 51 r 4

Case References:
Alexander v Stocks & Holdings (Sales) Pty Ltd
[1975] VR 843

Buresti v Beveridge
[1998] 1136 FCA
(1998) 88 FCR 399

Cheong v Webster
(1986) 20 A Crim R 107

Cousins v Gosford Shire Council
(1970) 92 WN(NSW) 263

Deputy Commissioner of Taxation v Coco
[2003] QSC 119
52 ATR 700

Deputy Commissioner of Taxation v Dick
[2007] NSWCA 190
2007 ATC 4816
67 ATR 762

Deputy Commissioner of Taxation v George
(2002) 55 NSWLR 511
2002 ATC 4930
51 ATR 130

Deputy Commissioner of Taxation v Gruber
(1998) 43 NSWLR 271
98 ATC 4317
38 ATR 434

Deputy Commissioner of Taxation v Mutton
(1988) 12 NSWLR 104
88 ATC 4153
19 ATR 890

Deputy Commissioner of Taxation v Nercessian
(2006) 67 NSWLR 215
2006 ATC 4693
64 ATR 360

Deputy Commissioner of Taxation v Saunig
(2002) 55 NSWLR 722
2002 ATC 5135
51 ATR 435

Deputy Commissioner of Taxation v Taylor
[1983] 2 NSWLR 139
83 ATC 4539
14 ATR 567

Deputy Commissioner of Taxation v Trio Site Services Pty Ltd
[2007] FCA 776

Deputy Commissioner of Taxation v Woodhams
(2000) 199 CLR 370
2000 ATC 4141
43 ATR 757

Deputy Commissioner of Taxation (Cth) v Woodhams
(1998) 148 FLR 230
99 ATC 4062
41 ATR 204

Fancourt v Mercantile Credits Ltd
(1983) 154 CLR 87

Forsyth v Deputy Commissioner of Taxation
(2004) 62 NSWLR 132
2005 ATC 4025
58 ATR 179

In re 88 Berkeley Road, NW9; Rickwood v Turnsek
[1971] Ch 648
[1971] All ER 254

Kyogle Shire Council v Muli Muli Local Aboriginal Land Council
(2005) 62 NSWLR 361

McCallum v Purvis
[1906] VLR 578

McClelland v Amcil Industries Pty Ltd
[1983] 1 NSWLR 615

Murphy v Teakbridge
[1999] NSWSC 1231

R v Westminster Unions Assessment Committee
[1917] 1 KB 832

Repatriation Commission v Gordon
(1991) 100 ALR 255

Scope Data Systems Pty Ltd v Goman
[2007] NSWSC 278

Skalkos v T & S Recoveries Pty Ltd
[2004] FCAFC 321
(2004) 141 FCR 107

Other References:
Pearce and Geddes, Statutory Interpretation in Australia (6th ed, 2006) at [6.1]