The ATO’s claim against the sole director of a company which failed to pay superannuation guarantee charge (SGC) amounts has been upheld.

The unpaid SGC amounts were for a number of quarters between July 2013 and March 2015 and totalled just over $550,000. The defendant was potentially liable to pay a penalty equal to each unpaid SGC amount, pursuant to s 269-20 in Sch 1 to the TAA. Two DPNs were given to the defendant, the first in August 2015 in person and the second in November 2015 by post.

After finding that the second DPN was properly served as it was posted to an address which ATO records showed was the defendant’s then residential address.

The Victorian Supreme Court went on to hold that none of the defences in s 269-35 in Sch 1 to the TAA (extracted below) were available to the defendant, as:

  • there was no evidence that mental health issues currently affecting the defendant affected him during the relevant period (2012-2015);
  • there was evidence to contradict the defendant’s submission that he had not participated in the management of the company; and
  • in any event, relying on others to take care of the company’s financial affairs was not a good reason to explain a lack of participation in the management of the company (if that had been the case).

(DCT v Lawson [2017] VSC 789, Supreme Court of Victoria, Croft J, 21 December 2017.)

[LTN 4, 8/1/17; FJM; Tax Month January 2018]

 

Section 269-35 of the TAA – Defences

Illness

269-35(1)   You are not liable to a penalty under this Division if, because of illness or for some other good reason, it would have been unreasonable to expect you to take part, and you did not take part, in the management of the company at any time when:
(a) you were a director of the company; and
(b) the directors were under the relevant obligations under subsection 269-15(1).

All reasonable steps

269-35(2)  You are not liable to a penalty under this Division if:
(a) you took all reasonable steps to ensure that one of the following happened:

(i) the directors caused the company to comply with its obligation;

(ii) the directors caused an administrator of the company to be appointed under section 436A, 436B or 436C of the Corporations Act 2001;

(iii) the directors caused the company to begin to be wound up (within the meaning of that Act); or


(b) there were no reasonable steps you could have taken to ensure that any of those things happened.

 

269-35(3)   In determining what are reasonable steps for the purposes of subsection (2), have regard to:
(a) when, and for how long, you were a director and took part in the management of the company; and
(b) all other relevant circumstances.

Superannuation guarantee charge – reasonably arguable position & reasonable care

269-35(3A)    You are not liable to a penalty under this Division to the extent that the penalty resulted from the company treating the Superannuation Guarantee (Administration) Act 1992 as applying to a matter or identical matters in a particular way that was *reasonably arguable, if the company took reasonable care in connection with applying that Act to the matter or matters.

 

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