In a decision handed down on Wed 8.8.2012, the Supreme Court of Victoria has dismissed a taxpayer’s appeal and held that a statutory demand for unpaid tax debts should stand, even though there had been a change of taxpayer.
A company called I.E.S. Australia Pty Ltd (now called Australia D.I.S. Pty Ltd) (DIS, the taxpayer) acted as the trustee of a Family Trust. The Deputy Commissioner served a statutory demand dated 31 August 2011 on DIS for $4.58m, composed of an RBA deficit, estimates due under Div 268 in Sch 1 to the TAA, and administrative penalties and GIC. DIS applied under the Corporations Act 2001 for orders that the demand be set aside, or alternatively that it be varied. The application was heard by an Associate Judge who made orders which included varying the amount of the demand to just over $4m. DIS appealed from those orders.
The Supreme Court said the financial manager of DIS deposed that on 20 January 2011, I.D.S. Australia Pty Ltd replaced DIS as the trustee of the Family Trust in question, but it seemed that the ATO was not told there had been a change of trustee until early June 2011. However, by then, the Deputy Commissioner had already made an estimate of the amounts that DIS had not paid but was liable to pay for PAYG withholding. The Deputy Commissioner requested a copy of the trust deed verifying the change of trustee and information as to the weekly PAYGW amounts and dates withheld for the financial years ended 30 June 2006 to 2011, but none of that information was forthcoming. The company’s financial manager deposed that on 20 January 2011, DIS owed the Deputy Commissioner just over $1.1m and he estimated that with penalty interest added, the amount owed at the date of the statutory demand was no more than $1.648m.
The Deputy Commissioner submitted that the majority of the debt demanded related to the period when DIS was unarguably the trustee. In respect of the balance of the debt (which was included in the estimate), the Deputy Commissioner contended that DIS was liable because of the operation of Div 268 of Sch 1 of the TAA. In broad terms, that Division provides that a taxpayer must pay the amount estimated unless the estimate is revoked or varied.
The Supreme Court concluded that DIS had not satisfied the onus to have the statutory demand set aside. DIS, in the Court’s view, had not established there was a genuine dispute about the debt. The Court said that none of the documents relied upon by the taxpayer showed the company’s liability as at the date of the demand.
(Australia DIS Pty Ltd v DCT [2012] VSC 331, Victorian Supreme Court, Ferguson J, 8 August 2012.)
[LTN 152, 8/8]