The County Court of Victoria has granted judgment to the ATO for a Directors’ Penalty Notice after finding that the director had not established adequate defences against the ATO claim.

The penalties related to PAYG amounts withheld but not remitted to the ATO by the company in question. The director did not dispute the debt itself, but sought to rely on defences under s269-35 of the First Schedule Taxation Administration Act 1953.

The Court said the test in question was not only what the director actually did know, but also what he “ought to have known”. After reviewing the matter, the Court came to the view that it was not satisfied the director took all reasonable steps to ensure the requisite steps were taken. The Court said the director appeared to take no steps to become aware of the amounts outstanding nor to pay them. It also noted that the delegation of the financial affairs to another director was insufficient. The Court found for the ATO and awarded judgment of $264,043.

(DCT v Holton [2016] VCC 516, Victorian County Court, Kennedy J, 17 May 2016.)

[LTN 94, 18/5/16]