The Federal Court has ordered that a company be wound up in insolvency concerning a tax debt of around $90,000, despite its claim that it proposed to commence proceedings in the AAT that, if successful, would mean that it owed no tax debt.
The Deputy Commissioner had applied under the Corporations Act 2001 for an order winding up the company in insolvency following the issue of a statutory demand, which the company failed to comply with. After the time for compliance with the statutory demand had expired, the company lodged its BAS for the quarter ended 30 June 2013, claiming input tax credits of $83,785. The company submitted that it “sought to satisfy the tax debt” by lodging the BAS.
The ATO audited the company and disallowed ITCs claimed in respect of invoices issued to the company by a deregistered company for management services, and by another company. The company objected and that objection was disallowed. The Court said there was evidence the company had instructed its solicitors to apply to the AAT for review of the ATO’s decision to disallow its objection, but that application had not yet been made.
The Court said the company’s balance sheet as at 31 October 2013 showed net assets of id=”mce_marker”.89m. The Federal Court said it had concerns about the lack of evidence offered by the company to support its claims as to solvency and the accuracy of its financial statements. The Court considered the evidence did not establish that the company would be solvent even if it succeeded in the AAT (in respect of the amended assessment) and there was no tax debt left to pay.
The Court enquired whether the company was willing and able to pay the tax debt now as a condition of an adjournment of the application pending determination of the dispute by the AAT. However, the company was only prepared to pay half of the tax debt now and the remainder in the event it was unsuccessful in the AAT.
The Court ordered that the company be wound up in insolvency, and that an official liquidator be appointed liquidator of the company.
(DCT v Specialised Finance Group Pty Ltd, in the matter of Specialised Finance Group Pty Ltd [2013] FCA 1415, Federal Court, Rangiah J, 23 December 2013.)
[LTN 1, 3/1/14]