The Full Court of the NSW Court of Appeal has unanimously allowed a Deputy Commissioner’s appeal from the decision of the NSW District Court in DCT v Zammitt [2012] NSWDC 135 in which the Court had dismissed a claim for recovery of DPN penalties of over $365,000 notified in a DPN notice which had specified the wrong date for the time required to comply with the notice. The matter related to the retrospective effect of Div 269 of the TAA, which authorised recovery of the penalties (via Sch 7 of Tax Laws Amendment (2011 Measures No 7) Act 2011).
While the District Court at first instance agreed that the retrospective legislation rectified the problem with the incorrect date notified on the DPN, it found that the transitional provisions in Div 269 did not authorise recovery of the penalties as the DPN did not comply with s 269-25 for 2 main reasons: (i) the DPN was not given or issued under the authority of that section; (ii) the DPN did not explain that the penalty would be remitted if, within 21 days of the date of the notice being posted, the obligations under s 269-15 were met.
However, the Full Court of the NSW Court of Appeal unanimously agreed with the Commissioner that the director’s construction would render the whole of Sch 7 ineffective, when its purpose was to render DPNs issued under the former Div 9 of the ITAA 1936 effective for the purpose of the related transitional provisions and, in particular, for the purpose of facilitating the recovery by the Commissioner of the penalty, where the recipient had no entitlement to its remission.
Moreover, the Full Court found that the interpretation adopted by the District Court in relation to the operation of the transitional provisions would render Sch 7 of no relevance – contrary to the manifest intention of the legislature.
(DCT v Zammitt [2014] NSWCA 104 (Full Court of the NSW Supreme Court of Appeal, Bathurst CJ, Bergin CJ in Eq, Gleeson JA, Tobias AJA, Beazley P, 4 April 2014.)
[LTN 66, 7/4/14]