In a complex procedural matter, the NSW Supreme Court has held that where a company is in liquidation, the Commissioner is nevertheless entitled to make adjustments to the company’s running balance account (RBA) in respect of transactions which took place prior to the company being placed in liquidation. The adjustments related to a credit for an amendment lodged by the liquidator for a reduced capital gains tax liability of some $650,000 and subsequent debits by the Commissioner against that credit for income tax withholding, income tax, GST and the superannuation guarantee charge. The liquidator contested the RBA debiting in the circumstances (albeit, he was successful in obtaining judgment for the amount of id=”mce_marker”13,914 after the Court’s determination of the issue).
In arriving at its decision, the Court noted that the Commissioner was entitled under the RBA provisions of the Taxation Administration Act 1953 to make the offsetting debits and credits amongst the various tax debts of a taxpayer at his discretion and to arrive at a net position by aggregating the relevant RBA accounts of the taxpayer.
- In any event, it noted that any net debit owing to the Commissioner had to be proved on liquidation or any net credit owing to the taxpayer would have to be repaid to the taxpayer (as was the case here).
- The Court also found that the setting-off of RBA amounts in different accounts was permissible for a company in liquidation.
- The Court also dismissed the company’s claim that debits made by the Commissioner against the company’s RBA credits acted as an “attachment, sequestration, distress or execution” against the property of the company contrary to the Corporations Law.
- Instead, the Court found that credit amounts in the RBA against which the debits had been made would not become “property of the company” until a net balance had been determined by the Commissioner, and that the debit of amounts did not amount to an attempt to enforce a debt.
(In the matter of 4 Doonan Street Collinsville Pty Ltd (in liq) [2015] NSWSC 437, NSW Supreme Court, Black J, 17 April 2015.)
[LTN 76, 23/4/15]
Catchwords from [2015] NSWSC 437
CORPORATIONS – winding up – conduct and incidents of winding up – where Commissioner sought to determine net position within running balance accounts – whether Company had a chose in action as to tax credit prior to set-off – whether amounts in accounts were property under s 9 of the Corporations Act – whether set-off constituted attachment under s 500 of the Corporations Act 2001 (Cth).