The NSW Supreme Court has dismissed a company director’s appeal against a Local Court ruling that upheld her being convicted and fined for failing to provide security for tax liabilities.
In January and April 2011, the director had received a total of 7 notices from the DPP to give security for the due payment of future tax-related liabilities. On 20 March 2013, the director was convicted of 5 offences under s 255-110 of Sch 1 to the Taxation Administration Act 1953 in the Local Court for failing to provide security for tax liabilities as required by the Commissioner and was fined id=”mce_marker”,000. The director appealed to the Supreme Court seeking to have the conviction and the orders set aside.
The director argued that, in each case, the reason for the security not being provided was that it was impossible for her to do so, an impossibility for which she was not responsible. It is submitted that the impossibility arose in 2 respects: (i) the Commissioner stipulated an unreasonable time for compliance with each Notice; and, (ii) the Commissioner unreasonably withheld his cooperation in respect of each Notice by making compliance conditional on the plaintiff making a down payment of an arbitrary sum towards the Commissioner’s costs of preparing the mortgage documentation.
She also argued that the prosecution bore the onus of proving that the plaintiff “failed” to comply with the notices and that the Magistrate should not have been so satisfied.
The Supreme Court denied the appeal. It held the time limits that had been stipulated for compliance were reasonable. The Supreme Court was of the view that the conclusion of the Local Court about this matter “was not only correct: it was inevitable”.
(Soong v Director of Public Prosecutions (Cth) [2014] NSWSC 1030, NSW Supreme Court, Adams J, 31 July 2014.)
[LTN 187, 26/9/14]
Extract from the Taxation Administration Act 1953 – Schedule 1
255-100 Commissioner may require security deposit
(1) The Commissioner may require you to give security for the due payment of an existing or future * tax-related liability of yours if:
(a) the Commissioner has reason to believe that:
(i) you are establishing or * carrying on an * enterprise in Australia; and
(ii) you intend to carry on that enterprise for a limited time only; or
(b) the Commissioner reasonably believes that the requirement is otherwise appropriate, having regard to all relevant circumstances.
Note: A requirement to give security under this section is not a tax-related liability. As such, the collection and recovery provisions in this Part do not apply to it.
(2) The Commissioner may require you to give the security:
(a) by way of a bond or deposit (including by way of payments in instalments); or
(b) by any other means that the Commissioner reasonably believes is appropriate.
(3) The Commissioner may require you to give security under this section:
(a) at any time the Commissioner reasonably believes is appropriate; and
(b) as often as the Commissioner reasonably believes is appropriate.
Example: The Commissioner may require additional security if he or she reasonably believes that the original security requirement underestimated the amount of the likely tax-related liability.