Trustee for B & J Chung Trust v CofT – Deregistered trust company could not pursue AAT application (but why not re-register or get a new trustee?)

A recent AAT decision serves as a reminder that the AAT cannot review an objection decision made by or on behalf of a company if the company no longer exists.

A director of a trustee company applied to the AAT for review of an ATO decision disallowing an objection to an assessment for penalties imposed on the company. However, at some point before the application was heard, the company was deregistered by ASIC. It therefore no longer existed. Accordingly, the AAT did not have jurisdiction to hear the matter (and the director did not have standing to pursue the application). In the words of the AAT, “deregistration is the corporate equivalent of death”.

There are a number of points to be made about this short judgement.

1. The decision is about standing – given that the trustee company objected prior to being deregistered (on 11 April 2020) but applied to the AAT after that (on 29.4.20). The director of the deregistered company made the application on its behalf. The ATO challenged the standing of either the director, or the deregister company, to make the application. The Application was to review the imposition of about $38k of TAA Div 284 shortfall penalties, dating back to 2014 & 2015 years. Quite why that liability might matter, is not stated (because the short decision was only about standing).
2. An obvious point is, that the company could been ‘re-registered’ if it mattered and someone wanted to spend the money doing it (the corporate equivalent of being ‘exhumed’ and ‘resurrected’).
3. Another point is, that under trust law ‘no trust should fail, for want of a trustee’ – but this requires a court to appoint a new one, and there is nothing to say that this happened.
4. None of these things were answered, because the director was given the opportunity to make submissions, on the standing point, and didn’t. So Deputy President McCabe went on to decide the standing question ‘on the papers’ and in only 9 paragraphs – which did not touch on any of the above.
5. What is interesting is why a trust, with a deregistered trustee, could be bothered contesting a $38k assessment. Perhaps it was to resurrect the trustee, the trust, and use trust losses that would otherwise be gone (but we can’t tell from these 9 paragraphs).

(Trustee for B & J Chung Trust and FCT [2022] AATA 383, AAT, McCabe DP, 3 February 2022.)

[Tax Month – March 2022 – Previous Month, 9.3.22] [LTN 45, 9/3/22]