Advance Pallets Pty Ltd v Chief Commissioner of State Revenue [2017] NSWCATAD 128

Summary

The Applicant, Advance Pallets Pty Ltd (“the Applicant”) sought review of the decision of the Chief Commissioner of State Revenue (“the Chief Commissioner”) to issue notices of assessment to the Applicant for the payment of payroll tax under the Payroll Tax Act 2007 (NSW) (“the Act”) for the 2011 to 2013 financial years.

Both parties conducted the hearing on the basis that:

1. there was no dispute between the parties that the Applicant was liable to pay payroll tax in respect of the 2011 and 2013 financial years; and
2. the only dispute was as to whether the Chief Commissioner properly imposed penalty tax and interest in respect of the Applicant’s failure to register and lodge returns  and to make timely payment of payroll tax in respect of those financial years.

Background

Mr Anthony Attard and his wife Mrs Carmen Attard are the two shareholders in and directors of the Applicant. Mr Attard is the sole secretary of the applicant and Mrs Attard’s role was administrative. On 13 March 2014 Mr Attard was diagnosed with a brain tumour. As a result Mr Attard engaged a production management team to assist in the management of the Applicant.

On 27 August 2014 the Applicant lodged an objection to payroll tax assessments issued by the Respondent in respect of the financial years 1 July 2010 to 30 June 2011, 1 July 2011 to 30 June 2012 and 1 July 2012 to 30 June 2013 (“the Objection’). The Chief Commissioner applied the market rate component of interest only under s 22 of the Taxation Administration Act 1996.

The Chief Commissioner by way of letter dated 31 October 2014 disallowed the Objection. On 17 February 2015 the Chief Commissioner issued a further letter allowing the Objection for the financial year 1 July 2011 to 30 June 2012 only.

On 22 March 2016, 11 months after the expiry of the statutory period, the Applicant applied for a review by the Tribunal of the Respondent’s determination. The time for filing the application was retrospectively extended under s 41 of the Civil and Administrative Tribunal Act 2013.

The Application for Review was limited to the Chief Commissioner’s decision to impose penalty tax and interest for the financial years ending 30 June 2011 and 30 June 2013 as the Applicant acknowledged during those respective years it incurred additional payroll tax.

The Applicant sought that interest be remitted on the unpaid tax and that penalty tax not be imposed as Mr Attard’s illness amounted to circumstances beyond the Applicant’s control that prevented it meeting its payroll tax obligations.

Under s 100(3) of the Taxation Administration Act 1996 the Applicant must demonstrate, on the balance of probabilities, the deficiencies in the Chief Commissioner’s decision, otherwise the Chief Commissioner’s decision will stand.

Decision

Interest

The Tribunal found that the market rate component of the interest should not be remitted for the following reasons:

1. The decision in Chief Commissioner of State Revenue v Incise Technologies Pty Ltd established the only circumstances where remittance is permissible is where the Chief Commissioner contributed to the late payment or, as set out in the Chief Commissioner’s Revenue Ruling No PTA 036 version 2, it was a result of force majeure events. Mr Attard’s illness was not considered either of these circumstances; and
2. The Applicant had engaged a production management team and therefore had the management structure in place and ability to pay the tax in a timely way; and
3. The Chief Commissioner recognised difficulties that arose for the Applicant as a result of Mr Attard’s illness and therefore remitted the premium rate component under ss 21, 22 and 25 of the Taxation Administration Act 1996.

Penalty Tax

The Tribunal found the Applicant had not discharged the onus placed on it under s 100(3) of the Taxation Administration Act 1996 due to:

1. The Applicant at the time of being unable to meet its payroll tax obligations having in place a temporary management structure which met production and sales objectives;
2. Mr Attard despite his illness taking steps to preserve the Applicant’s production and marketing capacity;
3. Commissioner of ACT Revenue v G Kalsbeek Pty Ltd [2015] ACAT 90 where the illness of a director of the taxpayer was considered a circumstance to justify remission of penalty tax, not being analogous to the present case. The Tribunal was of the view Mrs Attard had the authority attached to her position as a basis for establishing temporary management arrangements; and
4. The Chief Commissioner recognising there was no intentional disregard of the law and therefore imposing reduced penalty tax of 20%.

Orders

The decision under review is confirmed.

Link to decision

Advance Pallets Pty Ltd v Chief Commissioner of State Revenue  [2017] NSWCATAD 128