Kalis Nominees Pty Ltd v Deputy Commissioner of Taxation of the Commonwealth of Australia [1995] FCA 611

IN THE FEDERAL COURT OF AUSTRALIA VICTORIAN DISTRICT REGISTRY GENERAL DIVISION VG 3431 of 1994 IN THE MATTER OF KALIS NOMINEES PTY LTD BETWEEN KALIS NOMINEES PTY LTD Applicant -and- DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA Respondent Coram: Olney J Place: Melbourne Date: 14 August 1995

MINUTE OF ORDER THE COURT ORDERS THAT the application herein be dismissed with costs. NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA VICTORIAN DISTRICT REGISTRY GENERAL DIVISION VG 3431 of 1994 IN THE MATTER OF KALIS NOMINEES PTY LTD BETWEEN KALIS NOMINEES PTY LTD Applicant -and- DEPUTY COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA Respondent Coram: Olney J Place: Melbourne Date: 14 August 1995 REASONS FOR JUDGMENT THE APPLICATION The applicant seeks orders pursuant to ss 459G, 459H and/or 459J of the Corporations Law setting aside a Creditor's Statutory Demand for Payment of Debt served on it on 8 September 1994. Other associated relief is also sought. THE FACTS The applicant has at all relevant times been the trustee of a family trust. On 31 August 1993, pursuant to s 99A of the Income Tax Assessment Act 1936 (the ITAA), the respondent (the Commissioner) issued assessments of income tax to the applicant in respect of each of the years of income ending 30 June 1988 to 1992 (inclusive). In each case the tax assessed was due for payment on 4 October 1993. The tax assessed totalled $139,091.13. The applicant gave notice of objection to each assessment on 28 October 1993 and on 23 March 1994 the respondent advised that the objections had been considered and disallowed (the objection decisions). The Commissioner caused a creditor's Statutory Demand for Payment of Debt (the demand) to be issued on 6 September 1994 and same was served on the applicant on 8 September 1994. The amount specified in the demand is made up as follows: a) Tax assessed for year ended 30 June 1988 $27,186.93 b) " " 30 June 1989 $53,824.30 c) " " 30 June 1990 $48,399.73 d) " " 30 June 1991 $ 5,544.62 e) " " 30 June 1993 $ 4,135.55 $139,091.13 f) Additional tax due and payable pursuant to s 207 of the ITAA for late payment of income tax calculated at the rate of 16% per annum to 6 September 1994 $20,547.38 $159,638.51 On 20 October 1994 the applicant applied to the Administrative Appeals Tribunal (the AAT) for an extension of time within which to seek a review of the objection decisions and on 24 March 1995 the AAT extended the time for lodging each application to 21 October 1994. The review applications have not yet been dealt with by the AAT. THE GROUNDS FOR SEEKING RELIEF The applicant challenges the demand on 3 bases, namely: a) The Commissioner was not entitled to issue the demand; b) There is a genuine dispute about both the existence and the amount of the debt claimed; and c) In the circumstances, the Court should exercise its discretion under s 459J(1)(b) to set aside the demand or alternatively, the time for compliance should be extended until after the AAT has determined the review applications. THE COMMISSIONER'S STANDING A person may serve a demand under s 459E(1) relating to "2 or more debts that the company owes to the person, that are due and payable". I do not understand the applicant to dispute that the amounts of tax assessed and the additional tax claimed are "due and payable". In view of the provisions of ss 204 and 207 of the ITAA any contrary suggestion could not be sustained. What is said is that by reason of the provisions of s 208, the amounts which are due and payable are not "2 or more debts that the company owes to (the Commissioner)" (emphasis added). Section 208 provides: 208 (1) Income tax when it becomes due and payable shall be a debt due to the Commonwealth, and payable to the Commissioner in the manner and at the place prescribed. (2) In subsection (1), "income tax" includes interest under section 170AA or 207A and additional tax under section 207 or Part VII.