Commissioner of Taxation v Wong [2002] FCA 756

FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation v Wong [2002] FCA 756

INCOME TAX – construction of subs 255(1) of the Income Tax Assessment Act 1936 (Cth) – whether controller of money belonging to a non-resident is obliged to retain money in respect of tax due and payable by the non-resident, where tax not assessed, and therefore not due and payable, and notice under par 255(1)(a) not served, until after controller has ceased to have the "receipt control or disposal" of any money belonging to the non-resident Income Tax Assessment Act 1936 (Cth) subs 255(1)

THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA v MOGO WONG N 1321 OF 2001 LINDGREN J 14 JUNE 2002 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 1321 OF 2001

BETWEEN: THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

APPLICANT

AND: MOGO WONG

RESPONDENT

JUDGE: LINDGREN J

DATE OF ORDER: 14 JUNE 2002

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. The application be dismissed. 2. The applicant pay the respondent's costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 1321 OF 2001

BETWEEN: THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

APPLICANT

AND: MOGO WONG

RESPONDENT

JUDGE: LINDGREN J

DATE: 14 JUNE 2002

PLACE: SYDNEY

REASONS FOR JUDGMENT

introduction 1 This case raises an interesting and important question as to the proper construction of subs 255(1) of the Income Tax Assessment Act 1936 (Cth) ("the Act"). In their written submissions counsel for the applicant ("the Commissioner") state that the question "has not previously been considered by a court" and in his written submissions counsel for the respondent ("Mr Wong") states that the proceeding raises "novel questions of interpretation". 2 Subsection 255(1) is as follows: "With respect to every person having the receipt control or disposal of money belonging to a non-resident, who derives income, or profits or gains of a capital nature, from a source in Australia or who is a shareholder, debenture holder, or depositor in a company deriving income, or profits or gains of a capital nature, from a source in Australia, the following provisions shall, subject to this Act, apply: (a) he shall when required by the Commissioner pay the tax due and payable by the non-resident; (b) he is hereby authorized and required to retain from time to time out of any money which comes to him on behalf of the non-resident so much as is sufficient to pay the tax which is or will become due by the non-resident; (c) he is hereby made personally liable for the tax payable by him on behalf of the non-resident to the extent of any amount that he has retained or should have retained under paragraph (b); but he shall not be otherwise personally liable for the tax; (d) he is hereby indemnified for all payments which he makes in pursuance of this Act or of any requirement of the Commissioner." For convenience I will refer to the "person having the receipt control or disposal of money ..." to whom the provision refers as "the Controller". The Controller may be a resident or a non-resident. Paragraph (a) does not stipulate that the Commissioner's requirement must be communicated to the Controller in any particular form, but I will refer to the communication of it as the giving of a notice of the requirement. 3 The question of construction is whether the obligation to retain imposed by par (b) and the personal liability created by par (c) arise independently of, and therefore potentially prior to, and even without, the giving of a notice under par (a).