MILLER v DEPUTY COMMISSIONER OF TAXATION [1997] NSWCA 205

MILLER v DEPUTY COMMISSIONER OF TAXATION SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL MASON P, PRIESTLEY and BEAZLEY JJA

19 September 1997, 18 December 1997

[1997] NSWCA 205

PtVI Division 9 Income Tax Assessment Act — s222APB — s222API — director's liability -"'no reasonable steps" — "recover" — "begin to be wound up"

This appeal challenges the entry of summary judgment in favour of the Deputy Commissioner of Taxation ("the DCT") against the appellant.

The appellant was a director of Belcora Pty Ltd. The company was sent an estimate of unpaid group tax liabilities under s222AGB of the Income Tax Assessment Act. S222APC allowed the DCT to recover unpaid liabilities from a director where s222APB had not been complied with before the end of 14 days.

The appellant admitted that he failed to comply with s222APB(1) by causing the company to do one of four things within 14 days:

(a) pay the amount of the estimate; (b) make an agreement with the Commissioner under s222ALA; (c) appoint an administrator to the company; (d) begin to be wound up within the meaning of the Corporations Law.

On appeal, the appellant claimed:

(1) A defence was made out under s222API(3) because he took all reasonable steps to comply with s222APB(1) or alternatively there were no such steps that could have been taken.

(2) As one of two gridlocked directors, the 14 days allowed in s222APB(1) was insufficient time to cause the company to begin to be wound up within the meaning of the Corporations Law.

(3) The DCT commenced proceedings in the District Court in contravention of s222APE. That section prevents the DCT from recovering a penalty until the end of 14 days after a penalty notice has been provided.

Held; Appeal allowed:

(1) A defence under s222API(3) is only made out where the appellant shows the reasonableness of his conduct in relation to all four options offered to the directors by s222APB(1).