Tax Laws Amendment (Transfer of Provisions) Act 2010 (79 of 2010)

Schedule 1   Collection and recovery of tax

Part 1   Main amendments

Taxation Administration Act 1953

10   At the end of Part 4-15 in Schedule 1

Add:

Division 268 - Estimates and recovery of PAYG withholding liabilities

Table of Subdivisions

Guide to Division 268

268-A Object

268-B Making estimates

268-C Liability to pay estimates

268-D Reducing and revoking estimates

268-E Late payment of estimates

268-F Miscellaneous

Guide to Division 268

268-1 What this Division is about

This Division enables the Commissioner to make an estimate of amounts not paid as required by Part 2-5 (Pay as you go (PAYG) withholding), and to recover the amount of the estimate.

If you are given an estimate, you are liable to pay the amount of the estimate. That liability is distinct from your liability to pay the amounts required by Part 2-5. However, you can ensure that the Commissioner does not require you to pay more than the amounts not paid under that Part.

Other Divisions of this Part provide for the recovery of amounts payable under this Division.

Subdivision 268-A - Object

Table of sections

268-5 Object of Division

268-5 Object of Division

The object of this Division is to enable the Commissioner to take prompt and effective action to recover amounts not paid as required by Part 2-5 (Pay as you go (PAYG) withholding).

Subdivision 268-B - Making estimates

Table of sections

268-10 Commissioner may make estimate

268-15 Notice of estimate

268-10 Commissioner may make estimate

Estimate

(1) The Commissioner may estimate the unpaid and overdue amount of a liability (the underlying liability ) of yours under section 16-70.

Note: Section 16-70 requires you to pay to the Commissioner amounts you have withheld under the Pay as you go withholding rules.

Amount of estimate

(2) The amount of the estimate must be what the Commissioner thinks is reasonable.

(3) In making the estimate, the Commissioner may have regard to anything he or she thinks relevant.

Example: The Commissioner may have regard to information about amounts you withheld under the Pay as you go rules before the period in relation to which the underlying liability arose.

Only one estimate for each liability

(4) While the estimate is in force, the Commissioner cannot make another estimate relating to the underlying liability.

(5) For the purposes of subsection (4), the estimate is in force if:

(a) the Commissioner has given you notice of the estimate; and

(b) the estimate has not been revoked; and

(c) your liability to pay the estimate has not been discharged.

268-15 Notice of estimate

Commissioner must give notice of estimate

(1) The Commissioner must give you written notice of the estimate.

Content of notice

(2) The notice must:

(a) identify the underlying liability; and

(b) specify the date of the estimate; and

(c) set out the amount of the estimate; and

(d) state that the amount of the estimate is due and payable; and

(e) explain how you may have the amount of the estimate reduced or the estimate revoked.

(3) To avoid doubt, a single notice may relate to 2 or more estimates, but must comply with subsection (2) in relation to each of them.

When notice is given

(4) Despite section 29 of theActs Interpretation Act 1901, a notice under subsection (1) is taken to be given at the time the Commissioner leaves or posts it.

Note: Section 28A of theActs Interpretation Act 1901may be relevant to giving a notice under subsection (1).

Subdivision 268-C - Liability to pay estimates

Table of sections

268-20 Nature of liability to pay estimate

268-25 Accuracy of estimate irrelevant to liability to pay

268-30 Estimate provable in bankruptcy or winding up

268-20 Nature of liability to pay estimate

Liability to pay amount of estimate

(1) You must pay to the Commissioner the amount of the estimate if the Commissioner gives you notice of the estimate in accordance with section 268-15. The amount is due and payable when the Commissioner gives you the notice.

Note: The amount of the estimate may be reduced, or the estimate revoked, under Subdivision 268-D.

Liability to pay amount of estimate is distinct from underlying liability

(2) Your liability to pay the amount of the estimate is separate and distinct from the underlying liability. It is separate and distinct for all purposes.

Example: The Commissioner may take:

(a) proceedings to recover the unpaid amount of the estimate; or

(b) proceedings to recover the unpaid amount of the underlying liability; or

(c) proceedings of both kinds.

Discharging one liability discharges other liabilities

(3) Despite subsection (2), if, at a particular time, one of the liabilities to which this subsection applies is discharged, to the extent of an amount, for either of the following reasons, each of the other liabilities to which this subsection applies is discharged to the extent of the same amount:

(a) an amount is paid or applied towards discharging the liability;

(b) the liability is discharged because of section 269-40 (Effect of director paying penalty or company discharging liability).

(4) Subsection (3) applies to whichever of the following liabilities are in existence at the particular time:

(a) your liability to pay the amount of the estimate;

(b) the underlying liability;

(c) a liability of yours under a judgment, to the extent that it is based on a liability referred to in paragraph (a) or (b).

(5) Subsection (3) does not discharge a liability to a greater extent than the amount of the liability.

268-25 Accuracy of estimate irrelevant to liability to pay

You are liable to pay the unpaid amount of the estimate even if:

(a) the underlying liability never existed or has been discharged in full; or

(b) the unpaid amount of the underlying liability is less than the unpaid amount of the estimate.

Note 1: Section 268-40 revokes the estimate if you give the Commissioner a statutory declaration, or file an affidavit, to the effect that the underlying liability never existed.

Note 2: Subdivision 268-D provides ways in which you can challenge the estimate or its amount.

268-30 Estimate provable in bankruptcy or winding up

(1) Your liability (the estimate liability ) to pay the unpaid amount of the estimate is provable in a bankruptcy or winding up, even if the estimate was made after:

(a) the date of the bankruptcy; or

(b) the relevant date (within the meaning of theCorporations Act 2001).

(2) However, the estimate liability is provable only to the extent that the underlying liability would be provable if the unpaid amount of the underlying liability were the same as the unpaid amount of the estimate.

Example: Subsection (2) prevents proof of the estimate liability if the underlying liability could not be proved because, for example, of when it arose.

(3) Subsections (1) and (2) do not apply if:

(a) the underlying liability has already been admitted to proof; and

(b) the proof has not been set aside.

(4) If the estimate liability has been admitted to proof at a particular amount, the underlying liability is provable only to the extent the unpaid amount of the underlying liability exceeds that particular amount.

(5) To the extent that a liability is provable because of this section, it is taken, for the purposes of theBankruptcy Act 1966,to be provable in bankruptcy under that Act.

Subdivision 268-D - Reducing and revoking estimates

Table of sections

268-35 How estimate may be reduced or revoked - Commissioner's powers

268-40 How estimate may be reduced or revoked - statutory declaration or affidavit

268-45 How estimate may be reduced or revoked - rejection of proof of debt

268-50 How estimate may be reduced - amount paid or applied

268-55 When reduction or revocation takes effect

268-60 Consequences of reduction or revocation - refund

268-65 Consequences of reduction or revocation - statutory demand changed or set aside

268-70 Consequences of reduction or revocation - underlying liability

268-35 How estimate may be reduced or revoked - Commissioner's powers

Reduction

(1) The Commissioner may at any time reduce the amount of the estimate, but is not obliged to consider whether or not to do so.

(2) If the Commissioner reduces the amount of the estimate under subsection (1), he or she must give you a written notice that:

(a) identifies the underlying liability; and

(b) sets out the reduced amount of the estimate.

Note: The estimate is taken always to have had effect as reduced: see section 268-55.

Revocation

(3) The Commissioner may at any time revoke the estimate, but is not obliged to consider whether or not to do so.

(4) If the Commissioner revokes the estimate under subsection (3), he or she must give you a written notice that:

(a) identifies the underlying liability; and

(b) states that the estimate has been revoked.

Note: The estimate is taken never to have been made: see section 268-55.

Matters for Commissioner to consider

(5) In exercising his or her power under this section to reduce the amount of the estimate, or to revoke the estimate, the Commissioner must have regard to:

(a) the following principles:

(i) the estimate is of the unpaid amount of the underlying liability as at a particular time;

(ii) the purpose of reducing the amount of the estimate is to bring it closer to the unpaid amount of the underlying liability as at the time the estimate was made;

(iii) reductions of the unpaid amount of the underlying liability that happen after the time the estimate was made are dealt with by section 268-20 (Nature of liability to pay estimate) and so should not be taken into account in exercising such a power; and

(b) the effects of sections 268-55 and 268-70 (effect of reduction or revocation on liabilities).

268-40 How estimate may be reduced or revoked - statutory declaration or affidavit

Scope

(1) This section applies as set out in the following table:

Example: For the purposes of item 2 of the table, taking a procedural step as a party to proceedings includes entering an appearance, filing a notice of intention to defend, or applying to set aside judgment entered in default of appearance.

Note 1: Section 459C of theCorporations Act 2001 creates a presumption that a company is insolvent, and may be wound up, if the company fails to comply with a statutory demand.

Note 2: See section 268-90 for what the statutory declaration or affidavit must contain and who must make, swear or affirm it.

Reduction

(2) The amount of the estimate is reduced if the statutory declaration is to the effect, or the affidavit verifies facts sufficient to prove, that a specified lesser amount is the unpaid amount of the underlying liability.

Example: Subsection (2) will apply if the statutory declaration etc. is to the effect that the underlying liability has been discharged in full (and therefore the unpaid amount of the liability is nil).

(3) The amount of the reduction is the amount by which the unpaid amount of the estimate (just before the reduction) exceeds the amount specified.

Note: The effect of subsection (3) is to reduce the unpaid amount of the estimate to the amount specified.

Revocation

(4) The estimate is revoked if the statutory declaration is to the effect, or the affidavit verifies facts sufficient to prove, that the underlying liability never existed.

268-45 How estimate may be reduced or revoked - rejection of proof of debt

Scope

(1) This section applies if:

(a) the Commissioner lodges a proof of debt relating to the unpaid amount of the estimate; and

(b) section 268-95 applies to an entity (your supervising entity ) in relation to you.

Rejection of proof of debt

(2) Your supervising entity may give the Commissioner a statutory declaration to the effect that:

(a) the underlying liability has been discharged in full; or

(b) the unpaid amount of the underlying liability is a specified, lesser amount; or

(c) the underlying liability never existed.

Note: See section 268-90 for what the statutory declaration must contain and who must make it.

(3) If your supervising entity does so, he or she may reject the proof of debt (in whole or in part) on the ground made out in the statutory declaration.

(4) If the Commissioner appeals, or applies for review of, your supervising entity's decision to reject the proof of debt, nothing in subsection (2) or (3) prevents evidence being adduced to contradict statements in the declaration.

Note: Such evidence might also be relevant to a prosecution for an offence, such as an offence against section 11 of theStatutory Declarations Act 1959 (False declarations).

Revocation or reduction of estimate

(5) The following table applies in relation to the outcome following all (if any) appeals from, and applications for review of, your supervising entity's decision to reject the proof of debt. (If there are no appeals or applications for review, the outcome is your supervising entity's decision as originally made.)

Note 1: The effect of item 1 of the table is to reduce the unpaid amount of the estimate to nil.

Note 2: The effect of item 2 of the table is to reduce the unpaid amount of the estimate to the amount admitted to proof.

268-50 How estimate may be reduced - amount paid or applied

(1) This section applies if:

(a) an amount is paid or applied towards discharging your liability to pay the amount of the estimate; and

(b) the amount paid or applied exceeds the unpaid amount of the underlying liability as at the time just before the payment or application.

(2) The amount of the estimate is reduced so that it does not exceed the unpaid amount, at the time mentioned in paragraph (1)(b), of the underlying liability.

268-55 When reduction or revocation takes effect

Scope

(1) This section applies for the purposes of the following:

(a) Subdivision 268-C (Liability to pay estimates);

(b) section 268-60 (refund of overpayments);

(c) Subdivision 268-E (Late payment of estimates);

(d) Division 269 (Penalties for directors of non-complying companies).

When reduction or revocation takes effect

(2) If the amount of the estimate is reduced, the estimate has effect, and is taken always to have had effect, as if the original amount of the estimate had been the reduced amount.

(3) If the estimate is revoked, the estimate is taken never to have been made.

268-60 Consequences of reduction or revocation - refund

(1) This section applies if:

(a) an amount is paid or applied towards discharging your liability to pay the amount of the estimate; and

(b) the amount paid or applied exceeds the unpaid amount of the estimate as at the time just before the payment or application.

Example: You pay an amount towards discharging the estimate and the estimate is later reduced to a lesser amount.

Note: Section 268-50 provides for the reduction of the amount of the estimate in the case of overpayment.

(2) The Commissioner must pay you the excess.

Note: See Division 3A of Part IIB of this Act for the rules about how the Commissioner must pay you. Division 3 of that Part allows the Commissioner to apply the amount owing as a credit against tax debts that you owe the Commonwealth.

268-65 Consequences of reduction or revocation - statutory demand changed or set aside

Scope

(1) This section applies if:

(a) the estimate is of the unpaid amount of a liability of a company; and

(b) the Commissioner has served a*statutory demand on the company relating to the company's liability to pay the unpaid amount of the estimate; and

(c) the amount of the estimate is later reduced, or the estimate is revoked.

Statutory demand changed

(2) The*statutory demand is changed accordingly.

(3) The*statutory demand is taken to have had effect (as so changed) from the time the Commissioner served it on the company.

Statutory demand set aside

(4) The*statutory demand is set aside if subsection (2) reduces the amount of the debt (or the total of the amounts of the debts) below the statutory minimum (within the meaning of theCorporations Act 2001).

268-70 Consequences of reduction or revocation - underlying liability

Reduction of the amount of the estimate, or revocation of the estimate, does not affect the Commissioner's rights or remedies in relation to the underlying liability (except to the extent that this Division expressly provides otherwise).

Subdivision 268-E - Late payment of estimates

Table of sections

268-75 Liability to pay the general interest charge

268-80 Effect of paying the general interest charge

268-75 Liability to pay the general interest charge

(1) This section applies if your liability to pay the amount of the estimate remains undischarged at the end of 7 days after the Commissioner gives you notice of the estimate.

(2) You are liable to pay the*general interest charge on the unpaid amount of the estimate for each day in the period that:

(a) started at the beginning of the day by which the underlying liability was due to be paid; and

(b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:

(i) the amount of the estimate;

(ii) general interest charge on any of the amount of the estimate.

Note: The general interest charge is worked out under Part IIA of this Act.

268-80 Effect of paying the general interest charge

Scope

(1) If you are liable to pay the*general interest charge under section 268-75 in relation to the estimate, this section applies to the following liabilities:

(a) your liability to pay the general interest charge;

(b) a liability of yours to pay a general interest charge, under a corresponding provision of Subdivision 16-B, because the underlying liability remains undischarged;

(c) liability under a judgment, to the extent that it is based on a liability referred to in paragraph (a) or (b);

(d) a liability of yours to pay interest carried by a judgment debt, to the extent that the judgment debt is based on:

(i) the liability to pay the estimate; or

(ii) the liability to pay the general interest charge under section 268-75 on an unpaid amount of the estimate.

Discharging one liability discharges other liabilities

(2) If, at a particular time, an amount is paid or applied towards discharging one of the liabilities, each of the other liabilities that is in existence at that time is discharged to the extent of the same amount.

(3) However, this section does not discharge a liability to a greater extent than the amount of the liability.

(4) If, because a judgment debt carries interest, section 8AAH of this Act reduces the amount of a*general interest charge payable as mentioned in paragraph (1)(b) of this section, the amount of the reduction is taken, for the purposes of subsection (2) of this section, to have been applied towards discharging your liability to the charge.

Subdivision 268-F - Miscellaneous

Table of sections

268-85 Effect of judgment on liability on which it is based

268-90 Requirements for statutory declaration or affidavit

268-95 Liquidators, receivers and trustees in bankruptcy

268-100 Division not to limit or exclude Corporations or Bankruptcy Act

268-85 Effect of judgment on liability on which it is based

Estimate payable despite judgment

(1) The unpaid amount of the estimate, or of the underlying liability, does not stop being payable merely because a judgment has been given by, or entered in, a court.

Division applies to liability under judgment

(2) This Division applies in relation to liability under a judgment, to the extent that it is based on your liability to pay the amount of the estimate, in the same way as this Division applies to that estimate liability.

(3) This Division applies in relation to liability under a judgment, to the extent that it is based on the underlying liability, in the same way as this Division applies to the underlying liability.

(4) Subsections (2) and (3) do not apply for the purposes of the following:

(a) section 268-20 (Nature of liability to pay estimate);

(b) section 268-30 (Estimate provable in bankruptcy or winding up);

(c) section 268-45 (rejection of proof of debt).

Judgment conclusive as to amount of liability

(5) Nothing in this Division affects the conclusiveness of a judgment as to the amount of a liability on which it is based.

268-90 Requirements for statutory declaration or affidavit

Scope

(1) This section applies to a statutory declaration given, or an affidavit filed, for the purposes of section 268-40 or 268-45 in relation to the estimate.

Content

(2) The statutory declaration or affidavit must verify the following facts:

(a) whichever of the following are applicable:

(i) the sum of all amounts you withheld under Division 12 during the relevant period, or the fact that you did not withhold any such amounts during the period;

(ii) the sum of all amounts you were required to pay under Division 13 (Alienated personal services payments) during the relevant period, or the fact that you were not required to pay any such amounts during the period;

(iii) the sum of all amounts you were required to pay under Division 14 (non-cash benefits and accruing gains) during the relevant period, or the fact that you were not required to pay any such amounts during the period;

(b) what has been done to comply with Division 16 (Payer's obligations and rights) in relation to the amounts referred to in paragraph (a).

Maker or deponent

(3) The statutory declaration or affidavit must be made, sworn or affirmed by:

(a) an individual specified in the following table; or

(b) your liquidator, receiver or trustee in bankruptcy (if and as applicable).

(4) If the entity specified in the table in subsection (3) is not an individual, the table is taken to specify the individual who, under that subsection, would be eligible to make a statutory declaration in relation to an estimate of a liability of that entity.

268-95 Liquidators, receivers and trustees in bankruptcy

Scope

(1) This section applies to an entity (your supervising entity ), in relation to you, if:

(a) the entity is your liquidator, receiver, trustee in bankruptcy or administrator, or the administrator of a deed of company arrangement executed by you; or

(b) your property is vested in the entity, or the entity has control of your property.

(2) For the purposes of this Division, this section applies to an entity in relation to a partnership if it applies to the entity in relation to a partner of the partnership.

Notices from the Commissioner

(3) For the purposes of this Division, a notice given by the Commissioner to your supervising entity is taken to have been given to you.

(4) You must give your supervising entity a copy of any notice given to you by the Commissioner under this Division. You must do so as soon as practicable, and in any event within 7 days, after:

(a) if the Commissioner gave you the notice before the day when your property vested in, or control of your property passed to, the supervising entity - that day; or

(b) if subsection (2) applies and the Commissioner gave you the notice before the day when the relevant partner's property vested in, or control of the relevant partner's property passed to, the supervising entity - that day; or

(c) otherwise - the day when the Commissioner gave you the notice.

(5) If the Commissioner gives you and your supervising entity a notice at different times, each notice is taken to have been given at the later of those times.

Action taken by your supervising entity

(6) For the purposes of this Division, a statutory declaration given to the Commissioner by your supervising entity is taken to have been given by you.

(7) For the purposes of this Division, an affidavit filed by your supervising entity is taken to have been filed by you.

(8) For the purposes of item 2 in the table in subsection 268-40(1) (recovery proceedings), a procedural step taken by your supervising entity is taken to have been taken by you.

Multiple supervising entities

(9) If you have 2 or more supervising entities, anything this Division provides for to be done by or in relation to your supervising entity may be done by or in relation to any of them.

268-100 Division not to limit or exclude Corporations or Bankruptcy Act

This Division is not intended to limit or exclude the operation of Chapter 5 of theCorporations Act 2001 (External administration), or theBankruptcy Act 1966, to the extent that Chapter or Act can operate concurrently with this Division.

Note: Section 268-30 and Subdivision 268-D affect the operation of Chapter 5 of theCorporations Act 2001 and theBankruptcy Act 1966.

Division 269 - Penalties for directors of non-complying companies

Table of Subdivisions

Guide to Division 269

269-A Object and scope

269-B Obligations and penalties

269-C Discharging liabilities

269-D Miscellaneous

Guide to Division 269

269-1 What this Division is about

The directors of a company have a duty to ensure that the company either:

(a) meets its obligations under Subdivision 16-B (obligation to pay withheld amounts to the Commissioner) and Division 268; or

(b) goes promptly into voluntary administration under theCorporations Act 2001 or into liquidation.

The directors' duties are enforced by penalties.

Note: The duties this Division imposes on the directors of the company are in addition to the similar duties imposed on the public officer of the company. See subsection 252(1) of theIncome Tax Assessment Act 1936.

Subdivision 269-A - Object and scope

Table of sections

269-5 Object of Division

269-10 Scope of Division

269-5 Object of Division

The object of this Division is to ensure that a company either:

(a) meets its obligations under Subdivision 16-B (obligation to pay withheld amounts to the Commissioner) and Division 268; or

(b) goes promptly into voluntary administration under theCorporations Act 2001 or into liquidation.

Note: The directors' duties are enforced by penalties on the directors. A penalty recovered under this Division is applied towards meeting the company's obligation.

269-10 Scope of Division

(1) This Division applies as set out in the following table:

Note: In a case covered by item 2, 3 or 4 of the table, the due day is the same as the initial day.

(2) This Division applies in relation to an amount that the company purports to withhold under Division 12, but is not required to withhold, as if the company were required to withhold the amount.

Subdivision 269-B - Obligations and penalties

Table of sections

269-15 Directors' obligations

269-20 Penalty

269-25 Notice

269-30 Remission of penalty before end of notice period

269-35 Defences

269-15 Directors' obligations

Directors' obligations

(1) The directors (within the meaning of theCorporations Act 2001) of the company (from time to time) on or after the initial day must cause the company to comply with its obligation.

(2) The directors of the company (from time to time) continue to be under their obligation until:

(a) the company complies with its obligation; or

(b) an administrator of the company is appointed under section 436A, 436B or 436C of theCorporations Act 2001; or

(c) the company begins to be wound up (within the meaning of that Act).

Instalment arrangements

(3) The Commissioner must not commence, or take a procedural step as a party to, proceedings to enforce an obligation, or to recover a penalty, of a director under this Division if an*arrangement that covers the company's obligation is in force under section 255-15 (Commissioner's power to permit payments by instalments).

Note 1: The arrangement may also cover other obligations of the company.

Note 2: Subsection (3) does not prevent the Commissioner from giving a director a notice about a penalty under section 269-25.

269-20 Penalty

Penalty for director on or before due day

(1) You are liable to pay to the Commissioner a penalty if:

(a) at the end of the due day, the directors of the company are still under an obligation under section 269-15; and

(b) you were under that obligation at or before that time (because you were a director).

Note: Paragraph (1)(b) applies even if you stopped being a director before the end of the due day: see subsection 269-15(2).

(2) The penalty is due and payable at the end of the due day.

Note: The Commissioner must not commence proceedings to recover the penalty until the end of 21 days after the Commissioner gives you notice of the penalty under section 269-25.

Penalty for new director

(3) You are also liable to pay to the Commissioner a penalty if:

(a) after the due day, you became a director of the company and began to be under an obligation under section 269-15; and

(b) 14 days later, you are still under that obligation.

(4) The penalty is due and payable at the end of that 14th day.

Note: The Commissioner must not commence proceedings to recover the penalty until the end of 21 days after the Commissioner gives you notice of the penalty under section 269-25.

Amount of penalty

(5) The amount of a penalty under this section is equal to the unpaid amount of the company's liability under its obligation.

Note 1: See section 269-40 for the effect on your penalty of the company discharging its obligation, or of another director paying his or her penalty.

Note 2: See section 269-45 for your rights of indemnity and contribution.

269-25 Notice

Commissioner must give notice of penalty

(1) The Commissioner must not commence proceedings to recover from you a penalty payable under this Subdivision until the end of 21 days after the Commissioner gives you a written notice under this section.

Content of notice

(2) The notice must:

(a) set out what the Commissioner thinks is the unpaid amount of the company's liability under its obligation; and

(b) state that you are liable to pay to the Commissioner, by way of penalty, an amount equal to that unpaid amount because of an obligation you have or had under this Division; and

(c) explain the main circumstances in which the penalty will be remitted.

(3) To avoid doubt, a single notice may relate to 2 or more penalties, but must comply with subsection (2) in relation to each of them.

When notice is given

(4) Despite section 29 of theActs Interpretation Act 1901, a notice under subsection (1) is taken to be given at the time the Commissioner leaves or posts it.

Note 1: Section 28A of theActs Interpretation Act 1901may be relevant to giving a notice under subsection (1).

Note 2: Section 269-50 of this Act is also relevant to giving a notice under subsection (1).

269-30 Remission of penalty before end of notice period

A penalty of yours under this Division is remitted if the directors of the company stop being under the relevant obligation under section 269-15:

(a) before the Commissioner gives you notice of the penalty under section 269-25; or

(b) within 21 days after the Commissioner gives you notice of the penalty under that section.

269-35 Defences

Scope

(1) This section applies in relation to:

(a) proceedings to recover from you a penalty payable under this Division; or

(b) proceedings against you in relation to a right referred to in paragraph 269-45(2)(b) (directors jointly and severally liable as guarantors).

Illness

(2) It is a defence in the proceedings if it is proved that, because of illness or for some other good reason, it would have been unreasonable to expect you to take part, and you did not take part, in the management of the company at any time when:

(a) you were a director of the company; and

(b) the directors were under the relevant obligations under section 269-15.

All reasonable steps

(3) It is a defence in the proceedings if it is proved that:

(a) you took all reasonable steps to ensure that the directors complied with their relevant obligations under section 269-15; or

(b) there were no such steps that you could have taken.

(4) In determining what are reasonable steps for the purposes of subsection (3), have regard to:

(a) when, and for how long, you were a director and took part in the management of the company; and

(b) all other relevant circumstances.

Power of courts to grant relief

(5) Section 1318 of theCorporations Act 2001 does not apply to an obligation or liability of a director under this Division.

Subdivision 269-C - Discharging liabilities

Table of sections

269-40 Effect of director paying penalty or company discharging liability

269-45 Directors' rights of indemnity and contribution

269-40 Effect of director paying penalty or company discharging liability

Liabilities

(1) This section applies to the following liabilities:

(a) the liability of the company under its obligation referred to in section 269-10;

(b) the liability of each director (or former director) to pay a penalty under this Division in relation to the liability of the company referred to in paragraph (a);

(c) a liability under a judgment, to the extent that it is based on a liability referred to in paragraph (a) or (b).

Discharging one liability discharges other liabilities

(2) If an amount is paid or applied at a particular time towards discharging one of the liabilities, each of the other liabilities in existence at that time is discharged to the extent of the same amount.

(3) If, because of section 268-20 (Nature of liability to pay estimate), one of the liabilities is discharged at a particular time to the extent of a particular amount, each of the other liabilities in existence at that time is discharged to the extent of the same amount.

(4) This section does not discharge a liability to a greater extent than the amount of the liability.

269-45 Directors' rights of indemnity and contribution

(1) This section applies if you pay a penalty under this Division in relation to a liability of the company under an obligation referred to in section 269-10.

(2) You have the same rights (whether by way of indemnity, subrogation, contribution or otherwise) against the company or anyone else as if:

(a) you made the payment under a guarantee of the liability of the company; and

(b) under the guarantee you and every other person who has paid, or from whom the Commissioner is entitled to recover, a penalty under this Division in relation to the company's obligation were jointly and severally liable as guarantors.

Subdivision 269-D - Miscellaneous

Table of sections

269-50 How notice may be given

269-55 Division not to limit or exclude Corporations Act

269-50 How notice may be given

The Commissioner may give you a notice under section 269-25 by leaving it at, or posting it to, an address that appears, from information held by the Australian Securities and Investments Commission, to be, or to have been within the last 7 days, your place of residence or*business.

269-55 Division not to limit or exclude Corporations Act

To avoid doubt, this Division is not intended to limit or exclude the operation of Chapter 5 of theCorporations Act 2001 (External administration), to the extent that Chapter can operate concurrently with this Division.