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Deputy Commissioner of Taxation v Smith

[2008] NSWDC 219

(Judgment by: Judge Truss)

Deputy Commissioner of Taxation
v. Smith

Court:
New South Wales District Court

Judge:
Truss DCJ

Subject References:
Administrative overpayment allocated to running balance account
Notice under s 8AAZN(2) not required for recovery of general interest charge

Legislative References:
Taxation Administration Act 1953 (Cth) - TOC

Case References:
Deputy Commissioner of Taxation v Cannon - (unreported 10 December 2007, County Court of Victoria)
Deputy Commissioner of Taxation v De Angelis - [2008] SADC 103 (unreported 14 August 2008)

Hearing date: 12/09/08
Judgment date: 19 September 2008

Judgment by:
Judge Truss

DECISION:

Commissioner not required to give notice under s 8AAZN(2) of the Act Judgment for the plaintiff in the amount of $336,389.34 including GIC Defendant to pay the plaintiff's costs

PARTIES:

Deputy Commissioner of Taxation v Darryl Peter Smith

FILE NUMBER(S):

148/07

COUNSEL:

Mr R Quinn for Plaintiff

No Appearance for Defendant

JUDGMENT

1 The plaintiff seeks judgment against the defendant in respect of a running balance account (RBA) deficit debt amounting to $336,389.34 which comprises:

•
administrative overpayments;
•
administrative penalties;
•
general interest charge.

2 The defendant, who is self-represented, filed a defence on 25 September 2006. He was present before the Judicial Registrar on 4 August 2008 when the matter was listed for hearing on 5 September 2008. In early hours of that day he sent to Ms McGuire an officer employed in the Taxation Office an email in which he provided contact details and stated:

Please be advised that due to sickness, there will be no appearance by the defendant at the hearing.
Recognition is acknowledged that the Deputy Commissioner will be entitled to seek and obtain judgment.

3 At the hearing on 5 September 2008 counsel for the plaintiff tendered affidavit evidence and the matter was stood over for two weeks for written submissions to be provided in relation to that part of the debt which comprises the general interest charge (GIC) amounting to $130,706.59 as at 1 September 2008.

4 Detailed written submissions dealing with all aspects of the claim were provided on 12 September and the court was informed that a copy would be sent to the defendant.

5 The issues raised by the defence have been answered in paragraphs 8 to 12 of the written submissions and I consider it necessary to deal only with the issue of whether the Commissioner is entitled to claim GIC in the absence of notice.

6 For the reasons set out in paragraphs 13 to 18 of the submissions I am satisfied that there was an administrative overpayment by the Commissioner within the meaning of section 8AAZN(3) of the Taxation Administration Act 1953 (TAA) in the sum of $116,553 which, by reason of section 8AAZN(1), was a debt due and payable by the defendant to the Commissioner as well as a primary tax debt as defined by section 8AAZA.

7 It would have been open to the Commissioner to seek to recover the overpayment as a self-contained cause of action in a court of competent jurisdiction. In that event the giving of notice under section 8AAZN(2) is a requirement for the recovery of GIC on overdue amounts. That subsection provides:

2) If:

(a)
the Commissioner has given a notice to the recipient in respect of the overpaid amount, specifying a due date for payment that is at least 30 days after the notice is given; and
(b)
any of the overpaid amount remains unpaid at the end of that due date;

then the recipient is liable to pay the general interest charge on the unpaid amount for each day in the period that:

(c)
started at the beginning of that due date; and
(d)
finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:

(i)
the overpaid amount;
(ii)
general interest charge on any of the overpaid amount.

8 The RBA provisions provide an alternate method to section 8AAZN for the recovery of administrative overpayments. Section 8AAZD entitles the Commissioner to allocate an administrative overpayment to an RBA as a primary tax debt but not the GIC.

9 Where there is an RBA deficit debt at the end of a day section 8AAZF provides that GIC is payable on the RBA deficit debt for that day. There is no requirement for the giving of notice. GIC becomes payable upon there being an RBA deficit debt at the end of a particular day.

10 The issue for determination is whether the requirement to give 30 days notice in respect of the overdue amount under section 8AAZN(2) applies when an administrative overpayment has been allocated to an RBA as a primary tax debt.

11 The court was referred to two decisions neither of which are binding. In Deputy Commissioner of Taxation v Cannon (unreported 10 December 2007, County Court of Victoria) the Commissioner had sought the recovery of a debt which included administrative overpayments. The Commissioner had not given notice pursuant to section 8AAZN(2) and had allocated the administrative overpayment to an RBA. Recovery of that overpayment was sought as an RBA deficit debt together with the GIC payable on it pursuant to section 8AAZF. There was an ex parte hearing. Judge Howie noted that notice had not been given under section 8AAZN(2) but included in the judgment sum GIC payable on the RBA under section 8AAZF. This was an ex-parte hearing.

12 Deputy Commissioner of Taxation v De Angelis [2008] SADC 103 (unreported 14 August 2008) concerned an appeal in respect of summary judgment where one of the issues was whether the defendant had an arguable defence. Judge Shaw observed at [143]:

It is reasonably arguable that s 8AAZN(2) of the TAA is a specific provision applicable to the recovery of administrative overpayments as defined in s 8AAZN(3) of the TAA.. It cannot be overridden by the general provision relating to the recovery of primary tax debts through their allocation to an RBA. That is, Parliament provided a specific and different regime for the recovery of overpayments made as a result of a mistake by the Commissioner, as compared to the recovery of other tax debts. It is arguable that Parliament did not intend to permit the Commissioner to deprive the taxpayer of certain rights in relation to administrative overpayments under s 8AAZN(3) of the TAA, by adopting an alternative route for recovery of this kind of overpayment.

13 I understand Her Honour to be saying that the specific provision in section 8AAZN(2) cannot be overridden by the general provision relating to the recovery of primary tax debts through being allocated to an RBA. However, the legislation entitles the Commissioner to allocate administrative overpayments to the RBA as a primary tax debt but not the GIC payable thereon. Once this has occurred GIC becomes payable under section 8AAZF and is no longer payable under section 8AAZN(2). The Commissioner's claim in this case is not for an administrative overpayment under section 8AAZN(1) but for an RBA deficit debt due and payable under section 8AAZH.

14 In my view the proper conclusion is that once the characterisation of the debt has, in accordance with the legislation, been changed from an administrative overpayment to the RBA, section 8AAZN(2) no longer has any application.

15 For these reasons the court concludes that the Commissioner was not required to give notice under section 8AAZN(2) and is entitled to judgment for the full amount sought viz $336,389.34 which includes GIC.

16 The court also orders the defendant to pay the plaintiff's costs.


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