A New Tax System (Tax Administration) Act 1999 (179 of 1999)

Schedule 2   Collection and recovery rules

Part 1   Amendment of the Taxation Administration Act 1953

1   At the end of Schedule 1

Add:

[The next Division is Division 250.]

Part 4-15 - Collection and recovery of tax-related liabilities and other amounts

Division 250 - Introduction

Table of Subdivisions

250-A Guide to Part 4-15

250-B Object of this Part

Subdivision 250-A - Guide to Part 4-15

250-1 What this Part is about

This Part deals with the methods by which the Commissioner may collect and recover amounts of taxes and other liabilities.

These rules may affect you if you are liable to pay an amount of a tax-related liability (see, for example, Division 255). Some of the rules may also affect you because of your relationship with someone else who is liable for such an amount (see Division 260).

Table of sections

250-5 Some important concepts about tax-related liabilities

250-10 Summary of tax-related liabilities

250-5 Some important concepts about tax-related liabilities

(1) A tax-related liability may arise for an entity before it becomes due and payable by that entity.

Example: Under Part 2-5, an entity's liability to pay a withheld amount may arise before the amount is due and payable.

(2) For some tax-related liabilities, an assessment needs to be made before the amount of the relevant liability becomes due and payable.

Example: Under Division 1 of Part VI of the Income Tax Assessment Act 1936, an amount of income tax needs to be assessed before it becomes due and payable.

(3) An amount of a tax-related liability may become payable by an entity (for example, when the amount has been assessed) before it is due and payable by that entity.

250-10 Summary of tax-related liabilities

(1) The following table is an index of each tax-related liability under the Income Tax Assessment Act 1936. The key provision for the liability, as set out in the table, specifies when the liability becomes due and payable.

Note: The Commissioner may vary the time at which the amount becomes due and payable. See Subdivision 255-B.

(2) The following table is an index of each tax-related liability under other Acts. The key provision for the liability, as set out in the table, specifies when the liability becomes due and payable.

Note: The Commissioner may vary the time at which the amount becomes due and payable. See Subdivision 255-B.

Subdivision 250-B - Object of this Part

250-25 Object

The object of this Part is to ensure that unpaid amounts of *tax-related liabilities and other related amounts are collected or recovered in a timely manner.

[The next Division is Division 255.]

Division 255 - General rules about collection and recovery

Table of Subdivisions

255-A Tax-related liabilities

255-B Commissioner's power to vary payment time

255-C Recovery proceedings

Subdivision 255-A - Tax-related liabilities

Table of sections

255-1 Meaning of tax-related liability

255-5 Recovering a tax-related liability that is due and payable

255-1 Meaning of tax-related liability

A tax-related liability is a pecuniary liability to the Commonwealth arising directly under a *taxation law (including a liability the amount of which is not yet due and payable).

Note 1: See section 250-10 for an index of tax-related liabilities.

Note 2: A taxation law, or a provision of it, may be excluded from being applied to this Part. See section 265-65.

255-5 Recovering a tax-related liability that is due and payable

(1) An amount of a *tax-related liability that is due and payable:

(a) is a debt due to the Commonwealth; and

(b) is payable to the Commissioner.

(2) The Commissioner, a Second Commissioner or a Deputy Commissioner may sue in his or her official name in a court of competent jurisdiction to recover an amount of a *tax-related liability that remains unpaid after it has become due and payable.

Note: The tables in section 250-10 set out each provision that specifies when an amount of a tax-related liability becomes due and payable. The Commissioner may vary that time under Subdivision 255-B.

Subdivision 255-B - Commissioner's power to vary payment time

Table of sections

255-10 To defer the payment time

255-15 To permit payments by instalments

255-20 To bring forward the payment time in certain cases

255-10 To defer the payment time

(1) The Commissioner may, having regard to the circumstances of your particular case, defer the time at which an amount of a *tax-related liability is, or would become, due and payable by you (whether or not the liability has already arisen). If the Commissioner does so, that time is varied accordingly.

Note: General interest charge or any other relevant penalty, if applicable for any unpaid amount of the liability, will begin to accrue from the time as varied. See, for example, paragraph 204(3)(a) of the Income Tax Assessment Act 1936.

(2) The Commissioner must do so by written notice given to you.

255-15 To permit payments by instalments

(1) The Commissioner may, having regard to the circumstances of your particular case, permit you to pay an amount of a *tax-related liability by instalments under an *arrangement between you and the Commissioner (whether or not the liability has already arisen).

(2) The *arrangement does not vary the time at which the amount is due and payable.

Note: Despite an arrangement under this section, any general interest charge or other relevant penalty, if applicable for any unpaid amount of the liability, begins to accrue when the liability is due and payable under the relevant taxation law, or at that time as varied under section 255-10 or 255-20.

255-20 To bring forward the payment time in certain cases

(1) If the Commissioner reasonably believes that you may leave Australia before the time at which an amount of a *tax-related liability becomes due and payable by you, the Commissioner may bring that time forward. If the Commissioner does so, that time is varied accordingly.

Note: General interest charge or any other relevant penalty, if applicable for any unpaid amount of the liability, will begin to accrue from the time as varied. See, for example, paragraph 204(3)(a) of the Income Tax Assessment Act 1936.

(2) The Commissioner must do so by written notice given to you.

Subdivision 255-C - Recovery proceedings

Guide to Subdivision 255-C

255-35 What this Subdivision is about

This Subdivision deals with procedural and evidentiary matters relating to proceedings to recover an amount of a tax-related liability.

Table of sections

Operative provisions

255-40 Service of documents if person absent from Australia or cannot be found

255-45 Evidentiary certificate

255-50 Certain statements or averments

255-55 Evidence by affidavit

[This is the end of the Guide.]

Operative provisions

255-40 Service of documents if person absent from Australia or cannot be found

(1) This section applies if a document needs to be served on a person in respect of a proceeding to recover an amount of a *tax-related liability, and the Commissioner, after making reasonable inquiries, is satisfied that:

(a) the person is absent from Australia and does not have any agent in Australia on whom the document can be served; or

(b) the person cannot be found.

(2) The Commissioner may, without the court's leave, serve the document by posting it, or a sealed copy of it, in a letter addressed to the person at any Australian address of the person (including the person's Australian place of business or residence) that is last known to the Commissioner.

255-45 Evidentiary certificate

(1) A certificate:

(a) stating one or more of the matters covered by subsection (2); and

(b) signed by the Commissioner, a Second Commissioner or a Deputy Commissioner;

is prima facie evidence of the matter or matters in a proceeding to recover an amount of a *tax-related liability.

(2) A certificate may state:

(a) that a person named in the certificate has a *tax-related liability; or

(b) that an *assessment relating to a tax-related liability has been made, or is taken to have been made, under a *taxation law; or

(c) that notice of an assessment, or any other notice required to be served on a person in respect of an amount of a tax-related liability, was, or is taken to have been, served on the person under a *taxation law; or

(d) that the particulars of a notice covered by paragraph (c) are as stated in the certificate; or

(e) that a sum specified in the certificate is, as at the date specified in the certificate, a debt due and payable by a person to the Commonwealth.

255-50 Certain statements or averments

(1) In a proceeding to recover an amount of a *tax-related liability, a statement or averment about a matter in the plaintiff's complaint, claim or declaration is prima facie evidence of the matter.

(2) This section applies even if the matter is a mixed question of law and fact. However, the statement or averment is prima facie evidence of the fact only.

(3) This section applies even if evidence is given in support or rebuttal of the matter or of any other matter.

(4) Any evidence given in support or rebuttal of the matter stated or averred must be considered on its merits. This section does not increase or diminish the credibility or probative value of the evidence.

(5) This section does not lessen or affect any onus of proof otherwise falling on a defendant.

255-55 Evidence by affidavit

In a proceeding to recover an amount of a *tax-related liability:

(a) a person may give evidence by affidavit; and

(b) the court may require the person to attend before it:

(i) to be cross-examined on that evidence; or

(ii) to give other evidence relating to the proceedings.

[The next Division is Division 260.]

Division 260 - Special rules about collection and recovery

Table of Subdivisions

Guide to Division 260

260-A From third party

260-B From liquidator

260-C From receiver

260-D From agent winding up business for non-resident principal

260-E From deceased person's estate

Guide to Division 260

260-1 What this Division is about

This Division deals with the collection and recovery of an amount from a person who is not personally liable to pay that amount. Apart from Subdivision 260-A, which covers a wider range of amounts, this Division primarily deals with amounts of tax-related liabilities.

Subdivision 260-A - From third party

Table of sections

260-5 Commissioner may collect amounts from third party

260-10 Notice to Commonwealth, State or Territory

260-15 Indemnity

260-20 Offence

260-5 Commissioner may collect amounts from third party

Amount recoverable under this Subdivision

(1) This Subdivision applies if any of the following amounts (the debt ) is payable to the Commonwealth by an entity (the debtor ) (whether or not the debt has become due and payable):

(a) an amount of a *tax-related liability;

(b) a judgment debt for a *tax-related liability;

(c) costs for such a judgment debt;

(d) an amount that a court has ordered the debtor to pay to the Commissioner following the debtor's conviction for an offence against a *taxation law.

Commissioner may give notice to an entity

(2) The Commissioner may give a written notice to an entity (the third party ) under this section if the third party owes or may later owe money to the debtor.

Third party regarded as owing money in these circumstances

(3) The third party is taken to owe money (the available money ) to the debtor if the third party:

(a) is an entity by whom the money is due or accruing to the debtor; or

(b) holds the money for or on account of the debtor; or

(c) holds the money on account of some other entity for payment to the debtor; or

(d) has authority from some other entity to pay the money to the debtor.

The third party is so taken to owe the money to the debtor even if:

(e) the money is not due, or is not so held, or payable under the authority, unless a condition is fulfilled; and

(f) the condition has not been fulfilled.

How much is payable under the notice

(4) A notice under this section must:

(a) require the third party to pay to the Commissioner the lesser of, or a specified amount not exceeding the lesser of:

(i) the debt; or

(ii) the available money; or

(b) if there will be amounts of the available money from time to time - require the third party to pay to the Commissioner a specified amount, or a specified percentage, of each amount of the available money, until the debt is satisfied.

When amount must be paid

(5) The notice must require the third party to pay an amount under paragraph (4)(a), or each amount under paragraph (4)(b):

(a) immediately after; or

(b) at or within a specified time after;

the amount of the available money concerned becomes an amount owing to the debtor.

Debtor must be notified

(6) The Commissioner must send a copy of the notice to the debtor.

Setting-off amounts

(7) If an entity other than the third party has paid an amount to the Commissioner that satisfies all or part of the debt:

(a) the Commissioner must notify the third party of that fact; and

(b) any amount that the third party is required to pay under the notice is reduced by the amount so paid.

260-10 Notice to Commonwealth, State or Territory

If the third party is the Commonwealth, a State or a Territory, the Commissioner may give the notice to a person who:

(a) is employed by the Commonwealth, or by the State or Territory (as appropriate); and

(b) has the duty of disbursing public money under a law of the Commonwealth, or of the State or Territory (as appropriate).

260-15 Indemnity

An amount that the third party pays to the Commissioner under this Subdivision is taken to have been authorised by:

(a) the debtor; and

(b) any other person who is entitled to all or a part of the amount;

and the third party is indemnified for the payment.

260-20 Offence

(1) The third party must not fail to comply with the Commissioner's notice.

Penalty: 20 penalty units

Note 1: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

Note 2: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

(2) The court may, in addition to imposing a penalty on a person convicted of an offence against subsection (1) in relation to failing to pay an amount under the notice, order the person to pay to the Commissioner an amount not exceeding that amount.

Subdivision 260-B - From liquidator

Table of sections

260-40 Subdivision does not apply to superannuation guarantee charge

260-45 Liquidator's obligation

260-50 Offence

260-55 Joint liability of 2 or more liquidators

260-60 Liquidator's other obligation or liability

260-40 Subdivision does not apply to superannuation guarantee charge

This Subdivision does not apply to a *tax-related liability that is superannuation guarantee charge imposed by the Superannuation Guarantee Charge Act 1992.

260-45 Liquidator's obligation

(1) This Subdivision applies to a person who becomes a liquidator of a company.

(2) Within 14 days after becoming liquidator, the liquidator must give written notice of that fact to the Commissioner.

(3) The Commissioner must, as soon as practicable, notify the liquidator of the amount (the notified amount ) that the Commissioner considers is enough to discharge any *outstanding tax-related liabilities that the company has when the notice is given.

(4) The liquidator must not, without the Commissioner's permission, part with any of the company's assets before receiving the Commissioner's notice.

(5) However, subsection (4) does not prevent the liquidator from parting with the company's assets to pay debts of the company not covered by either of the following paragraphs:

(a) the *outstanding tax-related liabilities;

(b) any debts of the company which:

(i) are unsecured; and

(ii) are not required, by an *Australian law, to be paid in priority to some or all of the other debts of the company.

(6) After receiving the Commissioner's notice, the liquidator must set aside, out of the assets available for paying amounts covered by paragraph (5)(a) or (b) (the ordinary debts ), assets with a value calculated using the following formula:

formula inserted here

where:

amount of remaining ordinary debts means the sum of the company's ordinary debts other than the *outstanding tax-related liabilities.

(7) The liquidator must, in his or her capacity as liquidator, discharge the *outstanding tax-related liabilities, to the extent of the value of the assets that the liquidator is required to set aside.

(8) The liquidator is personally liable to discharge the liabilities, to the extent of that value, if the liquidator contravenes this section.

260-50 Offence

The liquidator must not fail to comply with subsection 260-45(2), (4), (5), (6) or (7).

Penalty: 10 penalty units.

Note 1: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

Note 2: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

260-55 Joint liability of 2 or more liquidators

If there are 2 or more persons who become liquidators of the company, the obligations and liabilities under this Subdivision:

(a) apply to all the liquidators; but

(b) may be discharged by any of them.

260-60 Liquidator's other obligation or liability

This Subdivision does not reduce any obligation or liability of a liquidator arising elsewhere.

Subdivision 260-C - From receiver

Table of sections

260-75 Receiver's obligation

260-80 Offence

260-85 Joint liability of 2 or more receivers

260-90 Receiver's other obligation or liability

260-75 Receiver's obligation

(1) This Subdivision applies to a person (the receiver ) who, in the capacity of receiver, or of receiver and manager, takes possession of a company's assets for the company's debenture holders.

(2) Within 14 days after taking possession of the assets, the receiver must give written notice of that fact to the Commissioner.

(3) The Commissioner must, as soon as practicable, notify the receiver of the amount (the notified amount ) that the Commissioner considers is enough to discharge any *outstanding tax-related liabilities that the company has when the notice is given.

(4) The receiver must not, without the Commissioner's permission, part with any of the company's assets before receiving the Commissioner's notice.

(5) However, subsection (4) does not prevent the receiver from parting with the company's assets to pay debts of the company not covered by either of the following paragraphs:

(a) the *outstanding tax-related liabilities;

(b) any debts of the company which:

(i) are unsecured; and

(ii) are not required, by an *Australian law, to be paid in priority to some or all of the other debts of the company.

(6) After receiving the Commissioner's notice, the receiver must set aside, out of the assets available for paying amounts covered by paragraph (5)(a) or (b) (the ordinary debts ), assets with a value calculated using the following formula:

formula inserted here

where:

amount of remaining ordinary debts means the sum of the company's ordinary debts other than the *outstanding tax-related liabilities.

(7) The receiver must, in his or her capacity as receiver, or as receiver and manager, discharge the *outstanding tax-related liabilities, to the extent of the value of the assets that the receiver is required to set aside.

(8) The receiver is personally liable to discharge the liabilities, to the extent of that value, if the receiver contravenes this section.

260-80 Offence

The receiver must not fail to comply with subsection 260-75(2), (4), (5), (6) or (7).

Penalty: 10 penalty units.

Note 1: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

Note 2: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.

260-85 Joint liability of 2 or more receivers

If 2 or more persons (the receivers ) take possession of a company's assets, for the company's debenture holders, in the capacity of receiver, or of receiver and manager, the obligations and liabilities under this Subdivision apply to:

(a) all the receivers; but

(b) may be discharged by any of them.

260-90 Receiver's other obligation or liability

This Subdivision does not reduce any obligation or liability of the receiver or receivers arising elsewhere.

Subdivision 260-D - From agent winding up business for non-resident principal

Table of sections

260-105 Obligation of agent winding up business for non-resident principal

260-110 Offence

260-115 Joint liability of 2 or more agents

260-120 Agent's other obligation or liability

260-105 Obligation of agent winding up business for non-resident principal

(1) This Subdivision applies to an agent whose principal:

(a) is not an Australian resident; and

(b) has instructed the agent to wind up so much of the principal's business as is carried on in Australia.

(2) Within 14 days after receiving the instructions, the agent must give written notice of that fact to the Commissioner.

(3) The Commissioner must, as soon as practicable after receiving the notice, notify the agent of the amount (the notified amount ) that the Commissioner considers is enough to discharge any *outstanding tax-related liabilities that the principal has when the notice is given.

(4) Before receiving the Commissioner's notice, the agent must not, without the Commissioner's permission, part with any of the principal's assets that are available for discharging the *outstanding tax-related liabilities.

(5) After receiving the notice, the agent must set aside:

(a) out of the assets available for discharging the *outstanding tax-related liabilities, assets to the value of the notified amount; or

(b) all of the assets so available, if their value is less than the notified amount.

(6) The agent must, in that capacity, discharge the *outstanding tax-related liabilities, to the extent of the value of the assets that the agent is required to set aside.

(7) The agent is personally liable to discharge the liabilities, to the extent of that value, if the agent contravenes this section.

260-110 Offence

A person must not fail to comply with subsection 260-105(2), (4), (5) or (6).

Penalty: 10 penalty units.

Note 1: Chapter 2 of the Criminal Code sets out the general principles of criminal responsibility.

Note 2: See section 4AA of the Crimes Act 1914 for the current value of penalty units.

260-115 Joint liability of 2 or more agents

If 2 or more agents are jointly instructed by the principal to wind up the business, the obligations and liabilities under this Subdivision:

(a) apply to all the agents; but

(b) may be discharged by any of them.

260-120 Agent's other obligation or liability

This Subdivision does not reduce any obligation or liability of the agent or agents arising elsewhere.

Subdivision 260-E - From deceased person's estate

Table of sections

260-140 Administered estate

260-145 Unadministered estate

260-150 Commissioner may authorise amount to be recovered

260-140 Administered estate

(1) This section applies if:

(a) a person has an *outstanding tax-related liability when the person dies; and

(b) either of the following is granted after the death:

(i) probate of the person's will;

(ii) letters of administration of the person's estate.

(2) The Commissioner may, in respect of the liability, deal with the trustee of the deceased person's estate as if:

(a) the deceased person were still alive; and

(b) the trustee were the deceased person.

(3) Without limiting subsection (2), the trustee must:

(a) provide any returns and other information that the deceased person was liable to provide, or would have been liable to provide if he or she were still alive; and

(b) provide any additional returns or other information relating to the liability that the Commissioner requires; and

(c) in the trustee's representative capacity, discharge the liability and any penalty imposed in respect of the liability under a *taxation law (including any *general interest charge) for which the deceased person would be liable if he or she were still alive.

(4) If:

(a) the amount of the liability requires an *assessment under a *taxation law but the assessment has not been made; and

(b) the trustee fails to provide a return or other information in relation to assessing that amount as required by the Commissioner;

the Commissioner may assess that amount. If the Commissioner does so, the assessment has the same effect as if it were made under that taxation law.

(5) A trustee who is dissatisfied with an *assessment under subsection (4) may object in the manner set out in Part IVC.

(6) Part IVC applies in relation to the objection as if the trustee were the deceased person.

260-145 Unadministered estate

(1) This section applies if neither of the following is granted within 6 months after a person's death:

(a) probate of the person's will;

(b) letters of administration of the person's estate.

(2) The Commissioner may determine the total amount of *outstanding tax-related liabilities that the person had at the time of death.

(3) The Commissioner must publish notice of the determination twice in a daily newspaper circulating in the State or Territory in which the person resided at the time of death.

(4) A notice of the determination is conclusive evidence of the *outstanding tax-related liabilities, unless the determination is amended.

(5) A person who is dissatisfied with the determination may object in the manner set out in Part IVC if the person:

(a) claims an interest in the estate; or

(b) is granted probate of the deceased person's will or letters of administration of the estate.

(6) Part IVC applies in relation to the objection as if the person making it were the deceased person.

260-150 Commissioner may authorise amount to be recovered

(1) The Commissioner may, in writing, authorise a person (the authorised person ) who is:

(a) a member or a special member of the Australian Federal Police; or

(b) a member of the police force of a State or Territory; or

(c) any other person;

to recover:

(d) the total amount of the *outstanding tax-related liabilities of a deceased person as determined under section 260-145 (about unadministered estates); and

(e) any reasonable costs incurred by the authorised person in recovering that amount;

by seizing and disposing of any property of the deceased person.

(2) The authorised person may seize and dispose of the property as prescribed by the regulations.

[The next Division is Division 265.]

Division 265 - Other matters

Table of Subdivisions

265-A Right of person to seek recovery or contribution

265-B Application of laws

Subdivision 265-A - Right of person to seek recovery or contribution

Guide to Subdivision 265-A

265-35 What this Subdivision is about

This Division deals with a person's right to recover from another person an amount paid in discharge of a tax-related liability if:

• the person has paid the amount for or on behalf of the other person;

• the persons are jointly liable to pay the amount.

Table of sections

Operative provisions

265-40 Right of recovery if another person is liable

265-45 Right of contribution if persons are jointly liable

[This is the end of the Guide.]

Operative provisions

265-40 Right of recovery if another person is liable

A person who has paid an amount of a *tax-related liability for or on behalf of another person may:

(a) recover that amount from the other person as a debt (together with the costs of recovery) in a court of competent jurisdiction; or

(b) retain or deduct the amount out of money held by the person that belongs to, or is payable to, the other person.

265-45 Right of contribution if persons are jointly liable

(1) If 2 or more persons are jointly liable to pay an amount of a *tax-related liability, they are each liable for the whole of the amount.

(2) If one of the persons has paid an amount of the liability, the person may recover in a court of competent jurisdiction, as a debt, from another of those persons:

(a) an amount equal to so much of the amount paid; and

(b) an amount equal to so much of the costs of recovery under this section;

as the court considers just and equitable.

Subdivision 265-B - Application of laws

Table of sections

265-65 Non-application of certain taxation laws

265-70 Application of the Criminal Code

265-65 Non-application of certain taxation laws

This Part does not apply in relation to a *taxation law, or a provision of a taxation law, that is prescribed by the regulations.

265-70 Application of the Criminal Code

The Criminal Code applies to all offences against this Part.