WILLIAMS v FC of T
Members:SC Fisher M
Tribunal:
Administrative Appeals Tribunal
MEDIA NEUTRAL CITATION:
[2005] AATA 113
SC Fisher (Member)
Introduction and background
1. The Applicant, William (Bill) Williams and his wife, Donna Marie Williams, operate a business trading as Springwood Gourmet Meats. They employed a number of employees in the financial years ended 30 June 2001 and 30 June 2002 (``the relevant years''). The Applicant paid superannuation contributions on behalf of those employees after the due dates. The Commissioner of Taxation (``the Respondent'') subsequently raised default assessments of superannuation guarantee charge (``SGC'') for the relevant years.
2. The Respondent remitted the Part 7 Penalty to nil as the Applicant paid the superannuation contributions, although late.
Jurisdiction
3. The Tribunal has jurisdiction in this appeal by virtue of sections 14ZZA-14ZZM of the Taxation Administration Act 1953 (``TAA''), read in conjunction with section 42 of the Superannuation Guarantee (Administration) Act 1992 (``SGAA'').
The burden of proof
4. Under section 14ZZK(a) of the Taxation Administration Act 1953, the taxpayer is limited to the grounds stated in the taxation objection to which the decision relates unless this Tribunal orders otherwise. Among other things, the taxpayer has the burden of proving that the assessment is excessive or that the taxation decision concerned should not have been made or and that it should have been made differently: section 14ZZK(b). In general, the taxpayer must go further than showing the assessment is excessive or wrong and show what the correct assessment should be:
Trautwein v FC of T (1936) 4 ATD 48 at 62-63; (1936) 56 CLR 63 at 87-88. In the absence of evidence, the Tribunal is not able to infer facts in favour of taxpayers:
McCormack v FC of T 79 ATC 4111; (1979) 143 CLR 284. The scheme of the Taxation Administration Act 1953, the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997 does not place any onus on the Respondent to show that the assessment was correctly made:
Gauci v FC of T 75 ATC 4257 at 4261.
The decision under review
5. The decisions under review are decisions made by the Respondent to raise superannuation guarantee charges against the Applicant in respect of the fiscal years ended 30 June 2001 and 30 June 2002 in the amounts of $18,809.06 (for 2001) and $9,094.79 (for 2002).
6. The substantive issue in this appeal is governed by the SGAA.
The role of the Tribunal
7. The role of the Tribunal is to review the merits of the decision before it: section 43 of the Administrative Appeals Tribunal Act 1975 and Secretary, Department of Social Security v Murphy Federal Court, 29 June 1998, 908/98;
ATC 2060
(1998) 52 ALD 268. The Tribunal is guided by the norm that it should reach the correct and preferable decision on the basis of the material before it:Ajka Pty Ltd v Australian Fisheries Management Authority [2003] FCA 248 at [33]. The Tribunal is required to stand in the shoes of the original decision-maker and consider all evidence anew, bearing in mind statutory provisions and any significant legal precedent:
Bantick and Secretary, Department of Family and Community Services [2003] AATA 472 at [ 23]. The Tribunal proceeds de novo:
Bramwell v Repatriation Commission (1998) 51 ALD 56 at 60 per Weinberg J. The Tribunal must base its decision upon the material that is logically probative of the existence of facts that emerge from the evidence before it:
Collins v Minister for Immigration and Ethnic Affairs (1981) 36 ALR 598 at 601.
The material before the Tribunal
8. The following documentary evidence was before the Tribunal:
- Exhibit 1 Documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975
Evidence
9. The Applicant did not attend the hearing. The Registry of the Tribunal made telephone contact with the Applicant at the appointed time for the hearing. The Applicant advised the Registry to proceed with the hearing in his absence, which the Tribunal did. Neither party called any evidence.
Issue
10. The main issue in this appeal is whether the assessments of superannuation guarantee charge for the fiscal years ended 30 June 2001 and 30 June 2002 are correct and whether or not the objection decision should be affirmed or set aside (and if the latter, on what basis). A subsidiary issue is what legal consequences attach to the fact that the Applicant has paid the outstanding superannuation entitlements after their due dates for payment, particularly in the light of the power of the Respondent to levy and recover superannuation guarantee charge against that very contingency.
Applicant's submissions
11. The Applicant contends that he has paid all superannuation entitlements on behalf of his employees for the relevant years.
12. The Applicant concedes that he paid the superannuation contributions on behalf of his employees in respect of the relevant years after the due dates. The Applicant made payment of the superannuation contributions to the superannuation trustee.
Respondent's submissions
13. The Respondent made the following submissions in oral argument and written submissions, which the Tribunal found to be of great assistance to it.
14. The Applicant was an employer, making payments of salary or wages to eligible employees in the relevant years.
15. The terms ``employer'' and ``employee'' are defined in subsection 12(1) of the Superannuation Guarantee (Administration) Act 1992 (``SGAA'') as having their ordinary meaning. Subsections 12(2) to (11) expand the ordinary meaning of ``employee''.
16. The Applicant did not pay the minimum superannuation contributions on behalf of his eligible employees to a complying superannuation fund, Retirement Savings Accounts (``RSA'') or Superannuation Holdings Accounts Reserve (``SHAR'') by 28 July following the end of the relevant years.
17. As a consequence of failing to make superannuation contributions on behalf of his eligible employees by 28 July following the end of the relevant years and pursuant to section 33 of the SGAA, the Applicant was required to lodge superannuation guarantee (``SG'') statements and pay the SG shortfalls to the Respondent by 14 August following the end of the relevant years. The Applicant failed to do so.
18. Accordingly, the Respondent raised default assessments of superannuation guarantee charge (``SGC'') for the relevant years pursuant to section 36 of the SGAA.
• 2001 Assessment
19. The assessment of SGC for the 2001 financial year was correctly raised based on the individual SG shortfalls of the following fifteen employees:
20. The elements comprising the assessment of SGC for the 2001 financial year are as follows:
Total Superannuation Guarantee Shortfall: $16,462.16
Nominal Interest: $1,846.90
Administrative Charge: $500.00
21. Accordingly, the assessment of SGC for the 2001 financial year is $18,809.06.
• 2002 Assessment
22. Superannuation contributions paid by the Applicant prior to 28 July 2002 in respect of the 2001 financial year have been taken into account in calculating the individual SG shortfalls for the following four employees (who were still in the employ of the Applicant in the 2002 financial year) for the 2002 financial year:
+--------------------------------------------------------------------------+
No. | Employee | Gross Salary | Contribution paid | % of Gross | Shortfall
| | | on 22.10.01 | Salary | %
| | | | Paid |
---------------------------------------------------------------------------
1. | K. Harper | $21,872 | $1,105.79 | 5.0557% | 2.9443%
---------------------------------------------------------------------------
2. | D. George | $1,558 | $124.64 (of | 8% | 0.0%
| | | $949.16 paid on | |
| | | 22.10.01 only | |
| | | $124.64 is | |
| | | required to be | |
| | | paid for 2002 | |
| | | year) | |
---------------------------------------------------------------------------
3. | R. Popiel | $19,132 | $760.32 | 3.9741% | 4.0259%
---------------------------------------------------------------------------
4. | K. West | $28,229 | $936.48 | 3.3174% | 4.6826%
+--------------------------------------------------------------------------+
ATC 2062
23. The assessment of SGC for the 2002 financial year was correctly raised based on the individual SG shortfalls of the following eight employees:
+-----------------------------------------------------------+
No. | Employee | Gross Salary | Shortfall % | Individual
| | | | Shortfall
------------------------------------------------------------
1. | K. Harper | $21,872 | 2.9443% | $ 643.97
------------------------------------------------------------
2. | D. George | $1,558 | 0.0 | NIL
------------------------------------------------------------
3. | R. Popiel | $19,132 | 4.0259% | $ 770.24
------------------------------------------------------------
4. | T. McMahon | $11,246 | 8% | $ 899.68
------------------------------------------------------------
5. | K. West | $28,229 | 4.6826% | $1,321.84
------------------------------------------------------------
6. | P. Broderick | $16,443 | 8% | $1,315.44
------------------------------------------------------------
7. | J. McGregor | $26,147 | 8% | $2,091.76
------------------------------------------------------------
8. | B. Paget | $11,246 | 8% | $ 899.68
------------------------------------------------------------
| TOTAL | $135,873 | | $7,942.61
+-----------------------------------------------------------+
24. The elements comprising the assessment of SGC for the 2002 financial year are as follows:
Total Superannuation Guarantee Shortfall: $7,942.61
Nominal Interest: $892.18
Administrative Charge: $260.00
25. Accordingly, the assessment of SGC for the 2002 financial year is $9,094.79.
26. There is no provision in the SGAA which confers on the Respondent the discretion to waive the Applicant's obligations to pay the SGC or to extend the time for payment for the relevant years. This is supported by the Tribunal decision in
Jarra Hills Pty Ltd v FC of T 97 ATC 2132 at 2134 where Senior Member Pascoe stated:
``... The legislation is quite clear in providing a deadline for contributions to superannuation of 28 July of the following year. There is no provision in the legislation which allows for any extension of time beyond that date nor any discretion given to the respondent or this Tribunal to overlook a failure to make required levels of superannuation contributions by that date.''
27. There is no provision in the SGAA which confers on the Respondent the discretion to remit or waive the nominal interest component or the administration component of the SGC.
28. Accordingly, when raising the assessments of SGC for the relevant years, the Respondent had no discretion to take into account the superannuation contributions the Applicant paid on behalf of his employees after 28 July following the relevant years, other than the amounts referred to in paragraph 22 above, which amounts were taken into account in calculating the individual shortfalls for the 2002 financial year.
29. In addition, General Interest Charge (GIC) was levied under section 49 of the SGAA.
30. The Respondent submits that the GIC levied under section 49 is not an assessment for the purposes of section 42 and, as such, cannot be the subject of an objection under Part IVC or of an application for review to the Tribunal. This is supported by the Tribunal's decision in
Pye v FC of T 2004 ATC 2029 at 2031 where Senior Member McCabe stated:
``The Tribunal does not have jurisdiction to review the ATO's decision in relation to the Late Payment Penalty or GIC, imposed under s 49. These cannot be the subject of an objection under s 42 because they are not an `assessments' as defined in s 6.''
31. The Respondent remitted the Part 7 Penalty to nil as the Applicant paid the superannuation contributions on behalf of his employees for the relevant years, although late. In effect, there is no contest between the parties regarding the Part 7 penalty.
ATC 2063
Findings of fact
32. On 8 November 2002 an employee of the Applicant lodged an Employee Notification (``EN'') of insufficient superannuation contributions with the Respondent.
33. On 12 December 2002 the Respondent issued Superannuation Guarantee Audit Questionnaires (``SGAQs'') for the relevant years to the Applicant. The Respondent requested that the information be provided to the Australian Taxation Office (``ATO'') no later than 24 January 2003.
34. On 4 March 2003 an officer of the Respondent telephoned the Applicant, who advised he had not received the SGAQs but confirmed the address to which they were sent was correct. The officer agreed to send further SGAQs with a new return date of 31 March 2003.
35. Under cover of letter (dated 26 March 2003) the Applicant returned the SGAQs for the relevant years.
• 2001 Assessment
36. The SGAQ for the 2001 financial year disclosed that the Applicant paid the following superannuation contributions on behalf of fifteen employees after the due date (that is, after 28 July 2001, the date the superannuation contributions became due and payable).
+----------------------------------------------------------------+
No. | Employee | Gross Salary | Contributions Paid | Date Paid
------------------------------------------------------------------
1. | R. Popiel | $17,780 | $760.32 | 22.10.01
| | | $616.36 | 16.03.03
------------------------------------------------------------------
2. | R. Searle | $6,336 | $506.88 | 16.03.03
------------------------------------------------------------------
3. | D. George | $27,471 | $ 949.16 | 22.10.01
| | | $1,019.94 |
------------------------------------------------------------------
4. | J. Charlton | $2,860 | $183.04 | 16.03.03
------------------------------------------------------------------
5. | K. West | $36,542 | $936.48 | 22.10.01
| | | $1,028.02 | 16.03.03
------------------------------------------------------------------
6. | K. Harper | $32,472 | $1,105.79 | 22.10.01
| | | $988.68 | 16.03.03
------------------------------------------------------------------
7. | J. Purnell | $ 2,153 | $162.29 | 16.03.03
------------------------------------------------------------------
8. | A. Parry | $18,519 | $592.47 | 22.10.01
| | | $516.22 | 16.03.03
------------------------------------------------------------------
9. | M. Shaw | $18,930 | $591.29 | 22.10.01
| | | $632.37 | 16.03.03
------------------------------------------------------------------
10. | P. Bondfield | $19,906 | $720.36 | 22.10.01
| | | $860.29 | 16.03.03
------------------------------------------------------------------
11. | E. Denyer | $7,847 | $221.09 | 22.10.01
| | | $406.58 | 16.03.03
------------------------------------------------------------------
12. | T. Scott | $3,300 | $228.80 | 22.10.01
| | | $35.20 | 16.03.03
------------------------------------------------------------------
13. | R. Groome | $7,058 | $170.07 | 22.10.01
| | | $308.27 | 16.03.03
------------------------------------------------------------------
14. | P. Broderick | $3,449 | $275.87 | 16.03.03
------------------------------------------------------------------
15. | A. Groome | $1,154 | $92.33 | 16.03.03
------------------------------------------------------------------
| | | $13,968.17 |
+-----------------------------------------------------------------+
ATC 2064
37. The Applicant did not lodge a superannuation guarantee statement for the 2001 financial year.
• 2002 Assessment
38. The SGAQ for the 2002 financial year disclosed that the Applicant paid the following superannuation contributions on behalf of eight employees after the due date (that is, after 28 July 2002, the date the superannuation contributions became due and payable):
+-----------------------------------------------------------------+
No. | Employee | Gross Salary | Contributions Paid | Date Paid
-------------------------------------------------------------------
1. | K. Harper | $21,872 | $ 1,698.36 | 16.03.03
-------------------------------------------------------------------
2. | D. George | $1,558 | $118.14 | 16.03.03
-------------------------------------------------------------------
3. | R. Popiel | $19,132 | $1,495.46 | 16.03.03
-------------------------------------------------------------------
4. | T. McMahon | $11,246 | $889.60 | 16.03.03
-------------------------------------------------------------------
5. | K. West | $28,229 | $2,206.08 | 16.03.03
-------------------------------------------------------------------
6. | P. Broderick | $16,443 | $1,293.20 | 16.03.03
-------------------------------------------------------------------
7. | J. McGregor | $26,147 | $2,063.58 | 16.03.03
-------------------------------------------------------------------
8. | B. Paget | $11,246 | $899.60 | 16.03.03
-------------------------------------------------------------------
| | | $10,674.02 |
+------------------------------------------------------------------+
39. The Applicant did not lodge a superannuation guarantee statement for the 2002 financial year.
40. On 29 April 2003 the Respondent raised assessments of SGC for the relevant years.
41. On 29 April 2003 the Respondent issued a letter to the Applicant advising that:
- (a) default assessments of SGC for the relevant years had been raised pursuant to section 36 of the SGAA; and
- (b) General Interest Charge (``GIC'') will continue to accrue at the prescribed rate (currently 11.75%) until the outstanding shortfall is paid in full.
42. On 24 June 2003 the Applicant lodged a notice of objection with the ATO against the default assessments of SGC for the relevant years.
43. On 12 February 2004 the Respondent issued a Notice of Decision on Objection advising the Applicant that the objection was disallowed for the relevant years.
44. The Applicant lodged an application (dated 30 March 2004) for a review of that decision to the Administrative Appeals Tribunal.
The legislation
• Superannuation Guarantee (Administration) Act 1992
45. Broadly speaking, the purpose of the SGAA is to ensure that all eligible employees receive a prescribed minimum level of superannuation support. This minimum level of superannuation support must be provided for the benefit of the eligible employees to a complying superannuation fund, Retirement Savings Accounts (``RSA'') or the Superannuation Holding Accounts Reserve (``SHAR'') is by the dates prescribed in the SGAA. Where an employer does not provide a minimum level of superannuation support for all of its eligible employees by the prescribed dates, the employer becomes liable for the SGC.
46. The SGC, which is payable by the employer and is levied on an employer's superannuation guarantee shortfall, is payable to the Respondent. Part of the SGC collected by the Respondent is redistributed for the benefit of the affected employees.
47. Under section 17 of the SGAA, the superannuation guarantee shortfall is comprised of three elements:
- (a) the total of the employer's individual superannuation guarantee shortfalls for the year;
ATC 2065
- (b) the employer's nominal interest component for the year; and
- (c) the employer's administration component.
48. Under section 19, the individual superannuation guarantee shortfall is calculated to be a certain percentage of the total salary or wages paid by the employer to the employee for the year. However, in accordance with sections 22 and 23, the individual superannuation guarantee shortfall is reduced to the extent that the employer has made contributions to an RSA, a complying superannuation fund, or SHAR. Further, where the monthly salary or wages of an employee totals less than $450, that amount is excluded from the amount of salary or wages used as a basis for determining the individual superannuation guarantee shortfall of an employee under section 19.
49. Under section 33 of the SGAA, employers with a superannuation guarantee shortfall must lodge a superannuation guarantee statement by the dates prescribed under the SGAA. Such a statement is deemed to be an assessment under section 35. If a superannuation guarantee statement is not lodged by the employer and the Respondent is of the opinion that the employer is liable to pay the SGC, section 36 provides that the Respondent may make an assessment of the superannuation guarantee charge payable on the shortfall. In addition, a penalty under Part 7 will apply for non-lodgement of superannuation guarantee statements.
50. Under section 6 an ``assessment'' is defined as:
- (a) the ascertainment of an employer's superannuation guarantee shortfall in a year and of the superannuation guarantee charge payable on the shortfall; or
- (b) the ascertainment of additional superannuation guarantee charge payable under Part 7.
51. Section 42 provides that employers may object against assessments in the manner set out in Part IVC of the TAA.
Tribunal's reasons
52. The Respondent contended that there is no provision in the SGAA which confers on the Respondent the discretion to waive the Applicant's obligations to pay the SGC or to extend the time for payment for the relevant years:
Jarra Hills Pty Ltd v FC of T 97 ATC 2132 at 2134. The Tribunal respectfully agrees with this proposition, which it notes has been recently deployed in the recent decision of this Tribunal in
Kancroft Pty Ltd (acting as Trustee for Robertson Family Trust) v FC of T 2004 ATC 2126; [2004] AATA 591. The Tribunal notes that sections 22 and 23 of the SGAA do not shift this proposition or change it in any way. What this proposition means is that this Tribunal, as a merits-based administrative review body does not have a discretion that it can exercise in favour of the Applicant to waive the Applicant's obligations to pay the SGC or to extend the time for payment for the relevant years. As it appeared to the Tribunal, one of the underlying policies to the SGAA is to compel employers to make payments of superannuation on behalf of employees (whether the basis of such an obligation such as an employment contract, any relevant industrial award or instrument or some other basis recognised by the law of obligations or some other branch of public law). Unfortunately for the Applicant, this proposition is decisive of the resolution of this appeal in favour of the Respondent.
53. A subsidiary issue is what legal consequences attach to the fact that the Applicant has paid the outstanding superannuation entitlements after their due dates for payment, particularly in the light of the power of the Respondent to levy and recover superannuation guarantee charges against that very contingency.
54. This issue troubled the Tribunal greatly. The Applicant has attempted to perform his legal obligations in relation to the payment of superannuation on behalf of his employees, although he has done so late, and then by way of payment to the superannuation trustee. In view of the timing differential, the Respondent was empowered to, and did, impose a superannuation guarantee charge in respect of the late payment of superannuation.
55. The Tribunal had close regard to the terms of the SGAA. There is nothing in the SGAA that relieves the Applicant from the duty to pay the amount of a superannuation guarantee charge once the Respondent has raised the charge.
56. In both effect and broad terms, the Applicant has paid superannuation contributions twice. The Respondent is not obliged to refund any superannuation guarantee charge that it has properly raised against the
ATC 2066
Applicant. Whether the Respondent chooses to do so on an ex gratia basis is a matter entirely for the Respondent. This will not give rise to a reviewable decision by this Tribunal.57. The other option open to the Applicant is to make inquiries of the superannuation trustee to determine whether any proper refund of twice-paid contributions can be made to the Applicant (if indeed this is the case in point of fact). This will depend upon, among other things, the construction and operation of the trust deed constituting the superannuation fund, as well as the operation of any relevant policy that is consistent with the trust deed itself.
Tribunal's conclusion
58. The correct (but not necessarily preferable) decision in this case is that the Respondent was lawfully empowered to raise and recover superannuation guarantee charges against the Applicant for the fiscal years ended 30 June 2001 and 30 June 2002 in respect of a shortfall in the payment of superannuation by the Applicant on behalf of his employees for those years. The Applicant has not demonstrated that the assessments raised are excessive.
59. There is an unfortunate legislative lacuna raised by the facts of this case where the Applicant paid superannuation contributions to the trustee late, yet still has incurred a superannuation guarantee charge liability. The Respondent might reconsider the working of the SGAA in this respect and consider whether some legislative or administrative variation of the superannuation guarantee charge liability regime is necessitated where a liable employer makes late superannuation contributions direct to the trustee.
Tribunal's order
60. The Tribunal decides to affirm the decision under appeal.
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