Buchanan v. Kahl

Judges:
Bray CJ

Court:
Supreme Court of South Australia

Judgment date: Judgment handed down 23 May 1972, received 14 August 1972.

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Bray C.J. On 15 March 1972 the appellant was convicted by a court of summary jurisdiction at Adelaide of failing to furnish an income tax return in respect of the year 1970-1971 within 14 days after being required to do so by the Deputy Commissioner of Taxation by notice in writing dated 8 December 1971 and was fined $120 and costs. He appeals against both conviction and penalty.

He conducted his own case before the learned special magistrate and before me, and the first ground of appeal is that, though he pleaded not guilty, he was during the hearing advised by the learned special magistrate to enter a plea of guilty and that he did so and was thereby deprived of a chance of presenting his arguments for the dismissal of the charge.

This ground, I think, proceeds from a misapprehension. According to the record the appellant was treated throughout as pleading not guilty. There is no record of any change of plea. At the end of the evidence it is recorded that the appellant addressed the court further. The official note reads, ``Court finds charge proved''. The learned special magistrate then made some remarks on the question of penalty. The appellant, therefore, as far as the official record goes was in the position of a defendant who has pleaded not guilty, called evidence, addressed the court and been convicted at the conclusion of the case in the regular way. But if the appellant did from misapprehension, or otherwise, lose any chance of presenting his arguments to the learned special magistrate, he has had a full opportunity to present them to me. They are arguments of law turning on the facts in evidence and he has lost nothing, whatever happened in the court below.

At the trial the respondent, the Deputy Commissioner of Taxation, relied on the averment section of the Income Tax Assessment Act 1936-1971, sec. 243, and the notice referred to in the complaint was put in. That notice, dated 8 December 1971, required the appellant within 14 days of the date of the notice to furnish a return in the appropriate form setting out ``a full and complete statement of all income derived from all sources in Australia or elsewhere during the year ended 30 June 1971''.

By reason of the provisions of sec. 243 that proved a prima facie case. The appellant, however, gave evidence himself and called Mr. Hand, the prosecuting officer of the Taxation Department, who stated that he was representing the Deputy Commissioner. Further evidence concerning what took place at the hearing and other matters was contained in affidavits tendered on each side and received by me without objection.

The 14 days mentioned in the notice expired on 22 December. The appellant said in evidence, and I see no reason to doubt him, that he did not receive the notice until 29 December when it was impossible to comply with it in accordance with its terms. He was, he says, away from Adelaide during the relevant period. On 30 December 1971 he

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wrote asking for an extension. Unfortunately he quoted the wrong file number. The prosecuting section of the Taxation Office in Adelaide did not receive that letter until after the complaint had been signed on 2 February. The appellant subsequently asked the respondent to withdraw the complaint, but he would not.

It further appears that the appellant was a partner in a firm called R.A. Buchanan and Partners. The tax agents acting for that firm asked for an extension of time in which to file the partnership return required by sec. 91. An extension was granted until 29 February. The appellant's case is that by reason of the grant of extension to the firm the notice to him was waived because he could not fill in his own return until the amount of his income from the partnership had been ascertained.

It is, of course, true that the appellant had to include in his personal return a statement of his partnership income. However, he is charged with a breach of sec. 223(1) which reads as follows -

``(1) Any person who fails to duly furnish any return or information or comply with any requirement of the Commissioner as and when required by this Act or the regulations or by the Commissioner shall be guilty of an offence.

Penalty: Not less than Four dollars or more than Two hundred dollars.''

Prima facie he was guilty of an offence by failing to comply with the Commissioner's requirement in the notice to furnish a return containing a full and complete statement of his income for the relevant period within the specified time. It is, of course, special cases possibly apart, no excuse for the taxpayer to say that he cannot find out what his income during that period was. It is for him so to order his affairs that he can find out. The fact that the firm is given an extension of time in which to lodge its return does not of itself carry with it a corresponding extension to the individual partner. It does not follow that the income of the firm cannot be ascertained until the partnership return is lodged. In fact it must be ascertained before the return is lodged and, indeed, before it is signed. The income of a partner from his firm might well be ascertainable from the books long before the return is prepared. There is a logical gap in the appellant's argument which treats the date of ascertainment of the amount of his share in the partnership income as indentical with the date of lodgment of the partnership return. This is enough, in my view, to destroy his argument though, even apart from this, I do not think that an extension granted for the lodgment of a firm return can be treated as equivalent to a similar extension for the lodgment of the individual return by the partner, or that the absolute nature of the liability imposed by sec. 223 can be qualified by a concession made for another purpose to another entity as for this purpose I think the firm is.

I was, however, given some cause for hesitation by the layout of Item 45 in the form of the individual return for the year 1970-1971. That reads as follows:

``Share in partnership or income as a beneficiary under will, settlement, deed of gift or instrument of trust -

      of (a) . . .       -return lodged at . . .       Taxation Office
      of (b) . . .       -return lodged at . . .       Taxation Office
      of (c) . . .       -return lodged at . . .       Taxation Office''
          

I was told that this item appeared in this way for the first time in the form of the return for the year in question. If that is to be read as requiring the taxpayer to include his share in the partnership income as it is shown in a partnership return lodged before the individual return, then I think there would be some ground for arguing that an extension of time for the lodging of the partnership return impliedly operated as an extension with regard to the individual return as well, because it would be impossible to comply with the requirement of the individual return until the partnership return had been lodged. On consideration, however, I think that that is not the effect of the wording in question. There is a dash between the reference to the amount of the share in the partnership and the reference to the lodging of the partnership return. There are no connecting words such as ``as per'', or ``as contained in'' or the like. I think that the words relating to

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the lodging of the partnership return were only included in the individual return for some purpose of office convenience as indicating the State of the Commonwealth in which the partnership return had been lodged or was going to be lodged and were not intended to qualify the obligation to furnish the figure of the taxpayer's share in the partnership income as an independent and absolute obligation, irrespective of what was in the partnership return, though no doubt normally the figures would correspond. In addition it might be difficult to hold that an alteration to the form could alter the construction of the Act or of the obligation imposed by sec. 223. I think, therefore, that the appeal against conviction fails. It is otherwise, however, with the appeal against penalty.

The penalty fixed by sec. 223 is a fine of not less than $4 or more than $200. The learned magistrate chose a halfway figure. He said he saw no reason for departing from the usual scale of penalties in cases of late lodgments when the return has been lodged, as this one was, by the time of the hearing. He said, truly enough, that a taxpayer has no right to act on the assumption that extensions have been or will be granted. He made reference to the fact that the return was some months overdue, that the amount of tax was substantial and that it was not offset by deductions. The second and third of these are clearly relevant matters and I do not think it makes any difference that it ultimately turned out that the appellant was entitled to some credit for provisional tax paid in respect of the previous year. This is not, I think, a deduction in the sense used by the learned special magistrate, and, moreover, provisional tax was payable on his 1970-1971 income with respect to the next financial year. I am not sure whether the learned special magistrate was referring to the length of time the return was overdue before the respondent's notice of 8 December. If so, I doubt whether this was relevant, since the appellant was charged with failing to comply with that notice, not with failing to lodge his return at some earlier date. However, it is not necessary to pursue that now.

I do not agree that the case can properly be regarded as an offence of average seriousness so as to justify a penalty about halfway between the minimum and the maximum, but it is fair to say that the facts were probably developed more extensively and more clearly before me than they were before the learned special magistrate. Technically the appellant committed the offence at midnight on 22 December, but if he had lodged the return on the 29th when he wrote the letter I am sure that there would have been no prosecution. Instead on that day he asked for an extension and I think that if the letter had reached the proper quarters in due course of post, he would have got it, particularly if it had been appreciated that the time for lodging the partnership return had been or was going to be extended. It did reach the Taxation Department, but not the proper quarter of that department. It was careless of the appellant to have quoted the wrong file number, but, after all, he gave his name and in my view the letter should have reached the appropriate officer very soon after 30 December, certainly long before 2 February when the compliant was signed. It was reasonable for the appellant to expect a reply to that letter, though he was not legally entitled to rely on that. In fact he got the complaint instead and I think it probable that in his subsequent communications with the department he was less than tactful.

We have, then, the initial slothfulness of the appellant, which would not, in my view, have led to any prosecution if there had not been some laxity, or at least some breakdown in communication, in the internal workings of the department. For that the appellant was not to blame. It ought not to take a month for a letter with a wrong file number on it, but with the taxpayer's name, to get to the right person in the department. Someone in charge of the file bearing the wrong number quoted by the appellant should surely have seen that letter soon after it arrived and realised that there was something wrong and sent the letter on to the right place.

I think a fine of $20 would be amply

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sufficient in the circumstances of this case. I dismiss the appeal against conviction but allow the appeal against penalty. The penalty imposed by the learned special magistrate is set aside and in lieu thereof I order that the appellant be fined the sum of $20 with $4 costs. I will hear counsel as to what consequential orders should be made.