Luke Livingston recently appeared, successfully, for the Deputy Commissioner of Taxation resisting an appeal by Mr Nathan Kedwell in respect of a director penalty notice issued under Div 269 of Sch 1 to the Taxation Administration Act 1953 (Cth).
On 28 September 2017, the Commissioner issued the DPN to Mr Kedwell. The DPN identified the underlying liability to which the notice related as being quarterly Pay as You Go amounts that Synergy HR (Aust) Pty Ltd had withheld and not remitted to the Commissioner for the periods commencing 1 October 2016 and 1 January 2017.
The DPN contained details on how payment could be made in satisfaction of the DPN, using a specified electronic funds transfer reference number. At that time, Synergy had a Running Balance Account debt of $1,109,811 to the Commissioner. Many of the amounts the subject of this debt accrued prior to the underlying liability to which the DPN related.
On four separate occasions between 20 October 2017 and 23 January 2018, Mr Kedwell made payments to the Commissioner using a different EFT reference than that which had been allocated to the DPN. The payments were made by transfer from Minerva BPO Pty Ltd to Synergy and then to the Commissioner.
Mr Kedwell was the sole director of both Minerva and Synergy.
The payments were applied by the Commissioner to Synergy’s RBA towards debts which had accrued prior to the underlying liability to which the DPN related.
Justice Payne (with whom Bell P and Basten JA agreed) held that the evidence led by Mr Kedwell did not establish a loan agreement between Minerva and Mr Kedwell. Their Honours concluded that the sporadic payments by Minerva to Synergy over the course of four months, without more, did not evidence a loan agreement.
The Court of Appeal concluded that the payments made to the Commissioner were made by Synergy and Minerva in discharge of Synergy’s RBA debts, without Mr Kedwell, Synergy or Minerva giving a direction to the Commissioner that the funds should be applied to Mr Kedwell’s DPN liability.
Mr Kedwell caused each of the payments to be made using the EFT reference for Synergy and did not use the EFT reference he was given in the DPN for payment of his DPN liability. Accordingly, applying s 8AAZLE of the Taxation Administration Act 1953 (Cth), the Commissioner was not bound by any instructions given to him on behalf of Synergy about how those payments were to be allocated in payment of Synergy’s debts.
Finally, the Court of Appeal rejected Mr Kedwell’s estoppel case. Their Honours concluded that, in a telephone call on 23 January 2018, there was no representation made by the ATO officer about the ATO’s past or future conduct in relation to sums paid to Synergy’s Running Balance Account. Further, the admissions made by Mr Kedwell in cross-examination, together with the contemporaneous documents, established that Mr Kedwell did not rely on the representation allegedly made by the ATO representative. Nor did Mr Kedwell establish that he had suffered any relevant detriment so as to found an estoppel. In those circumstances, the Court of Appeal found it unnecessary to address the authorities concerning the precise limits of any estoppel which may arise against the Commissioner.
Accordingly, the Court of Appeal dismissed the appeal with costs.
A copy of the judgment is available here.
