Case: Commissioner of Taxation v Wong [2002] FCA 756 ; (2002) 121 FCR 60
Outcome: applied
The first question of construction which arises is whether the prefatory words of subs 255(1): 'With respect to every person having the receipt control or disposal of money belonging to a non-resident', require the person to have that receipt, control or disposal at the time of being served with a notice of requirement pursuant to par (a), or whether it is sufficient that the person subsequently has that receipt, control or disposal even though he did not have that receipt, control or disposal at the time of service of the notice. While the matter is not free from doubt, I have come to the conclusion that it is not necessary for the person to have the receipt, control or disposal of money belonging to the non-resident at the time of service of the notice and that the operative provisions of pars (b), (c) and (d) will be triggered if and when the person, subsequent to service of the notice of requirement pursuant to par (a), has that receipt, control or disposal. Such a construction promotes the section's undoubted legislative function and purpose as a tax collection mechanism. The contrary view would mean that the Commissioner would have to know when a person had the receipt, control or disposal of money belonging to the non-resident and serve him with a notice of requirement pursuant to par (a) before he ceased to have that receipt, control or disposal. In many cases the Commissioner will know that a person will, or is likely to, have the receipt, control or disposal of money belonging to the non-resident, but not when he will have it. The conclusion to which I have come avoids that dilemma. This question was left open by Lindgren J in Commissioner of Taxation v Wong [2002] FCA 756 ; (2002) 121 FCR 60 where his Honour said at [24]: 'In order to decide the present case, I need not, and therefore I do not, decide whether, in order for parts (b), (c) and (d) to be enlivened, a person served with a notice under s 255(1)(a) must satisfy the description in the prefatory words at the time of service, or whether it suffices that he does so later and before action is brought. The reason is that in my opinion the recipient of a notice is required to satisfy that description (be a Controller) either at the first, or at either of those two times, but Mr Wong did not satisfy either formulation of the requirement.' Although, a little later his Honour said at [27]: 'The prefatory words are themselves indefinite in point of time. Is see no reason why notional words such as "at any time and from time to time" should not be understood to qualify "having" and "derives" in the prefatory words.' which suggests, in my view, that his Honour may well have come to the same conclusion as I have. 52 His Honour went on to say at [28]: 'Consistently with this view, par (a)'s reference to "the tax due and payable by the non-resident" is a reference to the tax due and payable by the non-resident on the "income, or profits or gains of a capital nature" derived by him at any time and from time to time. In other words, a notice given under par (a) can be expressed to have an ambulatory or ongoing operation and to require the recipient to pay not only tax that is already due and payable, but tax which may become due and payable in the future, and will do so if the non-resident derives further income. This construction apparently treats "when" not as referring to a time for payment, but as meaning "if". The construction is supported by par (b).' I agree that a notice given under par (a) can be expressed to have an ambulatory or ongoing operation and to require the recipient to pay not only tax that is already due and payable, but tax which may become due and payable in the future. As his Honour says, such construction is supported by par (b). 53 However, in Wong , Lindgren J made it quite clear (at [23]) that, in his view, notice or other communication of requirement pursuant to par (a) is the 'trigger' which activates the operative provision of subs 255(1), in particular that without that requirement, the provisions of pars (b), (c) and (d) are not activated. I entirely agree with his Honour's view in this regard. 54 One issue which arises from the terms of subs 255(1) is, in what circumstances, outside circumstances which attract the deeming operation of subs 255 (2), will money in the receipt, control or disposal of a person belong to another person, being a non-resident.