Panayi v Deputy Commissioner of Taxation
Document type: Decision Impact Statement
Venue: Supreme Court (S152 of 2017)
Judgment date: 14 September 2017
Date published: 14 March 2018

Summary of decision:
Outlines the ATO's response to this case which concerns the application of the lockdown director penalties provisions as introduced by the Tax Laws Amendment Act 2012.

Overview of facts:
The ATO commenced proceedings to recover liabilities due under the director penalty regime against the taxpayer in his capacity as director of a company. The taxpayer defended the proceedings on grounds inter alia that he was not a director of the company at the relevant time and that the liability had been remitted when members of the company resolved that it be wound up voluntarily. The success of this argument depended on the application of section 269-30 of Schedule 1 to the Taxation Administration Act 1953 (Cth) (TAA) in its unamended form as in force before 30 June 2012. | The primary judge applying the decision of the Western Australian Court of Appeal in Roche v Deputy Commissioner of Taxation [2015] WASCA 196 at [56] -[58], rejected the arguments and held that the amended form of section 269-30 of Schedule 1 to the TAA applied to the appellant's penalty because the appellant, as a director of the company, did not stop being under the relevant obligation under section 269-15 of Schedule 1 to the TAA until after 30 June 2012, the date of commencement of item 9 of the Tax Laws Amendment Act 2012. Applying that section as amended, subsection (1) did not apply to effect a remission of the appellant's penalty because the company did not give the Commissioner any notification under section 16-150 of Schedule 1 to the TAA within the period of three months after the due date for the payment of any of the withheld amounts. | Issues decided by the court | The issue in the appeal as relevant to the special leave application was limited to: • whether the primary judge erred in applying the amended form of section 269-30 of Schedule 1 to the TAA. | • whether the primary judge erred in applying the amended form of section 269-30 of Schedule 1 to the TAA. | The Court of Appeal held that an amendment that prospectively alters a person's unexercised opportunity to have a liability remitted does not engage the common law presumption that statutes do not have a retrospective operation. | The High Court refused to grant special leave and dismissed the application with costs.

Issues decided:
The issue in the appeal as relevant to the special leave application was limited to: • whether the primary judge erred in applying the amended form of section 269-30 of Schedule 1 to the TAA. • whether the primary judge erred in applying the amended form of section 269-30 of Schedule 1 to the TAA. The Court of Appeal held that an amendment that prospectively alters a person's unexercised opportunity to have a liability remitted does not engage the common law presumption that statutes do not have a retrospective operation. The High Court refused to grant special leave and dismissed the application with costs.

ATO view of decision:
The decision accords with the ATO's view of the application of the lockdown director penalties provisions as introduced by the Tax Laws Amendment Act 2012.

Administrative treatment:

Legislative references: Civil Procedure Act 2005 (NSW) 56 Corporations Act 2001 5B 206F 533 1274B Evidence Act 1995 (NSW) 3 59 69 91 Taxation Administration Act 1953 269-15 269-20 269-30 269-35 Tax Laws Amendment (2012 Measures No 2) Act 2012 3 Sch 1 Div 3 Items 8, 9 Uniform Civil Procedure Rules 2005 (NSW) 51.38 51.53
Case references: Abbott v Minister for Lands [1895] AC 425 Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 [2009] HCA 41 Australian Securities Commission v Marlborough Gold Mines Ltd [1993] HCA 15 (1993) 177 CLR 485 Colley v Futurebrand FHA Pty Ltd (2005) 63 NSWLR 291 [2005] NSWCA 223 Deputy Commissioner of Taxation of the Commonwealth of Australia v Woodhams (2000) 199 CLR 370 [2000] HCA 10 (2000) 43 ATR 757 2000 ATC 4141 Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89 Federal Commissioner of Taxation v SNF (Australia) Pty Ltd (2011) 193 FCR 149 [2011] FCAFC 74 2011 ATC 20-265 (2011) 82 ATR 680 Gray t/as Clarence Valley Plumbing Services v Ware Building Pty Ltd [2013] NSWCA 271 Maxwell v Murphy [1957] HCA 7 (1957) 96 CLR 261 Perish v R (2016) 92 NSWLR 161 [2016] NSWCCA 89 Roche v Deputy Commissioner of Taxation [2015] WASCA 196 Seltsam Pty Ltd v McGuinness (2000) 49 NSWLR 262 [2000] NSWCA 29