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Director Penalty Notices valid: DCT v Power (Australia)

16 November 2012   (0 Comments)
Posted by: SAIT Technical
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By Taxvine (Tax Institute Australia)

The Supreme Court of New South Wales has held that Director Penalty Notices (DPNs) issued to a director of a company which had failed to remit PAYG deductions, withheld on behalf of employees, to the ATO were valid notices, and the ATO was entitled to judgment against the director.

The defendant was a director of a company which had failed to remit substantial amounts of PAYG deductions withheld from employees' wages.

The sole issue in the proceedings was whether the DPNs issued by the Deputy Commissioner to the defendant were valid. The defendant contended that the DPNs were invalid as they failed to accord with the requirement in s 269-25(2)(b) of the TAA 1953 that the DPNs inform the defendant that he was liable because of an obligation which he had, or formerly had, under Division 269 of the TAA 1953.

The court made the following findings:

· although the defendant had ceased to be a director by the time the final DPN was issued, a proper construction of the legislation indicates that the obligation which it imposes on a director is a continuing one, and that it survives any renunciation of directorial duty

· the legislative purpose of the notice required under s 269-25(1) of the current legislation is the same as the legislative purpose in respect of the former notice under s 222AOE of the ITAA 1936. In this case, the DPNs clearly fulfilled the legislative purpose of notices of this type. They informed the defendant of the quantum of the company's unpaid liability and of his liability to a penalty in an equal amount, and they made clear what he was required to do to avoid the penalty

· where there are two or more amounts claimed, there is no requirement to inform the director of the obligation in respect of each amount.

DCT v Power [2012] NSWSC 995 (Johnson J, 9 November 2012).


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