In the recent Supreme Court of New South Wales case of Deputy Commissioner of Taxation v Fitzgerald, the Deputy Commissioner of Taxation (DCT) sought to recover an amount in respect of director penalties for which the defendant, Mr Fitzgerald, became liable due to an unpaid tax debt owed by HBO EMTB Employment Services Pty Limited (the Company).
The DCT’s argument was relatively straightforward. The DCT argued that:
- The Company was required to withhold amounts of PAYG withholding and remit them to the DCT in accordance with the Act.
- Mr Fitgerald as director of the Company, was obliged to cause the Company to comply which he failed to do.
- The DCT gave notice of the penalty pursuant to the Act by giving a Director Penalty Notice (DPN) to the address of Mr Fitzgerald as found on ASIC’s records.
- Mr Fitzgerald is therefore liable for the Company’s outstanding PAYG withholdings.
In what was a creative defence, Mr Fitzgerald asserted that service of the DPN had not been affected properly and as a result did not give the Defendant an opportunity to appoint an administrator to avoid personal liability. Mr Fitzgerald argued that the affidavit of service noted that the DPN was ‘posted’, but the deponent did not specify that the person actually walked to a specified Australia Post mailbox and place the envelope in it.
Notwithstanding these submissions, the Court was satisfied that the DCT affected service of the DPN and Mr Fitzgerald was liable to pay the whole amount claimed.
We have previously published articles and fact sheets relating to DPN’s (see for example here, here and here). Of note, if you are served with a DPN, it is essential that you immediately seek professional advice to determine your options.
For more information, please contact us.