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The Supreme Court of NSW has ordered a taxpayer to pay the ATO over $24 million in relation to unpaid income tax and penalties.
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Taxpayer ordered to pay $24.4m to ATO over unpaid tax debts
10 September 2024
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A taxpayer has been ordered to pay around $24.4 million to the ATO in relation to disputed tax debts and penalties, ahead of a hearing before the Administrative Appeals Tribunal.
In a recent case, Deputy Commissioner of Taxation v Fayad [2024] NSWSC 1140, the Deputy Commissioner of Taxation (DCT) sought judgment against a taxpayer for unpaid tax and penalties amounting to $24,405,424.43, based on an ATO assessment at 2 September 2024.
The DCT claimed that the taxpayer and defendant in the case was indebted to the Commonwealth for liabilities including income tax, shortfall interest charge, administrative penalties, and Division 293 tax.
According to the assessments by the ATO, the income tax-related liabilities amounted to the sum of $11,526,959, which included general interest charge amounts. The shortfall interest charge was calculated to be $1,993,643.96 in total.
In addition, the DCT claimed there was $10,882,983.81 in administrative penalties and around $364.93 in failure to lodge penalties. The Division 293 tax was estimated to be in the sum of $1,472.35.
The defendant had commenced proceedings under Part IVC of the TAA in the Administrative Appeals Tribunal seeking a review of the commissioner’s objection decision.
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The taxpayer and grandmother filed a defence in the proceedings brought by the DCT as she disputed the tax assessments.
She first filed objections in relation to her income tax assessments, penalty assessments, and interest assessed by the ATO on or about 6 June 2017. On or about 28 July 2023, all of her objections were disallowed.
In her decision, Justice Natalie Adams said that the fact that a review or appeal is pending in relation to a taxation decision does not in the meantime interfere with or affect that decision and any tax or other amounts may be recorded as if no appeal were pending.
Adams also said that assertions by the defendant’s tax agent that instead of owing over $24 million, their client only owed about $4,000 was, on its face “very difficult to accept”.
“That is particularly so when regard is had to the fact that nearly half of the amount owed is derived from penalties,” she said.
The court dismissed the defendant’s notice of motion and ordered her to pay the amount of $24,405,424.43.
The defendant was also ordered to pay the plaintiff’s cost of the motion and the costs of the proceedings.
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