FEDERAL COURT OF AUSTRALIA

Price v Commissioner of Taxation [2019] FCA 543

ORDERS

THE COURT ORDERS THAT:

1.    The proceedings be dismissed.

2.    Unless either party applies within 7 days for a different order with respect to costs, the applicant pay the respondent’s costs.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THAWLEY J:

OVERVIEW

1    Mr Robert Price brought proceedings under s 39B of the Judiciary Act 1903 (Cth) seeking a declaration to the effect that he was entitled to tax credits against his liability to income tax for the years ended 30 June 2001 to 30 June 2016. He also sought an order in the nature of mandamus requiring the respondent to allow the tax credits.

2    It was not contended that these proceedings could have been brought under Part IVC of the Taxation Administration Act 1953 (Cth). If they could have been, that would have been a discretionary reason to refuse relief under s 39B: Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146 at [10]. These proceedings could not be brought under Part IVC because, as is explained below, the relevant tax credits are not part of the process of assessment and are therefore not a “particular” of the assessment which could be the subject of an objection. There is no other mechanism to object, with the consequence that there is no reviewable objection decision which could found a review in the Administrative Appeals Tribunal or “appeal” to this Court under Part IVC.

3    Robert was a truck driver who had performed work for four entities, each of which was said to have been controlled by his brother, Mr Jim Price. The entitlement to tax credits was said to arise because the amounts in respect of which he sought a declaration had been withheld by his employers from his wages under the Pay-As-You-Go or PAYG system.

4    Robert’s case was that amounts were withheld by those employers, but the relevant employer did not remit the amounts to the Commissioner. The Commissioner’s case was that Robert had not discharged his onus of proving that the relevant amounts had in fact been withheld by the employers at all. The principal question in the proceedings was, accordingly, whether amounts had been withheld from Robert’s wages. If amounts had been withheld, Robert was entitled to a credit irrespective of whether they were remitted to the Commissioner. If amounts had not been withheld, Robert was not entitled to a credit.

5    For the reasons which follow, Robert has not discharged the onus of establishing that amounts were withheld by any of the four employers with the consequence that the declaration should not be made.

THE PAYG SYSTEM

6    The PAYG system is provided for in various parts of Chapter 2 of Schedule 1 of the Taxation Administration Act 1953 (Cth) (TAA). The PAYG regime commenced from 1 July 2000, the day after the PAYE regime ended.

7    A convenient summary of the two regimes was provided by the Full Court (Sundberg, Jessup and Tracey JJ) in Perdikaris v Deputy Commissioner of Taxation (2008) 172 FCR 412 at [2] and [3]:

[2]    Until 30 June 2000 a system was in place under which employees were required to pay tax on their salary or wages progressively as they earned it. The tax was paid through an instalment deduction system which employers were required to implement under the Income Tax Assessment Act 1936 (Cth) (the Assessment Act). The system was known as Pay-As-You-Earn or PAYE. A Group Certificate was issued to an employee at the end of the financial year which recorded, amongst other things, the tax instalments deducted in respect of the employee. The Certificate was lodged by the employee with the Commissioner as part of the employee’s tax return so as to enable a credit to be claimed for the amount of tax deducted and remitted by the employer to the Commissioner.

[3]    As from 1 July 2000 a new tax system, known as Pay-As-You-Go or PAYG, was introduced. Under this system a payer is required to withhold amounts from salaries and wages paid to a payee, which are then to be remitted by the payer to the Commissioner. The payee then becomes entitled to a credit against his or her tax debts for the amounts collected. In lieu of a Group Certificate, a PAYG Payment Summary is issued by the payer to the payee at the end of the financial year. The Summary records, amongst other things, the total tax withheld in respect of the payee. The Summary is returned to the Commissioner together with the employee’s tax return to enable a credit to be made for the amount withheld and remitted by the employer to the Commissioner.

A more detailed account of the legislative history was provided by Edmonds J in the David Cassaniti decision referred to immediately below, from [12] to [29].

8    Reference is made below to three decisions of this Court which have considered the operation of the PAYG system:

    the decision of Edmonds J in Cassaniti v Federal Commissioner of Taxation (2010) 186 FCR 480 (David Cassaniti);

    the decision of Robertson J in Cassaniti v Federal Commissioner of Taxation (2018) 107 ATR 371 (Cassaniti FCA);

    the appeal from the aforementioned decision of Robertson J, namely Commissioner of Taxation v Cassaniti [2018] FCAFC 212 (Greenwood, Logan and Steward JJ) (Cassaniti FCAFC)

9    Part 2-5 of Schedule 1 is about PAYG withholding. Section 12-35 provides:

12-35     Payment to employee

An entity must withhold an amount from salary, wages, commission, bonuses or allowances it pays to an individual as an employee (whether of that or another entity).

10    Section 16-5 of Schedule 1 sets out the rules for when an employer should withhold:

16-5    When to withhold an amount

If Division 12 requires an entity to withhold an amount from a payment, the entity must do so when making the payment.

11    The parties proceeded on the basis that the act of withholding by the relevant entity must be contemporaneous with the payment of salary or wages – see: David Cassaniti at [33], [184], [189] – [190]; Cassaniti FCA at [41]; Cassaniti FCAFC at [27].

12    Section 16-70 sets out the liability of an employer to remit withheld amounts to the Commissioner. It includes:

16-70    Entity to pay amounts to Commissioner

(1)    An entity that withholds an amount under Division 12 must pay the amount to the Commissioner in accordance with this Subdivision.

13    Section 16-140 requires such an entity to apply to register with the Commissioner. By s 16-150, an entity that must pay an amount to the Commissioner under s 16-70(1) must notify the Commissioner of the amount on or before the day on which the amount is due to be paid, regardless of whether it is paid. The notification must be in the approved form and lodged with the Commissioner.

14    Within 14 days after the end of a financial year, the payer must give a payment summary (and a copy of it) to the recipient if during the year the payer made one or more withholding payments to the recipient: s 16-155.

15    By s 16-153(2), an entity must give a report to the Commissioner in the form required by s 16-153(3), not later than 14 August after the end of a financial year, if during the financial year the entity made any payment from which an amount was required to be withheld under Subdiv 12-B.

16    Of central importance in these proceedings is s 18-15(1) of Schedule 1:

18-15 Tax credit for recipient of withholding payments

(1)    An entity is entitled to a credit equal to the total of the *amounts withheld from *withholding payments made to the entity during an income year if an assessment has been made of the income tax payable, or an assessment has been made that no income tax is payable, by the entity for the income year.

17    Section 995-1 of the Income Tax Assessment Act 1997 (Cth) (1997 Act) defines the terms “amount withheld” and “withholding payment” relevantly as follows:

amount withheld by an entity from a withholding payment means:

(a)    an amount that the entity withheld from the payment under Division 12 in Schedule 1 to the Taxation Administration Act 1953;...

...

withholding payment means:

(a)    a payment from which an amount must be withheld under Division 12 in Schedule 1 to the Taxation Administration Act 1953 (even if the amount is not withheld);...

...

withholding payment covered by a particular provision in Schedule 1 to the Taxation Administration Act 1953 means a *withholding payment consisting of:

(a)    a payment from which an amount must be withheld under that provision (even if the amount is not withheld);...

18    Section 18-15(1) only entitles an entity to a credit where amounts have in fact been withheld from withholding payments and then only in the amount actually withheld: David Cassaniti at [37], [173].

19    In David Cassaniti at [161] to [173], Edmonds J gave detailed consideration to what constituted a withholding. The relevant principles may be summarised as follows:

(1)    The word “withhold” is not defined in the Act. In this legislative context, it connotes “deprivation, the holding back of something due to the employee, resulting in the reduction of a gross amount to a net amount which is paid to the employee”. The process by which a withholding takes place might be revealed or evidenced by:

(a)    actual funds held by the payer on behalf of the employee pending payment to the Commissioner;

(b)    but, more usually, only in the wage records and books of account of the payer as an accounting entry: at [161] to [163].

(2)    Where an amount has been set aside by the payer and is quarantined in a bank account pending its remission to the Commissioner, clearly the presence of the funds so designated will demonstrate that a withholding has been made. The remission of the amounts withheld will invariably lead to the same conclusion: at [164].

(3)    In the usual case, where the withholding is reflected in accounting entries, the question whether a legitimate process of withholding has occurred will depend upon a close examination of the books and records and the surrounding circumstances. A mere journal entry in the absence of other evidence may not be sufficient evidence, having regard to the surrounding circumstances, that there has been a payment of salary and wages and a withholding from that payment: at [165].

(4)    Documents demonstrating compliance with reporting requirements of the statutory regime will constitute contemporaneous documentary evidence from which it may be inferred that a withholding has occurred: at [169] and [172]. Relevant reporting requirements include:

    pursuant to s 16-150 of Schedule 1, the payer is required to give notification to the Commissioner of the amounts it was required to pay to the Commissioner under s 16-70(1) on or before the day on which the amount is due to be paid (regardless of whether it is paid);

    pursuant to s 16-153(2) of Schedule 1, the payer is required to give an annual report to the Commissioner in the “approved form” being a summary of payments withheld not later than 14 August after the end of the financial year.

(5)    Conversely, a lack of compliance with such provisions is a matter from which an inference may be drawn, depending on the entirety of the circumstances, that a withholding was not made: at [169] and [172].

20    Steward J (with whom Greenwood and Logan JJ agreed) in Cassaniti FCAFC at [26] approved Edmonds J’s observations at [161] to [169] summarised above.

21    Withholding under the PAYG regime, like deductions under the PAYE regime, do not form part of the process of assessment: Federal Commissioner of Taxation v Ryan (1998) 82 FCR 345 at 363-4 (Merkel J, with whom Burchett and French JJ agreed); Constantinidis v Federal Commissioner of Taxation (2004) 55 ATR 348 at [72] (Hill J); David Cassaniti at [174] and [175] (Edmonds J).

22    The credit to which an entity is “entitled” under s 18-15(1) arises only “if an assessment has been made of the income tax payable, or … that no income tax is payable”. The entitlement to a credit by reason of s 18-15(1) only arises once the assessment is made: Cumins v Deputy Commissioner of Taxation (2007) 68 ATR 39 at [20] (French, Tamberlin and Stone JJ).

23    A reference to the amount of a credit or to a nil credit or to the fact that there had been an adjustment to credits might appear in the notice of assessment (and did in the notices of assessment in this case), but such references are not a “particular” of the assessment. Rather, they are a particular of the statement of account between the taxpayer and the Commissioner: Ryan at 363-4; David Cassaniti at [175].

24    The production of a notice of assessment as contemplated by s 350-10(1) of Schedule 1 (formerly s 177(1) of the Income Tax Assessment Act 1997) does not conclusively prove the amount of the credit appearing in the notice of assessment (in this case an adjustment of claimed credits to nil credits). In recovery proceedings, a taxpayer would be at liberty to prove that his employer withheld amounts and that he was entitled to a credit under s 18-15(1) and the production by the Commissioner of a notice of assessment in such proceedings would not be a barrier: Perdikaris at [21]; David Cassaniti at [175].

CASSANITI FCA AND CASSANITI FCAFC

25    Mr Price relied heavily in these proceedings on the decision of Robertson J in Cassaniti FCA and the Full Court’s decision in Cassaniti FCAFC. Mr Price submitted that these cases were, in substance, determinative of the result in the present case.

26    For that reason, it is necessary to understand the facts underlying those cases. Mrs Mariolina Cassaniti had, relevantly, three employers: “Ultra Nova”, “Darlinghurst” and “United”. She was not a director, and she had played no role in management, of the employer entities. She had no access to their records. She adduced written evidence of her contracts of employment which identified her gross annual salary. Her case was that the credits she claimed were the total of amounts withheld from her salary in respect of her employment as an office clerk in Armstrong Scalisi Holdings Pty Ltd trading under the name CAP Accounting. Her case was that her contracts of employment showed the gross amount of her salary and the amounts received into her bank account showed the net amounts received. Her banking records recorded that which had been received as “net pay”: Cassaniti FCAFC at [30]. She claimed to be entitled to a credit for the difference between her gross salary as disclosed in her written employment contracts and her net pay as disclosed in her banking records and by her weekly payslips.

27    Mrs Cassaniti accepted that the withholding must occur at the time of each payment and submitted that this was shown by the payslips she received each week and by the PAYG payment summaries she received each year.

28    The Commissioner’s case was that Mrs Cassaniti’s evidence was unreliable and the inference should not be drawn that the amounts were actually withheld. The Commissioner emphasised that the amounts said to have been withheld were not paid to the Commissioner. The Commissioner had adduced evidence from Mr Zafiriou, the Director, Significant Debt Management, employed by the Australian Taxation Office (ATO), which was summarised by Robertson J in the following way in Cassaniti FCA at [27]:

There was no information on any of the ATO’s computer accounting systems that Ultra Nova ever notified or withheld PAYG withholding amounts in respect of the applicant. The Statement of Account for that entity showed that no PAYG withholding amounts were remitted to the respondent Commissioner by that taxpayer. There was no information on any of the ATO’s computer accounting systems that Darlinghurst ever notified or withheld PAYG withholding amounts in respect of the applicant. The Statement of Account for that entity showed that no PAYG withholding amounts were ever remitted to the Commissioner by that taxpayer. There was no information on any of the ATO’s computer accounting systems that United ever withheld PAYG withholding amounts in respect of the applicant. United was never registered for GST or PAYG withholding.

29    Robertson J accepted Mrs Cassaniti’s evidence as truthful: at [52]. His Honour accepted that she was given her employment contracts, each styled “Offer of Employment”, on or about the dates they bore and that she accepted each offer: at [55] to [57].

30    His Honour accepted that a document constituting the payroll advice for certain periods recorded payment advices received contemporaneously by the applicant once a week, but with only one week on each payment advice: at [58].

31    His Honour accepted that the payslips showing payment dates of 2 July 2012 through to 24 June 2013 were received by Mrs Cassaniti contemporaneously with those dates: at [59]. Each of these recorded a PAYG withholding amount, the accuracy of which his Honour accepted. Mrs Cassaniti gave evidence, which was accepted, that she received a payslip each week in the 2012 to 2014 financial years: at [60].

32    Robertson J accepted that Mrs Cassaniti was given the PAYG payment summaries shortly after the end of each relevant financial year: at [61].

33    The Commissioner submitted, by reference to various documents, that Mrs Cassaniti was in fact paid by Armstrong Scalisi and the documents did not support any withholding by them: at [73]. Robertson J recorded at [74]:

The respondent Commissioner submitted that the Court could not be satisfied on the balance of probabilities that the letters of offer, the payslips, the summaries and the payroll advice were the true records of the three companies. The respondent Commissioner submitted it would be open to the Court to find on the balance of probabilities that those documents were recent inventions by some or all of Mr Sam Cassaniti, Mr David Cassaniti and Mr Michael Lowe. It was submitted that those documents must have been falsely prepared.

34    The Commissioner made other submissions against a conclusion that there had in fact been any contemporaneous withholding, recorded by Robertson J at [75] to [80].

35    His Honour ultimately concluded that there had been a contemporaneous withholding, saying:

[87]    There is no direct evidence as to the circumstances in which Armstrong Scalisi, the accounting firm to which the applicant’s services as an employee were provided by Ultra Nova and Darlinghurst during successive periods in the relevant years, was making the deposits into the applicant’s bank account for salary or wages …

[90]    I have taken into account the surrounding circumstances in what is ultimately a fact-finding exercise. While I accept the applicant’s submission that the non-payment to the Commissioner of amounts withheld does not show that the amounts were not withheld from the payments made to the applicant, that non-payment invites particular scrutiny of the facts and matters relied on by the payee. So also does the fact that the applicant and Mr David Cassaniti are wife and husband. Having considered the surrounding circumstances, in particular the evidence of the applicant, I have not accepted the respondent Commissioner’s submission that the Court could not be satisfied on the balance of probabilities that the letters of offer, the payslips, the summaries and the payroll advice were the true records of the three companies. Neither have I accepted the respondent Commissioner’s submission that those documents were recent inventions by some or all of Mr Sam Cassaniti, Mr David Cassaniti and Mr Michael Lowe or that those documents were falsely prepared. It also follows that I do not accept the Commissioner’s submission that there was not sufficiently clear contemporaneous evidence of the PAYG being withheld from payments to the applicant.

36    The Full Court dismissed the Commissioner’s appeal. The principal judgment was delivered by Steward J. His Honour noted that one of the Commissioner’s main contentions on appeal was “that the primary judge erred in accepting the veracity of the PAYG payment summaries, the payslips, and the written offers of employment which contained the respondent’s terms of employment”: at [34]. The contention was put on two bases: first, the documents were a recent invention and, secondly, their authenticity had not properly been proven. Both bases for the contention of error were rejected.

37    The claim of recent invention involved an attack on the credibility of Mrs Cassaniti engaging the principle that the primary judge’s finding would need to be demonstrated to be wrong by incontrovertible facts or uncontested testimony, or glaringly improbable or contrary to compelling inferences: Robinson Helicopter Co Inc v McDermott (2016) 90 ALJR 679 at [43]; Cassaniti FCAFC at [36] to [39], [48], [49]. None of that was shown. Further, inadequate notice had been given in respect of a claim of recent invention. The contention was not in the objection decision. It was not put to the witness in cross-examination. It was first made in closing submissions: at [40] to [47].

38    His Honour then moved to consider the attack on the admissibility and probative value of the business records which had been relied upon. Mrs Cassaniti had been extensively cross-examined. She recalled receiving payslips each week: at [58]. She recognised each “Offer of Employment” as the one she had received at the time and she recalled receiving the PAYG payment summaries annually: at [59]. Furthermore, the authenticity of the documents was discernible by drawing inferences from the appearance and context of the documents without the need to call the makers of them as witnesses: at [63] to [67]; s 58 of the Evidence Act 1995 (Cth).

39    His Honour also referred at [68] to s 1305 of the Corporations Act 2001 (Cth) which provides:

(1)    A book kept by a body corporate under a requirement of this Act is admissible in evidence in any proceeding and is prima facie evidence of any matter stated or recorded in the book.

(2)    A document purporting to be a book kept by a body corporate is, unless the contrary is proved, taken to be a book kept as mentioned in subsection (1).

40    His Honour noted at [69] that the term “books” was defined by s 9 of that Act to include “financial records”, which in turn was defined, and at [70] recorded that s 286 of that Act set out what documents a company must keep.

41    His Honour concluded that the payslips and PAYG payment summaries were probably:

(1)    “financial records” which were required to be “kept” under s 286 of the Corporations Act: at [71]; and

(2)    therefore, probably prima facie evidence of the matters stated in them by reason of s 1305 of the Corporations Act, including being prima facie evidence of the respondent’s entitlement to gross salary, the payment to her of a net amount, and the withholding of amounts from her: at [72].

42    His Honour then stated at [72]:

… If that is so, then for practical purposes, the onus probably shifted to the Commissioner to prove otherwise. On this basis, it would have been incumbent upon him to lead evidence showing that the matters stated in the business records were false or mistaken. This he did not do.

43    The Full Court dismissed the appeal.

THE FACTS

44    With that introduction, it is then appropriate to turn to the facts of the present case.

45    Robert’s case was that he was paid by four different entities and that each of them contemporaneously withheld amounts from his salary or wages as reflected in his tax returns, each of which was lodged on 26 September 2016:

(1)    for the three financial years beginning 1 July 2000 until 30 June 2003 he was paid by Allyma Pty Ltd which withheld $23,864, $24,672 and $24,932 each year respectively;

(2)    for the seven financial years beginning 1 July 2003 until 30 June 2010 he was paid by Allyma Transport Pty Ltd which withheld $25,452, $24,984, $24,204, $22,904, $23,060, $22,124 and $22,280 each year respectively;

(3)    for the five financial years beginning 1 July 2010 until 30 June 2015 he was paid by Allyma Transport Services Pty Ltd which withheld $22,436, $22,696, $22,644, $23,736 and $24,360 each year respectively; and

(4)    from 1 July 2015 until 30 June 2016 he was paid by Sunrock Australia Pty Ltd as trustee for the Sunrock Australia Trust which withheld $24,516.

46    Robert had been employed as a truck driver during each of the relevant years. His employment duties and activities never altered with any change in employer. His brother, Jim, was the controller of each of the entities which ran the trucking business to which Robert’s services were provided.

47    Robert’s evidence was given by way of three affidavits. He was cross-examined. He had difficulty in various respects with holding facts in his memory and, to some extent, in answering questions asked of him. He repeatedly stated that he was confused and that he did not understand. His understanding was sometimes improved by simplifying questions or repeating them. His recollection was generally not good, in particular on matters of detail. I do not place great weight on the precise terms of the conversations which he deposed to in his affidavits. The detail of the conversations which appeared in his affidavits was not consistent with the level of recollection which he otherwise displayed. Nor was the language in his affidavits consistent with the language he used when giving oral evidence.

48    I accept most of the general themes in his evidence. Specifically, I accept that:

(1)    Robert commenced employment with Allyma in June or July 2000.

(2)    Robert was told by Jim, or led by him to believe, and Robert genuinely believed at least in the earlier years, that the relevant employer would be paying the relevant taxes in respect of his wages and would be contributing to his superannuation.

(3)    A bookkeeper by the name of Ms Sue Ingham worked in the business for the entire period that Mr Price performed his work. Ms Maria De Maria was also a bookkeeper who worked in the business.

(4)    From the commencement of his employment with the first employer (Allyma) and throughout the period of his employment from then until his employment with the fourth employer (Sunrock) he was not once given a pay slip, nor a PAYG summary. I will deal more precisely with the position with respect to the fourth employer later.

(5)    Robert repeatedly asked Jim for his “group certificates” (PAYG payment summaries), from the end of the first financial year of his employment (around July 2001) until the events in mid to late 2016 (described below) and was on each occasion not given one or any.

(6)    Robert was never given any document which indicated that superannuation was being paid. Robert made repeated inquiries of Jim about his superannuation and Robert believed that his superannuation was not being paid. His evidence at [7] of his second affidavit was:

      I recall constantly asking Jim about my superannuation, we would have conversations to the following effect:

Me:    “Jim, what’s happening with my super mate, I don’t think it’s getting paid. I am sick of constantly asking you”.

Jim:     “Bob trust me, I will get it all sorted, just give me time, you are not retiring tomorrow”

  Me:    “I trust you Jim, just get it sorted out please”

  I later came to know, that Jim never did pay my superannuation.

(7)    Robert did not lodge a tax return for any of the financial years from that ending 30 June 2001 to that ending 30 June 2016 until 26 September 2016 when all sixteen of them were lodged at once.

(8)    The amount transferred into Robert’s bank account by, or on behalf of, his employers was generally $925 per week from commencement of employment in 2001, $1,100 per week from about October 2004 and $1,300 per week from around September 2008.

49    Robert tendered his bank statements. These identified transactions from 23 October 2004 until 1 November 2016. He was unable to find earlier bank statements.

2001 to 2003 Financial Years: Allyma

50    There were no banking records available for the financial years ended 30 June 2001and 30 June 2002. Robert gave evidence, which I accept, that he received $925 per week. He gave evidence of a conversation with Jim in which Jim stated that the company would “take care of all of your super and tax”. I accept Robert was led to believe that the company would take care of his taxes and make superannuation contributions.

51    Robert gave evidence that he recalled signing, on a few occasions, a purple or pink form with his tax file number on it. He stated he gave these to Ms Ingham.

52    According to the evidence of Mr Zafiriou, which I accept, no TFN declaration was ever lodged by Allyma in relation to Robert. This is to be contrasted with the fact that Allyma did lodge TFN declarations in respect of 21 payees.

53    In 2001 and 2002, Allyma lodged “Payment Summary Annual Reports” stating that 15 employees had received PAYG payment summaries in 2001 and 14 employees had received PAYG payment summaries in 2002. Robert was firm in his evidence that he never received a PAYG payment summary until 2016. For the 2002 year, Allyma reported to the ATO the names of 15 persons in respect of whom amounts had been withheld and Robert was not one of them.

54    The only documentary evidence of any withholding by Allyma in the 2001 to 2003 years was the PAYG payment summaries in respect of each of those years. The 2001 PAYG payment summary was undated. The 2002 and 2003 PAYG payment summaries bore the date 14 November 2016. For reasons expanded upon below, I am not satisfied that the PAYG payment summaries were created contemporaneously with the ends of the 2001 to 2003 financial years. The probabilities favour the PAYG payment summaries tendered in these proceedings all being prepared on around 14 November 2016. Although the 2001 PAYG payment summary is undated, it was also likely prepared on 14 November 2016 together with the 2002 and 2003 PAYG payment summaries which bear that date.

55    I also find that the PAYG payment summaries for the 2001, 2002 and 2003 years were not prepared or produced from any documentary records of employment or from any electronic data reflecting data inputted contemporaneously with the payments made to Robert. No such records or data was shown to exist.

56    Robert stated in evidence that Jim had boxes of “archived books everywhere in the boxes in the warehouse, round the walls, out on pallets”. It was submitted on behalf of Robert that I would infer that there were records which evidenced details of withholding from two matters: first, the PAYG payment summaries which were described as “printouts” and, secondly, because of Robert’s evidence that there were “copies of all of the financial documents in boxes that were all kept in a systematic way”. Robert did not give that evidence. I would not infer from the evidence Robert did give that Jim or Allyma had PAYG payment summaries in respect of Robert or business records which recorded any withholding from Robert’s wages. I do not accept that the PAYG payment summaries were “printouts” if that submission was intended to mean that they were reproductions of PAYG payment summaries which existed contemporaneously with the ends of the relevant financial years or that they were generated from electronic data which was inputted contemporaneously with the payment of wages to Robert. These conclusions also apply with respect to Allyma Transport and Allyma Transport Services, discussed below.

57    I am not persuaded that Allyma (or any other entity) withheld tax in respect of Robert’s wages in the 2001 to 2003 years. Robert bears the onus of establishing that amounts were in fact withheld. In Jones v Dunkel (1959) 101 CLR 298 at 305, Dixon CJ observed that the law:

… does not authorise a court to choose between guesses, where the possibilities are not unlimited, on the ground that one guess seems more likely than another or the others. The facts proved must form a reasonable basis for a definite conclusion affirmatively drawn of the truth of which the tribunal of fact may reasonably be satisfied.

58    The “definite conclusion” or positive satisfaction that amounts were in fact withheld is to be determined “upon a preponderance of probabilities, and it may be obtained by direct testimony, by circumstantial evidence, or presumptively”: Axon v Axon (1937) 59 CLR 395 per Dixon J at 403. Inferences, namely affirmative conclusions drawn from facts otherwise proved in evidence, are part of the process by which the court determines whether it has been persuaded to the requisite standard of the existence of a fact in issue. Inferences are as much a part of the evidence as the facts from which the inferences are drawn: Holloway v McFeeters (1956) 94 CLR 470 at 480; Girlock (Sales) Pty Ltd v Hurrell (1982) 149 CLR 155 at 168.

59    I am not persuaded that Allyma in fact withheld amounts from what it paid Robert, albeit I am satisfied that Jim told Robert that Allyma would take care of his taxes. Accordingly, Robert has not discharged the burden of proof.

60    In fact, I am satisfied that there was no contemporaneous withholding in respect of the amounts of $925 paid weekly to Robert in the 2001 to 2003 years. I draw that inference from:

    the absence of any records from the ATO to that effect or supporting that inference. In this respect, I have had regard to the observations of Steward J in Cassaniti FCAFC at [94]. The fact that the employer did not remit in respect of a particular employee does not necessarily require an inference that there had been no withholding; whether such an inference could or should be drawn depends upon the particular circumstances of the case and the evidence before the court;

    the fact that Allyma did prepare PAYG payment summaries for other employees which it did provide to the ATO;

    the absence of any contemporaneous record of any person or entity who paid Robert evidencing that any amount had been withheld;

    the fact that every year or thereabouts Robert asked for but was not provided any PAYG payment summaries;

    the fact that Jim promised Robert that Allyma would pay superannuation for Robert but never did; and

    the facts and circumstances referred to below concerning the later employers in the later years.

61    The fact that there was no withholding in the 2001 to 2003 years has some relevance to later years, in particular because of Jim’s association with the relevant later employers.

2004 to 2010 Financial Years: Allyma Transport

62    The first relevant transaction shown in Mr Price’s bank statements is an entry “CASH DEPOSIT” in the amount of $1,300 on 28 October 2004. From then until 8 July 2010 each deposit bore the description “CASH DEPOSIT”, except for one on 7 February 2008 which bore the description “EXPRESS DEP”. The last deposit bearing the description “CASH DEPOSIT” was on 8 July 2010.

63    On 15 July 2010, the description of the deposit of $1,300 was “nt tpt p/l labour”. From this point until the end of 30 June 2011, with one exception, each deposit of wages bore a description in substantially similar terms, referring to “nt tpt” or similar and “labour”. I would draw the inference from this that a new entity began paying wages on 15 July 2010 (in the 2011 year), consistently with Robert’s case that, from 1 July 2010, his employer changed.

64    The PAYG payment summaries were not consistent with the amounts of wages recorded in Robert’s bank statements. The applicant’s solicitor prepared a table which summarised the content of Robert’s bank statements and compared this to the PAYG payment summaries. The first year in which this analysis was conducted was the 2006 year. In that year, the PAYG payment summary stated that gross wages were $77,486 and that tax withheld was $24,204, providing a net amount of $53,282. However, Robert’s bank statements revealed that he received $57,400 in payments from his employer in the 2006 year. There was no year in which the PAYG payment summaries correlated in this regard with the payments Robert in fact received.

65    In the 2009 year, Allyma Transport lodged a Payment Summary Annual Report with the ATO identifying the people to whom a PAYG payment summary had been provided. Robert was not one of them. In that year Allyma Transport reported to the ATO that it had withheld PAYG amounts for one person. That person was not Robert.

66    In the 2010 year, Allyma Transport lodged a Payment Summary Annual Report with the ATO identifying the people to whom a PAYG payment summary was provided. Robert was not one of them. In that year, Allyma Transport reported to the ATO that it had withheld PAYG amounts for four people. Robert was not one of them.

67    The only documentary evidence of any employment with, or withholding by, Allyma Transport was the PAYG payment summaries in respect of the 2004 to 2010 years. Each of them was dated 14 November 2016. For reasons expanded upon below, I am not satisfied that any PAYG payment summary in respect of the 2004 to 2010 years was created contemporaneously with the end of the relevant financial year. Rather, the probabilities favour the PAYG payment summaries having first been prepared on around 14 November 2016.

68    I also find that the PAYG payment summaries for the 2004 to 2010 years which were tendered in these proceedings were not prepared from any documentary records of employment or from any electronic data reflecting data inputted contemporaneously with the payments made to Robert. No such records or data was shown to exist.

69    Allyma Transport went into liquidation in March 2014 and was deregistered in June 2016. The circumstances in which the PAYG payment summaries were prepared after these events and bearing the date 14 November 2016 were not explained. The liquidator, Mr Roufeil, gave evidence that he had no record of being requested to prepare or provide a PAYG payment summary or being requested to authorise one. The liquidator was not ever provided with any wage or employee records from Allyma Transport despite requests being made to its director (Mr Nassar), former directors (Mr Hanna and Mr Jim Price) and accountants (Cassaniti & Associates).

70    The registered office of Allyma Transport was “Ash Corporate and Secretarial” at Suite 1, Level 1, 106 Moore Street, Liverpool for the period 12 September 2013 to 26 June 2016. For the period 30 June 2003 to 11 September 2013, the registered office of Allyma Transport was “Cassaniti & Associates” at the same address. The liquidator wrote to Cassaniti & Associates on 1 April 2014, noting his understanding that they had provided accounting services to the company and requesting they forward any company books in their possession.

71    On about 27 May 2014 and 3 June 2014, the liquidator received documents from CAP Accounting which did not contain wages or employee records.

72    There was no evidence in the proceedings of the existence of any wage records created or held by Allyma Transport with respect to Robert.

73    Robert received a letter from the ATO dated 23 May 2009 which indicated that Robert’s tax returns for the 2004 to 2007 years were overdue. Robert stated in cross-examination that he had probably received about four such letters. The letter indicated that, if Robert did not respond, the ATO might refer the matter to its prosecutions area to begin legal action. Robert stated that he gave this letter to Jim and asked for his “group certificates” (PAYG payment summaries). The following question and answer was posed and given in cross-examination:

And he didn’t have any, did he?---No, he didn’t have nothing.

74    Later in cross-examination the following evidence was given:

And Jim couldn’t give you your group certificates in 2009, could he?---Yes.

You’re agreeing with me. He couldn’t?---No. He just – he said I’d get it sorted. And it’s always the same thing. I’ll get them sorted for you.

And he never did, did he?---No.

75    Robert has not discharged the onus of proving that Allyma Transport (or any other entity) withheld tax in respect of his wages in the 2004 to 2010 years.

76    In fact, I am satisfied that there was no contemporaneous withholding in respect of the amounts paid weekly to Robert in the 2004 to 2010 years. I draw that inference from:

    the absence of any records provided to the ATO establishing that Allyma Transport withheld with respect to Robert, combined with the fact that Allyma Transport did prepare PAYG payment summaries for some of its employees which were provided to the ATO;

    the absence of any contemporaneous record of any person or entity who paid Robert evidencing withholding;

    the fact that every year or thereabouts Robert asked for but was not provided any PAYG payment summaries;

    the fact that no superannuation was paid for Robert in breach of the promise which had been made to him;

    the fact that Allyma (which was controlled by Jim) had not withheld in earlier years;

    the fact that Allyma Transport Services (also controlled by Jim) did not withhold in respect of Robert in later years.

2011 to 2015 Financial Years: Allyma Transport Services

77    As mentioned above, from 15 July 2010, the entries in Robert’s bank statements for the weekly deposits changed from “CASH DEPOSIT” to “nt tpt labour”, or similar, for about a year.

78    On 26 July 2011, the entry was “PMG SUB CONTRACTOR PAY”. On 1 August 2011, the entry was “PMG Transport Subcontractor paym”. On 9 August 2011, it was “PMG Transport Robert price”. On 15 August 2011, it was “PMG Transport Subcontractor paym”. From that entry until the entry of 24 September 2012 most of the entries referred to “subcontractor” or “subbie” or “SUBBIE R & D PRICE” or “PMG Transport R&D TRANSPORT”. Robert had, many years earlier, performed work for “Wridgeways”, providing his services through a partnership named “Robert & Denice Price”. I infer from these bank entries that, whether or not Robert was in fact an employee (and the parties accepted he was), the entity making payments to him was treating him as a subcontractor, either in his own right or through a partnership. The drawing of that inference does not support an inference that the entity making payments to Robert was withholding under the PAYG regime and suggests it was not.

79    On 1 October 2012, the entry in the bank statements was “CJN TRANSPORT R PRICE WAGES”. That entry, or a substantially similar one, occurred for almost each weekly deposit up to and including 21 October 2013. The entry for 31 October 2013 was “CASH DEPOSIT”. From 4 November 2013 until 2 December 2015, the entries were almost all “CBA rob price wages” or similar. Two exceptions were entries on 29 July 2014 and 4 August 2014 which were both “Allyma Tpt Serv R PRICE”. As described further below there were a couple of entries of “CASH DEPOSIT” on 26 November 2015 and 10 December 2015 (in the 2016 year).

80    The PAYG payment summaries for the 2011 to 2015 years were not consistent with Robert’s bank statements in the same way that they were not consistent in relation to the 2006 to 2010 years as discussed at [64] above.

81    Allyma Transport Services lodged with the ATO TFN declarations in relation to 4 payees, but none was lodged in relation to Robert. If one had been signed by Robert, the failure on the part of Allyma Transport to lodge it would be consistent with an intention not to withhold taxes from Robert’s wages.

82    In the 2011 year, Allyma Transport Services lodged a Payment Summary Annual Report recording 2 people as having PAYG amounts withheld. It lodged a Payment Summary Annual Report recording 4 people as having PAYG amounts withheld in each of the 2012 to 2015 years. Robert was not one of those people in any of those years.

83    The only documentary evidence of withholding by Allyma Transport Services (or any other entity) was the PAYG payment summaries in respect of the 2011 to 2015 years. For reasons expanded upon below, I am not satisfied these were created contemporaneously with the ends of the relevant financial years. Rather, the probabilities favour these having all been created on around 14 November 2016. Although the PAYG payment summaries for each of these years was undated, I conclude that they were prepared at the same time as all of the PAYG payment summaries which include summaries bearing the date 14 November 2016.

84    I also find that the PAYG payment summaries for the 2011 to 2015 years tendered in the proceedings were not prepared from any documentary records of employment or from any electronic data reflecting data inputted contemporaneously with the payments made to Robert. No such records or data was shown to exist.

85    Mr Lo Pilato was appointed liquidator of Allyma Transport Services on 5 October 2016. There was no evidence that he prepared or authorised the preparation of the PAYG payment summaries – cf: 198G of the Corporations Act, formerly s 471A.

86    I am not persuaded that Allyma Transport Services (or any other entity) withheld tax in respect of Robert’s wages in the 2011 to 2015 years. Robert has not discharged his onus of proof.

87    In fact, I am satisfied that there was no contemporaneous withholding in respect of the amounts paid weekly to Robert in the 2011 to 2015 years. I draw that inference from:

    the absence of any records from the ATO to that effect or supporting that inference;

    the absence of any contemporaneous record of any person or entity who paid Robert evidencing withholding;

    the fact that every year or thereabouts Robert asked for but was not provided any PAYG payment summary;

    the fact that no superannuation was paid for Robert;

    the fact that Allyma Transport Services did prepare PAYG payment summaries for other employees;

    the fact that the bank records suggest a number of different entities paid the weekly amounts into Robert’s account (including NT TPT Pty Ltd, PMG Transport, CJN Transport) and that at least one of those entities (PMG Transport) probably treated the payments to Robert on the basis that he (or a partnership of which he was a partner) was a subcontractor rather than an employee; and

    the facts and circumstances referred to earlier with respect to Robert’s employment with Allyma and Allyma Transport.

The 2016 Financial Year: Sunrock

88    Mr Price conducted his case, consistently with his 2016 tax return and the 2016 PAYG payment summary, on the basis that he was employed by Sunrock from 1 July 2015. I do not accept that he was employed by Sunrock from 1 July 2015 and I conclude that his 2016 PAYG payment summary is incorrect and does not reflect what records are available from Sunrock. I do not accept Robert was employed by Sunrock from 1 July 2015 for the reasons which follow.

89    First, the weekly pay in his bank records from 1 July 2015 until 2 December 2015 recorded the deposited amount of $1,300 as “CBA R PRICE wages” (consistently with nearly all entries from 4 November 2013), except for 26 November 2015 which recorded “CASH DEPOSIT”. The description on 10 December 2015 was also “CASH DEPOSIT”. From 17 December 2015, the entries for the weekly deposits of $1,300 each referred to “Sunrock” and generally also referred to “wages”. From this, together with the matters referred to below, I infer that Sunrock first commenced paying amounts of $1,300 to Mr Price on 17 December 2015. The payment made on that day was for the “pay period” 5 December 2015 to 11 December 2015.

90    Secondly, the MYOB backup data files from Sunrock contained Sunrock’s general ledger for the period 17 December 2015 to 30 June 2017. It was printed on 1 March 2019. The general ledger contained the following records: “cheque account”, “electronic clearing account”, “payroll accruals payable”, “net wages sold”, “PAYG sold”, “Superannuation sold” and “wages and salaries”. These records were consistent with Mr Price being:

(1)    paid wages of $1,753, with taxes withheld of $452 (equal to a net wage of $1,301);

(2)    entitled to superannuation of $166.44 per week; and

(3)    paid $1,300 by electronic funds transfer consistently with Mr Price’s bank statements.

91    I draw from the absence of any record of any payment before 17 December 2015 the inference that Sunrock made no payment to Mr Price before that date, consistently with the same inference I have drawn from Robert’s bank statements.

92    Thirdly, the first “Payroll Advice” from Sunrock’s records provides details of a payment made on 17 December 2015 which records “PAYG Withholding” of $452 and “Superannuation Guarantee” of $166.44. Those amounts were not only the amounts recorded as paid on that date, but also represented the “YTD” (year to date) total. In other words, the first “Payroll Advice” reflected the first payment made by Sunrock to Robert. The last “Payroll Advice” was one dated 28 June 2016, which recorded year to date PAYG withholding of $13,108 and gross wages of $50,808.

93    Fourthly, a statement in relation to “labour hire” for “Allyma Transport” (17 December 2015 to 29 June 2016) and “Allyma Express Transport” (1 July 2016 to 4 April 2017) sent by Accolade Advisory to Ms De Maria (who had been a bookkeeper together with Ms Sue Ingham) on 5 April 2017 appears to itemise every invoice issued from Sunrock to those Allyma entities. These commence with invoice number 1 issued on 17 December 2015.

94    Fifthly, Robert accepted in cross-examination that he only commenced being paid by Sunrock from 5 December 2015 (which was what the 17 December 2015 “Payroll Advice” indicated) and that he had not received earlier “pay slips”.

95    Sixthly, the evidence suggested that the premises from which the trucking business operated commenced being leased out by “Stonny Batter Road Unit Trust” in November 2015 to Allyma Express Transport Pty Ltd, which operated the trucking business and for which Sunrock was a “labour hire” or payroll entity. I draw from this the inference that a new structure was put in place around November or December 2015.

96    As can be seen, unlike each of the previous years, there were records in evidence which on their face indicated that amounts were withheld in the 2016 financial year, from 17 December 2016 when Robert commenced being paid by Sunrock. Prima facie, these records evidence withholding.

97    Sunrock did not lodge any TFN declarations in respect of any payees, it did not lodge any Payment Summary Annual Reports and it did not report to the ATO the withholding of any amounts for the 2016 year.

98    The PAYG payment summary for the 2016 year, identifying the payer as Sunrock Australia Trust states that the “gross payments” were $88,547 and that $24,516 was the “total tax withheld”. This is inconsistent with Sunrock’s general ledger and “Payroll Advice” which records total year to date amounts as at 28 June 2016 of $50,808 (gross) and $13,108 (withheld) – see: [92] above.

99    The 2016 PAYG payment summary states that the “period of payment” was 1 July 2015 to 30 June 2016. Robert was not employed by Sunrock until December 2015, receiving his first payment on 17 December 2015. This payment related to the period 5 to 11 December 2015 – see: [89] above.

100    I conclude, for reasons expanded upon below, that the PAYG payment summary for the 2016 year was prepared on around 14 November 2016. I also find that the PAYG payment summary for the 2016 year was not prepared from any electronic data reflecting data inputted contemporaneously with the payments made by Sunrock to Robert. If it had been prepared from the MYOB files (which was the case advanced by Robert), then it would have contained the lesser amount of gross payments and tax withheld as reflected in those electronic records. Sunrock’s records were consistent with Robert’s bank statements in that payments started being received by Robert from Sunrock on 17 December 2015.

101    In light of the significant inconsistency between the 2016 PAYG payment summary, on the one hand, and Sunrock’s general ledger, “Payroll Advices” and Robert’s bank statements, on the other, I am unable to reach a positive satisfaction that Sunrock withheld the amounts identified in the 2016 PAYG payment summary. Indeed, I am satisfied it did not withhold the amount of $24,516 identified in the 2016 PAYG summary.

102    The fact that the 2016 PAYG payment summary is so materially inconsistent with Sunrock’s general ledger and “Payroll Advices” (which are consistent with Robert’s bank statements) suggests that caution is required in assessing the material as a whole, in particular the PAYG payment summaries. The inconsistency does not mean that anything improper has occurred. The inconsistency just means that a view must be taken as to whether the applicant has discharged his onus in the face of inconsistent documents. The general ledger and “Payroll Advices” are inherently more reliable than the 2016 PAYG payment summary; it is also not definitively known from what or how or by whom the 2016 PAYG payment summary was prepared. The question then is whether the lesser amount of $13,108 referred to as the amount withheld in the general ledger and “Payroll Advices” should be accepted as reflecting an amount in fact withheld.

103    Having regard to certain late served material (described next) and for the reasons which follow, I am also not persuaded that Sunrock in fact “withheld” the lesser amount of $13,108 which might otherwise have been regarded as established, or was prima facie established, by the general ledger and the “Payroll Advices”.

104    Robert tendered two volumes of emails and other documents described as “email correspondence between Accolade Advisory and Sunrock Australia attaching wage records”. These two volumes of material had been served by the applicant in the week before the hearing. The provenance of the documents was not entirely clear, however I infer that at least a substantial part of them was provided to Robert’s solicitors by Accolade Advisory. Robert’s solicitors also acted for Accolade Advisory.

105    Included in the late served material were emails from Accolade Advisory to Ms De Maria attaching “Pay Slips”. I infer from the emails that the payslips were prepared by Accolade Advisory and that Accolade Advisory (or an associated entity) prepared and kept the MYOB data for Sunrock. The payslips all post-dated the 2006 financial year. Nevertheless, they included payslips for Robert which referred to PAYG withholding and superannuation. Robert’s case was that superannuation contributions were not made by Sunrock despite what was contained in these payslips and despite the content of the general ledger.

106    Also included in the material were invoices from Sunrock to Allyma Express Transport which charged a “labour hire fee for the week ending …”. The invoices itemised charges for net wages and tax (being tax withheld), as well as workers’ compensation, superannuation and management fees. One email between Accolade Advisory and Ms De Maria, however, suggests that perhaps the arrangement was that Allyma Express Transport was only to pay net wages, notwithstanding the content of the invoices.

107    An email dated 24 February 2017 from Morgan Walsh, the relevant “accounts manager” at Accolade Advisory, to Mr Sam Cassaniti stated (errors in original):

Good Morning Sam,

Maria asked me for a statement showing how much “credit” Allyma had.

When I sent it through i advised her this is no credit as Allyma owes Sunrock $429,834.57

Maria has now advised that apparently there should be a credit because Allyma is only to be paying the actual wages not the invoices in full.

I’m pretty sure this is not true but just wanting confirmation that Allyma should be paying the Sunrock invoices in full not just the Net wages amount.

108    No response to that email was in evidence.

109    Various other emails evidence Morgan Walsh of Accolade Advisory requesting Ms De Maria (an employee of Sunrock whose services were provided to an “Allyma employer”) to deposit further funds into the relevant account because of a shortfall in the account to pay wages. The wages referred to in those emails were the net wages payable. To take one example, on 28 March 2017, Mr Walsh wrote an email to Ms De Maria indicating that $17,587.10 was the total amount required for wages to be paid that day and that the account was $380 short. An invoice dated 28 March 2017 from Sunrock to Allyma Express Transport for “labour hire” invoiced an amount of $29,723.57 as follows:

110    The “deductions” of $171.36 referred to under “wages” were in fact child support payments due in respect of an employee. Accordingly, the total wages payable were $17,413.74 + $171.36, namely $17,585.10 (presumably this is the amount in the email dated 28 March 2017). These figures for wages were also confirmed by Sunrock’s general ledger and a “payment submission” in relation to child support.

111    An amount of $380 was paid to Sunrock on 28 March 2017. I infer that the payment of $380 addressed the “shortfall in the account” (referred to in Mr Walsh’s email) such that net wages could be paid.

112    It was submitted for Robert that a document entitled “Statement in relation to Labour Hire for Allyma Transport & Allyma Express Transport” revealed that each invoice sent by Sunrock to Allyma Transport Services or “Allyma Express Holdings Pty Ltd” contained in the late served material was contained in that statement. The statement was attached to an email from Mr Walsh sent on 5 April 2017. The statement is in the form of a summary table. The statement indicates that 68 invoices were sent by Sunrock, the first on 17 December 2015 and the last on 4 April 2017. The invoices were mostly in amounts of around $30,000. The payments by Allyma Transport Services and Allyma Express to Sunrock shown in the statement broadly correlate with the payments recorded in the “cheque account” in Sunrock’s general ledger but are not entirely consistent with it. The statement suggests that Allyma Transport Services or Allyma Express never paid the full amount of any of the invoices issued to it by Sunrock. This is consistent with the 24 February 2017 email referred to above which indicated that “Allyma” (in this email meaning Allyma Transport Services andAllyma Express) then owed Sunrock $429,834.57. Returning to the example of the invoice of 28 March 2017, the statement records invoice number 67 for $29,723.57 on that day and also records a payment of $380 on that day. This allowed net wages to be paid. The statement was otherwise left unexplained.

113    The material which the applicant served in the week before the hearing and relied upon to support a withholding, when assessed in light of all of the evidence, suggests that the relevant Allyma entity would make payments to Sunrock only sufficient to ensure there were funds to pay net wages. It also opens the possibility that the agreement between the relevant Allyma entity and Sunrock may have been that the relevant Allyma entity was under no obligation to pay to Sunrock the amounts in the invoice described as “tax” (being tax withheld). This suggests that amounts paid to Robert may not have been amounts from which anything was in fact “withheld”.

114    It is also relevant to note that it was Robert’s case that superannuation contributions were not made by Sunrock. The late served material did not suggest that Sunrock was ever put in funds to pay superannuation. It was common ground that no superannuation was paid in respect of Robert and that no amounts were remitted to the ATO representing a withholding from Robert’s wages.

115    Robert’s solicitors in the proceedings, who were also Accolade Advisory’s solicitors, in their letter to the liquidator of Sunrock dated 24 April 2018, described Jim Price as the “shadow director” of Sunrock even though ASIC records revealed the then current director as Mr Michael Lowe. The liquidator’s report to creditors dated 14 November 2017 recorded that, at one time, Sunrock and Allyma Express Transport had a common director in Michael Graham Lowe. I infer that Sunrock and the relevant Allyma entity were not dealing at arm’s length.

116    Sunrock’s general ledger (referred to earlier) was supplied to the liquidator of Sunrock by the applicant’s solicitor on 22 May 2018 whilst these proceedings were on foot. They provided the liquidator with a sworn affidavit of Robert “that relates to the operations of Sunrock Australia Pty Ltd and various other entities under the control of Jim Price” and an unsworn affidavit of Mr Sam Cassaniti attached to the letter dated 24 April 2018. Whilst the solicitor’s letter was tendered, neither affidavit was tendered.

117    No person from Accolade Advisory was called to give evidence. I infer that Accolade Advisory provided the late served documents or a substantial part of them to the solicitors for the applicant. The late served documents, assessed in the context of all of the evidence including the history of years of non-payment of withholding taxes or superannuation by companies associated with Jim, the associations between the Allyma entities and Sunrock through Jim and Mr Lowe and the necessarily incorrect 2016 PAYG payment summary, suggest the possibility that the relevant arrangements between Sunrock and the relevant Allyma entities may have been that:

(1)    various employees who had provided services to Allyma (that is, the relevant Allyma entity) became employees of Sunrock in December 2015 and their services, from that time, were provided to Allyma as employees of Sunrock, a “labour-hire” entity (it was Robert’s case that he was an employee of Sunrock);

(2)    Sunrock (by Accolade Advisory) would invoice Allyma, inter alia, for net wages, tax and superannuation, but not actually require payment of tax and superannuation from Allyma;

(3)    Sunrock (by Accolade Advisory) would make contemporaneous records (and contemporaneously input data into an MYOB data file) indicating, inter alia, a PAYG withholding and the making of, or liability for, superannuation contributions;

(4)    Sunrock did not intend that it be paid by, or that Sunrock recover from, Allyma the tax component of wages for employees (or superannuation) – this inference would be more easily drawn by reason of the fact that Sunrock and Allyma were not dealing at arm’s length for the reasons identified earlier and that Sunrock was “controlled” by Jim who had never caused PAYG to be withheld in respect of Robert and that Ms De Maria, an employee of Sunrock (whose services were provided to the Allyma entities) understood that to be the arrangement; and

(5)    Sunrock did not in fact withhold anything from wages it paid to Robert (or pay superannuation).

118    The late served documents were adduced by Robert in order to support an inference that there was in fact a withholding. In particular, reliance was placed on the “Pay Slips” which expressly referred to amounts being withheld. These late served documents must be assessed in light of all of the documents adduced into evidence by the applicant in particular the late served materials of which they formed a part, and in light of the material inconsistency between the 2016 PAYG payment summary and the general ledger accounts and the other circumstances identified above.

119    It is as well to set out at this point what Edmonds J said in David Cassaniti at [164] and [165], approved by the Full Court in Cassaniti FCAFC at [26]:

164.    Where an amount has been set aside by the payer and is quarantined in a bank account pending its remission to the Commissioner clearly the presence of the funds so designated will demonstrate that a withholding has been made. Indeed the remission of the amounts withheld will invariably lead to the same conclusion.

165.    Where in the usual case the withholding process is represented only by accounting entries the question whether a legitimate process of withholding has ensued will depend upon a close examination of those books and records and the surrounding circumstances to see whether it may be inferred from those records and circumstances that a withholding has occurred. At one end of the spectrum, a mere journal entry in the absence of other evidence may not be sufficient evidence, having regard to the surrounding circumstances, that there has been a payment of salary and wages and a withholding from that payment. The authorities make it plain that entries of this kind, standing alone, are not conclusive evidence of the transaction: see, Temples Wholesale Flower Supplies Pty Ltd v Federal Commissioner of Taxation (1991) 29 FCR 93 at 100 – 103.

120    I am not persuaded that there was in fact a withholding by Sunrock of the amount of $13,108. It is not necessary to conclude whether the true arrangements were as is suggested by some of the material outlined above. It is sufficient to record that, on the whole of the evidence adduced, particularly having regard to the records served in the week before the hearing and the inconsistency between the 2016 PAYG payment summary and Sunrock’s general ledger, I am not satisfied that there was in fact a withholding even though some of the records prima facie indicate a withholding when looked at in isolation. Accordingly, Robert’s onus of proving that Sunrock did withhold has not been discharged.

121    It was submitted that I should infer from the documents produced by the liquidator of Sunrock and the late produced material that, since 2001, the various Allyma employers (Allyma, Allyma Transport and Allyma Transport Services) had in fact withheld tax. This was because, so it was submitted:

(1)    Sunrock’s records, together with other evidence, indicated a “tendency” on the part of all of the previous employers to withhold;

(2)    Ms Ingham was the bookkeeper for all the four employing entities and therefore I should come to the conclusion that each employer had a “consistent method of withholding”.

122    I reject that submission. I am not satisfied that Sunrock withheld. Even if it had, I am not satisfied that the way in which Sunrock conducted its affairs was equivalent to the way in which each of Robert’s previous employers conducted their affairs. The appointed directors of Sunrock were different to the directors of Allyma, Allyma Transport and Allyma Transport Services. There was no general or detailed evidence of what system the earlier employers had in place with respect to their employees. Ms Ingham was not called to give evidence even though the submission proceeded upon the unestablished hypothesis that she looked after withholding. The late produced material did not suggest any involvement on the part of Ms Ingham in any process of withholding by Sunrock or any of the “Allyma employers”. That material suggested that Sunrock’s accounts were looked after by Accolade Advisory and that they would provide “Pay Slips” to Ms De Maria.

Events from July 2016 to 26 September 2016

123    Robert turned 65 in July 2016. He gave evidence that he “had to” retire. He wanted to get a pension. That was one reason that he wanted to sort out his tax affairs. He had never previously filed a tax return.

124    In Robert’s first affidavit he stated that the first time he received payslips or “group certificates” was in around July 2016. His affidavit at [21] stated:

Payslips

21.    The only time that I received payslips and group certificates in relation to my salary from the Allyma Employers was around July 2016 and following. It was around July 2016 that Jim said to me words to the effect “I have new accountants called Accolade Advisory. I gave them your e-mail so they can send you payslips and that sort of thing”. I do not recall the exact date of this conversation as it was only in passing. Around this time, I received all the payslips from Accolade Advisory at tab 5. Some months later I received the PAYG Payment Summary reports referred to in paragraph 10 and found at tab 1.

125    In his second affidavit at [8] he stated:

8.    When I started nearing retirement I recall I had a conversation with Jim to the following effect:

Me:    “Jim, you know I am getting to the retirement age, what’s going with my super and tax returns? I want to get all my affairs in order before retirement, you know?”

Jim:    “Yes Bob I know. I’ll go through our records and get Sue to give you all of your Group Certificates for each year.”

It was a little after this time that I had the July 2016 conversation with Jim that I set out in paragraph 21 of my 7 Nov 2017 affidavit.

126    The “payslips” referred to in paragraph [21] of his affidavit were in fact each called “Payroll Advice”. Each bore the date 15 May 2017, which I infer was the date those particular documents were printed. If Robert was given “payslips” at all from July 2016, the probabilities favour that what he was given was individual payslips in the nature of those contained in the late served material attached to the emails from Mr Walsh to Ms De Maria. These contained documents called “Pay Slips”, albeit they all post-dated the 2016 financial year. It is not likely he was given the “Payroll Advices”, contrary to Robert’s evidence and the submission made for him. The “Payroll Advices” were not shown to exist in a form which suggested they were produced weekly for providing to employees; rather, they appear to be a list of all payments made to an employee extracted from the general ledger accounts.

127    In cross-examination, Robert stated he went to Accolade Advisory in about May 2016 and they became his tax accountants. He dealt mainly with Mr Sam Cassaniti. His evidence as to what he took with him when he went was not consistent. At one stage, he said he had no documents at all: T23.46. On other occasions, he said he had a small envelope which had been given to him by Sue Ingham: T17, T24.2. He could not give any clear answer as to what was in the envelope. He did not look at the contents: T43. Before he was re-examined, Robert’s counsel conferred with him, having first sought leave to do so. In re-examination, Robert was asked who gave him the documents and he said he thought it was Sue.

128    It was submitted for Robert that I should conclude that Ms Ingham gave the PAYG payment summaries to Robert to take to Accolade Advisory. I am not satisfied that is the case for the reasons given below. The PAYG payment summaries were prepared on or around 14November 2016, after the tax returns were lodged.

The tax returns

129    On 26 September 2016, Robert lodged income tax returns with the ATO for years ended 30 June 2001 to 30 June 2016. In each income tax return, Robert had claimed a credit for PAYG tax credits allegedly withheld from salary and wages paid to him. The returns identified various information as follows:

130    I was informed that Wyse & Young was an accounting firm at the same address as CAP Accounting “as in it shared offices but it was a different accounting practice with a different person running it called Salvatore Arcuri”. I note the information set out in the table above which refers to “Mr Arcuri of Armstrong Scalisi Holdings Pty Ltd”. I note I was also informed that “Armstrong Scalisi was trading as CAP”. I note also that the table above indicates that tax refunds were to be paid into the “CAP Trust” account. Previous registered addresses of Armstrong Scalisi Holdings Pty Ltd, as revealed in a company search, included “CAP Accounting” and “Cassaniti & Associates” (both at the same address). I was informed by counsel for Robert, apparently on instructions from Accolade Accounting, that Cassaniti & Associates did not exist, which – in context – I understood to mean never existed. However, Armstrong Scalisi certainly represented that it existed, for example, in providing the name to ASIC for the purposes of indicating its registered address. Allyma Transport did likewise – see: [70] above.

131    The relationship between Accolade Advisory and Cap Accounting was partially explained by an initial letter to creditors dated 11 September 2017 from Mr Reidy, who had been appointed liquidator of Sunrock on 16 August 2017:

Accountant

On 17 August 2017, my staff located a phone number for the Company’s external accountant, Cap Accounting, through internet searches. The receptionist advised during a phone call that Cap Accounting was renamed to Accolade Advisory, and the accountant who had carriage of the matter was Sam Cassaniti. In this regard, a formal request for books and records of the Company was sent to Accolade Advisory by way of email and priority post marked as attention to Sam Cassaniti on 18 August 2017.

Subsequently, Accolade Advisory advised by way of a letter dated 18 August 2017 that the accounting firm who had carriage of the matter was called Armstrong Scalisi Holdings Pty Ltd trading as Cap Accounting.

My investigations reveal that Cap Accounting and Accolade Advisory have the same phone number, trading address and postal address. In this regard, my staff contacted Accolade Advisory by way of phone call again on 23 August 2017 in order to seek further and better particulars.

During the subsequent phone call conversation, another staff of Accolade Advisory advised that Cap Accounting and Accolade Advisory used to share the same trading premises. However, Cap Accounting had ceased trading. Sam Cassaniti used to work for Cap Accounting but now works for Accolade Advisory. My staff left a message for Sam Cassaniti to contact her to discuss the Company’s affairs. However, neither my staff nor myself have received any correspondence from Sam Cassaniti as at the date of this report. My investigations are ongoing.

132    On 17 October 2016 the ATO wrote to Robert, addressing the letter to PO Box 163, Liverpool, which was the postal address for Accolade Advisory and Wyse & Young indicated in the tax returns. The letter indicated that the processing of Robert’s 2001 to 2016 tax returns was delayed “as it contains amounts that need to be checked”. It enclosed a “response form” and requested certain supporting documents, namely:

•    your employer’s name and address

•    the name and contact phone number of your manager (at the above employer)

•    copies of your original payment summary issued by your employer.

•    copies of your original bank statements showing the deposits of payments from your employer

•    copies of your original payslips you received showing your income and tax withheld

133    On 7 November 2016, the ATO emailed Mr Arcuri seeking Robert’s “response form”. There was no response to this, and other, inquiries until 1 February 2017.

The PAYG payment summaries

134    The PAYG payment summaries were either undated or bore the date 14 November 2016, as follows:

    2001 – undated

    2002 to 2010 – 14 November 2016

    2011 to 2016 – undated

135    I conclude that all of the PAYG payment summaries were created on or about 14 November 2016, after the tax returns were lodged. The evidence did not disclose what records, if any, were used to identify gross wages and withheld amounts in the tax returns. Leaving aside Robert’s evidence about having been given certain documents in an envelope by Ms Ingham (discussed next), no witness gave evidence directly, or from which it could reasonably be inferred, that the PAYG payment summaries were given to the person who prepared the tax returns which had been lodged on 26 September 2016. No explanation was provided for not calling the person who prepared the tax returns.

136    Robert stated in his oral evidence that he had been given an envelope by Ms Ingham which he had taken to Accolade Advisory when he first saw them in May 2016. It was submitted that what Robert had been given by Ms Ingham was the PAYG payment summaries. Robert did not know what the content of the envelope was; he did not look. Robert could not have been given the 2016 PAYG payment summary in May 2016 because no such document was likely then to have existed. The relevant year had not ended. It is unlikely that the 2016 PAYG payment summary bearing the date 14 November 2016 would have been created earlier than 14 November 2016 and even more unlikely that it would have been created before the 2016 financial year had ended. I am also not satisfied that Ms Ingham gave Robert PAYG payment summaries at some point in time after May 2016.

137    It is improbable in light of the facts set out earlier that the PAYG payment summaries were created contemporaneously with the ends of the financial years to which they related. It is unlikely that they were created in or around May 2016 with some of them bearing the date 14 November 2016. It is unlikely they were created from computer data:

    no such data was shown to exist in respect of Allyma, Allyma Transport or Allyma Transport Services. There was no evidence of what electronic system, if any, was used by the earlier employers;

    the 2016 PAYG summary was inconsistent with Sunrock’s electronically stored general ledger data and “Payroll Advices” in material ways, identified earlier.

138    It was submitted that the PAYG payment summaries had been prepared each year, but that they were just kept from Robert by his employers. It was submitted that they existed contemporaneously with the end of each financial year. It was submitted that Robert gave that evidence. Robert gave no such evidence and the submission cannot be accepted. Robert’s evidence was that he asked for the “group certificates” (PAYG payment summaries) within a few weeks of the end of each financial year and was told by Jim on each occasion: “I’ll get them sorted soon”. Robert’s evidence at [6] of his second affidavit was:

6.    Within a few weeks of the end of each financial year, I would ask Jim words to the effect “can I have my Group Certificates”. Each time Jim replied in words to the effect “I’ll get them sorted soon”. I was annoyed by this but, at the time, did not see that not having my Group Certificates could cause me any serious problems. I considered them to be more a formality and thought that I could always do my tax returns on a later date.

139    Ms Ingham could have given evidence about what she gave Robert in May 2016 and would likely have been able to give evidence about the preparation of PAYG payment summaries and withholding if either had occurred at relevant times, at least with respect to Allyma, Allyma Transport and Allyma Transport Services. She was not called and nor was Ms De Maria.

140    Of course, the task is to assess whether the case Robert has advanced has been proven on the evidence adduced, not to speculate on what other evidence he might have adduced: Australian Securities and Investments Commission v Hellicar (2012) 247 CLR 345 at [164] – [170].

141    The evidence adduced does not satisfy me that PAYG payment summaries were prepared contemporaneously with the end of each financial year. In fact, I am satisfied PAYG payment summaries were not prepared until about 14 November 2016, which was after Robert lodged all of his tax returns.

142    One of the applicant’s solicitors gave evidence in respect of a conversation with an accountant “who is employed by an accounting practice known as Accolade Advisory”. She observed him produce a PAYG payment summary through an MYOB program. The PAYG summary so produced bore the date of the day she made the observation. The accountant then showed her how it was possible to change the date on the PAYG summary by altering the date settings in the Microsoft software. No explanation was provided as to why the accountant was not called to give this evidence.

143    The significance of this evidence to Robert’s case was obscure. There was no evidence that Robert’s PAYG payment summaries were in fact prepared through an MYOB program. The product of what Accolade Advisory produced during this demonstration was not tendered. The PAYG payment summaries tendered in the proceedings were not all in the same form. There was evidence that Sunrock kept its general ledger account using MYOB. There was no evidence that any previous employer kept relevant accounts electronically let alone using MYOB.

144    The late served material suggested that it was Accolade Advisory which provided to the relevant Allyma entity employment related records such as “Pay Slips” from Sunrock. It was established that Accolade Advisory gave the MYOB data which included the general ledger to the liquidator of Sunrock. It is probable that Wyse & Young or Accolade Advisory or an associated entity prepared the 2016 PAYG payment summary. It is probable that one of those entities prepared each of the PAYG payment summaries on or about 14 November 2016. It is probable that the figures in them were taken from the tax returns which had already been lodged or were derived in the same way as they had been for the purpose of preparing and lodging these returns. No person was called to explain what process was actually undertaken.

The notices of assessment

145    On 21 November 2016, the ATO wrote to Robert at PO Box 163, Liverpool (the postal address of Wyse & Young, Armstrong Scalisi and Accolade Advisory provided in the tax returns), notifying that it had finalised its review. That letter indicated the ATO position that it accepted the income amounts in the tax returns (the gross amounts) but denied any credits. At this point in time, the ATO had not been provided a response to its earlier inquiries.

146    On 23 November 2016, the Commissioner issued the applicant with notices of assessment in respect of the 2001 to 2015 financial years. On 28 November 2016, the Commissioner issued a notice of assessment for the 2016 year.

147    The notices of assessment identified in respect of each year the “taxable income”. They also identified the “assessed tax payable”, the Medicare levy amount and the amount owing. At the bottom of the notices of assessment, and using the 2001 year as an example, was indicated:

The following adjustments have been made to your assessment:

148    I have referred earlier to the fact that the identification of “tax withheld” or tax credits is not a “particular” of assessment and that it cannot be challenged in Part IVC proceedings – see: [2] and [21] to [24] above.

Further communications

149    Wyse & Young sent a 95 page facsimile to the ATO on 1 February 2017. This included:

We act for Robert Price.

…

We attach a bundle of documents and note the following.

In each year, our client was paid wages from which tax was withheld in accordance with the PAYG scheme. We have summarised the payer of wages for the relevant years, together with the sum of gross wages and tax withheld in a Table on page 1 of the bundle.

As part of the exercise, we have also located copies of our client’s PAYG summaries and provide these … The PAYG summaries demonstrate total tax withheld from our client’s wages.

In respect of 2014, 2015 and 2016, we requested from our client bank statements towards 30 June that demonstrate receipt of his wages. These bank statements appear in the bundle.

The material in the bundle indicates that our client is entitled to the PAYG credits claimed in previous tax returns.

We note TR 2011/5 at [111] and footnote 73. Reserving our clients rights, we request the ATO take a “second look” at the Assessments. We shall defer any challenge to the Deputy Commissioner’s [sic] in relation to the Assessments and associated debits to our client’s Income Tax Statement, until advised of the ATO’s position as regards a “second look” at the Assessments.

Please inform us if, in addition to this letter, any application form ought to be submitted and we will attend to this. We attach our authority to deal with the ATO in relation to this matter.

150    Page 3 of the facsimile from Wyse & Young was the authority referred to at the end of its introductory letter. It was an authority addressed to Accolade Advisory to the attention of Mr Sam Cassaniti. There was not a complete set of bank statements provided for any financial year. Rather, the facsimile provided bank statements “towards 30 June” of relevant years.

151    On 27 March 2017, the ATO sent a letter to Mr Price advising that his objection to the assessments was invalid and that the commissioner had taken a “second look” at the matter and determined not to allow the credit.

152    As a consequence, these proceedings were commenced, seeking declaratory relief as to entitlement to credits.

APPLICANT’S CONTENTIONS

153    In closing submissions on behalf of Robert, it was said there were five factual bases on which the Court should conclude amounts were withheld:

(1)    First, reliance was placed on the PAYG payment summaries said to have been given to Robert by Ms Ingham all at once in about May 2016 and the “Payroll Advices” said to have been given to Robert by Ms Ingham from July 2016 (after any relevant financial year).

(2)    Secondly, reliance was placed on what Robert was paid and what he was contractually entitled to be paid. In this regard, reliance was placed on Robert’s conversations with Jim and on the tax returns which he lodged stating what his salary was.

(3)    Thirdly, reliance was placed on Robert’s bank statements to show how much he was paid. This was then to be compared with the notices of assessment which conclusively proved Robert’s taxable income. The difference, it was submitted, should be inferred to have been withheld.

(4)    Fourthly, reliance was placed on the accounts of Sunrock. The “accounts” was a reference to the various accounts contained in the general ledger which had been printed from MYOB backup files (which covered the period December 2015 to June 2017). It was said that this material, together with other evidence, revealed a “tendency” on the part of all of the Allyma employers to withhold taxes from employees, particularly Robert.

(5)    Fifthly, reliance was placed on an agreed fact. The agreed fact was:

All people, except Robert Price, who have claimed a withholding credit from the Allyma Employers have received an ATO credit of some amount.

First contention

154    In relation to the first contention, it was said that the PAYG “summaries and payslips showed that Robert’s tax was withheld” and that Robert did not need to prove the truth of the content of these documents by reason of s 1305 of the Corporations Act 2001. The reference in this submission to the “payslips” was a reference to the “Payroll Advices” not the documents entitled “Pay Slips”.

155    For the reasons which follow, I do not accept that s 1305 requires the Court to conclude from the PAYG payment summaries, “Payroll Advice”, “Pay Slips” or other records that tax was in fact withheld.

156    Section 1305 of the Corporations Act provides:

Admissibility of books in evidence

(1)      A book kept by a body corporate under a requirement of this Act is admissible in evidence in any proceeding and is prima facie evidence of any matter stated or recorded in the book.

(2)      A document purporting to be a book kept by a body corporate is, unless the contrary is proved, taken to be a book kept as mentioned in subsection (1).

157    The word “books” is defined by s 9 of Corporations Act to include “financial records”, which in turn is defined in the following way

financial records includes:

(a)    invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes and vouchers; and

  (b)    documents of prime entry; and

  (c)    working papers and other documents needed to explain:

(i)    the methods by which financial statements are made up; and

(ii)    adjustments to be made in preparing financial statements.

158    Section 286 of the Corporations Act sets out what documents a company must keep (note excluded):

(1)    A company, registered scheme or disclosing entity must keep written financial records that:

(a)    correctly record and explain its transactions and financial position and performance; and

(b)    would enable true and fair financial statements to be prepared and audited.

The obligation to keep financial records of transactions extends to transactions undertaken as trustee.

…

159    The PAYG payment summaries and the “Payroll Advices” (and the “Pay Slips”) are probably “financial records” which are required to be “kept” by s 286: Cassaniti FCAFC at [71].

160    It was submitted that the PAYG payment summaries and the “Payroll Advices”, on their face, purported to be books kept by a body corporate within the meaning of s 1305(2) and that therefore they were taken to be books of the relevant body corporates. However, the deeming effect of s 1305(2) only operates “unless the contrary is proved”.

161    The PAYG payment summaries for the 2001 to 2015 years were not books “kept by a body corporate under a requirement” of the Corporations Act. The PAYG payment summaries were all prepared on or about 14 November 2016 for the purposes of Robert’s tax returns which had been lodged on 26 September 2016. In respect of Allyma, Allyma Transport and Allyma Transport Services, they were not “kept by” the relevant corporation at all. When the PAYG payment summaries were prepared on 14 November 2016, those corporations were either not in existence or were in liquidation and the liquidator had not authorised the creation of them:

    Allyma went into liquidation on 14 October 2009 and was deregistered on 30 January 2011. PAYG payment summaries could not have been prepared by it or for it on or around 14 November 2016.

    Allyma Transport went into liquidation on 7 March 2014 and was deregistered on 26 June 2016. PAYG payment summaries could not have been prepared by or for it on or around 14 November 2016.

    Allyma Transport Services went into liquidation on 5 October 2016. The liquidator of Allyma Transport Services did not authorise the preparation of the PAYG payment summaries for the 2011 to 2015 years. Again, PAYG payment summaries could not have been prepared by or for it on or around 14 November 2016.

162    Nor was any of the 2001 to 2015 PAYG payment summaries a reproduction of any electronically stored data of any of those corporations.

163    On the basis that none of the 2001 to 2015 PAYG payment summaries was prepared by or for the relevant corporation or from their records or data, they are not records of the corporation and cannot have been “kept” by them. There was no evidence that the PAYG payment summaries were given to the relevant corporation after they were created.

164    In any event, accepting for the purpose of argument that the PAYG payment summaries are, by reason of s 1305 of the Corporations Act, “prima facie evidence” that the relevant employer withheld the amounts identified in them, I am satisfied that this prima facie status is displaced by the matters and for the reasons referred to earlier.

165    In Australian Securities and Investments Commission v Rich (2009) 236 FLR 1 at [395] to [398], Austin J observed:

[395]    The defendants referred to the definition of the words “prima facie” in the Macquarie Dictionary (2nd revised edn), as meaning “at first appearance; at first view, before investigation”. They compared that with the definition of “prima facie evidence” as “evidence sufficient to establish a fact, or to raise a presumption of fact, unless rebutted.” They submitted that the former meaning is the one intended in s 1305, and that the words “prima facie” are not used in the sense that, absent some satisfactory contrary evidence on the part of the defendants, the matters said to be recorded in the books have been conclusively proved.

[396]    In my view the true meaning of the words “prima facie” lies between the alternatives identified in the defendants’ submission. The statement in s 1305(1) that the company’s books are prima facie evidence of a matter stated or recorded in them does more than merely to convey that they are the starting point to proof or a “first view”. All other things being equal, the fact that a matter is stated in a book kept by a company is sufficient to prove that matter in civil proceedings. That does not reverse the onus of proof in the proceedings in any general way, but it means that the tendering of the book is evidence of the matter recorded in it, and that matter will be thereby proven unless other evidence convinces the tribunal of fact to the contrary, on the balance of probabilities.

[397]    Section 1305(1) does not make the company’s books conclusive evidence of the matters they contain, in the sense of requiring the tribunal of fact to make a finding in terms of the content of the books in the absence of proof to the contrary by the opposing party. The books are prima facie evidence of the matters stated in them, but the weight of that evidence is to be measured in accordance with the common sense of the tribunal of fact (Phipson on Evidence, 16th edn (2005), at [7-17]).

[398]    In my view it would be open to the tribunal of fact to find that the prima facie evidence constituted by the company’s books is outweighed by other evidence (including evidence adduced by the proponent of the books, even if the opponent does not give evidence about them); or by some quality or characteristic of the books themselves, even if there is no other evidence. In particular, if a book has the appearance of a draft or (being electronic) has a file title indicating that it is a draft, that alone may be sufficient (all other things being equal) for the tribunal of fact to reject the book as evidence of the matter stated in it, notwithstanding that the book is prima facie evidence of that matter; a fortiori if, in addition to having the appearance of a draft, the book contains inconsistencies or ambiguities or the matter otherwise demands explanation.

166    Austin J referred to the explanatory memorandum to the Companies Bill 1981 (Cth), which introduced the provision, and said:

[400]     Therefore s 1305(1) allows a company’s books to be introduced into evidence as they are, without any “authenticating” evidence by any witness, and allows the books to be relied upon to prove transactions recorded in them. But it does not elevate the matters contained in the books to a plane of probative value that requires the court to disregard the context in which the matters relied on appear in the tendered document. If, for example, there is some doubt as to whether a particular transaction is “recorded’ in a book because of some uncertainty about the status of the document or ambiguity about what it contains, s 1305(1) does not overcome the problem.

167    For the reasons provided above, the prima facie evidence constituted by each of the PAYG payment summaries (assuming s 1305 applies to them) is outweighed by other evidence.

168    The 2016 PAYG payment summary was not a reproduction of, or produced from, any electronically stored data of Sunrock. When assessed against the electronic data of Sunrock (the general ledger) and the other evidence (in particular Robert’s bank statements), it is obviously unreliable.

169    Further, the characteristics of the PAYG payment summaries themselves give rise to significant doubt: Rich at [398]. They either bear the date 14 November 2016 or are undated. They are unsigned.

170    The only “Payroll Advices” which existed were those from Sunrock’s records, from 17 December 2015. They relevantly cover payment dates from 17 December 2015 to 28 June 2016. The “Pay Slips” contained in the late produced material all postdate the 2016 financial year. Those records are only prima facie evidence of the matters recorded in them.

171    I am satisfied, having regard to the other evidence referred to earlier, that it is not established that the amount of $13,108, being the year to date amount shown as withheld in the 28 June 2016 Payroll Advice, was in fact withheld.

Second contention

172    As to the second contention, I am satisfied that Robert was paid by the respective employers the amounts recorded in his bank statements and no more. I am satisfied that Jim promised Robert that the employer would take care of his taxes and I proceed on the basis that the employers owed an obligation to Robert to do so. I am not satisfied any of Robert’s employers withheld PAYG amounts. They did not pay his superannuation. I do not consider that they withheld from Robert and merely failed to pay withheld amounts to the ATO.

173    I place no weight on the fact that his tax returns, all lodged on 26 September 2016, identified a gross amount of wages which was higher than the amounts he received in his bank account by the amount claimed to have been withheld. Those figures were not shown to have been sourced from any record of any employer. They were identified before the PAYG payment summaries were produced on 14 November 2016. The evidence did not show the information from, or processes by, which the amounts in the tax returns had been identified. Those who could have given such evidence were not called. On the basis of the evidence which was adduced, the probabilities favour that the gross wages and tax withheld identified in the tax returns were reverse engineered from the amounts Robert in fact received into his bank account.

Third contention

174    The applicant submitted that, by reason of s 350-10 of Schedule 1, his “taxable income” was conclusively proved by the notices of assessment tendered in these proceedings. He next says that his bank statements prove how much he actually received and that the Court should then conclude that the difference between his conclusively proved “taxable income” and what he in fact received represents amounts withheld.

175    Section 350-10 replaced s 177(1) of the Income Tax Assessment Act 1936 (Cth). Section 350-10(1) provides:

350-10 Evidence

Conclusive Evidence

(1)    The following table has effect:

176    Section 350-10 is contained in “Part 4-90 – Evidence” of Schedule 1. Schedule 1 is entitled “Collection and recovery of income tax and other liabilities”. By reason of s 3AA(2) of the TAA 1953, an “expression has the same meaning in Schedule 1 as in the Income Tax Assessment Act 1997”. The word “assessment” (which is an “expression”) is defined in s 995-1(1) of the ITAA 1997 in the following way:

assessment:

(a)    [para (a) does not apply in the present case]; and

(b)    in relation to a *tax‑related liability not covered by paragraph (a), has the meaning given by a *taxation law that provides for the assessment of the amount of the liability.

Note:    The table lists provisions of taxation laws that define assessment.

177    Section 6(1) of the ITAA 1936 defines “assessment” to mean (amongst other things):

assessment means:

(a)    the ascertainment:

(i)    of the amount of taxable income (or that there is no taxable income); and

(ii)    of the tax payable on that taxable income (or that no tax is payable); and

(iii)    of the total of a taxpayer’s tax offset refunds for a year of income (or that the taxpayer can get no such refunds for the year of income); or …

178    It follows from these definitions that the ascertainment of both the tax payable recorded in the notice of assessment and the ascertainment of the amount of taxable income constitute the “assessment”. The word “particulars” in s 350-10(1) is not defined. In Oates v Commissioner of Taxation (1990) 27 FCR 289 at 308 to 309, Hill J commented:

For the Commissioner it was submitted that, although admittedly in the 1978 year the taxpayer had an excess of allowable deductions over assessable income to the extent of $20,433, the Notice of Assessment of income tax tendered before the Tribunal in respect of the 1978 year of income which showed a taxable income of $20,800, was conclusive evidence that this was not so. That notice showed, in respect of the year, a taxable income of $20,800 and tax payable accordingly thereon. It was said by reference to the definition of “taxable income” in s 6(1) of the Act, that the taxable income was the amount remaining after deducting from the assessable income all allowable deductions. Thus, if there were conclusively established a taxable income in the 1978 year, then it must follow that in that year there was not an excess of deductions over assessable income and accordingly not a loss to be carried forward under s 80(2).

…

The Commissioner’s submission assumes that tender of the notice or copy is conclusive evidence of the assessable income and the allowable deductions of that year, these being the “particulars” to which s 177(1) refers. However, in my opinion, when s 177 speaks of the particulars of the assessment, it speaks of that which, on its face, is contained on the face of the notice, normally the taxable income and tax payable thereon. It does not encompass the ingredients which go to making up that taxable income.

…

In my view, the purpose and effect of s 177 is to prevent challenge of an assessment, other than in accordance with Pt V proceedings and then only as to the issue of the excessiveness of the assessment. The notice of assessment is only conclusive of the particulars in it, (taxable income and tax payable thereon) in respect to the taxpayer whose assessment it is in the year of income to which the assessment relates. The section should be given no wider operation than this purpose and effect requires.

179    Section 350-10(1) does not conclusively prove gross income or assessable income or that “withholding payments” were made or that amounts were “withheld”. Accordingly, s 350-10(1) does not take the matter further. The most the section does is conclusively prove that Robert’s taxable income and tax payable were as identified in the notices of assessment.

180    I do not draw the inference that, because he received into his bank account less than the identified taxable income, his employers must have withheld.

Fourth contention

181    As recorded earlier, reliance was placed on the accounts in the general ledger of Sunrock. The “MYOB back up data file” from which the general ledger had been printed was supplied to the liquidator of Sunrock by the applicant’s solicitor by email on 22 May 2018. The email to the liquidator stated:

Please find attached MYOB back up data files which our client has in its possession.

The files relate to the 2016 financial year.

182    The reference to “our client” in that email is to Accolade Accounting, not the applicant in these proceedings. On 24 April 2018, the same solicitor wrote to the liquidator stating that he acted for Accolade Advisory and providing certain bank statements and wage records of Sunrock.

183    The general ledger must be assessed against all of the records of Sunrock which were tendered. This included two volumes of documents – which included “Pay Slips”, invoices from Sunrock to Allyma Express Transport and various emails between Accolade Accounting and Ms De Maria – which were served on the respondent in the week before the hearing (the “late served” documents referred to earlier). I have earlier concluded that Sunrock’s books, records and documents assessed in their entirety do not leave me with a positive satisfaction that the amount of $13,108 (or any amount) was in fact withheld – see: [88] – [120] above.

184    I have also earlier given reasons why I reject this material as probative of what earlier employers did – see: [121] – [122] above.

Fifth contention

185    The fifth contention, as I understood it, was that the Court should infer there had been a withholding with respect to Robert because the Commissioner had reached an agreement with all other people who had claimed a withholding credit from the Allyma employers which allowed at least some credits.

186    There is no doubt that the first three employers (Allyma, Allyma Transport and Allyma Transport Services) withheld in respect of some employees. It seems that Sunrock did not withhold in respect of any employee.

187    The question is whether those who made withholding payments to Robert in fact withheld from payments made to him. Nothing is known of the particular circumstances of the “people” the subject of the agreed fact, nor what material from the relevant employers was available if anything, nor why the Commissioner adopted the position he did in the agreed fact, nor the employer in respect of which it was concluded that there had been or may have been a withholding. The agreed fact is, in the circumstances, not probative of the question whether the relevant employers in fact withheld vis-à-vis Robert.

CONCLUSION

188    As the Court is not satisfied that any amounts were withheld from wages paid to Robert, the proceedings must be dismissed.

Associate:

Dated:    18 April 2019