The insolvency priority contest - garnishee notices versus general law fixed interest and PPSA security interests

This article will consider the Commissioner’s power to issue a notice to a third party that owes money to or holds money for a tax debtor under s 260–5 of Sch 1 to the Taxation Administration Act 1953 (Cth) (TAA). In particular, this article will discuss the effect of general law fixed interests and the Personal Property Securities Act 2009 (Cth) (PPSA) upon the Commissioner’s statutory garnishee charge under s 260–5.Sylvia Villio

An evaluation of Australia's director penalty regime

This article considers the Commissioner’s role as a creditor in a corporate insolvency with respect to the director penalty regime under Div 269 to Sch 1 of the Taxation Administration Act 1953 (Cth) (TAA 1953). The provisions within this Division concern the obligation of directors to cause the company to meet its pay-as-you-go withholding (PAYG withholding) and superannuation guarantee charge (SGC) liabilities and the consequent obligation imposed on directors to cause the corporation to take certain steps. Directors who fail to meet these obligations will face personal liability, subject to certain defences. In particular, this article will consider whether the director penalty regime satisfies the recognised tax policy criteria of achieving fiscal adequacy as well as achieving the socio-economic criteria of efficiency, equity and simplicity.Sylvia Villio

An inherited wealth tax for Australia? The Henry Recommendation 25 for a bequests tax

The Henry Tax Review considered the introduction of a bequests tax - a tax that would be levied on the accumulated wealth of people at the time of their death as a possible reform to Australia's tax system. The Henry Tax Review considers the introduction of this tax would be economically efficient, however puts it aside because of its controversial history.1 The article reviews the advantages and disadvantages of introducing a bequest tax in Australia. It draws upon Australia's experience with Death and Gift Dutites, its current approach to taxing property, and the European experience with a Net Worth Tax.Sylvia Villio

The legislative interface between the creation of a liability to tax and the right to challenge that liability

The “conclusive evidence” provisions in the taxation legislation have the effect of establishing conclusively (except in Pt IVC proceedings) that the amount and all the particulars in a notice of assessment produced by the Commissioner are correct. Provision is made in Pt IVC of the Taxation Administration Act 1953 (Cth) (TAA) for objections to assessments and for reviews by the Administrative Appeals Tribunal and appeals to the Federal Court. Together, the conclusive evidence provisions and Pt IVC of the TAA give voice to a legislative policy in respect of the interface between the creation of a liability to tax upon assessment under statute by an officer of the Executive, the Commissioner and the constitutionally necessary ability for the recipient of an assessment to be able to challenge that asserted liability by an invocation of judicial power. Sections 14ZZM and s14ZZR of the TAA also give voice to a legislative policy in respect of this legislative interface. This paper examines the operation of this legislative interface and highlights that the current taxation regime does not adequately address the protection of taxpayers against the impact of erroneous assessments.Sylvia Villio

The Court’s power to grant a stay and the interaction with the commissioner’s garnishee power

This article considers the authority of the Administrative Appeals Tribunal (AAT) and Federal Court to grant a stay of execution of judgment when the Commissioner of Taxation (Commissioner) has instituted a recovery proceeding in respect of an assessment debt while a challenge to that assessment is pending before the AAT or the Federal Court. Further, the article considers the validity of the Commissioner’s garnishee notice under Sch 1 of the Taxation Administration Act 1953 (Cth) (TAA 1953) (s 260–5 notice) which is issued after the AAT or Federal Court grants a stay and while the appeal or review proceedings are still pending.Sylvia Villio

Director penalty notices - promoting a culture of good corporate governance and of successful corporate rescue post insolvency

The director penalty regime under Division 269 to Schedule 1 of the Taxation Administration Act 1953 (Cth) empowers the Commissioner to take action against an insolvent company’s directors to recover outstanding tax debts of a company. The director penalty regime was introduced as a substitute for the Commissioner’s tax priority in a corporate insolvency and was aimed at encouraging directors to take early positive action to deal with insolvency. An analysis of Australia’s director penalty regime, including the most recent reforms, reveals that the regime helps to foster a culture of good corporate governance which is fundamental to achieving successful corporate rescue post insolvency.Sylvia Villio

The Commissioner's power to issue creditor's statutory demands: implications for corporate rescue post insolvency

The Commissioner’s role in a corporate insolvency has expanded as new forms of taxation have been created, leading to tax claims consuming more and more of an insolvent debtor’s estate. The literature which considers the role of the Commissioner in a corporate insolvency is predominantly concerned with whether the Commissioner should be given preferred treatment relative to other creditors; that is, whether such claims should be paid ahead of other unsecured, and in some cases also secured, claims. Many jurisdictions have traditionally conferred a priority on tax claims. The form and scope of such a priority varies. However, it appears that there is a trend towards the removal of taxation priorities. This article will outline the Law Reform Commission inquiries that led to the abolition of tax priority in Australia and will examine the various arguments concerning the proper role of the Commissioner in a corporate insolvency. In particular, this article argues that the Commissioner’s power to serve a company with a statutory demand has regrettable consequences when it comes to attempts to implement corporate rescue. The article suggests areas for reform and considers directions for future research and action.Sylvia Villio

Improving the students' tax experience: a team-based learning approach for undergraduate accounting students

Traditionally, in Australia, law tutorials for accounting students are conducted by way of a class discussion led by the tutor, as was the case of the authors' students in the 2009 undergraduate taxation law class. This paper compares the impact using two different team learning approaches in the teaching of tutorials to undergraduate accounting students studying taxation law that were introduced in 2010, 2013 and 2014. While research indicates that team learning aids students' ability to understand and apply content, the teaching experiment in 2010 was unable to provide clear evidence for this finding. However, when a team-based learning (TBL) approach was taken in 2013-14 using individual tests and team assignments with peer reviews, the benefits of TBL were evident. TBL was associated with significantly higher levels of student preparation, engagement, participation and attendance. Student satisfaction was high. TBL also encouraged student group development and generic skills, and this assists employers. Substantial benefits were also found for university law teachers in accounting schools. Overall, we argue that the key benefit for accounting students from TBL stems from the demand by employers for employees with soft skills who can effectively work in teams. For universities, the strategic benefit from TBL is the improvement in the quality of university courses to better satisfy the requirements of the Tertiary Education Quality and Standards Agency.Paul Kenny, Helen McLaren, Michael Blissenden, Sylvia Villio

Tax collection, recovery and enforcement issues for insolvent entities

28th Australasian Tax Teachers Association ConferenceThis article describes the ATO’s debt collection framework, including the number of debt collection strategies that the ATO has developed, giving particular attention to the position of a corporate tax debtor that is approaching insolvency within the ATO’s debt collection framework. In the context of a tax debtor that is approaching insolvency, it is evident that the manner in which the ATO administers the tax law has the potential to impact on the corporate tax debtor, as well as a number of other stakeholders. In the current economic climate, the ATO is most concerned about mitigating the risk to the revenue of non‑compliance and, more broadly, carefully managing its approach to debt collection to contain debt levels at acceptable limits. An analysis is made as to whether the ATO’s administrative practices are achieving the recognised tax policy criteria of fiscal adequacy, efficiency, equity and simplicity. This analysis highlights areas of weakness within the current ATO’s debt collection framework and the international experience is drawn on to discuss possibilities for future action. In order to successfully achieve the recognised tax policy criteria, a few themes will emerge in this article. These themes include the importance of early intervention, the early mandatory assessment of business viability, tax debtor engagement with the ATO and of striking the right balance of flexible delivery while fostering a positive compliance culture when administering the tax law.Sylvia Villio

Australian GST and Residential Property - Uncertainty Abounds

http://trove.nla.gov.au/work/1981361