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Accountants deemed liable in penalty tax hearing


A prominent mid-tier firm has been found liable for substantial tax penalties after it failed in its appeal of a court case involving the Chief Commissioner of State Revenue.

By Mitchell Turner 9 minute read

Chan & Naylor had applied to the NSW Civil and Administrative Tribunal for a review of a 2013 decision administered by the Chief Commissioner of State Revenue, in which it was deemed that the mid-tier firm was liable for payroll tax, penalty tax and interest in a sum in excess of $200,000, spanning a four-year period from 2009 to 2013.

In the original decision it was found that members of Chan & Naylor Holdings Pty Ltd (CN Holdings) and its trustee Chan & Naylor Pty Ltd (CN Australia) constituted a single group as opposed to two separate entities, a definition objected to and refuted by the firm.

In a swift rejection of the appeal, the tribunal noted that during the four-year period the directors of the companies in question were indeed the same individuals, with no evidence to suggest that Mr Ed Chan and Mr David Naylor were not entitled to exercise more than 50 per cent of the voting power at meetings of directors.


“Unfortunately for the applicants I find that they have provided no evidence to satisfy me that they took reasonable care or that the tax default occurred because of circumstances beyond their control. Nor have the applicants provided evidence of any other appropriate circumstances to justify a full or partial remission of penalty tax,” the tribunal said.

“It is the correct and preferable decision of the tribunal that the respondent’s decisions in respect of the grouping of the applicants throughout the relevant period are confirmed and the revised assessments as to tax, interest and penalty tax are confirmed.”

The tribunal assigned a hearing for 4 February to determine applicable costs as a result of the decision.

Mitchell Turner


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