Ho-ld on: $66 million just, quick and cheap reasons to stay tax recovery proceedings 

Deputy Commissioner of Taxation v Ho [2026] NSWSC 247

What taxpayers need to know

• The decision in Deputy Commissioner of Taxation v Ho [2026] NSWSC 247 (Ho) represents a departure from usual tax debt recovery practice and established principles about the Court's discretionary powers to stay recovery action by the Commissioner of Taxation (Commissioner).
• Tax debt recovery proceedings against the taxpayer in Ho were stayed by the Supreme Court of New South Wales while Part IVC proceedings were on foot, due to the "extreme financial hardship" that would have been imposed on the taxpayer and the need to progress the litigation in a "just, quick and cheap" manner.

Legislative position on recovering tax debts

Australia's tax legislation grants the Commissioner extensive powers to recover tax debts. A notice of assessment is deemed to be "conclusive evidence" that an assessment was properly made (section 350-10 of Schedule 1 to the Taxation Administration Act 1953 (Cth) (TAA)).

The fact an appeal or review is pending in relation to a taxation decision does not of itself interfere with the Commissioner's power to seek recovery of the debt (sections 14ZZM and 14ZZR of the TAA). That is, the Commissioner is entitled to take a 'pay now, argue later' approach.

Authorities on stay proceedings

The High Court of Australia's decisions in Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd [2008] HCA 41 (Broadbeach) and Federal Commissioner of Taxation v Futuris [2008] HCA 32 (Futuris) are leading authorities on tax recovery. Relevant principles from those cases include that:

• The Commissioner is entitled to recover tax notwithstanding pending Part IVC proceedings.
• The circumstances in which a court might intervene in the Commissioner's recovery of a tax debt are intentionally narrow and limited, and circumstances in which relief may be granted "should not be needlessly expanded". These may include where the Commissioner knowingly acted in excess of his powers or otherwise where there was some "improper purpose".

That is, the threshold for the Court's intervention in the Commissioner's tax debt recovery actions is high.

However, there are cases where the 'pay now, argue later' approach can be overcome if it would be "oppressive conduct" for the Commissioner to enforce payment of the full amount due before the final resolution of a genuine dispute about the correctness of the assessment (see for instance Hyder v Commissioner of Taxation [2022] FCA 264 citing Deputy Commissioner of Taxation v Moorebank Pty Ltd (1988) 165 CLR 55).

Further, the decision of the Full Federal Court in Oracle Corporation Australia Pty Ltd v Commissioner of Taxation [2025] FCAFC 145 (Oracle) represents another notable instance of the Court granting a stay of tax proceedings. In Oracle, the Full Court allowed Oracle's appeal from the Federal Court for an application for a temporary stay of Oracle's domestic proceedings until the conclusion of the Mutual Agreement Procedure (MAP) under the double tax agreement between Australia and the Republic of Ireland, including any arbitration. Oracle's domestic proceedings sought to challenge ATO penalty assessments for royalty withholding tax that the Commissioner considered applied to payments made under software distribution arrangements.

The Ho decision considered

Background

The Ho case concerns an application by the Defendant, Mr Ricky Ho, to the Supreme Court of New South Wales for a stay of recovery proceedings by the Plaintiff, the Deputy Commissioner of Taxation, for tax debts owed by the Defendant totalling $66,508,209.66 plus costs.

That tax debt related to on-foot proceedings before both the Federal Court of Australia (relating to the Defendant's director penalty liability) and the Administrative Review Tribunal (ART) (relating to judicial review of the Defendant's personal tax liabilities).

The proceedings before the Federal Court and the ART were at an early stage and no evidence had yet been filed in those challenges.

Issue

The issue was whether the Court had discretion to stay the Plaintiff's recovery proceedings pending determination of the Federal Court and ART challenges, notwithstanding the legislative position (discussed above) and, if so, whether the Court should exercise that discretion.

Factors considered in the stay of proceedings

The Court in Ho was asked to consider five reasons as to why the Defendant should be granted a stay of the recovery proceedings:

1. The extreme hardship that he would suffer if a stay was not granted.
2. There was no legislative policy that said proceedings could not be stayed.
3. A stay would ensure the efficient disposal of the proceedings, as required by section 56 of the Civil Procedure Act 2005 (NSW).
4. He had an arguable case in the Federal Court and ART proceedings.
5. The Deputy Commissioner had conceded the stay in respect of the largest tax obligation (the director penalties of almost $60 million) so that it was appropriate for the whole of the proceedings to be stayed so as to "avoid piecemeal litigation" in line with a "holistic approach".

Each of the above reasons are considered in turn below.

Reason 1: Extreme hardship

The Defendant submitted that his tax debts exceeded his net worth, which included the value of his main residence. Judgment obtained for the value of his tax debt would render him "out of home" and "unable to fund the various legal proceedings in which he was engaged". Acting Justice Michael Elkaim at [18] held that these consequences amounted to "extreme financial hardship".

An interesting aspect of the Ho decision was that the Defendant relied on his own statutory declaration that was without reliable further evidence of his finances and was in hearsay form, but the Court found that this did not dislodge the Court's conclusion that the Defendant would suffer extreme hardship if the tax debts were enforced.

The Deputy Commissioner's position was that the Defendant's statutory declaration failed to disclose his interest in two companies, the combined value of which – if added to his asserted net wealth – would have exceeded his personal tax liabilities. The Deputy Commissioner further contended that the Statement of Financial Position submitted with the Defendant's statutory declaration was deficient in that it did not disclose that he had earned substantial income during the 2024 and 2025 tax years. Both these defects in the evidence were accepted by the Court.

Despite these deficiencies in the Defendant's evidence, the Court accepted that:

• the stay motion was an interlocutory proceeding which did not require the filing of an affidavit by the Defendant;
• cross-examination in interlocutory proceedings is only sparingly allowed, pursuant to Scanlon v American Cigarette Co (Overseas) Pty Ltd (No 1) [1987] VR 261 at 272;
• the hearsay rule does not apply to evidence if the party who adduces it also adduces evidence of its source, pursuant to section 75 of the Evidence Act 2005 (NSW); and
• the Defendant's income-earning capacity had been "severely impacted" since his registration as a tax agent had been terminated by the Tax Practitioners Board,

such that issues with the Defendant's form of evidence and non-disclosures "did not dislodge the conclusion that the defendant's net assets were well below his personal tax debts" (at [22]).

In reaching the above conclusion, Elkaim AJ relied on the decision of Deputy Commissioner of Taxation v Denlay (2010) 80 ATR 109; [2010] QCA 217 where, at [50], Chesterman JA in the Queensland Court of Appeal stated:

"…It is preposterous to contend that the loss of the respondents' entire estate, and with it any chance of demonstrating that the basis for the assessments was wrong so that they should not have lost their property, could not be a hardship rightly called extreme. It is not easy to imagine a greater hardship in this context…"

The Court also referred to the "extreme hardship" principles set out in Southgate Investment Funds Ltd v Deputy Commissioner of Taxation (2013) 211 FCR 274; [2013] FCAFC 10 (Southgate) at [77]. The Court held that Southgate permitted a stay of recovery proceedings if it was "demonstrated that the execution of a judgment debt would deprive the taxpayer of the financial resources needed to prosecute extant Part IVC proceedings".

Reason 2: Legislative policy

The Defendant conceded that the legislation permitted – and, indeed, intended for – the Commissioner to collect tax notwithstanding any objections or appeals.

However, the Court found that it retained a "discretion" to determine that a stay was appropriate in truly exceptional circumstances. This was despite the "position of special advantage" intentionally granted to the Commissioner by the legislative regime.

Reasons 3 and 5: Efficient disposal of the proceedings and a holistic approach

The Court acknowledged the Plaintiff's submission that, if all claims were the subject of a stay, then there could be an "unjust delay" if either of the hearings before the Federal Court or the ART were completed well before the other one.

However, in this case, the Plaintiff had already made a "major concession" to the Defendant by accepting that there should be a stay in respect of the director penalty tax claim, which comprised some $60 million of the tax obligations, representing the vast majority of the total outstanding debt. This concession is a unique consideration in the Ho case, and taxpayers should be mindful that the outcome may well be different in matters where no such concession has been made in similar circumstances.

Reason 4: Arguable case

The Court determined that there was "no way to gauge whether the case… has any merit or is even arguable" since evidence had not yet been filed in either the Federal Court or ART proceedings. On balance, the inability to establish whether the Defendant had an arguable case in the appeals was found to favour the Plaintiff.

Findings

The Defendant's "extreme hardship" was found to be "the strongest factor" in his favour. Relevantly, however, Elkaim AJ held at [40]-[41] that:

"…Were it the only factor I do not think it would surpass the "clear legislative policy" to give "priority to the recovery of taxation revenue notwithstanding that a taxpayer has a Part IVC proceeding on foot" (Southgate at [77]).

I do however think that the defendant, on delicate balance, should get the stay requested because of the combination of extreme hardship with the need to progress the litigation in a "just, quick and cheap" manner."

That is, a taxpayer's financial hardship alone will not generally be a sufficient reason to stay recovery proceedings by the Commissioner but is influential as part of a combination of factors. The distinguishing concept here was combining that extreme hardship with modern State law case management principles in s 56 of the Civil Procedure Act 2005 (NSW) of the just, quick and cheap resolution of the real issues in dispute.

Acknowledging the Plaintiff's concern about unnecessary delay in recovering tax if either the Federal Court or ART proceeding hearing was completed well before the other, the Court dealt with this issue in its orders providing for a stay of the recovery proceedings until after the determination of either the Federal Court or ART proceeding, whichever was determined first. The Defendant would then have time to "approach the Court for an extension of the stay either generally" or for limited purposes.

Key takeaways

• The outcome in Ho represents a significant departure from the usual practice of a Court allowing the Commissioner or Deputy Commissioner to obtain judgment with enforcement stayed pending the outcome of the taxpayer's appeals. The decision in Ho represents a return to Court discretionary or interventionist delay, with the invocation of State law case management principles as a basis to stay recovery proceedings a distinguishing element.
• A taxpayer's hardship alone will not generally be a sufficient reason to stay recovery proceedings by the Commissioner. In Ho, the "just, quick and cheap" resolution of the proceedings, in addition to the extreme hardship on the taxpayer of the recovery proceedings, was a persuasive factor in the Court's decision.
• To that end, taxpayers should apply caution when considering how this case might impact recovery against their tax debts. In Ho, the Commissioner's prior concession to delay recovery of most of the debt was a significant contributing factor to the Court finding that granting the stay of proceedings would facilitate the efficient disposal of proceedings.
• The standard of evidence to assess financial hardship in tax matters should be tailored to the type of challenge brought and will likely differ as between interlocutory applications (particularly where the matter is still in its early stages) and appeal or review hearings.