Allrange Tree Farms Pty Ltd and Deputy Commissioner of Taxation
[2004] AATA 1001
•30 August 2004
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2004] AATA 1001
ADMINISTRATIVE APPEALS TRIBUNAL )
) No W2002/51
GENERAL ADMINISTRATIVE DIVISION ) Re ALLRANGE TREE FARMS PTY LTD Applicant
And
DEPUTY COMMISSIONER OF TAXATION
Respondent
INTERIM DECISION
Tribunal Mr M J Allen, Member Date30 August 2004
PlacePerth
Decision The decision of the Tribunal is that:
(a) the reviewable decision of a delegate of the respondent made on 10 December 2001 to refuse access to the documents specified in Exhibit R1, other than folios 154, 216 (in part) and 796, is affirmed;
(b) folios 154, 216 (in part) and 796 are not exempt from release on the grounds of irrelevance or by virtue of s38 (1) of the Freedom of Information Act 1982 (“the Act”); and
(c) a Directions Hearing be convened for the purpose of determining the procedure to be followed in relation to folios 154, 216 and 796 in compliance with sub-sections 59(3) and 59A(3) of the Act.
.............(sgd M J Allen)...................
Member
CATCHWORDS
FREEDOM OF INFORMATION – request for access to large numbers of categories of documents concerning the disallowance of deductions in respect of participation in “mass marketed tax schemes” – consideration of what is scope of the request – consideration of whether documents are exempt under s 38 of the Freedom of Information Act 1982 – respondent also claiming documents exempt under ss 41 and 43 – respondent had not complied with s 59(3) and s 59A(3) – interim decision as to whether documents fall within the scop of the request or are exempt under s 38 – directions hearing to be convened regarding compliance with ss 59(3) and 59A(3)
Freedom of Information Act 1982 ss 11,15,18, 22, 27, 27A, 38, 41, 43, 59, 59A
Income Tax Assessment Act 1936 s 16(1), 16(2), 221B
Taxation Administration Act 1956 s 8WB
Re Yun Jin Ho and Human Rights and Equal Opportunity Commission [1998] AATA 790
Re Russell Island Development Association Inc. and Department of Primary Industries and Energy (1994) 33 ALD 683
Re Richardson and Commissioner of Taxation [2004] AATA 367
Re Collie and Deputy Commissioner of Taxation (1997) 45 ALD 556
Re Hart and Deputy Commissioner of Taxation [2002] AATA 1190
Johns v Connor (1992) 27 ALD 25, 197 ALR 465
REASONS FOR DECISION
30 August 2004 Mr M J Allen, Member 1. This is an application by the applicant, Allrange Tree Farms Pty Ltd, for review of a decision made on behalf of the respondent by officers of the Australian Taxation Office (ATO) to refuse the applicant access to the whole of certain documents and parts of other documents. The decision to refuse access to all or part of the documents was made on the basis that the documents in question were exempt from disclosure under all or some of ss 38(1), 41(1), 42(1) and 43(1) of the Freedom of Information Act 1982 (“the Act”) or because the documents contained material that was irrelevant to the applicant’s request for the purposes of s 22 of the Act. For reasons that are referred to at [19] and [20] below, this decision and the reasons for it deal only with issues arising under ss 22 and 38(1) of the Act.
2. At the hearing of the matter the applicant was represented by its solicitor, Mr Wilson, and the respondent was represented by Ms Price of counsel. The documents lodged pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 (“the AAT Act”) (T1-T26) and Exhibits R1-R3 tendered by the respondent were received in evidence. Oral evidence was given by Mr Martin McCoy, a solicitor employed by the respondent.
Background
3. The undisputed background to the matter is that in 1996 and 1997 the applicant, in its capacity as a trustee for the Kununurra Sandalwood Unit Trust, invited members of the public to participate in what was known as the Kununurra Tropical Forestry Project (“the Allrange project”), which involved the purchase of Indian sandalwood and other seedlings and the cultivation thereof. Participating growers claimed as tax deductions amounts contributed to the Allrange project. The Allrange project was restructured in 1998 following intervention by the Australian Securities and Investments Commission and investors were given the option of withdrawing from it. An audit report prepared by ATO officers about the Allrange project was completed in July 1999 and, in November 1999, the ATO released what was described as a “position paper” on the Allrange project to participants. Subsequently, in early 2000, the ATO disallowed deductions previously claimed by participants and issued amended assessments to them.
4. In November 2000 the applicant made a request for access to certain documents under the Act. Thereafter, there was extensive correspondence and contact between the applicant’s solicitors and the ATO regarding the scope of the applicant’s request and by letter dated 10 October 2001 the respondent advised the applicant that access would be granted to some documents but refused to grant access to all or part of a large number of other documents. Further reference to that correspondence will be made below. In November 2001 the applicant sought an internal review of the decision and on 10 December 2001 the respondent decided to grant access to additional documents but to continue to refuse access to others.
5. It is appropriate at this point to note that for several years prior to the end of 2001 there had been considerable public and parliamentary discussion about what had been described as “tax minimisation” or “mass-marketed” schemes, particularly in the area of horticulture and other aspects of primary production – and the ATO’s stance of disallowing claimed deductions. In February 2002 the Commissioner for Taxation announced that, following consideration of the recommendations of the Senate Economics References Committee’s “second report on mass marketed tax effective schemes”, the Commissioner had decided to offer to settle the disputed disallowed claims on certain terms: see Annexure B to Exhibit R3).
6. The Commissioner referred in that announcement to several test cases then before the Federal Court and emphasized that a vigorous approach would continue to be adopted towards what was perceived to be unreasonable tax avoidance – in some cases with the involvement of the Australian Federal Police and the Director of Public Prosecutions. The Commissioner named in excess of 150 schemes that he considered to be “eligible” to be dealt with in accordance with the terms of settlement offered. The Allrange Project was one of those named. For each named scheme the Commissioner’s internet web site contained a “fact sheet” that was intended to assist scheme participants and their advisers assess the offered settlement terms. The sheets did not contain any specific information about the terms of the particular scheme or the specific reasons why the Commissioner had disallowed participants’ claimed deductions in respect of that scheme (see Annexure C to exhibit R3).
7. After the applicant’s application to this Tribunal for review of the 10 December 2001 decision there was considerable further communication between the applicant’s solicitors and the ATO and the respondent has on several occasions granted access to all or part of additional documents. By the time of the hearing of the matter the documents remaining in dispute between the parties were as set out in Exhibit R1, as amended at the hearing. That document identified seventy-one folios, two of which are identical, leaving 70 folios in dispute. Annexure A to Exhibit R2 (an affidavit of Mr McCoy sworn 9 September 2003) sets out a general description of each folio and the grounds of exemption claimed in respect of each. All of the folios were claimed to be exempt under section 38 of the Act; all but one are claimed to fall outside the scope of the request made by the applicant; all but six are claimed to be exempt under s 41(1); and all but eight are claimed to be exempt under s 43(1)(c) of the Act.
8. At the completion of the hearing the respondent was invited to make written submissions regarding any additional statutory exemptions that may be available in respect of any of the documents. The respondent subsequently advised the Tribunal that it did not wish to take up that invitation.
The Statutory Framework
9. Section 11 of the Act gives a person a legally enforceable right to obtain access to documents held by a Minister or an agency, but only in accordance with the Act. Requests for access to documents must be made in writing and must contain such information concerning the documents requested as is reasonably necessary to enable the documents to be identified: s 15(1). Section 18 of the Act relevantly provides that a person shall be given access to documents if an appropriate request is made and relevant charges paid unless the document is an exempt document.
10. Section 22 of the Act relevantly provides that if a decision is made not to grant access to a document because it is an exempt document or because to do so would disclose information that would reasonably be regarded as irrelevant to the request for access, and it is possible to delete from a copy of the document parts of it such that the document would no longer be an exempt document or would no longer disclose such irrelevant information, then a copy should be made of the document, with appropriate deletions, and access granted to it.
11. Part IV of the Act sets out various grounds pursuant to which documents will be exempt documents. The first ground of exemption relied on in the present case by the respondent is s 38(1), which relevantly provides that a document is exempt if “… disclosure of the document, or information contained in the document, is prohibited under a provision of an enactment; and … that provision is specified in Schedule 3 [of the Act] …”. Section 38(1A) relevantly provides that a person’s right of access to a document is not affected merely because the document is exempt under s 38(1) if disclosure of the document, or information contained in it, to that person is not prohibited by the enactment concerned or any other enactment.
12. Schedule 3 of the Act specifies a number of provisions of various enactments. In the present case the relevant provisions are s 16(2) of the Income Tax Assessment Act 1936 (“the ITAA”) and s 8WB(1)(c) of the Taxation Administration Act 1953 (“the Administration Act”). Section 16(2) relevantly provides that “… an officer shall not either directly or indirectly … divulge or communicate to any person any information respecting the affairs of another person acquired by the officer as mentioned in the definition of ‘officer’ in subsection (1)”. Subsection 16(1) of the ITAA contains a definition of the word “officer” - which is relevantly defined to mean “… a person who is … employed by the Commonwealth … and who by reason of that … employment, or in the course of that employment, may acquire or has acquired information respecting the affairs of any other person, disclosed or obtained under the provisions of [the ITAA] …”.
13. Section 8WB(1)(c) of the Administration Act relevantly provides that, subject to some exclusions set out in s 8WB(1A) that are not relevant, “ …a person must not …divulge or communicate another person’s tax file number to a third person.”
14. Section 41 of the Act relevantly provides that a document is an exempt document if its disclosure “… would involve the unreasonable disclosure of personal information about any person (including a deceased person)”. Section 4(1) of the Act defines “personal information” as meaning “information or an opinion (including information forming part of a data base), whether true or not, and whether recorded in a material form or not, about an individual whose identity is apparent, or can reasonably be ascertained, from the information or opinion.”
15. Section 43(1)(c) relevantly provides that a document is an exempt document if its disclosure would disclose “… information … concerning a person in respect of his business or professional affairs or concerning the business, commercial or financial affairs of an organisation or undertaking, being information
(i) the disclosure of which would, or could reasonably be expected to, unreasonably affect that person adversely in respect of his lawful business or professional affairs or that organisation or undertaking in respect of its lawful business, commercial or financial affairs; or
(ii) the disclosure of which under this Act could reasonably be expected to prejudice the future supply of information to the Commonwealth or an agency for the purpose of the administration of the law of the Commonwealth or of a Territory or the administration of matters administered by an agency.”
16. Sections 27 and 27A of the Act deal with the procedure to be followed by an agency where a request is received for access to documents that contain information concerning (in the case of s27) a person’s business or professional affairs, or the business, commercial or financial affairs of an organisation or undertaking, or (in the case of s27A) personal information about a person. Both sections require that an agency must not make a decision to grant access to the document or an edited copy of it, so far as it contains the relevant information, unless an opportunity is given to the person or organisation or the undertaking to make submissions about whether the document is exempt under ss 41 or 43.
17. In the case of s27 (which deals with documents that may be exempt under s43) that opportunity must be given “where it is reasonably practicable to do so having regard to all the circumstances…”. In the case of s 27A (which deals with documents that may be exempt under s 41) that opportunity must be given where it is reasonably practicable to do so and it appears to the decision-maker that the person concerned (or the person’s legal personal representative if the person has died) “…might reasonably wish to contend that the document …is an exempt document under s 41”. Section 27A (1A) sets out factors that must be considered when determining whether a person might reasonably wish to contend that a document is an exempt document under s41.
18. I was advised at the hearing that the procedures contemplated by ss 27 and 27A were not followed by the respondent in relation to the documents remaining in dispute because it was considered that it was not practicable to do so in the circumstances. No particular consequences flow from that because the respondent has not granted access to the disputed documents that may contain information of the relevant kind. I observe, however, that to the extent that the respondent relied originally on ss 41 and 43 to deny access to documents that were subsequently released to the applicant, the provisions of ss 27 and 27A would have been applicable.
19. However, after completion of the hearing of the matter it became apparent that the respondent had not complied with its obligations pursuant to ss 59 and 59A of the Act. Both subsections 59(3) and 59A(3) relevantly provide that where an agency has decided to refuse a request for access to documents because the documents are exempt under s43 ( in the case of s 59) or s41 (in the case of s59A) and the person who made the request for access applies to the Tribunal for review of the decision, then the agency “…must, as soon as practicable, take all reasonable steps to inform [the person or organisation about whom the information relates], of the application” to the Tribunal. Such a procedure enables the person or organisation about whom information may be disclosed if the application to the Tribunal is successful to seek to become a party to the Tribunal proceedings. As was observed by Senior Member Dwyer in ReYun Jin Ho and Human Rights and Equal Opportunity Commission [1998] AATA 790 at [13], it is surprising how often matters come to the Tribunal where the above provisions have not been followed.
20. As a consequence of the respondent’s failure to comply with ss 59(3) and 59A(3) I convened a directions hearing after the completion of the substantive hearing of the matter for the purpose of discussing with the parties how best to proceed. Because, as noted at [7] above, all of the documents in dispute are claimed to be exempt under s 38 and all but one are claimed to fall outside the scope of the request made by the applicant, I suggested to the parties that I proceed to make an interim decision that dealt with those two grounds. Any documents that I found should not be disclosed to the applicant under one or both of those grounds would not, therefore, need to be subjected to the procedures contemplated by ss 59 and 59A. The parties agreed with that suggestion and, accordingly, this decision and the reasons for it do not deal with the grounds of exemption claimed under sections 41 or 43 of the Act. In that sense it is an interim decision that may not finally dispose of all issues arising in the proceedings.
Section 22
21. In relation to how the Tribunal should approach the resolution of a dispute about whether documents or parts of documents can be regarded as irrelevant to the request for access, Deputy President Forgie in Re Russell Island Development Association Inc. and Department of Primary Industries and Energy (1994) 33 ALD 683 at 692 said that “a request cannot be interpreted with the same degree of precision as one would approach a piece of legislation or even a set of pleadings. It is neither legislation nor pleadings and has not necessarily been drafted with the same eye to detail.” On the same page the Deputy President commented that “the request cannot be considered solely in isolation but must be considered in the context in which it is made” and that “finally I must stand back and take an overall view of the request and the context in which it is made bearing in mind that those making requests under the Act cannot necessarily be expected to have an intimate knowledge of the subject matter of the documents they seek or of the workings of government…” At p691 DP Forgie said that the expression “would reasonably be regarded” in s 22 of the Act requires the decision-maker to “…consider whether disclosure of certain information might reasonably, as opposed to irrationally or absurdly, be considered or looked on as irrelevant to the request made under the Act.”
Section 38
22. As noted at [12] above, there are two provisions specified in Schedule 3 of the Act that are relevant in the present case – s8WB(1)(c) of the Administration Act and s16(2) of the ITAA. In relation to the latter provision Deputy President Forgie recently reviewed a number of decisions concerning the interpretation of this provision in Re Richardson and Commissioner of Taxation [2004] AATA 367. The Deputy President reconsidered comments that she had made in Re Collie and Deputy Commissioner of Taxation (1997) 45 ALD 556 concerning the scope of the information encompassed within the definition of “officer” in s 16(1) of the ITAA for the purposes of s 16(2), specifically the requirement that information that has been acquired by an officer must have been “disclosed or obtained under the provisions of [the ITAA] or of any previous law of the Commonwealth relating to income tax”. DP Forgie did so having disagreed with an observation by (now) Senior Member McCabe in Re Hart and Deputy Commissioner of Taxation [2002] AATA 1190 at [65] that “…the wording of the statute suggests any information about an individual that was collected by the respondent may not be communicated…”.
23. DP Forgie concluded in Re Richardson at [41] that information will be disclosed or obtained under the ITAA if there is a link of substance between what is done (in relation to the acquisition of information) and the powers that are given under the enactment. At [42] DP Forgie said that
“… in administering the ITAA, the Commissioner and his officers require information that is relevant in assisting them to assess taxpayer’s liabilities and to carry out other powers and duties they are given by that legislation. He is given powers to obtain information to assist him to make those assessments but, beyond those specific powers, his power to assess liability and to carry out his powers and duties would authorise him to receive information more widely and so through avenues other than those provided by specific heads of power. That would mean that information that the person disclosing the information intends to be directed to the Commissioner’s powers and duties would have a connection of sufficient substance with his powers under the ITAA to say that the information has been disclosed under the ITAA. That does not mean that the information must be used by the Commissioner or his officers or even that it is objectively relevant. It does mean that it must be disclosed on the basis that it is directed to his powers and duties under the ITAA or any other law prescribed in s16(1). Whether or not the information is directed to matters within the Commissioner’s powers and duties, is a matter that would need to be assessed taking into account the nature of the information disclosed…”.
24. In addition to the information having been “acquired” by the officer because of disclosure in the specified way, the information must be “respecting the affairs of another person”. “Affairs” is “a word of very wide import” and its ordinary meaning “in relation to a corporation includes the activities, business or concerns of the corporation”: Johns v Connor (1992) 27 ALD 25, 197 ALR 465 per Lockhart J at 476. A similarly wide meaning is appropriate in relation to the affairs of an individual: Re Collie per D.P. Forgie at [45].
25. As to whether or not the “other person” referred to in s 16(2) of the ITAA must be able to be identified from the information in question, D.P. Forgie concluded in Re Collie at [49] that the provisions of s 16(2) “…do not require that the person be able to be identified from the information before an officer is under an obligation not to reveal that information. It is enough that it can be identified as information respecting the affairs of another person.”
26. Finally, information will be “respecting” the affairs of a person if it is in “relation, connection, reference or regard to the person’s affairs…or…is information regarding or concerning his affairs”: Re Collie at [46].
The scope of the request for access
27. In the present case the initial request for access made by the applicant’s solicitor referred to “copies of all ATO file notes, working papers, internal memoranda and correspondence passing between the ATO and other parties concerning the ATO’s decision to disallow deductions claimed by growers in relation to their “Allrange Tree farms project in the year ended 30 June 1997, 30 June 1998 and 30 June 1999” (T3). The writer of that letter may well have anticipated that the request would cover a large number of documents because the letter also stated that “before commencing any chargeable activities, please contact us to discuss your estimate of the charges that will be incurred.” In a letter dated 30 November 2000 (T6) the ATO informed the applicant’s solicitors that there were approximately 3,500 pages involved in the request and an estimate of the charges involved was $2,695. A deposit of $673 was sought. On 6 December 2000 the applicant’s solicitor advised the ATO that “to expedite the release of the information we have sought we are happy for the initial release of information to be restricted to the ATO audit report.” This will enable your officers to provide a copy of the audit report on a timely basis and in the meantime quantify more precisely the actual amount of documentation relating to ATO memoranda and correspondence between ATO officers concerning the audit” (T7). On 25 January 2001 the ATO wrote to the applicant’s solicitors (T9) advising that the documentation relating to “internal ATO memorandum concerning the audit” was approximately 2,900 pages, the relevant charges for which were estimated at $2,075. That letter advised the applicant that the charge for access to the audit report was $725.
28. By letter dated 19 February 2001 (T10) the applicant’s solicitors expressed surprise at the estimate of 2,900 pages and expressed concern that the ATO may have misconstrued what was meant by “internal ATO memoranda and correspondence passing between ATO officers concerning the Allrange Tree farms audit.” The letter went on to state that “it is our understanding that the relevant ATO officers who work on an audit of a project keep a separate correspondence file which includes all correspondence they make and receive on the audit and copies of notes they take concerning telephone attendances and meetings attended during the course of their audit. In our view it should be quite a simple matter to review the correspondence files kept by the various ATO officers concerned and then provide us with copies of this correspondence pursuant to our Freedom of Information request.”
29. Document T11 is a filenote made by an ATO officer of a telephone conversation with the applicant’s solicitor on 28 February 2001 in which the applicant advised that the ATO should proceed with considering the request for access to the audit report and that the solicitors “are also going to narrow down Allrange’s request apart from audit report”.
30. By letter dated 7 March 2001 (T13) the applicant’s solicitors advised the ATO that: “in relation to our request for the documents concerning the internal ATO memorandum relating to the audit report, we seek to limit the documents to:
(1) reports;
(2) filenotes;
(3) submissions;
(4) emails;
(5) telephone conversations; and
(6) notes of any personal investor details relating to Noel Puzey.”
The letter contained authorities from Mr Puzey and two other companies related to the applicant for the ATO to provide the applicant with access to any documents pursuant to the applicant’s request.
31. By letter of 20 April 2001 (T15) the ATO advised the applicant’s solicitors that the documentation relating to the “internal ATO memorandum” as particularised in the letter of 7th March 2001 consisted of 1253 pages located in eight folders. An estimate of charges ($2,724.59) was provided and a deposit of $681.15 was sought. That deposit was paid on 30 April 2001.
32. On 10 October 2001 the ATO wrote to the applicant’s solicitors (T17) to advise that access had been granted in part to the documents requested with various exemptions and deletions claimed. It appears that copies of 141 pages were provided at that time. Eleven distinct grounds of exemption were specified as being applicable to all or some of the documents that were not disclosed – but the claim was not made that any of the documents were not disclosed because they fell outside the scope of the request.
33. As noted at [4], on internal review a large number of other documents was released in whole or in part, with seven grounds of exemption being relied on to refuse access to the balance. Again, no reference was made to any of the documents falling outside the scope of the request. That ground arose only in various documents filed by the respondent once review proceedings had commenced in the Tribunal.
34. From the above it can be seen that the applicant’s original request for access was cast in very wide terms, specifying a number of categories of documents that concerned the ATO’s decision to disallow deductions claimed by participants in the Allrange project. The position taken by the respondent before the Tribunal was that the applicant’s request was recast and narrowed by the applicant’s letter of 7 March 2001 (T13) by limiting the request to certain types of documents internal to the ATO. The applicant’s position throughout has been that document T13 did nothing more than better define the scope of one of the categories in the original access request i.e. the category of “internal memoranda” and that at all times the applicant intended that its request be given a wide scope to cover all of the types of documents referred to in document T3 provided that the documents concerned the decision to disallow deductions.
35. The applicant has contended that the respondent adopted a “nationally coordinated and blanket approach to the disallowance of deductions claimed in respect of the so-called mass marketed investment schemes – which includes the [Allrange project]” – and that this brought within the scope of the request “[1] information relating to other schemes, particularly the respondent’s discussions about other similar schemes and their treatment and comparison with other schemes; and [2] information relating to or derived from …taxpayers (other than Mr Puzey) concerning the [Allrange project]” (see para 13 of applicant’s written submissions tendered at the hearing). The applicant contends that the respondent did not consider each participant individually, “…but rather treated all investors as one and disallowed deductions to all investors irrespective of their individual facts and circumstances…Therefore information obtained by the respondent from other Allrange [project] investors concerning the scheme is relevant to the decision on Mr Puzey” [para 14 of applicant’s submissions].
36. The request was made by the applicant’s legal advisers, who must be taken to have understood what it was that was being requested. I have noted above that the original request was in wide terms. It did not refer to Mr Puzey specifically or to any other participant in the Allrange project. It was, in its context, a request that related to ATO deliberations and decision-making about the deductibility of amounts claimed by participants in the Allrange Project generally – rather than specific participants, although certain types of information concerning Mr Puzey was added to the request by the 7 March 2001 letter. In my opinion, in the context in which the request was made and the “negotiations” that followed between the solicitors and the ATO concerning the scope of the request, the request should be taken to extend to all the various types of documents that were referred to in document T3 provided that the documents do indeed concern the decision to disallow deductions generally in respect of participation in the Allrange project. Documents that refer specifically to Mr Puzey will also be included, but I do not accept the applicant’s contention that documents that deal specifically with the affairs of other participants in the Allrange project will be included. Documents that refer to comparisons between aspects of the Allrange project and other schemes in a way that indicates that the comparison was in some way relevant to the ATO’s assessment of the Allrange project and the deductibility of participants’ contributions generally will also be regarded as within the scope of the request. In other words, subject to the exclusion of documents relating specifically to participants other than Mr Puzey, I am not prepared to adopt a narrow interpretation of the applicant’s request. I consider a broad approach to be appropriate having regard to the breadth of the original request and to the fact that the respondent, when processing the request, identified a very large number of documents as falling within its scope and the original decision-maker and internal reviewer did not rely on the documents being outside the scope of or irrelevant to the request when making the first and second tier decisions under the Act.
Examination of individual documents
37. Where access has already been granted to part of a document, a copy of the document (with the parts claimed to be exempt obscured) is contained in the T documents. Unedited copies of those documents, and copies of other documents that are claimed to be exempt in full, are contained in a bundle of documents that was filed by the respondent pursuant to the Tribunal’s Freedom of Information Practice Direction, which I will refer to as A1. Neither the applicant nor its legal representative had access to A1 at the hearing although Mr Wilson was present throughout the presentation of the respondent’s evidence and submissions.
38. In my examination of the individual documents in dispute I will refer to them, with one exception, by the folio numbers by which they are referred to in Annexure A of Mr McCoy’s affidavit of 9 September 2003 (R2). For ease of reference, in the headings below I will also identify the page number each folio bears in A1 (page 1 of that volume will be referred to as A1.1, page 2 as A1.2 and so on) and in the T documents.
Folios 29, 714 and 715 (A1.2, A1.252 and A1.253)
39. Folios 714 and 715 are described in R2 as being “… a hand written record of a meeting on 1 March 2000 between ATO officers and two solicitors regarding third parties and another tax scheme”. Folio 29 is a copy of folio 715, being the second page of the notes, except that some additional handwritten words and dates appear at the top of folio 29. The respondent relies on s 38 and that the folios fall outside the scope of the request.
40. The information provided to the ATO officers at the meeting in question concerned the financial and business affairs of the scheme in question and referred to certain intentions. Reference is made to several other named entities. In my opinion the information was of such a nature that it was in reference to, regarding or concerning the affairs of various persons and was provided to the respondent in a way that was directed to the respondent’s powers and duties in administering the ITAA. It has a sufficient connection with those powers under the ITAA to enable a conclusion that the information was disclosed or obtained under the ITAA. It follows that it was information of the type covered by s 16(2) of the ITAA and folios 714 and 715 are, consequently, within the exemption provided by s 38(1) of the Act. Having reached that conclusion it is not strictly necessary to consider whether the 2 folios fall within the scope of the applicant’s request. However, I observe that the documents would, in my opinion, be irrelevant to the applicant’s request. By March 2000 the respondent’s audit of the Allrange project had been completed and a decision had already been made to disallow deductions claimed by participants. Although folio 715 contains a reference to the Allrange project (and a comparison of one operational aspect of it with the project under consideration at the meeting), in my opinion it is not possible to say that the comparison or the document overall was in any way concerned with the making of decisions by the ATO to disallow deductions for participants in the Allrange project – either generally or specifically.
41. The additional words added to the top of folio 29 appear to have been added by an ATO officer who was not at the meeting and record that the folio was obtained from an ATO officer who was. The added words would not be exempt under s38 but, in my opinion, they are no more relevant to the applicant’s request than is folio 715 itself. I conclude that access should not be granted to any part of folios 29, 714 or 715.
Folios 146, 147, 154 and 156 (A1.9, A1.10, A1.12, A1.14; Tp 212, 213, 215, 217)
42. Folios 146 and 147 are typewritten notes that record discussions at a meeting of what is described as a “Part IVA Panel” that took place on 27 May 1999 and which were prepared by an ATO officer. Folios 154 and 156 are two pages of handwritten notes prepared by an ATO officer of the same meeting. The latter two folios are part of 9 pages of handwritten notes of the meeting, some of which have been previously released in whole or in part and which are no longer in dispute. All of folios 146, 147, 154 and 156 have been released in part, but certain sections have been deleted from the released copies.
43. The oral evidence of Mr McCoy was that a Part IVA Panel (“the Panel”) is a group of ATO officers and external persons knowledgeable in taxation matters. It is a practice of the ATO that no determination will be made to apply Part IVA of the ITAA (which deals with tax avoidance schemes) before the views of the Panel are obtained about the particular scheme. The meeting of the panel in May 1999 considered a number of schemes, one of which was the Allrange project, in the context of whether Part IVA should be applied to them.
44. The part of folio 146 that has been released to the applicant sets out the time and place of the meeting and the names of the attendees. The part that has been deleted contains the views of various Panel members about various aspects of a scheme (not the Allrange project) in the context of Part IVA, focussing on specific aspects of the scheme in a quite particular way. In my opinion the discussion about that scheme cannot be said to be relevant in any specific way to the Allrange project and does not concern the decision made to disallow deductions for Allrange project participants. Accordingly, it falls outside the scope of the request.
45. In addition, I am satisfied that the information that is referred to concerning the unrelated scheme does relate to the affairs of the persons and entities involved in the schemes and is of such a nature that it was disclosed to or obtained by ATO officers in the course of and for the purpose of administering the ITAA. The deleted information would therefore be exempt pursuant to s 38 of the Act.
46. In relation to folio 147, two parts have been deleted from the copy provided to the applicant. The larger of the deleted parts contains information relating to two other tax schemes and contains the views of Panel members about them in relation to Part IVA. No reference is made to, or comparison made with, the Allrange project and I consider that deleted material to be outside the scope of the request and exempt pursuant to s 38 for the same reasons as the material in folio 146 was exempt.
47. The second, smaller part that has been deleted from folio 147 is contained within the notes of the Panel meeting relating to the Allrange project. The final paragraph of that section of notes is as follows:
“Are there any people who invested in [the Allrange project] and [deleted]? This could cause problems as we have given a favourable PBR on PTP.”
I was informed that the letters “PBR” means ‘Private Binding Ruling’ and the initials “PTP” apparently refer to another tax scheme. All the notes concerning the Allrange project, apart from the word or words deleted in the sentence quoted, have been released.
48. Mr McCoy said in his oral evidence that he did not attend this particular Panel meeting and had never attended any other Panel meeting. He said that he could only speculate about the meaning to be given to this final paragraph and the comparison referred to. He thought that the participants at the Panel meeting may have simply been interested in whether there were any common investors in the two schemes, not because it was relevant to whether Part IVA should apply but merely out of curiosity or other interest. No other evidence was produced by the respondent as to the meaning of the comparison, and I am not prepared to accept the speculative view of Mr McCoy. In my opinion it is apparent from the documents that the Panel did want to know whether there were any common investors between the Allrange project and another scheme, and that this was thought to be of some relevance to the decision to be made about whether to invoke Part IVA in relation to the Allrange project. For that reason, in my opinion, it cannot be said that the deleted part is irrelevant to the decision made by the ATO to disallow deductions claimed by participants in the Allrange project. It falls within the scope of the applicant’s request.
49. In relation to the claimed s 38 exemption for this part of folio 147, the information that has been withheld is the name of the other scheme involved. The two sentences involved, as released, convey the information that a PBR was given to an unnamed scheme. Release of the word or words presently in dispute would identify the other scheme that had obtained the PBR. That is, in my opinion, information concerning the affairs of the persons and organisations involved in the other scheme that was obtained under the provisions of the ITAA. This part of folio 147 is also exempt under s 38(1).
50. The parts of folios 154 and 156 that have been deleted are the names of one or more schemes other than the Allrange project. In the case of folio 156 it is the same deletion as the second, smaller, deletion from folio 147 referred to at [47] above. For the reasons given at [47] to [49] I consider that this deletion is within the scope of the applicant’s request but is exempt under s 38. In the case of folio 154 the two deleted items are the name or names of one or more schemes in respect of which the Panel identified differences compared to the Allrange project. For reasons similar to those concerning folios 146, 147 and 156 I do not consider that the deleted parts of folio 154 fall outside the scope of the request. In the context of the whole of folio 154, I consider that the name of the other scheme or schemes does not involve information concerning the affairs of the other scheme or schemes – and so is not exempt under s 38.
Folio 202 (A1. 17, Tp 220)
51. This folio is an email transmission between two ATO officers in April 1999 in which one officer requests that papers be prepared in relation to a number of tax schemes (one of which is the Allrange project) for submission to the Part IVA Panel in May 1999. The first deleted part of the folio is a list of the names of the schemes (other than the Allrange project) that are to be submitted to the Panel. The second deleted part is a reference to whether the papers for two of the named schemes (not the Allrange project) will be completed in time and the reasons why that may be the case. The third and fourth deleted parts contain the name of another scheme in respect of which a paper for a Panel meeting had already been prepared and which was attached to the email as a guide to be used in the preparation of the requested papers dealing with the other schemes referred to.
52. Although, in my opinion, the email is of an administrative or mechanical nature only, as a whole it can be said to relate to the eventual decision-making that occurred in relation to the Allrange project and the deleted parts are not irrelevant to the eventual decisions. The deleted parts therefore fall within the scope of the request. However, disclosure of the names of the other schemes would reveal the identity of schemes that were considered by the ATO to be possibly susceptible to Part IVA determinations and that is, in my opinion, information concerning the affairs of the parties associated with those schemes that was obtained by the ATO in its administration of the ITAA. Folio 202 is, therefore, exempt under s 38.
Folios 205 – 215 (A1.18-A1.28)
53. These folios are the summary paper that was referred to in the email at folio 202 that was to be used as a guide for the preparation of the papers to be presented to the Panel in May 1999 in relation to the Allrange project and other schemes. According to the summary description of the folios contained in R2 it was prepared in relation to a 1994 scheme and had already been submitted to and considered by a Panel. The folios in question make no reference whatsoever to the Allrange project and it is apparent that it was attached to the email at folio 202 simply as an example of how the papers to be prepared for the Panel were to be structured, and the type of information that the papers were to contain. Although the paper has no specific relevance to the decision-making in relation to the Allrange project, on my broad approach to the scope of the request I am not prepared to conclude that the document falls outside that scope. However, the document contains a great deal of specific information about the particular scheme that, by its nature, would have been disclosed or obtained in the manner discussed at [23] above and concerned the affairs of those connected with the particular scheme in question. The folios are, therefore, exempt under s 38.
Folio 216 (A1.29, Tp 221)
54. This page is the one exception referred to at [38] above. Annexure A to R2 does not refer to it, but Exhibit R1 identifies it as a document remaining in dispute – and the parties agreed that was the case. An edited copy of this folio has been provided to the applicant. The folio is a memorandum from a named ATO officer to his or her supervisor in February 1999, the subject of which is described as “re Allrange Tree Farms – Sandalwood Project”. Apart from that subject heading and one sentence that refers to the payment of fees by the applicant to another corporate entity during 1998, all of the document and some hand written comments made by an unidentified ATO officer have been deleted from the copy provided to the applicant. The information in the memorandum that has been withheld refers to actions intended to be taken by the ATO to obtain information concerning various entities that are, given the subject of the memorandum, in some way connected to the Allrange project. The memorandum refers to the relationship between some of those entities and several named individuals, some of which was obtained from public sources. The handwritten additions are on four lines, two of which are the names of entities referred to in the memorandum. The other two lines appear to record the comments of the supervisor, one line of which was indecipherable to me and to Ms Price for the respondent.
55. The respondent did not originally contend that the folio fell outside the scope of the request, but relied upon it being exempt pursuant to ss 38 and other grounds. At the hearing Ms Price added the claim that the memorandum was also outside the scope of the request but acknowledged that the two lines recording the comments of the supervisor would not raise concerns for the respondent under s 38.
56. In relation to all the deleted parts of the memorandum and the handwritten additions, I consider they are all relevant to the ATO’s evaluation of the Allrange project and decision to disallow deductions. They are, therefore, within the scope of the request. As acknowledged by Ms Price the two handwritten lines of comment are not exempt under s 38.
57. In relation to s 38, I consider that the deleted part of the memorandum and the remaining two handwritten lines do contain information concerning the affairs of the various entities and individuals named and it is information that has a link of sufficient substance between the acquiring of the information and the powers and duties of the respondent in the administration of the ITAA. These deleted parts are, therefore, exempt under s 38.
Folios 340-345, 347 (A1.78-A1.83, A1.84)
58. Folio 347 is a handwritten note of a telephone message for an ATO officer in February 1997 made by an unknown ATO officer concerning the position of a named investor in the Allrange project and contains information about that person’s request for a variation of tax payable under s 221B of the ITAA. Folios 340-345 contain a summary of information obtained from 2 named tax payers who were participants in the Allrange project, one of whom is the person referred to in folio 347. The information was provided by the 2 tax payers in questionnaires submitted by them in support of applications for a variation of tax under s221B.
59. Whether or not the documents are within or outside the scope of the applicant’s request, the documents clearly contain information about the affairs of the two individuals and it is information that was disclosed by them to the respondent for the purposes of the administration of the ITAA. All the folios are exempt from release under s38.
Folios 349-352, 353-356 (A1.85-A1.88, A1.89-A1.92)
60. Folios 353-356 are handwritten notes made by an ATO officer of a telephone conversation in November 1999 with a named tax payer who was a participant in the Allrange project. Folios 349-352 are a typed record of the notes of the conversation. The tax payer concerned had received the position paper that had been distributed by the respondent and wished to discuss the Allrange project and how he or she might proceed with objections to any disallowance decision. I am satisfied that both the hand written record and the typed version contain information about the affairs of the tax payer and it is information that was disclosed to the respondent for the purposes of the administration of the ITAA. All the folios are therefore exempt under s. 38 and it is not necessary to consider whether they fall within the scope of the request.
Folios 357-359 (A1.93-A1.95)
61. Part of folio 357 contains a note of a telephone conversation in November 1999 between 2 ATO officers concerning contact made with one of them by a named participant in the Allrange project. Folio 359 contains brief notes made by the other ATO officer of a subsequent telephone conversation between that officer and the named person. Part of folio 357 and the whole of folio 358 contains a more detailed record of that second conversation. These folios are exempt under s.38 for the same reasons as are the folios referred to in [58] - [60] above.
Folio 369 (A1.97, Tp235)
62. This document is an email from one ATO officer to another dated 2 June 1999. The addressee is asked to ascertain whether any investors in the Allrange project are also investors in another named scheme. The document has been disclosed to the applicant save that the name of the other scheme has been deleted. It is apparent that the request was made as a response to the issue raised at the Panel meeting referred to at [47] above. Ms Price said in her oral submissions that there was “nothing to indicate that it played any role in the decision to issue assessments to individual investors. It was just an exploration of something that had arisen during that meeting.” In my opinion that position cannot be sustained. I consider that the Panel members must have considered the issue of commonality of investors between the Allrange project and the named scheme to be relevant to any decision that might be made in relation to the Allrange project. Accordingly, I consider that the document falls within the scope of the applicant’s request.
63. In relation to s 38, I concluded at [49] above that the name of the other scheme concerned in folio 147 was exempt under s 38 because of the information that could be conveyed by the release of the name. I consider that reasoning to apply also to the name of the scheme in the context of folio 369. The folio is exempt under s 38.
Folios 373-378 (A1.100-A1.105)
64. These folios record a conversation in May 1999 between an ATO officer and a named investor who withdrew from the Allrange project in June 1998 and records attempts to contact two other (named) similar investors. The six folios in question consist of two folios for each investor and set out questions or issues that the ATO officer wished to discuss with each investor. Folios 373 and 374 record the responses of the investor that was contacted.
65. I am satisfied that the inquiries made and attempted to be made by the ATO officer that are the subject of these folios arose out of issues identified at the Panel meeting in May 1999 and are therefore within the scope of the applicant’s request. However, they refer to information concerning the affairs of the three investors and, in the case of folios 373 and 374, information provided by one of them. This information was, by its nature, obtained for the purposes of the administration of the ITAA and for that reason all the folios are exempt under s 38.
Folios 421- 423, 426 (A1.124-A1.126, A1.128)
66. Folio 426 contains the notes made by an ATO officer (officer 1) of information obtained in a telephone conversation with a second ATO officer in February 1999. Folios 422 and 423 are an email from officer 1 to a third ATO officer which incorporates the information contained in folio 426. Folio 421 is a handwritten note made by officer 1 about two subsequent telephone conversations with two other ATO officers. The documents are claimed to be exempt in full. The subject of the documents are ATO audits of or inquiries concerning a number of named individuals and entities, some of which are said to have a connection with the Allrange project. I am satisfied that the documents are relevant to the decisions made concerning the Allrange project and therefore within the scope of the applicant’s request. However, they are documents that contain information about the affairs of the individuals and entities named therein and that information was obtained by the ATO for the purposes of its administration of the ITAA. All 4 folios are therefore exempt under s38.
Folios 477, 478, 480, 488 - 490 (A1.144 - A1.146, A1.150 - A1.152)
67. Folios 488 – 490 contain handwritten notes concerning a telephone conversation in November 1998 between two ATO officers concerning the level of penalty tax to be imposed on a named tax payer who had invested in and then withdrawn from the Allrange project. Folios 477, 478 and 480 contain an email from one of those officers to the other and the second officer’s response thereto concerning the position of the same tax payer. The documents refer to information provided to the ATO by the tax payer concerned and also to other information concerning that tax payer’s affairs. All the documents are exempt under s 38 in my opinion.
Folio 504 (A1.159)
68. This document contains emails between ATO officers concerning information provided by a named individual concerning a tax scheme other than the Allrange project. The document records the comment of the person who provided the information to the ATO about a possible connection between the Allrange project and the other scheme. The document is within the scope of the applicant’s request but it contains information concerning the affairs of a third party that was disclosed to the ATO for the purposes of its administration of the ITAA. It is therefore exempt under s 38.
Folios 513 and 514 (A1.164 and A1.165)
69. Folio 513 is a memorandum from one ATO officer to another in April 1998 recording the transfer of two files concerning two named tax payers (with tax file numbers), one of whom had invested in the Allrange project and one of whom had invested in an unrelated scheme. Folio 514 is a message from one ATO officer to another in May 1998 recording that files relating to private binding rulings for two named tax payers will be sent to the addressee.
70. The documents are irrelevant to any decision-making process of the ATO and to that extent fall outside the scope of the applicant’s request. To the extent that folio 153 refers to the tax file numbers of the two individuals disclosure would be prohibited by s 8WB(1)(c) of the Administration Act and hence exempt under s 38. However, both documents refer to the affairs of the named individuals and this information was obtained for the purpose of the administration of the ITAA and hence exempt under s 38.
Folio 592 (A1.191, Tp 246)
71. Folio 592 is a memorandum from one ATO officer to another in December 1996. It has been released to the applicant but with certain handwritten additions made by an ATO officer deleted. The handwritten part contains a note of information received by an ATO officer from an officer of the Australian Securities and Investments Commission concerning another tax scheme. The information provided related to some financial aspects of the other scheme and ASIC’s intended actions in respect of that scheme. It is not clear to me what the connection is between the contents of the memorandum between the two ATO officers and the Allrange project, but I note that the respondent has released that part of the document. The handwritten part is information about the affairs of the other tax scheme and persons involved in it that was provided to the ATO by ASIC for the purposes of the respondent’s administration of the ITAA and it is therefore exempt under s 38.
Folios 631, 636, 637, 639, 640 (A1.205, A1.209-A1.212; Tpp 258,262-265)
72. These folios form part of a larger document prepared by ATO officers about whether or not a number of named afforestation projects (including the Allrange project) should be the subject of settlement offers to be made by the ATO in accordance with a code of settlement practice that the ATO used to decide whether to settle disputes concerning the disallowance of deductions by participants in various tax schemes. Some of the pages of the larger document have been released in whole or part and are not in dispute. The pages that remain in dispute have all been released in part. The parts not released contain the names of the other schemes considered in the document and in some cases contain comments about other schemes and comparisons between them. In the case of folio 631, the names of a number of other schemes that are not considered in the document and the reasons for their exclusion have also been deleted. The paper identifies a number of characteristics of afforestation tax schemes and examines the various schemes covered by the paper in relation to those characteristics.
73. Although some of the comments about other schemes have already been released in a way that did not allow them to be attributed to particular schemes, the release of the names would enable the connection to be made. Although the folios are, in my opinion, within the scope of the applicant’s request, I consider that the names of the other schemes and the comments made about them are information concerning the affairs of those entities and the information was obtained by the respondent for the purposes of the administration of the ITAA. All the pages are therefore exempt under s 38.
Folio 687 (A1.233)
74. This document is an email from one ATO officer to a number of other ATO officers and conveys information obtained by the first officer from the provisional liquidator of a third party that was connected to another individual who had some association with the Allrange project. The information recorded concerns the activities of third parties and possible sources of information and records that the ATO may be able to access concerning third parties. The information is said to concern a number of tax schemes other than the Allrange project.
75. I consider that the document is not relevant to the applicant’s request but in any event it is information concerning the affairs of the entities named in the document that was disclosed to the ATO for the purposes of its administration of the ITAA. It is, therefore, exempt under s 38.
Folios 723, 724 and 725 (A1.261-263)
76. Folios 724 and 725 consist of an email from an ATO legal officer to another ATO officer in May 2001 and contains advice given in response to questions posed by the other officer about action to be taken in respect of a number of unnamed participants in the Allrange project. Folio 723 is the second page of an email subsequently sent by the ATO officer who had requested the advice to a third officer. The first page of that email (which was folio 722) is no longer in dispute. Folio 723 contains part of the email contained in folios 724 and 725. The emails in question form part of a series of emails over several months up to May 2001, the others of which are no longer in dispute.
77. The emails came into existence well after the ATO decisions were made to disallow deductions claimed by participants in the Allrange Project and relate, essentially, to administrative handling of subsequent objections. To that extent the documents are irrelevant to the applicant’s request but, in any event, they concern the affairs of the persons concerned even though those persons cannot be identified. The documents are exempt under s 38.
Folios 766 and 767 (A1.295 and A1.296) Tp278)
78. These folios consist of a series of email messages between ATO officers in November 2000 and have been released to the applicant with the exception of a reference in folio 766 to the name of an unrelated scheme and comments made about the progress of handling objections made by tax payers concerning that other scheme. The deleted part of folio 766 is not relevant to the applicant’s request and is exempt under s 38.
Folio 796 (A1.324)
79. This document is a handwritten note dated in November 2000 apparently made by an ATO officer, the significance of which is unclear. It appears to record an ATO file reference and the names of two individuals, one of whom at least appears to be an inquirer of the ATO on behalf of another person. I cannot conclude that the document has no relevance to the applicant’s request. No evidence was adduced as to how and in what circumstances the ATO obtained this information and I am not satisfied that the names of the persons are information obtained by the respondent in the administration of the ITAA and hence exempt under s 38.
SUMMARY OF CONCLUSIONS
80. I have concluded above that most of documents remaining in dispute are either irrelevant to the applicant’s request and/or exempt under s 38. The only documents that do not fall into one of those categories are folios 154, 216 (only in relation to the 2 handwritten lines of comment), and 796. Accordingly, it is appropriate to affirm the reviewable decision made on 10 December 2001 to refuse to grant access to all the folios specified in Exhibit R1 other than the documents referred to in the previous sentence.
81. The folios referred to in paragraph [80] are all the subject of claims for exemption under ss 41 and/or 43 of the Act and a directions hearing should be convened to determine how the respondent should comply with ss 59(3) and 59A(3) of the Act - so that further consideration can be given to the applicability of the claimed exemptions under ss 41 and 43 for the 3 documents remaining in dispute.
I certify that the 81 preceding paragraphs are a true copy of the reasons for the interim decision herein of Mr M Allen, Member
Signed: .....................(sgd V Wong)...........................
AssociateDate/s of Hearing 19 November 2003
Date of Decision 30 August 2004
Counsel for the Applicant Mr F Wilson
Solicitor for the Applicant Wilson & Atkinson
Counsel for the Respondent Ms L Price
Solicitor for the Respondent Australian Government Solicitor
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