C & K Components Plus Pty Ltd and Commissioner of Taxation (Taxation)

[2018] AATA 4666

C & K Components Plus Pty Ltd and Commissioner of Taxation (Taxation) [2018] AATA 4666 (20 December 2018)

Division:TAXATION AND COMMERCIAL DIVISION

File Numbers:         2018/6005

Re:C & K Components Plus Pty Ltd

APPLICANT

AndCommissioner of Taxation

RESPONDENT

DECISION

Tribunal:Deputy President S A Forgie

Date:20 December 2018  

Place:Melbourne

The Tribunal:

does not have jurisdiction to review a decision by the respondent declining to make a private ruling for which the applicant had applied.

.................[sgd].....................................................

Deputy President S A Forgie

PRACTICE AND PROCEDURE – JURISDICTION – decision by commissioner declining to make a private ruling – no valid objection decision – no jurisdiction to review decision for which review sought – application dismissed

Legislation

Administrative Appeals Tribunal Act 1975
Administrative Decisions (Judicial Review) Act 1977
Income Tax Assessment Act 1936
Taxation Administration Act 1953

Tribunals Amalgamation Act 2015

Cases

Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd [1979] FCA 21; (1979) 24 ALR 307; 41 FLR 338; 2 ALD 1
Drake v Minister for Immigration and Ethnic Affairs (1979) 24 ALR 577; 46 FLR 409; 2 ALD 60
Hospital Benefit Fund of Western Australia Inc v Minister for Health, Housing and Community Services [1992] FCA 599; (1992) 39 FCR 225; 16 AAR 566
Kennedy v Administrative Appeals Tribunal [2008] FCAFC 124; (2008) 168 FCR 566; 249 ALR 87; 103 ALD 238; [2008] ATC 20-037; 73 ATR 276; 48 AAR 500
Kim v Minister for Immigration and Citizenship [2008] FCAFC 73; (2008) 167 FCR 578; 248 ALR 51
Nevistic v Minister for Immigration and Ethnic Affairs [1981] FCA 41; (1981) 51 FLR 325
Saitta Pty Ltd v Commonwealth [2000] FCA 1546; (2000) 106 FCR 554

Shi v Migration Agents Registration Authority [2008] HCA 31; (2008) 235 CLR 286; 248 ALR 390; 48 AAR 345; 103 ALD 467; 82 ALJR 1147

Secondary Materials

Chambers 21st Century Dictionary (1999, reprinted 2004)

Legal Services Direction 2017

REASONS FOR DECISION

Deputy President S A Forgie

1. The applicant, C & K Components Pty Ltd (C&K), holds retained assets after selling its business. Its sole shareholder is a trustee of a Unit Trust. There are three unit holders of that Unit Trust and each is the trustee of a family trust. It was proposed that the units held by each trustee be transferred to the self-managed superannuation fund (SMSF) related to each trustee of each family trust. A new business partner for C&K would be found to invest in a new business venture to be conducted by that company. C&K applied to the respondent, the Commissioner of Taxation (Commissioner), for a private ruling under Division 359 of Part 5.5, Chapter 5 of Schedule 1 to the Taxation Administration Act 1953 (TAA).  It did so on 25 February 2017.  The application was made in respect of the possible application of Part IVA of the Income Tax Assessment Act 1936 (ITAA36) to the proposed arrangement.  Part IVA is concerned with schemes to reduce income tax.

1. In a letter dated 15 May 2017, a delegate of the Commissioner, declined to make a ruling.  On 15 October 2018, C&K applied to the Tribunal for review of the Commissioner’s decision to decline to make a ruling.  I have decided that, putting aside the fact that C&K would be well outside the time limit within which to lodge an application, the Tribunal does not have jurisdiction to consider the application.  At the conclusion of the hearing and at their request, I gave C&K’s accountants an opportunity to make further submissions regarding jurisdiction.  I have decided that the Tribunal does not have jurisdiction and I set out my reasons for reaching that decision.

THE COMMISSIONER’S DECISION

1. The Commissioner’s letter to C&K on 15 May 2017 referred to C&K’s application for a private ruling and continued:

   “Under certain circumstances, the Commissioner may decline to make a private ruling.

   Consideration of questions, particularly in the context of the General Anti-avoidance Rules, require a rigorous understanding [of] the entire facts and circumstances (including all surrounding circumstances) to be known in order for the proposed scheme to be properly identified and analysed.

   The whole of the circumstances which might comprise the scheme to be ruled upon do not appear to have been identified in this application, even after taking into account further information subsequently provided.  Further, some of this information does not appear capable of being answered with any certainty.

   Where a ruling is made based on speculative or hypothetical circumstances, the Commissioner could not have any confidence the ruling would apply to the proposed scheme once it has been implemented.

   It is not an appropriate use of the Commissioner’s resources to ask further questions to fill in that missing detail or deficiencies and as a general principle, the information and scheme to be ruled upon should not be extracted by the Commissioner but rather submitted by the applicant.

   Taking into account these circumstances, we are declining to give you a private ruling because in this light we consider that making the ruling would prejudice or unduly restrict our administration of a relevant law.

   A decision to decline to make a ruling is reviewable under the Administrative Decisions (Judicial Review) Act 1977.  For further information about your review rights, please read the explanatory notes attached to this letter.”

THE SUBMISSIONS

1. On behalf of the Commissioner, Mr Crowley of counsel submitted that the Tribunal does not have jurisdiction to review the decision to refuse to make a private ruling. In summary, he submitted that, in so far as private rulings are concerned, the Tribunal has jurisdiction under Part IVC of the TAA only when the Commissioner has made a private ruling or has failed to make a private ruling. It does not have jurisdiction to review the Commissioner’s decision when he has made a decision positively declining or refusing to make a private ruling. That follows from the fact that the TAA does not permit a taxpayer to make an objection to such a decision. As the taxpayer cannot make an objection, the Commissioner cannot make a decision on that objection i.e. there can be no reviewable objection decision. Without a reviewable objection decision, the Tribunal does not have jurisdiction to undertake a review.

2. On behalf of C&K, Mr Vats made four written submissions supporting his contention that the Tribunal has jurisdiction to review the Commissioner’s decision.  The essence of those submissions was that the Commissioner should not be permitted to rely on a technical defence in submitting that his declining to make a decision about a request for a private ruling is different from his failing to make a decision on that request.  Paragraph 3 to Appendix B of the Legal Services Direction 2017 (Legal Services Direction) requires Commonwealth agencies to act as a model litigant in merits review proceedings.  Mr Vats submitted that the obligation to act as a model litigant extends to Commonwealth agencies involved in merits review proceedings.  That obligation requires the Commonwealth and Commonwealth agencies to:

   “… act honestly and fairly in handling claims and litigation brought by or against the Commonwealth or a Commonwealth agency by:

   ‘not relying on technical defences unless the Commonwealth’s or the agency’s interests would be prejudiced by the failure to comply with a particular requirement …”.

1. The Commissioner’s decision to refuse to make a private ruling is judicially reviewable, Mr Vats continued.  A refusal to make a private ruling is equivalent to a failure to do so.  Neither the word “refusal” nor the word “failure” is defined in the TAA but guidance is to be found in the Administrative Decisions (Judicial Review) Act 1977 (ADJR Act) where s 3(1) provides that:

   “failure, in relation to the making of a decision, includes a refusal to make a decision.”

Mr Vats submitted that the Commissioner’s refusal to make a private ruling was tantamount to his failure to make that private ruling. 

1. In making his submissions, Mr Vats also relied on the cases of Drake v Minister for Immigration and Ethnic Affairs[1] (Drake) and Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd[2] (Brian Lawlor).  He did so in support of his contention that the Tribunal has broader powers to review an administrative decision than does the Federal Court on judicial review.  The Tribunal may decide whether a determination, even though incorrectly made by a decision-maker, is a “decision” within the meaning of s 25 of the AAT Act.

   [1] (1979) 24 ALR 577; 46 FLR 409; 2 ALD 60 Bowen CJ and Deane JJ; Smithers J dissenting

   [2] [1979] FCA 21; (1979) 24 ALR 307; 41 FLR 338; 2 ALD 1

1. In so far as the case of Brian Lawlor is concerned, Dr Crowley agreed that the Tribunal would have jurisdiction to review a reviewable objection decision even if it were made after reviewing an objection that was not validly made.  There can, however, be no jurisdiction if the taxpayer were not entitled to object to the Commissioner’s decision in the first place.

CONSIDERATION

The nature of merits review

1. The Tribunal is a body established by the Administrative Appeals Tribunal Act 1975 (AAT Act), which is an enactment of the Commonwealth Parliament.  Section 43(1) of the AAT Act sets out the powers and discretions that the Tribunal may exercise when reviewing a decision.  They are those powers and discretions conferred on the person who made the decision.  As interpreted by the Federal Court:

   “... The sole function of the Tribunal is to provide a review on the merits of the relevant decision, not to decide collateral questions of the lawfulness or validity of the decision being reviewed. ...”[3]

   [3] Kim v Minister for Immigration and Citizenship [2008] FCAFC 73; (2008) 167 FCR 578; 248 ALR 51 at [39]; 586; 59 per Gyles J

1. What it means to provide review on the merits was explained by Kiefel J in her dissenting judgment in Shi v Migration Agents Registration Authority.[4]  She began with s 43(1) of the AAT Act and with the principles established by the Full Court of the Federal Court in Drakev Minister for Immigration and Ethnic Affairs.[5]  Her Honour said:

   “          The reasons of the members of the Full Court of the Federal Court in Drakev Minister for Immigration and Ethnic Affairs confirm what is apparent from s 43(1), that the Tribunal reaches its conclusion, as to what is the correct decision, by conducting its own, independent, assessment and determination of the matters necessary to be addressed.^[[6]^] To the contrary of the argument put by the respondent on this appeal, that the Tribunal’s exercise of power is dependent upon the existence of error in the original decision, Smithers J denied that the Tribunal was limited to something of a supervisory role.  As his Honour said, the Tribunal is authorised and required to review the actual decision, not the reasons for it.^[[7]^]

   In considering what is the right decision, the Tribunal must address the same question as the original decision-maker was required to address.^[[8]^]  Identifying the question raised by the statute for decision will usually determine the facts which may be taken into account in connection with the decision. The issue is then one of relevance, determined by reference to the elements in the question, or questions, necessary to be addressed in reaching a decision. …”[9]

   [4] [2008] HCA 31; (2008) 235 CLR 286; 248 ALR 390; 48 AAR 345; 103 ALD 467; 82 ALJR 1147; Kirby, Hayne, Heydon and Crennan JJ; Kiefel J dissenting

   [5] (1979) 24 ALR 577; 46 FLR 409; 2 ALD 60

   [6] Drakev Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409; 24 ALR 577; 2 ALD 60 at 421-422; 591-592; 70-71 per Bowen CJ and Deane J; at 429-430 per Smithers J; and see Nevistic v Minister for Immigration and Ethnic Affairs [1981] FCA 41; (1981) 51 FLR 325 at 336 per Deane J.

   [7] Drakev Minister for Immigration and Ethnic Affairs (1979) 46 FLR 409; 24 ALR 577; 2 ALD 60 at 429-430; 599; 77

   [8] Hospital Benefit Fund of Western Australia Inc v Minister for Health, Housing and Community Services [1992] FCA 599; (1992) 39 FCR 225; 16 AAR 566 at 234; 575

   [9] [2008] HCA 31; (2008) 235 CLR 286; 248 ALR 390; 48 AAR 345; 103 ALD 467 at [141]-[142]; 327; 422-423; 499-500

1. Consistently with that role, it is clear from the judgment of Tamberlin J, with whom Besanko J agreed, in Kim v Minister for Immigration[10] that:

   “          The power of the Tribunal to review a ‘decision’ extends not only to the review of a decision which is in fact made lawfully, but also to the review of a decision which is only purported to be made but which is not authorised by law: see Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 41 FLR 338; 24 ALR 307; Yilmaz v Minister for Immigration and Multicultural Affairs (2000) 100 FCR 495. The expression ‘decision’ is to be given its ordinary meaning, namely, ‘the action of deciding’, which covers a situation where the decision is merely purported to be made but is in fact made without authorisation by law. …”[11]

   [10] [2008] FCAFC 73; (2008) 167 FCR 578; 248 ALR 51; Tamberlin, Gyles and Besanko JJ

   [11] [2008] FCAFC 73; (2008) 167 FCR 578; 248 ALR 51 at [21]; 583; 56. This passage and that from the judgment of Gyles J at [9] above were approved by the Full Court of the Federal Court in Kennedy v Administrative Appeals Tribunal [2008] FCAFC 124; (2008) 168 FCR 566; 249 ALR 87; 103 ALD 238; [2008] ATC 20-037; 73 ATR 276; 48 AAR 500. The Full Court said: “... The Tribunal has jurisdiction to hear and determine the present review under Part IVC of the TAA because each assessment purports to have been made in exercise of powers conferred by that enactment. Whether or not the assessments were, as a matter of law, validly made does not attenuate this finding. ...”: [2008] FCAFC 124; (2008) 168 FCR 566; 249 ALR 87; 103 ALD 238; [2008] ATC 20-037; 73 ATR 276; 48 AAR 500 at [22]; 573; 94; 245; 8; 478; 282-283; 507 per French, Tamberlin and Mansfield JJ.

1. One rationale for this approach was explained in Brian Lawlor, to which Tamberlin J referred.  It is a practical one, as Bowen CJ explained:

   “… It is a feature of administrative decisions that once made, even if unlawful, they have consequences which may adversely affect citizens, until such time as they are withdrawn due to a change of mind on the part of the administrative official himself or are set aside by the determination of a court or tribunal.  It appears to me that the [AAT] Act is designed to give a simple remedy in all such cases. …”[12]

   [12] [1979] FCA 21; (1979) 24 ALR 307 at 314

1. Another rationale is apparent from the judgment of Deane J in the same case.  It is based on the legal principle that applies in the Commonwealth, unlike the Australian States, that there is a separation between judicial and administrative power.  Courts exercise the former and bodies such as the Tribunal exercise the latter:

   “          An administrative tribunal will ordinarily have no authority to transcend the limits of the jurisdiction conferred upon it by hearing an application aimed not at invoking the jurisdiction which it possesses, but at securing an authoritative determination of questions of fact or law anterior to the existence of that jurisdiction. The provisions of the Act do not purport to confer any such authority upon the Administrative Appeals Tribunal. If they did, a serious question would arise as to whether, to that extent, they purported to confer part of the judicial power of the Commonwealth upon an administrative body which was not a court for the purposes of Ch III of the Constitution.”[13]

   [13] [1979] FCA 21; (1979) 24 ALR 307 at 343-344. There may be exceptions as mentioned by Weinberg J in Saitta Pty Ltd v Commonwealth [2000] FCA 1546; (2000) 106 FCR 554: “The AAT is able to decide questions of law arising in proceedings before it - Administrative Appeals Tribunal Act 1975 (Cth), s 42. Accordingly, if the AAT thinks it necessary to consider, as part of the process of reconsideration of the first and second sanctions decisions, the validity of the 1998 and 1999 Principles, it may do so. Although it cannot exercise judicial power, and may not be entitled to grant the declaratory relief which is specifically sought in the proceeding before this Court, the AAT can arrive at a conclusion as to whether or not the steps preceding the making of the sanctions decisions were lawful, and whether or not various provisions of the Act were contravened - Re Adams and the Tax Agents' Board (1976) 12 ALR 239 at 245 per Brennan J.  The AAT is entitled to treat delegated legislation as invalid where it is satisfied, on proper grounds, that this is so - Re Costello and Secretary, Department of Transport (1979) 2 ALD 934; and Re  Jonsson  and  Marine Council  [No. 2] [1990] AATA 192; (1990) 12 AAR 323 at 335-341.”: Saitta Pty Ltd v Commonwealth  [2000] FCA 1546; (2000) 106 FCR 554 at [103]; 575

1. The point made by Deane J is an important one and particularly so in this case.  While it is important to understand the nature of merits review undertaken by the Tribunal, it is also important to understand that the Tribunal cannot undertake merits review when it has no authority to do so.  It is its authority to undertake merits review, and not the nature of merits review, that is at the heart of this case.

The Tribunal’s authority or jurisdiction to review the Commissioner’s decision

1. At one time, the decisions that the Tribunal could review were set out in a Schedule to the AAT Act.  The list of decisions has grown so long that they cannot now be identified in that way.  Instead s 25(1) of the AAT Act provides that:

   “An enactment may provide that applications may be made to the Tribunal:

   (a)for review of decisions made in the exercise of powers conferred by that enactment; or

   (b)for the review of decisions made in the exercise of powers conferred, or that may be conferred, by another enactment having effect under that enactment.”

1. Before its repeal by the Tribunals Amalgamation Act 2015, s 25(4) expressly stated that “The Tribunal has power to review any decision in respect of which application is made to it under any enactment.”  The AAT Act no longer expressly states the Tribunal has power to review any decision in respect of which an application is made to it under an enactment. That power remains implicit in the fact that an application may be made to the Tribunal and in the powers the AAT Act gives it once an application has been made.

1. In light of that, the first step in working out the Tribunal’s jurisdiction is to look at the decision of which an applicant seeks review.  The purpose of doing that is to characterise the decision.  Is it, for example, a decision assessing the amount of taxation payable by a taxpayer, a decision imposing a penalty for late lodgement or for some other reason, a decision relating to the assessment of goods and services tax and so on. 

1. The next step is to look at the enactment under which the particular administrative decision of concern to an applicant was made. In this case, the administrative decision was made under the TAA. Section 14ZZ(1) of the TAA provides:

   “If the person is dissatisfied with the Commissioner’s objection decision (including a decision under paragraph 14ZY(1A)(b) to make a different private ruling), the person may:

   (a)       if the decision is a reviewable objection decision – either:

   (i)        apply to the Tribunal for review of the decision; or

   (ii)       appeal to the Federal Court against the decision; or

   (b)       otherwise – appeal to the Federal Court against the decision.”

1. In this case, therefore, if a decision is reviewable by the Tribunal, it must be an objection decision that has been made by the Commissioner or a decision under s 14ZY(1A)(b) of the TAA. I will begin with an “objection decision”.  That is to say, it must be a decision made by the Commissioner under ss 14ZY(1), (1A) or (1B).[14]  Those sections provide:

   [14] TAA; s 14ZY(2)

   “(1)     Subject to subsection (1A), if the taxation objection has been lodged with the Commissioner within the required period, the Commissioner must decide whether to:

   (a)allow it, wholly or in part; or

   (b)disallow it.

   (1A)If the taxation objection is an objection under subsection 359-50(3) in Schedule 1 against the Commissioner’s failure to make a private ruling, the Commissioner must:

   (a)make a private ruling in the same terms as the draft ruling lodged with the objection; or

   (b)       make a different private ruling.

   (1B)If the taxation objection is an objection under subsection 155-30(2) in Schedule 1 against the Commissioner’s failure to make an assessment of an assessable amount, the Commissioner must decide to make an assessment of the assessable amount.”

1. Clearly, s 14ZY(1B) does not apply in this case because the matter concerns a private ruling and not an assessment of an assessable amount.  That leaves me with ss 14ZY(1) and (1A) and what it means to lodge a “taxation objection”.  That expression is given its meaning by s 14ZL,[15] which provides that an objection made under s 14ZL(1) is called a “taxation objection”.[16]  Section 14ZL(1) sets out who may object, to what that person may object and how the objection may be made when it provides:

   “This Part [Part IVC] applies if a provision of an Act or of regulations (including the provisions as applied by another Act) provides that a person who is dissatisfied with an assessment, determination, notice or decision, or with a failure to make a private ruling, may object against it in the manner set out in this Part.”

   [15] TAA; s 14ZQ

   [16] TAA; s 14ZL(2)

1. The practical effect of s 14ZL(1) is that I must look for a provision in the TAA or in regulations, which provides that a person who is dissatisfied with a decision, may object against that decision. The decision in this case was made under Division 359 of Part 5.5 of the TAA. There are two provisions in Division 359 that permit a person to object to a decision made by the Commissioner. I will consider each.

1. The first is s 359-60 of Division 395 Schedule 1. It provides that:

   “(1)     You may object against a *private ruling that applies to you in the manner set out in Part IVC if you are dissatisfied with it.

   (2)The ruling is taken to be a taxation decision (within the meaning of that Part).

   (3)However, you cannot be object against a *private ruling if:

   (a)there is an assessment for you for the income year or other accounting period to which the ruling relates; or

   (b)the ruling relates to *withholding tax or *mining withholding tax that has become due and payable; or

   (c)all of the following subparagraphs apply:

   (i)the ruling relates to *excise duty, or another amount, payable in relation to the goods under an *excise law;

   (ii)the Commissioner has made a decision about the excise duty, or other amount, payable in relation to those goods;

   (iii)the decision is reviewable under an excise law.”

1. The expression “private ruling” is explained in s 359-5(1):

   “The Commissioner may, on application, make a written ruling on the way in which the Commissioner considers a relevant provision applies or would apply to you in relation to a specified *scheme.  Such a ruling is called a private ruling.”

The Commissioner has not made a private ruling in this case because he has declined to make such a ruling.  Therefore, C&K could not rely on s 359-60 to object because it had no private ruling against which to object.

1. The second provision in Division 359 that allows a person to object in the manner provided for in Part IVC is set out in s 359-50(3):

   “The applicant may object, in the manner set out in Part IVC, against the Commissioner’s failure to make the ruling if the Commissioner:

   (a)does not make the ruling within 30 days of the notice under subsection (1) being given; and

   (b)has not otherwise declined to make the ruling by the end of that period.”

1. C&K relies on s 359-50(3) in submitting that they may lodge an objection against the Commissioner’s decision. Section 14ZU sets out how such an objection must be made. In addition to its requirements regarding form, substance and the time within which it must be lodged, s 359-50(4) requires a draft private ruling to be lodged with the any objection made under s 359-50(3).

1. In the case of an objection made under s 359-50(3), the Commissioner’s duty to decide the objection is set out in s 14ZY(1A):

   “If the taxation objection is an objection under subsection 359-50(3) in Schedule 1 against the Commissioner’s failure to make a private ruling, the Commissioner must:

   (a)make a private ruling in the same terms as the draft ruling lodged with the objection; or

   (b)make a different private ruling.”

1. If the Commissioner should fail to make a decision one way or the other within 60 days of the taxation objection’s having been lodged, the Commissioner is taken to have disallowed the objection.  This follows from s 14ZYB when it provides:

   “(1) This section applies if the taxation objection is an objection under subsection 155‑30(2) or 359‑50(3) in Schedule 1 and the Commissioner has not made an objection decision by the end of 60 days after the later of these days:

   (a)the day on which the taxation objection was lodged with the Commissioner;

   (b)if the Commissioner decides under section 14ZX to agree to a request in relation to the taxation objection—the day on which the decision was made.

   Note 1:      Subsection 155-30(2) provides for objections against the Commissioner's failure to make an assessment of an assessable amount.

   Note 2:      Subsection 359-50(3) provides for objections against the Commissioner's failure to make a private ruling.

   (2)The Commissioner is taken, at the end of that 60 day period, to have disallowed the objection.”

1. Reading s 14ZYB(2) with s 14ZY(2), the result is that the Commissioner’s not making a decision means that he is taken to have disallowed the objection.  That is an objection decision, in relation to which an applicant may apply to the Tribunal for review.

The Tribunal has no jurisdiction even if the Commissioner has failed to make a ruling

1. The only decision that I have from the Commissioner is that dated 15 May 2017. If I were to assume for the moment that it is properly characterised as a failure to make a private ruling, the Tribunal would not have jurisdiction. It is apparent from s 359-50(3) of Schedule 1 to the TAA that the Commissioner’s failure to make a private ruling on an application for a private ruling confers only one right on the person who has applied for that private ruling. That right is a right to lodge a taxation objection. It is not a right to apply to the Tribunal. The right to apply to the Tribunal arises only when the Commissioner has made a decision on any objection that has been lodged i.e. an objection decision. In view of s 14ZY(1A), that objection decision will either be a decision to make a private ruling in the terms of the draft ruling lodged with the objection or a decision to make a different ruling. If no decision were made by the Commissioner within 60 days of lodgement of an objection, the Commissioner would be taken to have disallowed the objection.

1. Therefore, even if the Commissioner’s decision were properly characterised as a failure to make a decision, there is nothing on the Tribunal’s file to suggest that C&K has lodged an objection against that failure, that the Commissioner has made an objection decision on that objection or is taken to have made an objection decision at the end of a 60 day period after the lodgement of any objection. In the absence of an objection decision, there is no reviewable objection decision and C&K has no entitlement under s 14ZZ(1)(a)(i) or any other provision to apply to the Tribunal for review. As C&K has no right to apply to the Tribunal, the Tribunal has no jurisdiction or authority to review that objection decision. Any remedy that C&K may have will have to be found in the ADJR Act and not in the Tribunal under the AAT Act when read with the TAA.

Has there been a failure of the Commissioner to make a private ruling?

1. Mr Vats referred me to the definition of the word “failure” in s 3(1) of the ADJR Act but that legislation does not apply to the AAT Act or, more importantly, to the TAA or to their interpretation. The word is not defined in the TAA and so I have looked first to its ordinary meanings, which are:

   “1 the act of failing; lack of success. 2 someone or something that is unsuccessful. 3 a stoppage in functioning, eg of a computer, machine, system, etc. 4 a poor result. 5 the non-doing of something □ failure to turn up.”[17]

The meaning of a word depends, of course, on its context. In the context of s 359-50(3), its only meaning can be that of “the non-doing of something” i.e. the Commissioner’s non‑making of a ruling within 30 days of the applicant’s having given him a written notice requiring him to make such a ruling in the circumstances set out in s 359-50(1). 

[17] Chambers 21st Century Dictionary (1999, reprinted 2004) (Chambers)

1. The Commissioner’s failure to make a ruling in response to the written notice does not, of itself, give an applicant the right to object, in the manner set out in Part IVC of the TAA, against the Commissioner’s failure to make the ruling. The right to object given by s 359‑50(3) only arises if two conditions are met. The first is the Commissioner’s failure to make a ruling and that is the case here. The second condition that must be met is that the Commissioner “has not otherwise declined to make the ruling by the end of that period.”[18]  To “decline” to make the ruling is to “refuse”[19] to make the ruling.  It is a decision made by the Commissioner and not an omission to make a decision. 

[18] TAA; s 359-50(3)(b)

[19] Chambers

1. Division 359 provides for both a decision to decline to make a decision on an application for a private ruling and for a failure to make a decision. To explain that, I must start with s 359‑35(1) which provides that:

   “The Commissioner must comply with an application for a *private ruling and make the ruling.  However, this obligation is subject to subsections (2) and (3).”

Sections 359-35(2) and (3) set out the circumstances in which the Commissioner may make a private ruling:

“(2)     The Commissioner may decline to make a private ruling if:

(a)the Commissioner considers that making the ruling would prejudice or unduly restrict the administration of a *taxation law; or

(b)the matter sought to be ruled on is already being, or has been, considered by the Commissioner for you.

(3)The Commissioner may also decline to make a *private ruling if the matter sought to be ruled on is how the Commissioner would exercise a power under a relevant provision and the Commissioner has decided or decides whether or not to exercise the power.

Example:

…

Note:The Commissioner may also decline to make a private ruling if:

(a)the Commissioner has requested the applicant to give further information under section 357-105 and the applicant has not given it to the Commissioner within a reasonable time; or

(b)the Commissioner considers that the correctness of a private ruling would depend on which assumptions were made about a future event or other matters (see section 357-110).”

1. In this case, the Commission has clearly declined to make a ruling in response to C&K’s application for that ruling. Therefore, the condition stipulated in s 359-50(3) has not been satisfied and C&K did not have a right that it could exercise to object in the manner set out in Part IVC for the Commissioner’s failure to make a ruling. There is no other provision in the TAA that conferred such a right on C&K to object to the Commissioner’s decision to decline to make a ruling.

1. In a case such as this, the principles established by Brian Lawlor and adopted in Kim v Minister for Immigration have no application. This is not a situation in which the Commissioner purported to exercise powers conferred by the TAA but did not exercise them validly. The Commissioner has exercised the power he has been given to decline to make a ruling and the TAA does not confer on an applicant for a private ruling a power to make an objection. In the absence of a right to object, C&K could not make an objection. In the absence of an objection, the Commissioner could not make an objection decision for an objection decision is made on an objection. In the absence of an objection decision, the Tribunal does not have jurisdiction or authority to review the Commissioner’s decision to decline to make a private ruling for which C&K applied.

I certify that the preceding thirty five (35) paragraphs are a true copy of the reasons for the decision herein of Deputy President S A Forgie

....[sgd]...................................................................

Associate

Dated:  20 December 2018

Heard:

27 November 2018

Advocate for the Applicant:

Counsel for the Respondent:

Mr Gerald Vats
Vats Partners

Mr  Matthew Crowley

Solicitor for the Respondent:

Mr Benjamin De Santis
Australian Taxation Office