Commissioner of Taxation of the Commonwealth of Australia v Australia and New Zealand Savings Bank Limited

The Commissioner of Taxation sought special leave to appeal to the High Court of Australia from a decision of the Full Court. The dispute concerned the Commissioner's ability to defend an assessment by arguing that a deduction previously allowed to the taxpayer was not properly allowable, even if the original assessment was found to be excessive on other grounds. This raised significant practical implications for the conduct of taxation appeals and the Tax Office's administrative processes.

The primary legal issue before the High Court was whether the Commissioner, after making an assessment that included a particular sum in a taxpayer's assessable income, could subsequently defend that assessment by arguing that a deduction previously allowed was, in fact, not deductible. This question was framed in the context of the Commissioner's ability to rely on grounds not initially forming the basis of the assessment, particularly when a taxpayer challenges the assessment's quantum.

The Court considered the effect of section 190(b) of the Income Tax Assessment Act 1936, which places the onus on the taxpayer to demonstrate that an assessment is excessive. The applicant Commissioner argued that this provision, as interpreted in cases like *Daleo*, meant that the taxpayer bore the burden of establishing the correct tax liability, allowing the Commissioner to raise alternative grounds for upholding the assessment. The Court noted differing views in the Full Court regarding the scope of *Daleo*, with one view suggesting it applied only to specific types of assessments, while another contended it provided a general mechanism for finality in tax disputes by placing the onus on the taxpayer. The Commissioner's submission was that the latter interpretation was preferable, as it allowed for the efficient resolution of appeals by requiring the taxpayer to prove the entirety of their tax position.