Commissioner of Taxation v Futuris Corporation Limited
[2008] HCATrans 145
[2008] HCATrans 145
IN THE HIGH COURT OF AUSTRALIA
Office of the Registry
Adelaide No A47 of 2007
B e t w e e n -
COMMISSIONER OF TAXATION
Appellant
and
FUTURIS CORPORATION LIMITED
Respondent
GUMMOW J
KIRBY J
HAYNE J
HEYDON J
CRENNAN J
TRANSCRIPT OF PROCEEDINGS
AT CANBERRA ON FRIDAY, 28 MARCH 2008, AT 9.50 AM
(Continued from 27/3/08)
Copyright in the High Court of Australia
GUMMOW J: Yes, Mr Jackson.
MR JACKSON: Thank you, your Honours.
GUMMOW J: Just before you continue, it might assist you, I think, to know the answer, it would assist us, if we ask a question of Mr Williams at this stage. There was some discussion with you yesterday as to the relationship between the concurrent operation, if there is a concurrent operation, of the two sets of assessments, if I can put it that way. I think you referred to the later one as the extant one.
MR WILLIAMS: Your Honour, there is but one assessment, it has been amended. There was, of course, the deemed assessment arising under 166A. That was amended by the first amended assessment and further amended by the second amended assessment, but there is but one assessment in existence. There is an objection to the first amendment which is before the Court, and there was an objection to the second amended assessment, the status of which depends on the outcome of the appeal.
GUMMOW J: Now, section 203 or thereabouts creates the debt, does it not?
MR WILLIAMS: Section 204, your Honour, creates the debt.
GUMMOW J: Section 204. And then 208 provides for recovery – 208, 209, but for recovery by the Commonwealth.
MR WILLIAMS: Yes.
GUMMOW J: What is the source of the present debt?
KIRBY J: And amount?
MR WILLIAMS: The source, if one assumes - - -
GUMMOW J: I take it from what you are saying that there is only one debt, you say?
MR WILLIAMS: My hesitation comes from the present status of the matter with the second amended assessment having been declared to be of no effect. If the Court were to allow the appeal, the source and amount of the debt would lie in the second amended assessment.
KIRBY J: You seem to be having some contingent basis on which you want to keep alive the first assessment, or do you disclaim that? You may have to elect; you may have to be very clear.
MR WILLIAMS: Your Honour, the Commissioner’s submission is that there is one assessment. It is amended. There is an objection to it, that is, before a Chapter III court in extant proceedings. That raises a series of issues. There is a second amended assessment and if the Court allows this appeal, an objection to it which will also be extant before a Chapter III court. But the fact that there are two objections does not alter the fact that there is but one assessment.
I apprehend that the parties are at one on this in that our learned friend’s submission that he is about to hand up this morning, is to the effect that if the Full Court’s decision is upheld, the appeal proceedings with respect to the second amended assessment would fall away and the appeal proceedings with respect to the first amended assessment remain on foot. If the appeal is allowed, then both remain on foot. There is one assessment, two objections, which no doubt would be heard concurrently and as precedent for that, I think, in Pusey’s Case and others.
GUMMOW J: Thank you. Yes, Mr Jackson.
MR JACKSON: Your Honours, my learned friend referred to a document and it is a document which we have given to the Court which is headed “Respondent’s Supplementary Submission Amended Assessments, Objections and Appeals” and it lists, your Honours, what appear to be the relevant provisions about appeals. Could I just say, your Honours, if one goes to the concluding paragraphs of it on the second page, we refer in paragraph 8 – sorry, your Honours. Perhaps I should just say “appeals” referred to in paragraph 6 are appeals against the decision on an objection and the objection, as your Honours will see from paragraph 4 and section 14ZV that is referred to there, one is limited in respect of an amended assessment to objecting to the alterations or additions in respect of matters relating to the particular of amendment. Your Honours will see that in paragraph 10 on the last page, we say:
If the Full Court’s decision the subject of the present appeal is upheld the result will be that the appeal proceedings with respect to the Second Amended Assessment will fall away –
but one still had the position in relation to the first amended assessment.
Your Honours, that is the first of two documents I wanted to give your Honours. The second is one headed “Respondents Supplementary Submissions Capital Gains and Division 19A”. That is a document your Honour Justice Kirby referred to yesterday. We have put in a relatively short form the way in which the various provisions have application in the present case. It is possible to go into much greater detail if one wants to but there seems, with respect, no need but may I just say that if the Court at any stage wanted us to give a more extensive discussion of the operation of provisions, we would be able to do so.
KIRBY J: Do you take there to be any disagreement by the appellant on the factual basis that is set out in the second document?
MR JACKSON: Everything that is in there is something I said yesterday.
KIRBY J: Yes. We will hear in due course if there is.
MR JACKSON: Yes, your Honour. There are some factual matters referred to in it, substantially I think in the last paragraphs on the last page, but they are really no more than the submission that I made yesterday and have something more to say about today.
GUMMOW J: Thank you.
MR JACKSON: Your Honours, could I go to some other matters that were mentioned yesterday and then continue with our submissions more generally. A question was raised by your Honour Justice Hayne I think about how clearly the pleadings had raised the issue. May I go to that. The statement of claim is in volume 1 at page 3. Could I say, your Honours, there are relevantly two documents; a statement of claim and a later statement of facts, contentions and so on.
As to the first of those, the statement of claim at page 3, the relevant part is at page 8, I think, where one sees paragraph 16 and your Honours will see there is a reference to the Commissioner erring by double counting. Then your Honours will see in paragraph 17 the opening words, “The Commissioner was aware in issuing the Second Amended Assessment” of the three matters that are set out in the subparagraphs. One sees paragraphs 17.2 and 17.3.
Your Honours will then see that in paragraph 18 there is an allegation as to the obligations of the Commissioner. No doubt that is an assertion as to legal matters but it prefaces what one sees in paragraph 19. Then in paragraph 19.1 it is said “the Commissioner . . . must have known” – I emphasise those words, and then paragraphs 19.2 and 19.3 your Honours will see the references to “he knew” and “he knew” again, I think, in paragraph 19.3
Now, your Honours, what more, we would submit, does one need to demonstrate the case of absence of good faith in the exercise the power is being made out and, your Honours, we would submit that the allegation in paragraph 19 is very clearly expressed.
KIRBY J: But also of interest to me is that, though you have raised absence of good faith in 18.1, we do not confine the case to that; 18.2 and 18.3 are standard administrative law challenges to validity.
MR JACKSON: And, your Honours, that is made clear by the other document to which I am about to refer. It commences at page 18. You will see that it is the applicant’s, in that court, statement of facts, issues and contentions. Your Honours, there is a great deal of preliminary matter and then one comes to ‑ ‑ ‑
GUMMOW J: Just before you leave page 9, 18.1, 18.2 and 18.3 are the three branches of Hickman, are they not?
MR JACKSON: Yes, your Honour, yes.
GUMMOW J: Particularly 18.3, I think.
MR JACKSON: Yes, your Honour, yes. Thank you.
GUMMOW J: Page 18?
MR JACKSON: I am sorry, can I just say in response to that, they are reflecting a Hickman doctrine, if I can put it that way.
GUMMOW J: Yes, exactly.
MR JACKSON: Your Honours, could I come then to page 29 and you will see paragraph 24 and the opening words say:
The Commissioner was aware in issuing the Second Amended Assessment.
You will see particularly in subparagraph (b) an allegation that the Commissioner was aware that the figure was 20 million greater, and paragraph (c) the Commissioner was aware that the tax:
was $7,182,031.68 greater than the amount which he contended was the correct amount of tax payable for the year.
Your Honours, that is immediately followed by the statement of the issue at page 30 at the top in paragraph 25:
Whether the Second Amended Assessment constitutes notice of a valid “assessment” pursuant to the provisions of ITAA 1936.
Your Honours will see – I think your Honour Justice Kirby, that issue is there raised. You will also at paragraphs 36 to 38 on page 32, in a sense, the core of the argument and you will see that it is alleged it:
is not an “assessment” authorised by the Act . . . because the Commissioner –
and then your Honours will see paragraphs (a) and (b) “knowingly overstated” and one sees then the last two lines of paragraph 36, but refer also, your Honours, to paragraphs 37 and 38. Your Honours, in our submission, the nature of the contentions being advanced by the applicant was very clearly, with respect, stated.
Your Honours, if I could move to a slightly different aspect of it, your Honour Justice Hayne yesterday referred to what was the nature of the misstatement and by whom was it made, and may I come to that. Your Honours, the nature of the conduct one can see from the paragraphs to which I have just referred including paragraph 36 at page 32. As to the identity of the person who made the assessment, the assessment of course was made by the Commissioner in terms of the officeholder who did that and that is what the statute provides. No doubt there was some person other than the then actual Commissioner who made the actual decision. The document which is the second amended assessment one sees in volume 2 at page 484.
KIRBY J: Which page is it?
MR JACKSON: Page 484, your Honour, in volume 2. It is a notice of assessment that bears the name of Mr Holland. That appears to be a printed name of Mr Holland, that appears to be pro forma. But, your Honours, the fact that the amended assessment was to be made on that basis, had been made apparent by some earlier documents and from which one might draw the inference that the person who was the relevant person was, in fact, an officer Mr Kitney.
Your Honours, I will come back a little later to the degree of Mr Kitney’s personal knowledge, but so far as the inference is concerned, if one goes to the letter of 9 November 2004, which is at page 347, you will see that that letter encloses a paper on the float arrangement outlining the position on that matter. Now, that letter follows, but could I just say this about it, your Honours. On 9 November you will see on page 346, the preceding page, that Mr Kitney signs on behalf of Mr Duffus. The determination, which appears at the top of the page – and then, your Honours, if one looks at again the preceding page, page 345, you will that this is a document of Mr Kitney and he says:
Attached is the determination made on behalf of the Deputy Commissioner and in the name of the Deputy Commissioner by me, a duly authorised officer.
So it is Mr Kitney who is doing that. He, at page 346, makes the determination that it be included in assessable income. The position paper which is sent under the letter, at page 347, includes, at page 364, that determination. It includes also, your Honours, the adjustment sheet, or a copy of a proposed adjustment sheet, perhaps I might say, at page 365. Now, an adjustment sheet in the same terms was attached to the actual notice of amended assessment. Now, your Honours, it is right to say that the precise identity of the person who made the assessment of taxable income and the tax does not appear. However, the probability is that that person was Mr Kitney.
Now, your Honours, I will come shortly to earlier material and to some of this material which demonstrated that Mr Kitney was aware that the 82.9 million included the 20 million.
Your Honours, can I come back to the correspondence and the material in this regard and what I am seeking to demonstrate is that from the material it must have been apparent that the taxable income, in terms of the second amended assessment, did double-up the 20 million, to put it shortly.
Your Honours, I think I can do this relatively briefly, may I go first to volume 1 and to page 44. This is a document prepared by Mr Beale. It is a letter sent to us on 13 November 2002. Your Honours will see in paragraph 2 it says “a matter has come to our attention that needs urgent action”.Your Honours will see then in the paragraphs that go up to paragraph 11 that what is set out there is the contention in paragraph 11 that the cost base was only 63 million, which is effectively shares, excluding a loan. You will see in paragraph 14 at page 47 that it said:
When you calculated the capital gain made on the disposal of your Walshville shares, the Division 19A increase in respect of the cost base of the Walshville shares to you that you used was $82,950,090. This is $19,950,088 more than the Division 19A increase in respect of the cost base of the Walshville shares of $63,000,002 as per the preceding paragraph. Thus, the capital gain made on the disposal of your Walshville shares was $19,950,088 more –
Then it said, your Honours, in paragraphs 15 and 16 that there was a need for urgency. Your Honours, no doubt there was, nearly four years had passed, and perhaps not very surprisingly in the light of the terms of the letter, the invitation contained in the remainder of that document that we agreed to an extension of time for making the assessment was declined. Your Honours, I do not think I need to go to the document itself, you will see that in volume 2, at pages 455 and 456. So the first amended assessment issued and it was objected to. You will see that at page 50 of volume 1. Your Honours, one then sees a submission to the Part IVA - - -
KIRBY J: Is this the letter that is seeking information from you and is referred to in the appellant’s submission?
MR JACKSON: Your Honour, it is one of them. It said it was so difficult for them because when the time got round to nearly four years we did not agree to comply with these requirements. Can I say that one sees then a submission which is - - -
KIRBY J: A little bit of sympathy starts to ebb away from you if you, though, just dig your heels in and do not provide basic factual information. Then the Commissioner has to do his best - - -
MR JACKSON: Your Honour, can I say it is not as if they did not have information. We were being asked to say why we disagreed with this proposition. We were asked to do it in a very short time or to extend ‑ ‑ ‑
KIRBY J: Why not do that there, instead of coming up here and dealing with it in the Court? It is better for you to put your best foot forward, is it not?
MR JACKSON: We have not come up here about that at all, your Honour. I mean, that is something where ‑ ‑ ‑
KIRBY J: Well, the Commissioner certainly has. There was a little bit of poison in the well at the beginning of the submissions.
MR JACKSON: Can I just say, your Honour, we are talking about the first amended assessment. We objected to that in accordance with the Act and that is where we are. The first amended assessment was for 20 million, we objected and we exercised our statutory rights. The Commissioner was seeking to get an indulgence from us. We were not prepared to give it at that point. Hardly surprisingly, we would say, if we are asked only three weeks before the end of four years and then – but the first amended assessment as such is not the subject of challenge in these proceedings. What I am doing is simply indicating at the moment that it was known that the 20 million was part of the 82 million.
Your Honours, could I just say in relation to what your Honour said that one sees then a submission to what is called the Part IVA Panel made on 17 March 2003. If one goes to page 61 of that, you will see at paragraph 2(a) that what became the Part IVA issue was one that was identified during the course of actioning an application for private rulings lodged in respect to the then proposed arrangement. Could I say in relation to that that those applications are referred to in paragraphs 9 and 11 of that document at page 63.
KIRBY J: The more you dig your way down into the detail, the more one is tempted to say, well, the proper place for these matters to be dealt with is under the Part IVC procedures and what really you have to do, if you are thinking of upholding the Full Court, is to try to fashion a principle anchored in administrative law which permits the intervention of courts to strike down a non‑assessment in very clear cases which does not, as it were, simply because there is a dispute about the assessment, the proper place for which is the Part IVC hearing.
MR JACKSON: Your Honour, we have submitted first that it was very clear that the second amended assessment was something that was known to include as taxable income $20 million twice. What I am seeking to do really, I suppose, now is two things. One is to respond to the proposition that our learned friends have made and your Honour put to me a moment ago that there was some lack of knowledge in this regard. What I am just going to say is this, that it is apparent from material – and I do not intend to go to every piece of evidence about it – that there was the knowledge.
I referred to paragraphs 9 and 11 on page 63. You will see in particular in paragraph 11 there is a reference to the second application for private rulings and what appears from page 64, paragraph 13, is that what happened did not materially differ from the arrangement that was the subject of that second application. One sees at paragraph 19 an assertion as to lack of information but the lack of information is simply saying that, in effect, we have objected but we have not told them why they are wrong in relation to the determination of the 20 million. That is all that goes to, your Honour.
Now, your Honours, one sees at page 71, and going on for quite some pages, the detail of the matter discussed. You will see again at page 73, paragraph 9, that the arrangements did not differ materially from the arrangement that had been detailed in the second application for a private ruling. Your Honours, if one goes to paragraph 14 ‑ ‑ ‑
GUMMOW J: Paragraph?
MR JACKSON: Paragraph 14 at page 74.
GUMMOW J: Thank you.
MR JACKSON: It raises the issue that an issue is whether the Part IVA adjustment should be for the whole of the 82.9 million or for, in effect, 63 million. It does not say that the 20 million should be included in taxable income twice. Now, your Honours, could I ‑ ‑ ‑
KIRBY J: Another little bit of poison on page 65 where it says that:
FCL will no doubt appeal against the disallowance of the objection, and based on past form, drag out the appeal process, and therefore the payment of the tax involved, for as long as possible.
MR JACKSON: Your Honour, what appears from other material is that we paid half the amount of the first amended assessment and we paid it very promptly. But, your Honours, there is a bit of poison. They obviously did not like the people who then ran Futuris. One can understand that some taxpayers are not regarded as enthusiastically as others because sometimes they challenge what is done. They do not just take it. Sometimes they ‑ ‑ ‑
KIRBY J: The taxpayers in this nation do not have a choice. They just have it taken off them.
MR JACKSON: And if it be that a taxpayer was served with what purported to be a second amended assessment which was for $7 million too much, many taxpayers would just be forced to rollover and not do anything about it. Your Honours, that is why one sees that the challenges in these cases are often brought by people who need the money and sometimes brought by people who have the money to be able to challenge.
KIRBY J: Anyway, this case is not going to be decided on the interpersonal relations between the officers of the Commissioner and of your client.
MR JACKSON: No, your Honours, and I am not suggesting at all that should be so. But, your Honours, could I then ‑ ‑ ‑
GUMMOW J: Did you take us to paragraph 25 on page 76?
MR JACKSON: Your Honour, paragraph 25 refers to “there would be a degree of double taxation” but it is speaking of “both of the tax benefits identified above” and that seems to be – if your Honours look at paragraph 24, I think that is referring to taxation of two companies as distinct from the 20 million twice and I do not in the end think it is germane to the present case.
KIRBY J: But that is not referring to the double taxation about which you are complaining?
MR JACKSON: No. Your Honours, what I was ‑ ‑ ‑
KIRBY J: Is there any acknowledgement anywhere in the materials that were discovered that the Commissioner recognised that there was this element of double counting?
MR JACKSON: Well, that is what I am coming to now, your Honour. I want to come to the passages that seem to be most relevant in that regard. Now, your Honours, could I go to volume 1, page 206. I am coming to events that are closer to the time of the second amended assessment, 20 August 2004. The document commences at page 206 with an email that sets out various attachments and, in particular, your Honours, could I go to page 211. Your Honours will see in paragraphs 9 and 10 some matters which, in a sense, are introductory. It appears to be clear from that, those paragraphs, that it is recognised that the 20 million is a component of the 82. Paragraphs 9 and 10, your Honour, page 211. It appears to be recognised that the 20 million is part of the 82.9.
So then when one comes to paragraph 34 at page 217, there is a reference to a contention we had made and if one goes over to the top of page 218, about line 7, it said:
Obviously, we will not pursue recovery for both amounts of tax, penalty and 170AA interest/general interest charge involved with the two $19,950,088 adjustments.
Your Honours, if one goes to paragraph 40 of the same document at page 224, you will see a reference in subparagraph (a) about line 20 to an apparent error in the increase in the indexed cost base, an amended assessment issued. Then your Honours will see about line 29, “The otherwise possible $82,950,088 Part IVA adjustment . . . includes this $19,950,088”. Your Honours will see then the question which arose, whether the adjustment should be for 63 or 82. Your Honours will see in the paragraph commencing about line 43, it said:
If, as I recommend, an amended assessment issues including an amount under Part IVA of $82,950,088, then obviously we would only pursue payment of the tax, penalty and 170AA interest/general interest charge involved with one of the two $19,950,088 adjustments.
Your Honours, if I could just observe the next few lines relating to our having paid half the tax et cetera. Now, your Honours, if one goes then to the final audit report of 5 November 2004, that commences at page 261 in volume 2. At page 301 in paragraphs 9 and 10 you will see the general statements made about the matter.
Then at page 306 under the heading “My comments on the taxpayer’s contentions” your Honours will see paragraph 34 and, your Honours, this really appears to be a quotation from what had gone on before. You will see at page 307, about line 18:
Obviously, we will not pursue recovery for both amounts of tax, penalty and 170AA interest/general interest charge involved with the two $19,950,088 adjustments.
Then at page 313 you will see at paragraph 40, “two matters arise” and your Honours will see, about line 47 or 48, the 63 million is described as being “[$(82,950,088 – 19,950,088)]”, the issue being, what should the amended assessment be? Then at the top of the next page, about line 8, one again sees that:
If, as I recommend, an amended assessment issues including an amount under Part IVA of $82,950,088, then obviously we would only pursue payment of the tax, penalty and 170AA interest/general interest charge involved with one of the two $19,950,088 adjustments.
HEYDON J: Who is the “I” that appears throughout this document? It does not seem to be signed.
MR JACKSON: That document, your Honour, it is the ATO final audit report, your Honour. It commences at page 261.
HEYDON J: But do we not have to be sure either that Mr Kitney prepared this document or that Mr Kitney received it and read it?
MR JACKSON: There is, your Honour. May I come to that in just a moment?
HAYNE J: There are several references in the passages, or associated with the passages you have just taken us to, to the Part IVA Panel making a decision on 3 December 2003 which seems to be a decision to the effect that the 82 or 83 million should be included, not 63 million. Two questions; one, where do we find in the papers the decision of the Part IVA Panel and, two, is the Part IVA Panel a body that has a statutory foundation as distinct from an administrative foundation?
MR JACKSON: As to the first of those, your Honours, the report from that panel is, I think, at page 170 in volume 1. Your Honours, that was a meeting that was attended, as you will see at page 170, by Mr Beale, amongst others. That report at page 172 contains the passage, I think, commencing at about line 5 on the page, I suppose, and then also lines 44 to 45.
HAYNE J: Does the panel have a statutory or an administrative foundation?
MR JACKSON: I thought the latter, your Honour, but may I check. We understand it to be non‑statutory. Your Honours, may we check that and if there is a different view, let the Court know?
HAYNE J: But it is an internal body of ATO?
MR JACKSON: Yes, your Honour. Your Honours will next see in the reasons for the determination pursuant to section 177F – that commences at page 341 of volume 2 – at page 342, paragraphs 10 to 12 – could I say, your Honours, this is a document of Mr Kitney, which you will see at page 345, and in paragraphs 10 through to 12 he makes it clear that he is aware of the status, in effect, of the $20 million as part of the 82.95. You will see at page 346 that he makes that determination and at page 347 there is the document enclosing a paper, and part of that paper is at page 362, where you will see it is apparent that the 20 million is in the 82.95 and also, your Honours, the proposed adjustment sheet referred to at page 365 which includes the double counting. Your Honours, could I then say in response to what Your Honour Justice Heydon put to me - - -
GUMMOW J: Could you just go back to page 170 for a minute, Mr Jackson?
MR JACKSON: To 170, your Honour?
GUMMOW J: Yes. You took us to it a few minutes ago.
MR JACKSON: Yes.
GUMMOW J: At about line 24:
The issue deals with the avoidance of capital gains tax where the holding company of a company group disposes of one of its subsidiaries, where the cause of the avoidance is the increase in the cost base of the shares in the subsidiary that was disposed of. The increase resulted from two separate schemes, a capital gains tax reduction arrangement and the capitalisation of a loan from the holding company to the company that was disposed of.
As I understand it, there is no relevant attack in this proceeding on the Part IVA assessment, is there?
MR JACKSON: On the Part IVA determination, your Honour?
GUMMOW J: On the Part IVA determination, yes.
MR JACKSON: No.
GUMMOW J: One starts from that proposition then as to what the issue was. Where does one find the absence of bona fides?
MR JACKSON: Your Honour, the paragraph your Honour is looking at is one that reflects matters at a rather earlier point. The capitalisation of the loan perhaps is the 20 million, I think. The capital gains tax reduction is a perhaps larger matter but in the event, so far as Futuris was concerned, the amount is 92.95 million. Now, your Honours, if one goes on from there, the scheme that was actually found to exist or determined to exist was not two schemes as there referred to. What it was was one scheme, the scheme relating to the whole of the 82.95 million. So, your Honours, what is put there is really, in effect, a preliminary kind of matter but not what took place in the end.
HAYNE J: But is not what happened at the end reflected at page 172, lines 5 to 15?
MR JACKSON: Your Honour, can I answer it in this way? What your Honours see about line 10 and following is that it was, “advised the assessment should be made on the full amount” and then it said, “a compensating adjustment can be made at a later stage if necessary”. What is spoken about there, your Honours, is really the question whether the amount that should be treated as assessable income to which the determination relates is 63 million or the 82.
Now, including the whole of the 82.95 in assessable income is one thing. It does not follow from that that the compensating adjustment that would be made, using that language for the moment, is a compensating adjustment reducing taxable income or that the amount of the taxable income should be increased by 82.95 on top of the 20 million.
HAYNE J: What am I to make of the first sentence commencing at line 5 on page 172?
MR JACKSON: Your Honour, that is the point I am seeking to make, that what is says is:
The Panel also considered if Part IVA was to apply to FCL, whether the company should be assessed on a tax benefit of $82,950,088 or . . . the Part IVA adjustment should be for only $63,000,000.
The Part IVA adjustment is an adjustment determining what amount should be added to assessable income.
If one adds to assessable income or treats assessable income as including, the question was, either 82 or 63. Now, it does not follow that, when one comes to doing the next stage which is the process of assessment, which is taxable income, in relation to taxable income you add the two together.
HAYNE J: Is it open to conclude that the assessment that was issued was an assessment intended to reflect the view expressed between lines 5 and 15 on page 172?
MR JACKSON: Could I say this, your Honour. First of all, that is a year before the issue of the second amended assessment. That is the first thing. One sees then a number of stages gone through and the view that was no doubt arrived at is reflected in the determination. The determination made about a year later is that there be included in assessable income 82.95 million. Where things went wrong is in the next stage. That is why I said yesterday our complaint in these proceedings is not that the Commissioner was not entitled to say you can treat as assessable income the whole of the 82.95, it is what happened after that.
KIRBY J: The more one looks into these panel determinations, the more one, as it were, reacts – I speak only for myself – with the feeling, well, these are dutiful officers. There is no evidence in this material that they are just being irresponsible or, let alone, having a feeling of want of good faith towards your client. They may be wrong in law but there is no evidence that I have seen that shows a want of good faith, at least as I understand it. That makes very important to me the earlier discussion about whether or not want of good faith is not the only category here, that you then have to ask, well, okay, there is no want of good faith but by proceeding on a footing that they can make a compensatory adjustment later, that does not amount to a rational assessment of the income because it is burdening the taxpayer in the here and now with the obligation to pay the tax on the basis that, at a later stage, they might get it back, even though it is recognised that there is a double counting. That makes your paragraphs – I think they are 18.2 and 18.3 but not 18.1, it might be 16 – in the pleading the critical ones for me because you cannot read this material, these very, if I can say so, clever officers of the Commonwealth, and reach a view that there is a want of good faith.
MR JACKSON: Your Honour, so far as the matters leading to the adoption of the view that the appropriate amount for the Part IVA determination in relation to inclusion in assessable income was concerned of the $82.95 million, one can understand that view. But where the case runs into difficulty is in what followed from that.
Now, one can understand the first part of it, but having got to that, what one then see is the next stage, as I put it earlier, and that is the determination of taxable income at a sum which it must have been appreciated – I say it was appreciated, your Honours – that that did involve double counting.
KIRBY J: Mr Jackson, you have been very helpful with other material you have handed up. Speaking for myself, you have to make it a bit easy for us with this factual material and if whilst your team has all of this focused in their mind, it would of help to me addressing the alternative way of putting it, that is to say, not want of good faith but obvious, irrational, if you like, inclusion of a double counting. I would appreciate it if you would give in a form with reference to the appeal book the factual material that you rely on to assert that because otherwise we are doing what you are doing now, moving from page to page, and it is a very time consuming matter where you are almost certain to make factual mistakes and that is not a good thing, it is not fair to the other side.
MR JACKSON: Your Honour, I am happy to do that, if the Court wants me to, and perhaps if we could do it – I will ask for some time a little later.
GUMMOW J: Am I right, Mr Jackson, in thinking that your case still adheres to what you said yesterday in the transcript at page 60?
MR JACKSON: I hope so, your Honour.
KIRBY J: Just say yes.
HAYNE J: We will tell you later what it was.
MR JACKSON: I feel as though I am in a police station.
GUMMOW J: At line 2690. Those surrounding you should, I would have thought, have the transcript to hand.
MR JACKSON: We do, your Honour, I just did not have it quite to hand.
GUMMOW J: Namely, what was said was:
The Part IVA determination . . . was to the effect that the 82.9 million should be included in the assessable income of Futuris. Your Honours, that determination is not itself challenged in these proceedings. Rather, its correctness is assumed –
et cetera.
MR JACKSON: Yes. Your Honour, I think said for the purpose in these proceedings.
GUMMOW J: Yes.
MR JACKSON: Your Honour, that is so. That is why I say it is not the determination that it was part of assessable income, it is what follows from that.
CRENNAN J: Is it the adjusted amended taxable income? It is that figure you are complaining about?
MR JACKSON: Yes, your Honour, it is taxable income.
CRENNAN J: Should have the 20 million taken from it?
MR JACKSON: Yes, and that is why I said yesterday there was nothing at all to stop the notice of amended assessment increasing the amount of taxable income to the appropriate amount and charging the appropriate amount of tax, but it is the addition of the 20 million to us that is the problem.
MR JACKSON: Your Honour, if I could just respond to your Honour Justice Heydon, your Honour asked me what was Mr Kitney’s knowledge of matters. I think I have referred your Honours – perhaps not yet – to a report by email from Mr Beale to Mr Kitney. That is the document which commences at page 206. It has the attachments to it which stated, at page 224, I think – I have been to the passage already – to paragraph 40 of that document and also to paragraph 34. I have taken your Honours to those already.
HEYDON J: So the “I” there is Mr Beale?
MR JACKSON: Yes. Your Honours, if one goes to page 261 there is Mr Beale’s final audit report. I have taken your Honours to that already. I refer to page 314 of that:
obviously we would only pursue payment of the tax, penalty and –
At pages 341 to page 345, you have Mr Kitney citing the reasons for decision, and I have taken your Honours to that already. But may I say, if one goes to page 342 of it, at the bottom, you will see he says:
I agree with the tax benefit analysis set out in the final audit report prepared by Ken Beale.
So, your Honours, it seems clear that Mr Kitney agreed with what had been said by Mr Beale. Your Honours, may I move to a different topic, and it concerns section 177F(3).
GUMMOW J: How are we going for time, Mr Jackson?
MR JACKSON: Your Honour, I would expect to be about 15 minutes. What I wanted to say about section 177F(3) is set out in our written submissions, in paragraphs 47 to 57. I just wanted to say, if I may, something about it orally. Your Honours, the extent to which this actually matters may be a matter of not very great consequence, whether there was or was not actual power to amend in the way it was thought. It may not matter in the end all that much. But could I just say, your Honours, that the circumstances which enliven the power under section 177F(3) appear from the opening words of the provision, namely:
Where the Commissioner has made a determination under subsection (1) . . . in relation to a scheme to which this Part applies.
The determination which may be made under section 177F(1), your Honours will see, they involve a tax benefit that has been obtained or would be obtained in connection with the scheme and one goes to the definition of “tax benefit” in section 177C. The relevant part of that is paragraph (a). It refers to
an amount not being included in the assessable income of the taxpayer of a year of income where that amount would have been included, or might reasonably be expected to have been included . . . if the scheme had not been entered into or carried out ‑ ‑ ‑
GUMMOW J: I suppose the first question, or a question that arises is a temporal one. When the subsection says “the Commissioner may determine”, may in what time scale? It has been assumed – at large is not quite the expression – that it has a certain longevity to it.
MR JACKSON: Your Honour, section 177G(2) says that nothing in 170 prevents the amendment at any time if it is for the purpose of giving effect to subsection (3). Can I just say that, if one goes to 177F(1), the effect of a determination is that the tax benefit is to be included in the taxpayer’s assessable income. If one goes to subsection (3) it works on the assumption that a determination has been made under F(1) and the Commissioner is then given a power to make a further determination.
The conditions which must exist for its exercise are set out in paragraphs (i) and (ii). If I could go first to the subject matter of such a determination which can be seen from the further words in 177F(3) and that is that the Commissioner may determine that something described as “that amount” should not have been, or shall not be, included in the assessable income of the relevant taxpayer. But your Honours – and a determination under section 177F(3) has to be made in respect of “that amount”. What “that amount” is derives its meaning from section 177F(3)(a)(i) – that is an amount that would not have been included in assessable income if the scheme had not been entered into or carried out.
There is a double negative involved there of course. But the hypothesis is that the scheme was not carried out. What then arises, or the next question is that the 177F(3) issue is that there is an amount which would not have been included in assessable income but is assessable income on that hypothesis.
Your Honours, to put it a little more closely to the present facts, if the scheme had not been carried out here, the cost base would not have been increased by $82.9 million and in consequence there would have been included in assessable income an extra 82.9 million. The result would be, your Honours, that the double negative would not be satisfied. But if one turns to the 20 million that is referred to in the first amended assessment, one arrives at a similar conclusion, your Honours, because once again it is correct that if the scheme had not been carried out, the cost base would not have been increased by 82.9. Again the result would be that the 82.9 would have been included in assessable income, the 20 is part of the 82.9 and, therefore, it would have been included in the assessable income of Futuris and the inclusion in assessable income of the 20 million is predicated on the assumption that the scheme was carried out, not, as the section requires, that it was not. Your Honour, I am sorry. I would not pretend it is the simplest proposition to put, but that is our submission.
HAYNE J: It is also a proposition that seems to give little work to do to part of that amount in F(3)(a)(ii).
MR JACKSON: F(3)(a)(ii) works on the assumption that one starts from that amount and you get to that amount by looking at the earlier provision.
Your Honours, we have set out our submissions in relation to this issue in our written submissions. I gave the reference before. Could we simply say, your Honours, that, in our submission, the Full Court was correct in the views that it expressed in volume 2, page 526.
GUMMOW J: Paragraph?
MR JACKSON: Paragraph 16, your Honour, volume 2. Also paragraphs 22 to 23 at page 529.
GUMMOW J: It is the second sentence in paragraph 16, is it not?
MR JACKSON: Yes, your Honour.
GUMMOW J: That you support.
MR JACKSON: Yes. May we refer also to paragraphs 11 and 19 and, in our submission, the Full Court’s distinguishing of the ANZ Banking Group Case was done ‑ ‑ ‑
GUMMOW J: What would be the consequence if that construction in paragraph 16 is incorrect and the construction of the Commissioner is correct?
MR JACKSON: Your Honour, the position, in our submission, would not be different. That is why I said that perhaps this issue is one that does not really affect the matter, and this is where the Full Court was right in a sense in paragraphs 11 and 19 in saying that if one looked at what was being done with the second amended assessment, one had to make some kind of adjustment and the adjustment was one which necessarily would reflect the correct assessable taxable income and tax. If your Honours excuse me just one moment.
Your Honours, the last matter to which I wish to refer concerns the suggestion of our refusal to provide information. I think really I have dealt with that in what we have said so far. Your Honours, those are our submissions. I mentioned the question of a time to put in the document that your Honour wanted - perhaps a week, your Honours. Of course, we give our learned friends ‑ ‑ ‑
GUMMOW J: I think you should go first.
MR JACKSON: Yes, thank you, your Honour.
GUMMOW J: Yes.
MR WILLIAMS: Yes, thank you, your Honour. Our learned friends took your Honour this morning to the statement of facts, issues and contentions in the pleadings generally in volume 1 of the book. If I can take your Honours to the passage that gives context to the parts that the Court was taken to this morning, page 23 of volume 1 of the book are the passages that your Honours should be taken to because it is in paragraphs 20 and 21 that one sees the substance of what was being put.
GUMMOW J: I am sorry, where were you, Mr Williams?
MR WILLIAMS: At page 23 in paragraphs 20 and 21. The last words of 20, of course, are suggestive of some kind of constructive one of bona fides, a failure to recognise a matter. That does provide significant context for what is put later.
Your Honours, to the extent to which the applicant pleaded that the Commissioner knew that the assessment must be excessive, that was always denied and has always been denied on the pleadings and has never been accepted. The Commissioner does not accept that the second amended assessment is necessarily excessive and nor does he accept that there was every ‑ ‑ ‑
GUMMOW J: You had better shout a bit, Mr Williams.
MR WILLIAMS: I am sorry, your Honour?
HEYDON J: Speak up.
GUMMOW J: You are lapsing into what Sir Garfield Barwick would call conversational mode.
MR WILLIAMS: I am sorry, your Honour. I will endeavour to revert to a more belligerent approach, if I might?
GUMMOW J: Good.
HAYNE J: Befits your client.
MR WILLIAMS: Your Honours, nor does the Commissioner accept that there was evidence permitting the Federal Court to reach the conclusion that the second amended assessment was necessarily excessive, even if that were an issue that properly arose outside Part IVC proceedings and, of course, we do not concede for a moment that it was. I took your Honours yesterday to page 42 and to the reference to the capitalised loans. Now, assuming everything that the taxpayer says about the $19.95 million being numerically part of the 82.95 million is correct, the taxpayer may still fail to show in Part IVC proceedings that the second amended assessment is excessive.
The taxpayer has been put to proof of the elements of the cost base, other than the Division 19A value shift. I took your Honours yesterday, and I do not need to do it again, but I will give you the reference, to the statement of facts, issues and contentions in the Part IVC proceeding in volume 2 at page 435 at paragraph 11. The position was at the time of the second amended assessment that the Commissioner had sought information from the taxpayer about relevant transactions and calculations and the taxpayer had refused to provide, apparently on advice.
There are some additional references to those that my friend has given your Honours that I will need to take your Honours to as briefly as I may but they show that the Commissioner was entitled to take the view that he did not know enough to predict with confidence what the elements of the taxpayer’s income would be after the first amended objection proceeding, or the second.
To the extent to which the submission is put that the Commissioner’s position was self‑inflicted, there is one additional paragraph on page 47 to which I should take your Honours, being the letter in 2002 asking for confirmation or correction ‑ ‑ ‑
GUMMOW J: I think we have been taken to that, have we not?
MR WILLIAMS: You have, your Honour, but your Honours have not been taken to paragraph 17, which gives context to the reason why there was delay:
This matter only came to light when we were reviewing the information and documentation we recently received in respect of the Walshville/Bristile float arrangement.
Now, the evidence does not show what that material was or why it was being received at this time, but the extent to which there are references at page 61 to the tax issue, paragraph 2(a):
identified during the course of actioning an application for private rulings –
your Honours would not, on the material before the Court, draw any inference that this was years before or indeed anything other ‑ ‑ ‑
KIRBY J: But if on the face of the document there is a double counting, would not the forensic onus be on you to show that there is a proper foundation for that double counting which on the face of it is clear, specific, numerate, identified, identifiable and known? Would you not have to show what other reason can justify what on the face of it is burdening the taxpayer with something which could not be part of the assessable income of the taxpayer and, hence, outside the statute?
MR WILLIAMS: Your Honour, those reasons are shown very clearly in the documentation and that is that the officers making the decision had before them as the latest statement of the law on the matter a judgment of Justice Kenny in the ANZ Bank Case. They were aware from that judgment, if from nowhere else – and plainly highly‑skilled officers were looking at this question and held what the document showed to be a genuine concern about the consequences for the revenue if - - -
KIRBY J: It is in the nature of these officers they will always be concerned about protection of the revenue and that ‑ ‑ ‑
MR WILLIAMS: That is their job.
KIRBY J: And we are fortunate in this Commonwealth that we have people who have that concern, but if you have on the face something which is double counting - - -
MR WILLIAMS: Not on the face of the record, your Honour. What we have is an identification of an issue. We have the ANZ Bank decision showing that the concerns held about possible prejudice were real and showing that the mechanism that was used in this case was, according to a judge of the Federal Court, a correct and available mechanism. Your Honours will see in the material that that was drawn to the decision‑maker’s attention and, when the decision‑maker proceeds to make the decision in dealing with this complex issue of how to add in an admittedly correct $82.95 million 177F(1) determination into an amended assessment which is before - - -
KIRBY J: There is a bit of a flavour, if I can say so, in the passage Justice Hayne drew attention to on 172, “Well, let us get in and we can always give it back later” and that is not, in my understanding at least, a correct approach to an assessment by a statutory officeholder of the assessable income of the taxpayer.
MR WILLIAMS: Your Honours, the critical words in that passage are “if necessary”.
HEYDON J: The other critical words are “depending on the outcome of the Division 19A issue”.
MR WILLIAMS: That is so. I will show in the documents that I am about to take the Court to that the Commissioner had every reason to be concerned, that he did not know the full facts in this matter and he did not know the full facts because the taxpayer refused to tell him and your Honours will see this – if I can take your Honours to page 457 in the second volume. Our friends have referred in passing to 456. I do not think the Court ‑ ‑ ‑
GUMMOW J: We have not been taken to 457 before.
MR WILLIAMS: No, that is so. Page 456 was the refusal to extend and the refusal to confirm.
GUMMOW J: Yes.
MR WILLIAMS: Then, of course, there was an objection lodged and in early January the ATO said, and this appears at about line 35:
For us to consider reducing the $19,950,088 adjustment in full or in part, can you please advise us by 3 February 2003, of the full particulars of the errors, if any, contained in the details that we provided in our letter –
There are then other matters referred to. Your Honours, there are requests back and forth for extensions from the ATO for further time, having regard to the time of the year and the like. The ATO granted those extensions. They are in the pages that immediately follow. Then at 463 your Honours will see on 28 February that the taxpayer’s solicitors responded. This is at about line 38 that they were “not in a position” to confirm the position, and at line 40:
Considerable time and resources have been spent by Futuris in preparing its response to your 3 January 2003 letter. It has retained this firm and Senior Counsel to assist in that preparation. Futuris’ response is well advanced and almost complete.
They ask for time on 464, a further fortnight, in effect, to “14 March 2003”. Then, what appears on page 468 is the final outcome of the taxpayer’s response in respect of this issue and that is at about line 30 on page 468 that:
(‘Futuris’) has decided that it would not be appropriate at this time to put a substantive response to the matters –
will appeal a decision of the Commissioner to disallow, in full or in part –
That is not the end of the matter, your Honours, because at 444 in those proceedings the Commissioner filed a request for particulars or served, at least, a request for particulars. It commences at 443 but at 444 your Honours will see item 2 at about line 10:
(a)State the particulars . . . of the various loans alleged to have been made by Futuris to Vockbay on or before 2 September 1997;
(b)Give the usual particulars ‑
and that is defined on the previous page, but I do not need to trouble you ‑ ‑ ‑
KIRBY J: You are going just a bit too fast for me.
MR WILLIAMS: I am sorry.
KIRBY J: What is the document at page 446? This is out of its time sequence, is it?
MR WILLIAMS: This is 444. It is a document that is dated 22 April 2005 so it is half ‑ ‑ ‑
KIRBY J: This is from the present appellant, is it?
MR WILLIAMS: That is from the Commissioner, yes. So this is after the second amended assessment but before the decision of Justice Finn. This was in evidence before Justice Finn, as your Honours will see. Page 444 at paragraph 2(a) is the reference that we make seeking particulars of loans. If I can take your Honours back to page 439 just to show what those paragraphs 14 and 16 referred to and why particulars were necessary. Paragraph 14:
On or before 2 September 1997, Futuris had made various loans ‑
and the loans were, in 15:
15.1interest free;
15.2repayable on demand; and
15.3not secured.
Then 16:
A portion of the Vockbay Loans were made before 23 June 1992 and a portion of the Vockbay Loans were made on or after –
So the Commissioner’s state of knowledge in these respects had not advanced very much. If I can then take your Honours to the debate that occurred in respect – my friend invites me to take your Honours to page 440.
KIRBY J: Page 440?
MR WILLIAMS: Page 439, I think, to 440, paragraph 17 going over the page. There are particulars given there, but your Honours see that a debate is occurring over some other particulars. If I can then take your Honours to that debate at page 469, the transcript before Justice Finn, the relevant passage, this is a direction in the three matters, the two Part IVC proceedings and the present matter, and your Honours, at page 476 at about line 23 Ms Price refers to the request for particulars, waiting for a response, not being critical, about line 35:
we do see no justification for the pleading process not to be completed.
HIS HONOUR: Thank you, Ms Price. Why isn’t that a reasonable request, Mr Sullivan?
MR SULLIVAN: Your Honour, the particulars are sought in respect of matters but, on the other hand, the particulars were sought, I think, possibly before the Part IVA proceedings were commenced. So the situation is that there’s a crossover between the Part IVA case and the particulars sought in the division 19A case.
GUMMOW J: What would be the prejudice to the Part IVA case?
MR WILLIAMS: Your Honour, that is a question I am unable to assist your Honours with. The prejudice to the Part IVA case, one might imagine a range of prejudices, but it is not for me to speculate as to what they might be, but they are matters that certainly confirm the position that was before the Commissioner’s officer when the decision was made that the facts were not all in in this matter.
HEYDON J: I do not quite see logically how events that take place after the second further amended assessment can affect the state of mind revealed on page 172 of volume 1. Is there some sort of retrospect in circumstantial inferences?
MR WILLIAMS: No, we do not put it in that way, your Honour. What we put is that there were prior to the decisions and going back to 468, prior to the decision in question, there had been a chain of correspondence and ‑ ‑ ‑
HEYDON J: Yes, I follow all that. That I follow.
MR WILLIAMS: ‑ ‑ ‑ and a refusal. Then, in terms of the relevance of that in the Court - and before Justice Finn there was this debate that I have taken the Court to, the request for particulars, and the relevance of that debate and the refusal to provide them is merely evidence from which the Court could conclude that the inference available from the documents at 468 was properly available. It was evidence before Justice Finn. When one is saying that the evidence shows that the Commissioner knew that it was necessarily excessive and must have known that the amount could not exceed this total, then one can infer from the subsequent evidence before Justice Finn that there are indeed reasons to think, as the evidence before the officer showed at an earlier time, that the relevant facts are not all in and it may not be excessive.
That is the way in which we put it, your Honour. Can I make one passing reference to the Darrell Lea case. I am conscious of the time. We deal with Darrell Lea in our written submissions at paragraphs 52 and 53 and make the point that it was not a 39B case in that the relevant legislation contained no direct equivalent to section 175.
Your Honour the Presiding Judge asked yesterday about whether it was a default assessment. If your Honours have the volume 72 FCR, if I can take your Honours to page 182, another quite critical difference between the statutory schemes in issue appears in the paragraph next to the letter G. Sales tax is a tax like GST. The liability exists irrespective of assessment. There is a power to assess, but even without an assessment, the Commissioner can sue for it and that is a critical difference from the scheme of the Income Tax Assessment Act where the role of the notice of assessment is to crystallise the liability that the statute imposes and without that crystallisation the Commissioner cannot sue. So in that respect the statutory scheme was entirely different and it is, with respect, a fundamental error to translate from a quite different statutory scheme propositions of this kind.
Your Honour the Presiding Judge asked yesterday about the default assessment, whether it was a default assessment. If I can do this as briefly as I may, at 177 at about line C one of the four assessments in question in that case is set out where there is a reference to 25(1) or, alternatively, 25(2) or, further alternatively, 25(2A). Those provisions, your Honour, are referred to at page 183 of the report. If I can briefly give the Court the references, the first full paragraph deals with 25(1) and D deals with default assessments. Those are where those answers are to be found. We obviously put the submission that the case is of no assistance.
The decision in Stokes, in our submission, should be seen as an application of the decision of this Court in Hoffnung. On the face of the three notices, as Justice Davies pointed out – that is on the record itself it was apparent that the liability had not been fixed. At first instance the Commissioner had argued that all three were issued simultaneously.
GUMMOW J: They were default assessments, were they not?
MR WILLIAMS: They were default assessments, I believe, your Honour; yes. A slightly different position was sought to be taken on appeal but the Commissioner was denied leave to take that position. I will give your Honours the page reference that shows that. It is 164 at letters C and E. Our friends dealt this morning with 177F(3). Can I simply give your Honour the paragraph references to our submissions in‑chief – 25 to 29 – and paragraph 8 of our submissions in reply in that respect.
The documents our friends have given us this morning involve some complexity. With respect, we need some opportunity to reply to them because they are matters for instruction.
GUMMOW J: Yes, that is right.
KIRBY J: And to any further document that is now being offered.
MR WILLIAMS: Yes. Can I say in respect of the further document, your Honours, that, to the extent to which it might be contemplated that the further document will seek to make some case outside the pleading when we do read the pleading as ‑ ‑ ‑
GUMMOW J: Or outside the fact findings by the Full Court.
MR WILLIAMS: Yes. The pleading is a Hickman pleading, as we read it. To the extent to which it seeks to make a case for a wider principle, then we would, of course, have a difficulty with that. I will merely say that by way of preliminary observation.
GUMMOW J: Let me ask Mr Jackson how long he would need?
MR JACKSON: Perhaps a week, but could we say a fortnight, your Honour?
GUMMOW J: And how long would you need to respond to that? Another 14 days, I would think.
MR WILLIAMS: Yes, your Honour. I do not have my diary but the 14 days might be helpful, thank you.
MR JACKSON: Your Honours, might I just say in relation to what my learned friend said a moment ago that we do not agree with the way in which he construed the pleading. Might I have leave to say one further thing that I should have said in the course of my submissions and it simply relates to the contention that in the proceedings it might be open to take the view that you could add on the 20 million to the 80 million. The terms of paragraph 3 of the defence at page 11 ‑ ‑ ‑
GUMMOW J: Just a minute. Paragraph 3, page 11?
MR JACKSON: Yes. If I could invite your Honours to note paragraph 3 for the moment, and the first part of it says:
The Commissioner admits paragraph 3 of the statement of claim –
That is at page 4. That says that it is specified in the return that it was 86 million. Then if one goes back to paragraph 3 on page 11:
The commissioner admits paragraph 3 of the statement of claim and says further that:
3.1 The taxable income of $86,088,045 –
and that is the same figure as in paragraph 3 –
understated the taxable income for the year of income ended 30 June 1988 (“the 1998 year”) by $82,950,090 (“the understated amount”) –
that is the 82.5 and then, your Honours, in paragraph 3.2 it says:
The understated amount was described in the 1998 return as “Division 19A Value Shift”.
So, your Honours, in the proceedings it appeared to be asserted that the understatement was 82.95 million. That is the only point I wanted to make, your Honour.
GUMMOW J: Is there anything you want to say about that, Mr Williams?
MR WILLIAMS: Your Honour, could I deal with that in the written document that I have to do in any event?
GUMMOW J: Very well. I think you should go first, Mr Jackson, and the respondent will have 14 days from the day to put on any further written material of a factual nature that was outlined in the course of argument this morning. The Commissioner will have 14 days after the provision of that material to put on first a response to it and any responses also sought to be made to the written material already handed up this morning. Does that deal with the matter?
MR WILLIAMS: Yes, your Honour.
GUMMOW J: We thank counsel for their assistance and we will reserve our decision and we will adjourn for a short period before commencing the next appeal.
AT 11.22 AM THE MATTER WAS ADJOURNED
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