Confidential and Commissioner of Taxation
[2014] AATA 32
•24 January 2014
[2014] AATA 32
Division TAXATION APPEALS DIVISION
File Numbers 2012/2753 - 2574
Re Confidential
APPLICANT
And Commissioner of Taxation
RESPONDENT
DECISION
Tribunal Deputy President S A Forgie
Date 24 January 2014
Place Melbourne
The Tribunal has decided to affirm the objection decision of the respondent dated 14 January 2011 affirming:
(1) in relation to the 2006 income year:
(a) an amended assessment issued on 3 June 2010; and
(b) an assessment of administrative penalty issued on 9 June 2010; and
(2) in relation to the 2007 income year:
(a) an amended assessment issued on 9 June 2010; and
(b) an assessment of administrative penalty issued on 9 June 2010.
…[sgd] S A Forgie…
Deputy President
CATCHWORDS
TAXATION – assessment of income and penalties – partnership loss claimed in respect of managed investment scheme disallowed – loss claimed in return lodged by tax agent and refund paid to nominated bank account - audit – amended assessments – whether return lodged without taxpayer’s authority – whether amended assessments made within time – whether properly served – whether Commissioner estopped from amending assessments by representations made by ATO officers – decisions affirmed.
LEGISLATION
A New Tax System (Australian Business Number) Act 1999, s 41
Acts Interpretation Act 1901, s 28A
Administrative Appeals Tribunal Act 1975, s 25
A New Tax System (Goods and Services Tax) Act 1999
Bankruptcy Act 1966, s 47
Constitution, s 75(v)
Crimes Act 1914, s 4AA
Income Tax Assessment Act 1936, ss 161, 161A, 164, 166, 167, 169, 170, 174, 175, 177, 177F, 264Income Tax Assessment Act 1997, ss 3-10, 995-1
Judiciary Act 1903, s 39B
Road Safety Act 1986 (Vic), s 48
Taxation Administration Act 1953, ss 14ZZK, Sch1: 250-10, 255-1, 265-65, 284-145, 284-150, 284-225, 286-75, 286-80, 353-10, 388-50, 388-60, 388-65, 388-70, 388-75
Income Tax Regulations 1936, r 40
Taxation Administration Regulations 1976, r 12F
Bankruptcy Rules 1966, ss 6, 12
CASES
Atkinson v Federal Commissioner of Taxation (2001) 46 ATR 32
Batagol v Commissioner of Taxation [1963] HCA 51; (1963) 109 CLR 243
Blair v Curran (1939) 62 CLR 464
Briggs v Deputy Commissioner of Taxation (1986) 17 ATR 1140
Chu v Telstra Corporation Limited [2005] FCA 1730; (2005) 147 FCR 505; 89 ALD 39; 42 AAR 100
Corporation of the City of Enfield v Developments Assessments Commission [2005] HCA 5; (2000) 199 CLR 135; 169 ALR 400; 74 ALJR 490; 60 ALD 342; 106 LGERA 419
Deputy Commissioner of Taxation v Boxshall [1988] FCA 355; (1988) 19 FCR 435; 83 ALR 175; 19 ATR 1822
Deputy Commissioner of Taxation v Naidoo and Anor (1981) 81 ATC 4,537
Deputy Commissioner of Taxation v Taylor (1983) 72 FLR 283; 14 ATR 567
Director of Public Prosecutions v Mitchell [2008] VSC 130
Federal Commissioner of Taxation v ANZ Savings Bank Ltd (1994) 181 CLR 466
Federal Commissioner of Taxation v Dalco [1990] HCA 3; (1990) 168 CLR 614; 90 ALR 341; 20 ATR 1370; 64 ALJR 166; 90 ATC 4088
Federal Commissioner of Taxation v Futuris Corporation Limited [2008] HCA 32; (2008) 237 CLR 146; 247 ALR 605; 82 ALJR 1177; 69 ATR 41; [2008] ATC 20-039
Federal Commissioner of Taxation v Prestige Motors Pty Ltd [1994] HCA 39; (1994) 181 CLR 1; 123 ALR 306; 28 ATR 336; 94 ATC 4570; 68 ALJR 634
Federal Commissioner of Taxation v Star City Pty Ltd (No 2) [2009] FCAFC 122; (2009) 180 FCR 448
Federal Commissioner of Taxation v Stokes [1996] FCA 1128; (1996) 72 FCR 160; 141 ALR 653; 34 ATR 478
Federal Commissioner of Taxation v Wade (1951) 84 CLR 105
Galea v Commissioner of Taxation [1990] FCA 456; (1990) 90 ATC 5060; 21 ATR 1108
Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81
George v Federal Commissioner of Taxation [1952] HCA 21; (1952) 86 CLR 183
Leask v The Commonwealth [1996] HCA 29; (1996) 187 CLR 579; 140 ALR 1; 70 ALJR 995
Marijancevic v Mann [2008] FCAFC 161; 56 ATR 625
McAndrew v Federal Commissioner of Taxation (1956) 98 CLR 263; 30 ALJR 464
McCormack v Federal Commissioner of Taxation [1979] HCA 18; (1979) 143 CLR 284; 23 ALR 583; 9 ATR 610; 53 ALJR 436; 79 ATC 4111
Minister for Immigration and Citizenship v SZIAI [1] [2009] HCA 39; (2009) 259 ALR 429; 111 ALD 15; 83 ALJR 1123
R v Justices of Kent (1873) LR 8 QB 305
Re Kakavas and Federal Commissioner of Taxation [2011] AATA 48; 2011 ATC 10-173
Re Phillips and Inspector-General in Bankruptcy [2012] AATA 788; (2012) 58 AAR 452; 131 ALD 564
Re Rana and Military Rehabilitation and Compensation Commission [2008] AATA 558; (2008) 48 AAR 385; 104 ALD 595
Shail v Federal Commissioner of Taxation [2007] FCA 655
Re Simon Harland as Trustee for the PCS Global Discretionary Trust and the Commissioner of Taxation [2013] AATA 930
Timbarra Protection Coalition Inc v Ross Mining NL [1999] NSWCA 8; (1999) 46 NSWLR 55; 102 LGERA 52
Vu v Commissioner of Taxation [2006] FCA 889; (2006) 63 ATR 341
Woods v Deputy Commissioner of Taxation [2011] TASSC 68Chambers 21st Century Dictionary, 1999, reprinted 2004, Chambers
REASONS FOR DECISION
Mr T invested in a managed investment scheme (MIS) in 2006 and 2007. In the return lodged on his behalf in respect of the 2006 income year by his tax agent, Ms Tagent, Mr T claimed losses of $580,290.00 from that investment on the basis that he was a member of a partnership. The Commissioner of Taxation (Commissioner) allowed a deduction for that loss. Under that assessment, Mr T obtained a credit of $276,417.05 and credit for interest on overpaid tax of $771.84. After a deduction of an amount payable by Mr T of $586.05, the Commissioner paid $276,602.84 into Mr T’s bank account. On 15 October 2007, Ms Tagent lodged a return for the 2007 income year as Mr T’s tax agent. A partnership loss of $416,495.00 was claimed. On 30 October 2007, the Commissioner issued an assessment in accordance with the information in the return. That led to the sum of $185,708.35 being paid into Mr T’s nominated bank account.
On 9 May 2009, the Commissioner advised Mr T that he would conduct an audit in relation to those two income years. On 6 August 2009, Mr T made a voluntary declaration that the partnership losses should not have been claimed in either year. In relation to the 2007 income year, however, Mr T also claimed that the return had not been lodged with his authority as he had been involved in ongoing discussions with Ms Tagent and had not yet approved the return at the time that she lodged it without his knowing that she was doing so. The Commissioner did not accept that the return had been lodged without his authority and issued amended assessments in relation to both years. He also issued assessments of penalties on the basis that the returns had contained statements that were false or misleading in a material particular and had led to the Commissioner’s paying or crediting Mr T with an amount that was more than it would have been had the statement not been false or misleading. The Commissioner formed the view that the shortfall amount resulted from recklessness by Mr T or by Ms Tagent as to the operation of a taxation law. That meant that the base penalty was 50% of the shortfall amount but, treating Mr T as a person who had made a voluntary disclosure, the Commissioner remitted 80% of the penalty.
Mr T objected to the amended assessments and assessments of penalty on the basis that an officer of the Australian Taxation Office (ATO) had led other taxpayers to understand that the investment he had made in the MIS could be made. He also objected to those issued in relation to the 2007 income year on the basis that Ms Tagent had lodged the return without his authority. The Commissioner affirmed them. When Mr T applied to the Tribunal for review of the Commissioner’s objection decision, he raised other grounds. Among them was a contention that the Commissioner was out of time for issuing amended assessments and that he could not rely on s 170 of the Income Tax Assessment Act 1997 (ITAA97) to do so. I have considered Mr T’s contentions as well as those of the Commissioner and have affirmed the objection decision.
BACKGROUND
The investments
Mr T considered investing in an MIS, Great Southern Plantations 2005 Project (Great Southern), in the years between 1999 and 2005 but did not do so until some time in 2005. He discussed the matter with Ms Tagent, who was a registered Tax Agent and a Great Southern Authorised Representative. After those discussions, Mr T decided to invest in Great Southern through a partnership rather than individually. In the two income years ending 30 June 2006 and 2007, he made the following investments through the partnerships:
Income year
Partnership
Investment
2006
L&T
$580,290.00
2007
L&T
$62,966.95
2007
A&T
$298,844.00
2007
G&S
$ 54,684.00
Financial Report of the partnerships
A. L&T partnership
The Special Purpose Financial Report[1] prepared by Ms Tagent for the L & T partnership for the income year ending 30 June 2006 shows twelve partners including Mr T and his wife. It also showed that the partnership had incurred a loss of $2,001,000.00 in that year.[2] The loss attributable to Mr T’s interest in the partnership was shown as $580,290.00.[3]
[1] T documents; T9 at 133-140
[2] T documents; T9 at 137
[3] T documents; T9 at 138
The Financial Report prepared for the partnership of L&T partnership for the income year ending 30 June 2007 showed that Mr T had contributed a further sum of $57,142.04. His share of a capital loss of $217,320.59 was $62,966.95.[4]
[4] T documents; T9 at 118-119
B. A&T partnership
The Financial Report prepared for the A&T partnership for the income year ending 30 June 2007 shows a net loss of $4,269,200.00. That loss is shared among 31 partners of whom Mr T is one. His share of the loss is shown as $298,844.00.[5]
[5] Documents lodged by Mr T (A documents); A7 at 55-57
C. G&S partnership
The Financial Report prepared for the G&S partnership for the income year ending 30 June 2007 shows a net loss of $1,822,800.00. That loss is shared among 32 partners of whom Mr T is one. His share of the loss is shown as $54,685.00.[6]
[6] Documents lodged by Mr T (A documents); A8 at 70-81
The taxation returns
Although there was dispute between the parties as to whether lodgement of the 2007 return had occurred with Mr T’s consent, Mr T accepted that the return for the 2006 income year had been lodged by his then tax agent, Ms Tagent with his consent. The dates on which the returns were lodged and by whom were matters not in dispute. They were prepared and lodged by
Ms Tagent and may be summarised as:
Income year
Date of lodgement
Deduction claimed
Refund amount
Date of assessment
30 June 2006
20 February 2007
$580,290[7]
$276,602.84[8]
5 April 2007
30 June 2007
15 October 2007
$416,496[9]
$185,708.35[10]
30 October 2007
30 June 2008
11 March 2009
[7] This figure represents the losses shown in [4] above regarding the losses from the L & T partnership
[8] The amount of refund is shown at [6] in the Commissioner’s Statement of Facts and Contentions as $276,682.84 but the notice of assessment at T documents; T7 at 111 shows that amount as $276,602.84.
[9] This figure represents the losses shown in [6]-[8] above regarding the losses from the three partnerships.
[10] T documents; T11 at 154
The refunds
For each of the income years, the Commissioner paid the refunds to the trust account of Mr T’s tax agent, Ms Tagent.
Correspondence between Mr T and Ms Tagent regarding return for 2007 income year before its lodgement
In a letter dated 5 October 2007 and addressed to Mr T, Ms Tagent wrote:
“Your income return has been completed from the information supplied. The original return and a copy are enclosed.
Please check all the figures carefully and if you agree with the contents sign the original, where indicated by the red dots, and return to me, for lodgement with the Australian Taxation Office.
Your income tax position is as follows:
Taxable Income $28,030.00
Estimated Income Tax Refund $185,708.35
Your income tax refund is to be split as follows:
Your share$31,634.53
For Great Southern Investment $154,073.82
Please do not hesitate to contact me should there be any matters you may wish to discuss concerning your taxation affairs.”[11]
[11] A documents; A1 at 1
Mr T’s request for copies of Notices of Assessment for 2005-2007 income years
On 19 September 2008, Mr T asked the ATO for copies of the Notices of Assessment issued by the Commissioner for each of the income years ending 30 June 2005, 2006 and 2007. He was given them.
Correspondence between Mr T and Ms Tagent regarding return for 2007 income year after its lodgement
In a letter dated 11 November 2008 and said to be referring to the “2007 Income Tax Return”, Ms Tagent again asked Mr T to check the figures on the income tax return that she had completed and copies of which she had enclosed. She advised that his taxable income was $444,525.00 and estimated that he would receive a refund of $2,354.88.[12]
[12] A documents; A2 at 7 In a further letter dated 11 November 2008, Ms Tagent enclosed a copy of Mr T’s return for the income year ending 30 June 2008. She advised that it revealed a loss of $127,500.00 and that he would not be liable to pay tax: A documents; A3 at 12
Ms Tagent’s statement return for 2007 income year lodged in error
On 12 December 2008, Ms Tagent wrote an email to Mr T regarding his return for the 2007 income year. She wrote:
“It seems your 2007 tax return was lodged in error before we had your signature.
I need to provide it to ASIC this morning, they will be here in an hour to collect all the paperwork relating to … and their 2007 tree investments. Can you please print off the first 2 pages, sign Part A and Part B and scan and email back to me urgently. Thank you very much,
Will email adjustments on your tax return this afternoon, once I’ve got everything to ASIC.
Thanks again.”[13]
[13] T documents; T16 at 220
Part A showed Mr T’s taxable income to be $444,525.00 as Ms Tagent had advised him in her letter dated 11 November 2008. Part B shows business activities of timber hewing-forest in the 2007 income year, pulpwood cutting-forest in 2004 and timber hewing-forest in 2006. Deferred non-commercial business loss from a prior year were shown for each activity being $298,844.00, $62,967.00 and $54,684.00 respectively.[14] On a page sent to Mr T but not sent to the ATO, the losses were again described as deferred non-commercial business losses. The entity type was described as “partnership” and the loss type as “5 – Commissioner’s discretion”.[15]
[14] T documents; T16 at 231
[15] T documents; T16 at 232
Undated correspondence from Ms Tagent
In an undated open note, Ms Tagent wrote:
“To Whom it May Concern:
RE: … [Mr T] (TFN …) Tax Return 2007
I, … [Ms Tagent], hereby certify that … [Mr T’s] Tax Return 2007 was submitted in error on 15 October 2007 by my office without … [Mr T’s] knowledge and authority. … [Mr T] objected to the contents of a draft copy of the return when it was presented to him in August 2007.
In addition, the tax refund was credited to the … [Ms Lang and Associates Pty Ltd] Trust Account and wasn’t sent to him.”
Signed,
[handwritten signature]
… [Ms Tagent]”[16]
[16] A’s documents; A5 at 45
Mr T engaged another accountant
Mr T engaged the services of another accountant on 3 March 2009.
The audit
On 8 May 2009, the Commissioner advised Mr T that his returns for the income years ending 30 June 2006, 2007 and 2008 were subject to audit. He was required to attend at the ATO’s offices to give evidence in accordance with a notice issued under s 264 of the Income Tax Assessment Act 1936 (ITAA36) and s 353-10 of Schedule 1 to the Taxation Administration Act 1953 (TAA).[17]
[17] T documents; T13 at 160-193
Mr T’s disclosures at interview and voluntary disclosures
During a formal interview held on 25 June 2009, Mr T advised the Commissioner that the signature appearing on the 2006 Partnership Schedule for the L & T Partnership in the ATO’s office was not his own. He stated that he had neither signed nor submitted any Product Disclosure Statement application or Responsible Entity documentation in either the 2006 or 2007 income years.[18] Mr T also provided copies of bank statements, emails between him and Ms Tagent and documents regarding Willmot Forests 2008 but none for the Gunns Plantations (2007 Growers) project, the Great Southern Plantations 2005 Projects or the Great Southern 2007 High Value Timber Project (2007 Growers) project.
[18] T documents; T13 at 173
On 6 August 2009, Mr T made a voluntary disclosure in relation to his returns for each of the 2006 and 2007 income years. He asked that Label 12N, which is described as “Distribution from partnerships”, be reduced to “0” or zero.[19]
[19] T documents; T14 at 194
Mr T’s complaint to the Tax Agents’ Board
Mr T complained to the Tax Agents’ Board (Board) about Ms Tagent’s actions. He advised the ATO that the Board had told him that it was unable to take any action on his complaint as Ms Tagent was no longer registered as a tax agent. Mr T also notified the ATO that he had contacted the Tax practitioner integrity service. This he did in an email exchange with the ATO on 17 December 2009.[20]
[20] A’s documents; A6 at 49-50
Commissioner’s Position Paper
On 11 February 2010, the Commissioner wrote to Mr T advising him that the ATO had completed its audit for the three income years 2006 to 2008. He told Mr T of his decision and the reasons for it and that notices of amended assessments would be issued shortly.[21]
[21] T documents; T15 at 195-217
A. The arrangements
The Commissioner did so after reaching a view about the partnership losses that Mr T had claimed in his returns for the 2006 and 2007 income years. He summarised his views about the arrangements under which the losses had been claimed in the following way:
“a. The promoter is or becomes an authorised representative of an Australian Financial Services Licensee. The promoter holds a licence in his or her own right. The licence allows the promoter to market and sell specific Management Investment Scheme (MIS) interests as an agent of the Responsible Entity for the MIS.
The MIS is the subject of a product ruling. A product ruling sets out the Commissioner of Taxation’s opinion about the way in which identified taxation provisions apply to a defined class of entities. In particular the ruling typically provides that participants who fall within the class of entities are able to claim deductions for fees paid under agreements with the MIS manager on the basis that they carry on a business. That ruling is subject to certain conditions which are referred to later.
b.The promoter and/or associates (Tier 2 participants) lodge application forms and enter management agreements with the manager of the MIS as a partnership. Note that some Tier 2 participants did not sign any MIS or loan documentation, or become subject to the rights and obligations under the agreements in any other way.
c.To fund the investment in the MIS or project, Tier 2 participants enter into loan agreements with a specified financier (Financier) associated with the MIS.
d.The Promoter arranges to pay ongoing loan costs to the Financier out of the promoter trust account.
e.The promoter invites other individuals or entities to invest in the arrangement (Tier 3 participants). Some participants were members of both Tier 2 and Tier 3 partnerships.
f.The Tier 3 participants do not sign any of the application forms, or enter into management or loan agreements. They are not legally bound by them in any way. But, as they are advised that they are a partner of a partnership carrying on a business and entitled to claim deductions for partnership losses arising from that business. Tier 3 participants may or may not have entered into any partnership agreements.
g.The promoter applies for an Australian Business Number (ABN) and a tax file number (TFN) on behalf of the purported Tier 2 partnerships.
h.The purported Tier 2 partnerships make a claim for GST input tax credits on the basis that the GST has been incurred for a creditable purpose in carrying on an enterprise business (business in this case). The resulting refund is paid into the promoter trust account.
i.The purported Tier 3 partnership losses are apportioned and allocated by the promoter to the participants. The purpose of participating in the partnership is to gain access to losses sufficient to reduce the participant’s taxable income to the level at which the 30% marginal tax rate applies.
j.Tier 3 participants claimed a partnership loss resulting against their ordinary income, thus reducing their tax liability. The resulting tax refunds are also paid into the promoter trust account.
k.The Responsible Entity pays the promoter commission and marketing fees, based on a percentage of the total amount invested by the promoter via the purported Tier 2 partnerships.
l.The commission fees, input tax credits refunded, and taxation refunds are collectively used to either:
∙pay some of the Tier 2 participants who entered into the arrangement as a fee for services,
∙make part repayments on the loans entered into with the Financier,
∙fund unknown overseas activities, and/or
∙pay promoter expenses.”[22]
[22] T documents; T15 at 201-202
The Product Rulings, to which the Commissioner referred, were PR2006/8 (Income tax: Gunns Plantations Limited Woodlot Project 2006 ‘2007 Growers’), PR2004/116 (Income Tax: Great Southern Plantations 2006 Project – (Pre 30 June Growers)) and PR2007/7 (Income tax: Great Southern 2007 High Value Timber Project (2007) Growers).[23] Each Product Ruling was a Public Ruling expressing how, in the Commissioner’s opinion, certain provisions of the taxation law would apply to defined classes of entities. PR2007/7 applies to those entities accepted to participate in the Great Southern 2007 High Value Timber Project and who have executed the relevant project agreements between 14 February and 30 June 2007. PR2006/8 applies to entities who entered what is known as the Gunns Plantations Woodlot Project 2006 on or after 1 July 2006 and before 30 June 2007 for the purpose of staying in the scheme until it is completed and for deriving assessable income as a result. PR 2004/116 applies to those who entered the Great Southern Plantations 2006 Project between 15 December 2004 with the purpose of staying in the arrangement until it is completed for the purpose of deriving assessable income.
[23] T documents; T3-5 at 49-104
Reference is made in the Position Paper to Tier 2 and Tier 3 participants. Tier 2 participants, and so Tier 2 partnerships, consisted of a Promoter and either a direct Associate of the Promoter and/or a non-associate. Loan and scheme documentation was largely executed by two entities from the same group. A Tier 2 partnership would apply for an ABN and a TFN and claim input tax credits under the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). The resulting refund would be paid into the Promoter’s trust fund. Tier 2 participants purportedly assigned losses to the Tier 3 participants who might, or might not, have completed the MIS or loan documentation.
Tier 3 participants were purportedly allocated to partnerships that were formed at some time before or after the investment documentation was executed, and either before or after the end of the relevant year of income. They did not execute any partnership documentation or agreements or execute any Power of Attorney or agency agreements. Tier 3 participants shared in MIS project investments in nominated, but unequal, shares. Losses were purportedly allocated in sufficient amount to reduce taxable income to the level at which the 30% marginal tax rate applies.
Tier 3 participants were either unaware of loans required to fund the investments, understood that the loans did not impose any obligations on them personally or at all, or that the Promoter obtained and was responsible for their repayment. Tier 3 participants understood that there was no requirement for any up front out-of-pocket cash payments to be made. The only thing required of each participant was that each participant would make a contribution to the promoter of the income tax refund arising from the claim in question. Tier 3 had one of two understandings of what their refund would be used for. Those who were unaware of the loans, thought that they would be used to pay for their investments. Those who knew of the loans thought that the refund was available for use in commodities trading and that the loans would be serviced from those activities.
B. The Commissioner’s decisions
The Commissioner decided that Mr T was a Tier 3 participant in a Partnership Losses Arrangement of the sort I have just described. The reasons for that decision were:
“Tier 3 participants are not considered to be within the class of entities to which the product ruling(s) apply, as they have not executed the MIS documentation as required, or become subject to the rights and obligations arising under the scheme documentation in any other way.
There is no evidence that partnership deeds were ever executed or that a valid power of attorney was ever granted. There is a complete lack of evidence of any relationship between the supposed partners. You are not a member of a partnership carrying on business at any time.
Any expenditure incurred or paid, before or after 30 June of the relevant year, by you to the Promoter or their associated entities would not be deductible pursuant to the product ruling because any payment would not be pursuant to scheme obligations arising from the scheme arrangements as set out in that ruling.
Alternatively, if Tier 2 partnerships are valid, losses cannot be transferred to Tier 3 participants as any loss attributable to an assigned interest is deductible to the assignor in the capacity as trustee for the trust estate of the assigned interest. Any such loss therefore is incurred by the trust estate and is subject to Division 6 of the ITAA 1936. No deduction is allowable to the assignee in the year in which the partnership loss is incurred (see Taxation Ruling No. IT 2608).
Alternatively, Part IVA of the ITAA 1936 is likely to apply to cancel any tax benefit that may arise.
For an assignment of an interest to be effective it needs to be an assignment of present property, that being, a share of the partner’s interest in the partnership which carries with it the right to a proportionate share of future income attributable to that interest. Furthermore, the net income of the partnership attributable to that interest is derived beneficially by the assignee. (FC of T v Everett 80 ATC 4076)
Consequently the deductions in relation to the partnership losses of $580,290 and $416,495 for the years ended 2006, 2007 are disallowed and your returns will be amended accordingly by the Commissioner.”[24]
[24] T documents; T15 at 209-210
C.The assessments
C.1Amended assessments of income tax
The Commissioner issued amended assessments of income tax for each of the 2006 and 2007 income years on 3 June 2010 and 9 June 2010 respectively.[25] The information they contained is, in summary:
[25] T documents; T18 at 245 and T19 at 246
Year
Previous taxable income
Amended taxable income
Amended assessable tax payable
Difference in liability
Shortfall interest charge
Amount owing
2006
$22,397.00
$602,687.00
$263,343.89
$272,048.24
$60,216.52
$332,264.76[26]
2007
$28,030.00
$444,525.00
$180,132.25
$183,353.47
$21,250.70
$204,604.17[27]
[26] T documents; T18 at 245
[27] T documents; T19 at 246
C.2 Assessments of penalty
The Commissioner assessed penalties on the basis that Mr T had made a statement in each of his 2006 and 2007 returns that was false and misleading in a material particular. That statement consisted of his claiming partnership losses. As a result, he had a shortfall amount in each income year. That meant that his base penalty amount was assessed on a percentage of a shortfall amount in each income year. In making those statements, the Commissioner decided that Mr T had been reckless. Therefore, the relevant percentage to apply to the shortfall amounts was 50%. The Commissioner had taken this view even though he understood that Mr T had stated that he had not lodged the returns. The Commissioner decided that:
“… the behaviour of the tax agent is effectively attributed to the taxpayer. The tax agent engaged in misleading or deceptive conduct when the tax agent falsely witnessed applications for loan documentations in forestry products and powers of attorney. MT2008/1 provides that there is a higher standard of care applicable for a person with expert tax knowledge. The facts in BRK (Bris) Pty Ltd v Federal Commissioner of Taxation 2001 ATC 4111 also illustrate that the standard of care expected of a tax agent will be measured against that of a reasonable tax agent in the same circumstances.
∙You stated at the interview of 25 June 2009 that you did not sign any documentation with regard to MIS investment for 2006 and 2007 financial years.
∙You did not seek any independent advice from other professionals.
∙You said that you went to the ATO website to look at information regarding product rulings and MIS.
∙You appointed …[Ms Tagent] as your tax agent for her to lodge your income tax returns. You stated that at the interview you attended with … [Ms Tagent] she gave you Great Southern PDS with a DVD to show – where trees are located.
∙You stated that the signature on the (partnership) schedule presented to you, by the officers of the ATO, at the interview on 25 June 2009 was not yours.
∙You did not make any enquiries to follow up on your MIS investments and received no progress reports of investments.
∙You were introduced to … [Ms Tagent] during the 2005/06 year and she lodged your income tax return for the year ended 30 June 2006 in February 2007. You claimed a MIS investment through a partnership loss in 2006 financial year. You were aware that the money (tax refund) was directed into … [Ms Tagent’s] trust account. … [Ms Tagent] lodged your income tax return for the year ended 30 June 2007 in October 2007.
∙You received a low income tax offset of $478.80 you were not entitled to for the year ended 30 June 2007.
It is considered that the shortfall amount occurred due to recklessness, therefore the penalty amount payable (base penalty amount (BPA)) will be imposed on this shortfall amount at the rate of 50%.”[28]
[28] T documents; T15 at 213-214
Relying on s 284-225 of Schedule 1 to the TAA and Mr T’s voluntary disclosure after he had been notified of the audit, the Commissioner then reduced that base penalty amount by 20%. He reduced it further so that it was, in effect, an 80% reduction to reflect those taxpayers who, unlike Mr T, had been given an opportunity to make a voluntary disclosure before being given notice of an audit. Mr T had been among those taxpayers chosen for audit so that the Commissioner could come to a view on purported partnership participation in MIS arrangements. After coming to a view, Taxpayer Alert 2009/13 had been issued on 21 May 2009. The Commissioner ultimately imposed a tax shortfall penalty amount for the 2006 income year of $27,293.80 and for 2007 an amount of $18,335.30.[29]
[29] T documents; T20 at 247-248
OUTLINE OF SUBMISSIONS
In outline, Mr T’s submissions centred on his contention that the return lodged by Ms Tagent for the 2007 income year had not been lodged with his authority. He had not given her a written authority as required by s 388-65 of Schedule 1 to the TAA. Relying on [26] and [27] of the Law Administration Practice Statement PS LA 2008/11 issued by the Commissioner,[30] Mr T submitted that an authority given to her in a previous year was not an enduring authority. As the return had not been lodged with his authority, the Commissioner could not make an assessment upon it.
With regard to the amended assessments issued in relation to both the 2006 and 2007 income years, he submitted that, in making them, the Commissioner had not complied with the relevant provisions of the taxation law. In relation to the amended assessment for both income years, Mr T submitted that the Commissioner had not served it upon him as required by s 174(1) of ITAA36. Therefore, the process of making the amended assessments was incomplete and they are invalid.
Mr T also submitted that the assessments had not been properly made as they had not specified the amount of his taxable income as assessed by the Commissioner and the amount of tax payable on that taxable income. Mr T understood that the Commissioner had changed his view that he had earned taxable income under s 8-1 of the Income Tax Assessment Act 1997 (ITAA97) to a view that Part IVA and s 177F of ITAA36 were applicable.
Mr T also submitted that the amended assessments are invalid due to the operation of the doctrine of estoppel. He also made submissions about Part IVA of ITAA36 but the Commissioner indicated that he does not rely on Part IVA.
AN OUTLINE OF Mr T’s EVIDENCE
Lodgement of return for 2006 income year
Mr T said that he had first heard about MISs in 1999 from friends and colleagues but did not feel prepared to include an MIS in his portfolio until some time in or about 2005. He did his own research on the Internet and, after a few months, decided to discuss the matter with Ms Tagent of Tagent and Associates Pty Ltd. She was a registered Tax Agent and an Authorised Representative of Great Southern. Ms Tagent, Mr T said, explained the structure of the investment and confirmed that it was a very sound investment. The investments were known and endorsed by Great Southern Plantation, Great Southern Finance, Directors of the Great Southern Group, the ATO, Great Southern authorised representative, financial advisers, legal advisers and tax accountants. She pointed to a successful investment history of some seven years, Mr T said.
Mr T continued:
“8. Ms … [Tagent] explained that her clients invested in MIS projects directly or utilising so called partnership structure with managing partners and co-partners. Managing partners with authority had the ability to bind co-partners to meet obligations arising from contractual transactions. MIS applicants could accordingly create binding obligations for co-partners to repay finance that partner-applicants had obtained for the purpose of the woodlot acquisition. All partners could therefore claim s 8-1 ITAA97 deductions for liability arising from woodlot finance.
9.She managed her clients’ paperwork for the partnerships. Ms …[Tagent] recommended using partnership structure for my projects. I wanted to participate, but did not have a preference (direct or partnership) at that time and accepted her recommendation. A product ruling applied to individuals and partners in a partnership.”[31]
[31] A documents at 2
He said that he became a member of the L&T “… partnership to manage my MIS project for the 2006 income year. With the consultation of Ms …[Tagent] we agreed on the type of investment and amount to be invested ($580,290).” Against “investment type”, Mr T included a footnote referring to PR2004/114.[32] He continued:
“My wife … and I asked Ms …[Tagent] to manage our Tax returns. There was no signed contract with Ms …[Tagent]. The agreement was that she would prepare the ITR’s based on information provided by us. We review the draft versions of the ITRs, and make changes if required. When the ITR’s were ready we would authorise (by signing the relevant approved forms) and only then Ms …[Tagent] would submit the tax return to the ATO.”[33]
[32] A documents at 2
[33] A documents at 3
Mr T acknowledged that he authorised Ms Tagent to lodge his return for the 2006 income year. He also acknowledged that he had claimed partnership losses in that return and had based those losses on the L&T partnership’s “Special Purpose Financial Report”.
Lodgement of return for 2007 income year
In relation to the return for the 2007 income year, Mr T said:
“15. On or about August 2007 we discussed our 2007 Tax returns with Ms … [Tagent]. We were told that the ATO is questioning the way partnership losses were claimed in the Tax returns. We decided not to include partnership losses in our 2007 tax returns. We provided information related to our tax returns to Ms … [Tagent] without partnership losses.
16.On 5 October 2007 Ms … [Tagent] presented draft versions of 2007 ITRs for Mrs … [T] and … [Mr T]. Both Tax returns had errors and were not correct e.g. they had partnership losses.
17.We did not authorise the Tax Returns and instructed Ms …[Tagent] to fix them.
18.Ms …[Tagent] was asked to address the issues and finalise my wife’s and my Tax Returns.
19.I kept monitoring the progress of our Tax returns. However, I had been very busy with … work. …
20.In or about May 2008, taking into account ATO’s concern about partnership structure, notwithstanding Great Southern Executive Director’s opinion about validity of our partnerships, I decided to invest directly in the MIS project.
21.Therefore, if I knew about ATO’s concern I would most definitely invest directly in 2006 and 2007 income years, too. There was no [sic] any benefit or compelling reason to utilise partnership structure.
22.On 11 November 2008 Ms …[Tagent] finally presented updated versions of 2007 ITR’s without partnership losses. My Tax return still had some errors and was not correct e.g. wrong mobile phone and vehicle deductions.
23.On 12 December 2008 Ms …[Tagent] advised me that my 2007 return had been lodged without my signature. She stated that:
‘Will email adjustments on your tax return this afternoon, once I’ve got everything to ASIC.’”[34]
[34] A documents at 3-4 (footnotes omitted)
Mr T’s subsequent steps
Mr T then took steps, he said, to work out how to proceed. He decided that the best thing to do was to cancel the first return and lodge a fresh one. Ms Tagent agreed to work on the return and, he said, assured him that she would fix it. Mr T sought other advice but rejected advice he was given by an accountant and by the ATO to amend the return that had already been lodged. On 20 March 2009, Ms Tagent lodged Mrs T’s 2007 return without the partnership losses with the taxpayer’s authority. He did not, Mr T said, authorise her to lodge his “updated 2007 Tax return” as it still had some errors. In approximately April 2009, Mr T asked Ms Tagent to correct the incorrect deductions in the “updated ITR” so that he could authorise it.
Mr T said that he had tried to recover material facts related to his partnerships, loans, payments and the like. He has been unsuccessful in his efforts to obtain them from Ms Tagent or from the liquidators of Tagent and Associates Pty Ltd.
CONSIDERATION: taxpayer generally carries burden of proof
The Administrative Appeals Tribunal Act 1975 (AAT Act) applies in relation to the review of reviewable objection decisions such as those made by the Commissioner. Section 25(3)(c) of the AAT Act permits an enactment providing for applications to be made to the Tribunal to “… specify conditions subject to which applications may be made.” Section 14ZZK of the TAA provides, in so far as it is relevant in this case:
“On an application for review of a reviewable objection decision:
(a)the applicant is, unless the Tribunal orders otherwise, limited to the grounds stated in the taxation objection to which the decision relates; and
(b)the applicant has the burden of proving that:
(i)if the taxation decision concerned is an assessment (other than a franking assessment) – the assessment is excessive; or
(ii)-(iii)…”
What the burden means
Referring to a similar burden formerly imposed on the taxpayer by s 190(b) of ITAA36, Mason J said in Gauci v Federal Commissioner of Taxation[35] (Gauci):
“ The Act does not place any onus on the Commissioner to show that the assessments were correctly made. Nor is there any statutory requirement that the assessments should be sustained or supported by evidence. The implication of such a requirement would be inconsistent with s. 190 (b) for it is a consequence of that provision that unless the appellant shows by evidence that the assessment is incorrect, it will prevail.”[36]
[35] (1975) 135 CLR 81; Barwick CJ and Jacobs JJ; Mason J dissenting
[36] (1975) 135 CLR 81 at 89 and approved by Brennan J in Federal Commissioner of Taxation v Dalco [1990] HCA 3; (1990) 168 CLR 614; 90 ALR 341; 20 ATR 1370; 64 ALJR 166; 90 ATC 4088 at 624; 346-347; 1375; 170; 4,093
His Honour also explained the rationale for imposing a burden upon the taxpayer when he said:
“… There is nothing inherently unfair in the provision which places the onus on the taxpayer to prove his case when the purpose for which an asset was acquired depends so much on his intentions and on circumstances of which he, rather than the Commissioner, has comprehensive knowledge.”[37]
[37] (1975) 135 CLR 81 at 89
Standard of proof unaltered: balance of probabilities
Section 14ZZK does not alter the standard of proof that generally applies in the Tribunal. That means that a person who bears a burden of proof may meet it by producing to the Tribunal evidence and other material that is relevant and probative and that satisfies it of the existence or non-existence of relevant factual issues on the balance of probabilities rather than simply on the basis of possibilities.
How a taxpayer may satisfy the burden
The case of McCormack v Federal Commissioner of Taxation[38] illustrates the nature of a taxpayer’s task in satisfying the burden. It does so in a case in which the Commissioner had treated the net profit from the sale of a property as assessable income on the basis that it arose from the sale of a property Mrs McCormack had acquired for the purpose of profit-making by sale within the meaning of s 26(a) of ITAA36 as it was then in force. Gibbs J explained Mrs McCormack’s task:
“… The taxpayer bears the burden of proving that the assessment was excessive. To discharge that burden in a case such as the present he must prove affirmatively, on the balance of probabilities, that the property was not acquired for the purpose of profit-making by sale. The burden may be discharged by drawing inferences from the evidence. In some cases in which all the relevant facts are known, and there is no material upon which it might properly be concluded that the property was acquired for the relevant purpose, the inference may properly be drawn that the property was not acquired for the relevant purpose. But it is not enough, even when all the facts are known, that there is no material upon which it may be concluded that the property was acquired for the purpose mentioned in s. 26(a). If a taxpayer can succeed, simply because there is no evidence from which it can be concluded that the relevant purpose existed, that must mean that the burden of proving the existence of that purpose lies on the Commissioner. That in my respectful opinion would be to invert the onus of proof. The taxpayer will succeed if the proper inference from the evidence is that the property was not acquired for the relevant purpose, but if there is no evidence as to the purpose for which the taxpayer acquired the property the appeal must fail.”[39]
[38] [1979] HCA 18; (1979) 143 CLR 284; 23 ALR 583; 9 ATR 610; 53 ALJR 436; 79 ATC 4111
[39] [1979] HCA 18; (1979) 143 CLR 284; 23 ALR 583; 9 ATR 610; 53 ALJR 436; 79 ATC 4111 at [11]; 303; 597; 443; 622; 4,121
If all of the material facts were known and the amount of a taxpayer’s taxation liability turned on the application of the law to those facts, the taxpayer could discharge the burden of proof by establishing that the Commissioner had erroneously included in the assessed taxable income an amount that should not have been included.[40]
[40] Federal Commissioner of Taxation v Dalco [1990] HCA 3; (1990) 168 CLR 614; 90 ALR 341; 20 ATR 1370; 64 ALJR 166; 90 ATC 4088 at 625; 347; 1375-6; 170; 4094 per Brennan J
It is open to the taxpayer to attack the Commissioner’s power to make an assessment[41] or the calculation of the amount of an assessment. If the taxpayer chooses to attack the calculation of the amount of the assessment:
“… mere error in the formation of that judgment by the Commissioner does not warrant the setting aside of the amount assessed. Given the validity of the exercise of the power to make an assessment …, the ultimate question is whether the amount of the assessment is excessive. The amount of the assessment might not be excessive in fact, though the reasons which led to the assessment were erroneous. …”[42]
[41] McAndrew v Federal Commissioner of Taxation (1956) 98 CLR 263; 30 ALJR 464 at 270-271; 465-466 per Dixon CJ, McTiernan and Webb JJ
[42] Federal Commissioner of Taxation v Dalco [1990] HCA 3; (1990) 168 CLR 614; 90 ALR 341; (1990) 20 ATR 1370; (1990) 64 ALJR 166; 90 ATC 4088 at 623; 345; 1374; 169; 4092 per Brennan J
Therefore, merely establishing on the balance of probabilities that the Commissioner has made an error cannot satisfy the taxpayer’s burden of proof under s 14ZZK(b)(i) in relation to an assessment for the burden is to prove that “the assessment is excessive”. The point was made in Dalco:
“… A taxpayer who shows on the facts that are known a mere error by the Commissioner in assessing the amount of the taxpayer’s taxable income does not show that his objection should have been allowed or that the appeal against the assessment must be allowed. …”[43]
No burden of proof on Commissioner and no obligation to put forward material establishing a particular view
[43] [1990] HCA 3; (1990) 168 CLR 614; 90 ALR 341; (1990) 20 ATR 1370; (1990) 64 ALJR 166; 90 ATC 4088 at 625; 347; 1375-6; 170; 4094 per Brennan J with whom Mason CJ, Dawson, Gaudron and McHugh JJ agreed
At [44]-[45] above, I have referred at to passages from the judgment of Mason J in Gauci, in which he set out the consequences of a taxpayer’s carrying the burden of proof. I refer also the case of Galea v Commissioner of Taxation,[44] in which Hill J said:
“ To the extent that the applicant seeks to rely upon the description of what the Commissioner did here as being an attempt to mount a positive case, it is not clear to me at all why this has any relevance. As is clear from Dalco, supra, and as the tribunal itself said, it was not necessary for the Commissioner to seek to establish affirmatively that the applicant’s assessable income was at least a particular figure. The fact that the Commissioner sought so to do and failed has no bearing, at the end of the day, on the question whether the applicant has discharged the onus of showing, as he is required by s 190(b) of the Act to show, that the assessment is excessive. The Commissioner’s failure to establish a positive case, if that is what he sought to do, leaves the tribunal in no different position than it would have been in if the Commissioner had not sought at all to advance a positive case.”[45]
[44] [1990] FCA 456; (1990) 90 ATC 5060; 21 ATR 1108
[45] [1990] FCA 456; (1990) 90 ATC 5060; 21 ATR 1108 at [34]; 5,067; 1116 See also Vu v Commissioner of Taxation [2006] FCA 889; (2006) 63 ATR 341 at [9]; 344 per Finn J
I would add that the imposition of the burden of proof upon the taxpayer removes any obligation on the Tribunal of the sort identified in Minister for Immigration and Citizenship v SZIAI[46] (SZIAI). That was an obligation to make an obvious inquiry about a critical fact, when that inquiry could easily be made.[47] Section 14ZZK of the TAA clearly places the responsibility for that entirely in the hands of the individual and removes it from the Commissioner and so, on review, from this Tribunal. Nothing else changes, though. The Tribunal’s task on review continues to be to reach the correct or preferable decision. The rules of procedural fairness continue to apply if the Commissioner should choose to obtain further information.
CONSIDERATION: the relevance of a duly made return to a valid assessment
[46] [2009] HCA 39; (2009) 259 ALR 429; 111 ALD 15; 83 ALJR 1123; French CJ, Gummow, Hayne, Heydon, Crennan, Kiefel and Bell JJ
[47] [2009] HCA 39; (2009) 259 ALR 429; 111 ALD 15; 83 ALJR 1123 at at [25]; 436; 21; 1129 per French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ and at [52]; 441-442; 27; 1133 per Heydon J to like effect on the facts.
The applicant’s contentions
Mr T submitted that the return lodged for the 2007 income year is a nullity because he did not authorise Ms Tagent to lodge it. For the reasons that follow, I do not accept Mr T’s submission and have decided that it was lodged with his authority. Although I am not required to do so, I have set out the practical consequences of my reaching the contrary decision and deciding that the return was a nullity. I have done that lest Mr T think that a finding that the return was a nullity would have meant that the Commissioner could not have made an assessment of his income tax and that he would not have been subject to any type of penalty. The practical consequences are set out in Attachment A.
The statutory provisions
The validity of an assessment “… shall not be affected by reason that any of the provisions of this Act [i.e. ITAA36] have not been complied with.”[48] Section 177(1) goes on to provide:
“The production of a notice of assessment, or of a document under the hand of the Commissioner, a Second Commissioner, or a Deputy Commissioner, purporting to be a copy of a notice of assessment, shall be conclusive evidence of the due making of the assessment and, except in proceedings under Part IVC of the Taxation Administration Act 1953 on a review or appeal relating to the assessment, that the amount and all the particulars of the assessment are correct.”
Are there circumstances in which an assessment’s validity may be questioned?
[48] ITAA36; s 175
A. General principles
In George v Federal Commissioner of Taxation,[49] the High Court stated:
“… The clear policy of s 177 is to distinguish between the procedure or mechanism by which the taxable income and tax is ascertained or assessed on the one hand and on the other hand the substantive liability of the taxpayer. The former involves the due making of the assessment. The production of the notice of assessment is conclusive evidence of the due making of that assessment. It would, for example, be absurd to suppose that in an action brought by the commissioner under s. 209 to recover unpaid tax due upon such an assessment as those now under appeal, evidence must be given for the plaintiff that the right officer was not satisfied under s 167(b) and formed a judgment as to the amount of the income to be taxed. … Obviously the ‘due making of the assessment’ was intended to cover all procedural steps, other than those if any going to substantive liability and so contributing to the excessiveness of the assessment, the thing which is put in contest by an appeal.”[50]
[49] [1952] HCA 21; (1952) 86 CLR 183; Dixon CJ, McTiernan, Williams, Webb and Fullagar JJ
[50] [1952] HCA 21; (1952) 86 CLR 183 at [15]; 207 Section 167(b) of ITAA36 provided that, “If … the Commissioner is not satisfied with the return furnished by any person …, the Commissioner may make an assessment of the amount upon which, in his judgment, tax ought to be levied, and that amount shall be the taxable income of that person for the purposes of …”. Section 166 was drafted in terms compatible with its modern counterpart.
B. Recognised exceptions
The generally accepted exceptions to the protection afforded an assessment by s 175 are twofold. One is a tentative or provisional assessment and conscious maladministration or bad faith in the making of an assessment.
B.1 Tentative or provisional assessment
The reason why a tentative or provisional assessment is not afforded protection is because it is not an “assessment” for the purposes of s 175. In their judgment in Federal Commissioner of Taxation v Futuris Corporation Limited,[51] the majority explained:
“ The essential consideration here was explained as follows by Davies J in Stokes v Federal Commissioner of Taxation …[[52]]:
“ Because the making of an assessment involves the determination and fixing of the taxpayer’s liability to tax, subject to the taxpayer’s right to object and to seek administrative review or to appeal to this court, a process which fails to specify what is the amount of the taxable income which has been assessed and what is the tax payable thereon is not an assessment for the purposes of s 166 or of s 170 of the Act.’”[53]
[51] [2008] HCA 32; (2008) 237 CLR 146; 247 ALR 605; 82 ALJR 1177; 69 ATR 41; [2008] ATC 20-039; Gummow, Kirby, Hayne, Heydon, and Crennan JJ
[52] (1996) 32 ATR 500 at 506; affd Federal Commissioner of Taxation v Stokes (1996) 72 FCR 160
[53] [2008] HCA 32; (2008) 237 CLR 146 247 ALR 605; 82 ALJR 1177; 69 ATR 41; [2008] ATC 20-039 at [50]; 163; 617; 1189; 56; 8,505
The same would apply to an amended assessment made under s 170. There is no suggestion that the Commissioner has made a tentative or provisional amended assessment in this case. There is clearly a document that, on its face, shows that the Commissioner has made an amended assessment of the amount of the applicant’s taxable income and of the tax payable on that taxable income.
B.2 Conscious maladministration or exercise of powers in bad faith
The second exception to the protection afforded by s 175 would arise if the Commissioner or his officers were to engage in conscious maladministration or exercise the powers in bad faith. Mere failure to comply with the provisions of the taxation law in making an assessment would not be enough to lose the cloak of the protection for it is not within the scope of bad faith. Conscious maladministration or the exercise of powers in bad faith would, however, be in the scope of bad faith for it would amount to a deliberate failure to administer the law according to its terms. As the majority explained in Futuris, a member of the Australian Public Service:
“… who knowingly acts in excess of that officer’s power may commit the tort of misfeasance in public office … Members of the Australian Public Service are enjoined by the Public Service Act (s 13) to act with care and diligence and to behave with honesty and integrity. This is indicative of what throughout the whole period of the public administration of the laws of the Commonwealth has been the ethos of an apolitical public service which is skilled and efficient in serving the national interest. …”[54]
[54] [2008] HCA 32; (2008) 237 CLR 146; 247 ALR 605; 69 ATR 41; 82 ALJR 1177; 2008 ATC 20-039 at [55]; 164; 618; 57; 1190; 8,506
Their Honours went on to conclude:
“… These considerations point decisively against a construction of s 175 which would encompass deliberate failures to administer the law according to its terms.
Such failures manifest jurisdictional error and attract the jurisdiction to issue the constitutional writs. To the extent that there is any indication to the contrary in what was said by Mason and Wilson JJ in FJ Bloemen Pty Ltd v Federal Commissioner of Taxation ... [(1981) 147 CLR 360 at 378] that should not be followed.
It should be added that, with respect to the remedy of injunction, what was said in the joint reasons in Plaintiff S157/2002 v The Commonwealth … [(2003) 211 CLR 476 at 508 [82]] indicates that injunctive relief clearly is ‘available for fraud, bribery, dishonesty or other improper purpose’.”[55]
[55] [2008] HCA 32; (2008) 237 CLR 146; 247 ALR 605; 69 ATR 41; 82 ALJR 1177; 2008 ATC 20-039 at [55]-[57]; 165; 618; 57; 1190; 8,506
Establishing conscious maladministration is not an easy task. Mere inadvertence in administering the law is insufficient to take an assessment outside the scope of s 175. That is clear from Futuris where the majority said that:
“ Allegations that statutory powers have been exercised corruptly or with deliberate disregard to the scope of those powers are not lightly to be made or upheld. …”[56]
It has since been underlined by the Full Court of the Federal Court in Marijancevic v Mann:[57]
“… Before it can be said that an assessment has not been made bona fide, it must be shown that there was ‘conscious maladministration’ of the assessment process or the ITAA36 (Futuris at [25], [52]) or some deliberate failure to administer the law according to its terms (Futuris at [55]).”[58]
[56] [2008] HCA 32; (2008) 237 CLR 146; 247 ALR 605; 69 ATR 41; 82 ALJR 1177; 2008 ATC 20-039 at [60]; 165; 618; 58; 1191; 8,506
[57] [2008] FCAFC 161; 73 ATR 709; Ryan, Kenny and Stone JJ
[58] [2008] FCAFC 161; 73 ATR 709 at [13]; 717-718
On the evidence that I have, there is no suggestion that the assessments have not been made in good faith in any sense at all. Even if it were the case that there had been an absence of good faith and that the exceptions to the protection afforded by s 175 were made out, remedies in the form of constitutional writs are not within the power of the Tribunal to give. They come within the power of the High Court by means of the constitutional writs under s 75(v) of the Constitution or, through the same means but by virtue of the operation of s 39B of the Judiciary Act 1903, of the Federal Court.
B.3 Are there other exceptions?
The case of Woods v Deputy Commissioner of Taxation[59] required Porter J to consider whether summary judgment should have been entered for the Commissioner when he sued Mrs Woods for the income tax payable on amended assessments together with interest on those amounts. Mrs Woods had challenged the validity of the amended assessments and had sought a declaration that they were void. She based her challenge, in part, on an argument that the amended assessments had not been made bona fide. That comes within a recognised exception to s 177 and depended on the resolution of evidentiary issues.
[59] [2011] TASSC 68
Mrs Woods also based her challenge on an argument that the person making the amended assessments had not formed the relevant opinion under s 170(2) of ITAA36 and, in any event, the person who had purported to form the relevant opinion, had no authority to do so. That did not come within either of the recognised exceptions. Her argument was to the effect that, the absence of an opinion meant that there was no power to amend the assessment and a challenge could be made otherwise than under Part IVC of the TAA on the basis of jurisdictional error. The formation of an opinion under s 170(2) is a jurisdictional fact, Mrs Woods argued. If there was no opinion, there could be no assessment for, in the absence of the relevant opinion, the power to make an amended assessment was not enlivened. In Woods v Deputy Commissioner of Taxation[60] (Woods), Porter J decided this argument was open and “at least arguable”. It should have been decided before summary judgment was entered for the Commissioner.
[60] [2011] TASSC 68
Mr T has not argued that the Commissioner, or his delegate who made the assessment or amended assessment, has not formed the relevant opinion. What he has submitted is that the return on which the Commissioner or his delegate formed his opinion is not valid in the sense that it was made without his authority. I will now consider whether a return lodged on behalf of an individual without that individual’s authority may be a jurisdictional fact of the sort that would lead to the conclusion that the assessment or amended assessment has not been properly made.
B.3.1 What is a jurisdictional fact?
In Corporation of the City of Enfield v Developments Assessment Commission,[61] Gleeson CJ, Gummow, Kirby and Hayne JJ observed:
“ The term “jurisdictional fact” (which may be a complex of elements) is often used to identify that criterion, satisfaction of which enlivens the power of the decision-maker to exercise a discretion. Used here, it identifies a criterion, satisfaction of which mandates a particular outcome. …”[62]
[61] [2000] HCA 5; (2000) 199 CLR 135; 169 ALR 400; 74 ALJR 490; 60 ALD 342; 106 LGERA 419 at [28]; 148; 409; 496; 351-352; 430
[62] [2000] HCA 5; (2000) 199 CLR 135; 169 ALR 400; 74 ALJR 490; 60 ALD 342; 106 LGERA 419 at [28]; 148; 409; 496; 351-352; 430
A “jurisdictional fact” may be a fact or a state of affairs or even an opinion. Identifying a jurisdictional fact was considered by Finn J in Chu v Telstra Corporation Limited:[63]
“… As was observed by Weinberg J in Cabal v Attorney-General (2001) 113 FCR 154 at 172 there is nothing special about the task of determining whether a fact, or for that matter a state of affairs, is or is not jurisdictional: ‘all the normal rules of statutory construction apply’: see also Timbarra Protection Coalition Inc v Ross Mining NL (1999) 46 NSWLR 55 at 64.”[64]
[63] [2005] FCA 1730; (2005) 147 FCR 505; 89 ALD 39; 42 AAR 100
[64] [2005] FCA 1730; (2005) 147 FCR 505; 89 ALD 39; 42 AAR 100 at [13]; 509; 44; 104
In Timbarra Protection Coalition Inc v Ross Mining NL,[65] Spigelman CJ, with whom Mason P and Meagher JA concurred, expanded on the matters that may be relevant:
“The authorities suggest that an important, and usually determinative,
indication of parliamentary intention, is whether the relevant factual reference occurs in the statutory formulation of a power to be exercised by the primary decision-maker or, in some other way, necessarily arises in the course of the consideration by that decision-maker of the exercise of such a power. Such a factual reference is unlikely to be a jurisdictional fact. The conclusion is likely to be different if the factual reference is preliminary or ancillary to the exercise of a statutory power. The present case is, so far as I have been able to discover, unique in that the one statutory regime contains the same factual reference in both kinds of provisions.”[66][65] [1999] NSWCA 8; (1999) 46 NSWLR 55; 102 LGERA 52; Spigelman CJ, Mason P and Meagher JA
[66] [1999] NSWCA 8; (1999) 46 NSWLR 55; 102 LGERA 52 at [44]; 65; 62
B.3.2 Lodgement of a return may or may not be a jurisdictional fact
It is clear from a reading of ss 166 and 169 of ITAA36 that the Commissioner’s power to make an assessment is not dependent upon a taxpayer’s having lodged a return. Section 169 provides that, where a person is liable to pay tax, the Commissioner may make an assessment of the amount of that tax or an assessment that no tax is payable. As s 166 provides, the Commissioner may make an assessment on the basis of information contained in a return but also “from any other information in the Commissioner’s possession …” or from both a return and that other information. Therefore, the lodgement of a return is not necessarily a jurisdictional fact for it is not required by the Commissioner before he can make an assessment.
Therefore, assuming that the Commissioner did not rely on a return that has been lodged in contravention of what is required by ITAA36, the assessment or amended assessment cannot come within any exception to the principle stated in s 175 of ITAA36 that an assessment’s validity is not affected by reason that any of the provisions of that legislation have not been complied with. If it should be the case that the Commissioner relied only upon the information in a return, then the question whether that return has been lodged in contravention of what is required by ITAA36 would be a jurisdictional fact. That follows from the fact that, although broadly drafted, s 166 limits the sources of information on which the Commissioner may rely in making an assessment. If the Commissioner, or his delegate, has not relied on any source of information specified in s 166, there is no basis for his, or his delegate’s, exercising the power to make an assessment.[67]
[67] That would be consistent with the Commissioner’s having accepted in of Re Kakavas and Federal Commissioner of Taxation [2011] AATA 48; 2011 ATC 10-173, to which I refer at [137]-[141] below, that his assessment had been a nullity when based on a return that had not been duly made.
Was the return for the 2007 income year duly made?
In view of my understanding of the law and assuming, but not finding, that the Commissioner relied only on the information in the return, I must now consider whether the return was duly made with Mr T’s authority.
A.The statutory provisions
Section 3-10(1)(b) of ITAA97 provides that one of a taxpayer’s main obligations is to lodge income tax returns as required by ITAA36. The obligation to lodge a return for a year of income arises under s 161 of ITAA36. The Commissioner gives notice of those who are subject to the obligation and the time within which they must comply with it in the Government Gazette. If the Commissioner thinks fit, he may exempt certain persons from the obligation but exemption does not arise in this case.[68] ITAA36 does not expressly provide for the way in which a taxpayer “lodges” a return. It can be inferred from the provisions of s 161(2) relating to absent or infirm taxpayers, however, that lodgement means “delivery” to the Commissioner. Lodgement may also be by way of electronic means if approved by the Commissioner under s 161A of ITAA36.
[68] ITAA36; ss 161(1) and (2)
Further provision is made for lodgement in Schedule 1 to the TAA. Section 388-50 sets out the criteria that a return must meet in order to be in an approved form. Among those criteria is a requirement that it contain a declaration signed by, in the case of a return, the taxpayer, that the information it contains is true and correct.[69]
[69] TAA; Schedule 1, ss 388-50(1)(b) and 388-60 and see also s 388-75(1) and, in the case of an electronic return, s 388-75(3)(a)
Provision is made for documents, including returns, to be given to the Commissioner in an approved form by the taxpayer’s agent. That provision is made in s 388-65 of the TAA:
“(1) If a return, notice, statement, application or other document of yours is to be given to the Commissioner in the *approved form by an agent on your behalf, you must make a declaration in writing:
(a)stating that you have authorised the agent to give the document to the Commissioner; and
(b)declaring that any information you provided to the agent for the preparation of the document is true and correct.
(2)You must give the declaration to the agent.
(3)You must retain the declaration or a copy of it for:
(a)5 years after it was made; or
(b)a shorter period determined by the Commissioner in writing for you; or
(c)a shorter period determined by the Commissioner by legislative instrument for a class of entities that includes you.
(3A)A determination under paragraph (3)(c) may specify different periods for different classes of entities.
(4)You must produce the declaration or copy if requested to do so within that period by the Commissioner.
(5)The agent must not give the document to the Commissioner before you make the declaration.
(6)You must sign the declaration.”
If an agent gives a return to the Commissioner on the taxpayer’s behalf in paper form, the document must contain, if it so requires, a declaration made by the taxpayer with the taxpayer’s signature and, again if it so requires, a declaration made by the taxpayer’s agent with the agent’s signature.[70] If an agent lodges the return electronically, it must contain the agent’s declaration with the agent’s electronic signature.[71] The agent’s declaration is the subject of s 388-70 which provides:
“If an agent gives a return, notice, statement, application or other document to the Commissioner in the *approved form on behalf of another entity, the agent must, if the document so requires, make a declaration in the approved form stating that:
(a)the document has been prepared in accordance with the information supplied by the other entity; and
(b)the agent has received a declaration from the other entity stating that the information provided to the agent is true and correct; and
(c)the agent is authorised by the other entity to give the document to the Commissioner.”
[70] TAA; Schedule 1, s 388-75(2)
[71] TAA; Schedule 1, s 388-75(3)(b)
Section 164 of ITAA36 provides:
“Every return purporting to be made or signed by or on behalf of any person shall be deemed to have been duly made or with the person’s authority until the contrary is proved.”
The wording clearly places a burden of proof on the person seeking to establish that the return had not been made or signed on his behalf with his authority.[72]
B. The authorities
Mr T relied on two cases. One is R v Justices of Kent,[73] to which reference is made in the other case to which he relied. In that other case, Deputy Commissioner of Taxation (Vic) v Boxshall,[74] the Full Court of the Federal Court considered whether a creditor’s petition naming the Deputy Commissioner of Taxation (DCT) as the petitioning creditor had been properly signed. He had not signed the petition. Instead, it had been signed in his name by another person on his behalf. The Court set out the power of the DCT to present a petition for sequestration of a taxpayer’s estate to recover unpaid income tax. At the time, it was found in s 209 of ITAA36 when read with s 208. Section 47 of the Bankruptcy Act 1966 set out what was required of a creditor’s petition. This had to be read with Rule 12(2) of the Bankruptcy Rules made under that legislation. Among the requirements was that it be made according to a prescribed form. The form had an attestation clause stating that it was “Signed by the petitioner …” in the presence of a named witness. Separate provision was made for a petitioner which was a corporation. Rule 6 provided that strict compliance with the form was not necessary and that substantial compliance, or such compliance as the circumstances of the particular case allowed, was sufficient.
[73] (1873) LR 8 QB 305
[74] [1988] FCA 355; (1988) 19 FCR 435; 83 ALR 175; 19 ATR 1822; Lockhart, Burchett and Gummow JJ
The Court began with an examination of the common law and it is from this passage of the judgment that Mr T has taken [60] of his submission. It reads:
“We refer to the judgment of the English Court of Appeal in Re Prince Blucher; Ex parte Debtor [1931] 2 Ch 70 …
‘… where the court held that no proposal for a composition had been lodged by the debtor within s 16(1) as the words ‘signed by him’ were explicit, signature by the solicitor on behalf of the debtor being impermissible.’”[75]
[75] Footnote omitted
This passage appears more than halfway through the judgment and, I suggest, overlooks the points made by the Court before that. They were:
(1)“At common law, where a person authorises another to sign for him, the signature of the person so signing is the signature of the person authorising it: R v Justices of Kent (1873) LR 8 QB 305 per Blackburn J at 307. …”[76]
(2)“… There are cases in which a statute may require personal signature. …”[77]
(3)“… In some cases concerning some statutes the courts have concluded that personal signature was required. In other cases of other statutes the courts have held that signature by an authorised agent was sufficient: see R v Justices of Kent (supra) …”.[78]
(4)Section 308 of the Bankruptcy Act provided that “Subject to this Act, for the purposes of this Act - … (d) any person may act by his agent duly authorised in that behalf.”[79]
(5)“In our opinion s 308(d) is the statutory source of authority for a petition to sequestrate a debtor’s estate to be signed by a Deputy Commissioner of Taxation either himself or by an agent duly authorised by him for that purpose. We discern no contrary intention to be found in the Bankruptcy Act. Nor do we discern any contrary intention in the concluding words of Form 5 providing for the signature and attestation of the petition.”[80]
[76] [1988] FCA 355; (1988) 19 FCR 435; 83 ALR 175; 19 ATR 1822 at [15]; 438; 178; 1825
[77] [1988] FCA 355; (1988) 19 FCR 435; ATR 188 at [15]; 438; 178; 1825
[78] [1988] FCA 355; (1988) 19 FCR 435; ATR 188 at [15]; 438; 178; 1825
[79] [1988] FCA 355; (1988) 19 FCR 435; 83 ALR 175; 19 ATR 1822 at [19]; 438; 179; 1825
[80] [1988] FCA 355; (1988) 19 FCR 435; 83 ALR 175; 19 ATR 1822 at [21]; 438-439; 179; 1826
Clearly, their Honours were considering the matter by reference to the particular legislation requiring a signature. That had also been the task undertaken by the Court of Appeal in Re Prince Blucher; Ex parte Debtor. It considered whether s 16(1) of the Bankruptcy Act 1914 (UK) required a debtor to sign personally his written proposal for a scheme of composition in satisfaction of his debts. The debtor’s solicitor had signed it and the Court of Appeal decided that the words, “signed by him”, as they appeared in s 16(1) were explicit. Its conclusion was based entirely on the wording of the legislation before it and cannot be extrapolated to become the basis of some broader principle. There is a broader principle, though, and that is that, whether or not a document must be signed by an individual personally will depend upon the interpretation of the statute requiring signature.[81]
[81] See the discussion of Re Prince Blucher; Ex parte Debtor at [1988] FCA 355; (1988) 19 FCR 435; 83 ALR 175; 19 ATR 1822 at [15]; 438; 178; 1825 at [24]; 439; 179-180; 1826-1827.
Application of that broader principle requires me to have regard to s 164 of ITAA36. That broader principle is that, when Mr T’s returns purport to be signed by or on his behalf, they shall be deemed to have been duly made by him or with his authority until the contrary is proved. There has been no suggestion in this case that the return for the 2007 income year did not “… purport… to be made or signed on his behalf …” i.e “to profess by its appearance … to convey; to imply …”[82] that it was “… made or signed by or on his behalf …”. Therefore, it is deemed to have been duly made until Mr T proves, on the balance of probabilities, that it was not.
[82] Chambers 21st Century Dictionary, 1999, reprinted 2004, Chambers
C. Has the return for the 2007 income year been duly made?
Mr T relies on his own statements that he did not authorise Ms Tagent to lodge the return for the 2007 income year, her undated open letter and the course of correspondence between them. As to his own material, Mr T points to a document at A10 of his documents. In the Index to those documents, Mr T gives it a date of 5 October 2007 but the document itself is not dated. Referring to himself and his wife and to the document at A10, Mr T said that “… We provided information related to our tax returns to Ms … [Tagent] without partnership losses.”[83] The document at A10 appears to be a document prepared by Ms Tagent rather than by Mr T. It refers, for example, to tax agent fees paid “for you and your wife, and for your company” but also seeks confirmation from Mr T as to the information it contains. There is no reference in it to the MIS or for any claim for partnership losses.
[83] A documents; at 3, [15]
The course of correspondence shows that a return was submitted by Ms Tagent to Mr T for his approval by means of a letter dated 5 October 2007. It sets out that he is expected to receive a refund in the amount of $185,708.35. The majority of that refund is marked as “For Great Southern Investment” but the remaining $31,634.53 is marked as “Your share”. Mr T’s “share” of his own refund is much smaller than that which will be apportioned to the investment but it is not an insignificant amount. If it is assumed that Mr T did not authorise the return at that time, one wonders why there is nothing in the written material to suggest that he followed up on the errors. Mr T points to the undated letter from Ms Tagent supporting his position but it does not refer to his objecting to anything in the returns she submitted for his approval on 5 October 2007. Her reference is to his having objected to the contents of a draft copy she presented to him in August 2007. She makes no reference to her letter of 5 October 2007, which was written shortly before she lodged the return on 15 October 2007.
Ms Tagent’s letter a year later on 11 November 2008 makes no reference to the correction of any error at all and merely encloses for signature a return in which the partnership losses are not claimed. Ms Tagent’s letter of 12 December 2008 encloses a further copy of a return in that form and, while it acknowledges that the “2007 income tax return” had been lodged in error, makes no reference to when it had been lodged in error. If the two letters are read alone, the December letter could be read as suggesting that the return was lodged without its signature, and so in error, between November 2008 and December 2008. They could also be read as an attempt by Ms Tagent to obfuscate the fact that she had actually lodged the return more than a year earlier and an attempt to keep that fact from Mr T.
It would be tempting to read them that way if it were not for three matters. The first is that, on that view of events, Mr T did not correspond with her at all between 5 October 2007 and 11 November 2008 to follow up on what was happening with his return. He said that he was very busy with his work but, by 11 November 2008, he was clearly out of time for lodgement and it is apparent from his correspondence with the accountant he approached in March 2009 that he was aware that penalties may well be imposed for late lodgement. Why would he not chase Ms Tagent to lodge the return?
The second matter is that Mr T did not point to anything in the undated document A10 or elsewhere to the effect that he had directed Ms Tagent not to claim partnership losses. The information requested and supplied in that document related only to what might be called his personal expenses and investments over which he had control. As they had agreed that she managed the paperwork for the partnerships, he did not have access to that information. In light of that, the omission of any reference to the investment in the MIS is not unexpected. Assuming it was prepared in August 2007, it is as consistent with a view that he had decided to claim partnership losses as it is with a view that he had decided against it.
The third matter is that it is somewhat disingenuous for Mr T to write in his Statement of Facts, Issues and Contentions on which he relied at the hearing, that Ms Tagent advised him on 12 December 2008 that his 2007 return had been lodged without his signature and that she would email adjustments on his return that afternoon. For the previous three months or so, he had already known not only that his return had been lodged but that a refund had been paid on 30 October 2007. Armed with that knowledge, he had done nothing to follow the matter up.
His inaction is, perhaps, understandable for it is clear from his correspondence with the ATO on 2 March 2010 that he still considered that the investment was covered by the Commissioner’s Rulings and that it was only the ATO’s concerns that had made him hesitate. He attached to that correspondence an email sent to Ms Tagent reading “Please see extract from ATO website below which clearly states partnerships can be covered in product rulings?”[84] At the bottom of the email is a passage that appears to have been taken from the ATO’s website regarding Product Rulings but no further reference is given. The relevant passage would seem to be:
“A product ruling will only be given for a homogenous group of taxpayers. The tax consequences of the arrangement will be the same for all participants.
This usually means that income derived from an arrangement will be assessable and the costs of participating in the arrangement will be deductible expenses to the extent specified in the ruling.
This does not mean that the class of persons must all be individuals. Companies and trustees can also enter into a contractual arrangement and will be covered by a product ruling. Also, partners in a partnership may also enter into an arrangement and be included in the class of persons. Income and expenses will then be apportioned to the partners in the usual way.”[85] (emphasis added)
[84] T documents; T16 at 221
[85] T documents; T16 at 222
Bearing all of these matters in mind, the evidence is equivocal. It is consistent with various scenarios. First, it is consistent with the actions of a person who cares enough about his own affairs to ask questions but so distracted by his work that he does not ask other questions he should ask and take the actions he should take. At the same time, it is consistent with the actions of a person who has permitted and authorised Ms Tagent to manage his investment and his tax affairs and to take the steps that she considers appropriate, but who has realised too late that all is not as it should be, has not known what to do and has not set aside time to deal with the issue. Third, it is consistent with the actions of a person who is set upon creating a trail to make his past actions in authorising Ms Tagent to act on his behalf to appear something other than what they were. Left in that state, I conclude that Mr T has not discharged his burden of proof under s 164. The consequence is that his return for the 2007 income year is deemed to have been duly made by operation of s 164 of ITAA36. The validity of the Commissioner’s assessments or amended assessments cannot be challenged on the basis of that the return was not duly made.
C. Consideration
The principles established by the cases are clear. The Commissioner is not estopped in applying the law. Even if that were not the case, I would not be satisfied on the evidence that any representations made by an officer of the ATO led Mr T to decide to invest in the MIS. On his own evidence, Mr T was not party to any discussions between Ms Tagent and an officer of the ATO or to those between that officer and other taxpayers. There is no evidence that their circumstances matched Mr T’s own circumstances, no evidence of what was said and no evidence of anything that was said that suggested that the ATO officer understood that what he might have said would be relied upon by others considering investment in the MIS. In those circumstances, I would not be satisfied that it was reasonable to expect that Mr T would rely on any representation that might have been made by an officer of the ATO. As for any representations made in the Position Paper, the Commissioner is not walking away from them. On the evidence, I am not satisfied that Mr T’s circumstances bring him within the group of persons entitled to claim a deduction. I have already set out my reasons for reaching that view.
Was the Commissioner authorised to issue amended assessments under s 170 of ITAA 36?
A. The submissions
Mr T submitted that the Commissioner was estopped from amending the assessment. He contended that the Commissioner could not now rely on s 170 when he had not made specific reference to it in his reasons for decision in amending the assessments.
B.The statutory provisions: s 170
Item 1 of the Table set out in s 170(1) of ITAA36 sets out the general rule regarding the Commissioner’s power to amend an assessment:
“The Commissioner may amend an assessment of an individual for a year of income within 2 years after the day on which the Commissioner gives notice of the assessment to the individual.”
Item 1 then goes on to set out six qualifications to the general rule and its two year limitation period on the Commissioner’s power to amend and assessment. Of relevance in this case is that in (e):
“if it is reasonable to conclude that any person entered into or carried out a scheme (either alone or with others) for the sole or dominant purpose of the individual obtaining a scheme benefit in relation to income tax from the scheme for that year …”.
The word “scheme” is defined in s 995-1(1) of ITAA97:[113]
“scheme means:
(a)any *arrangement; or
(b)any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise.
Note: …”
An “arrangement” means “… any arrangement, agreement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable (or intended to be enforceable) by legal proceedings.”[114]
[113] ITAA36; s 170(14)
[114] ITAA97; s 995-1(1)
A “scheme benefit” has the meaning given to it by s 284-150 of Schedule 1 to the TAA:[115]
“An entity gets a scheme benefit from a *scheme if:
(a)a *tax-related liability of the entity for an accounting period is, or could reasonably be expected to be, less than it would be apart from the scheme or a part of the scheme; or
(b)an amount that the Commissioner must pay or credit to the entity under a *taxation law for an accounting period is, or could reasonably be expected to be, more than it would be apart from the scheme or part of the scheme.”[116]
[115] ITAA36; s 170(14)
[116] TAA; Schedule 1, s 184-150(1)
A “tax-related liability” is also defined in s 995-1(1) of ITAA97[117] to have the meaning given in s 255-1(1) in Schedule 1 to the TAA:
“A tax-related liability is a pecuniary liability to the Commonwealth arising directly under a *taxation law (including a liability the amount of which is not yet due and payable).
Note 1: …”
Section 265-65 of the TAA provides that a taxation law, or a provision of it, may be excluded from being applied but no such law or provision arises in this case. Various amounts are excluded but they are not relevant.
[117] TAA; s 3AA(3)
C. Consideration
C.1 Notice
Applying these principles to this case, I am satisfied that I have ensured that Mr T has had proper notice of the basis on which the Commissioner amended the assessments beyond the two year time limit. He first did so in his Outline of Submissions dated 16 November 2013 and lodged by email on 18 November 2013. Those submissions were made in response to my giving him leave to do so at the hearing held on 30 October 2013. Mr T responded to them in his further submissions dated and lodged on 16 December 2013.
C.2 Understanding qualification (e) to Item 1 of s 170(1)
The qualification in item (e) to the limits on Item 1 in s 170(1) raises two issues. The first is the reference to “any person” and then to “the individual”. The reference to “any person” may include an “individual” but the reference to “the individual” is a reference to the individual whose assessment the Commissioner may amend under Item 1 of s 170(1). That means that the individual, whose assessment may be amended, need not be the person who entered into or carried out a scheme, either alone or with others, for the sole or dominant purpose of his or her obtaining a scheme benefit in relation to income tax from the scheme for that year.
The second thing to note is that, as Dawson J said in the different context of s 31(1) of the Financial Transactions Report Act 1988, the words “it would be reasonable to conclude” go to the standard of proof to be applied.[118] That expression also appears in other provisions such as s 284-145 of Schedule 1 to the TAA. Section 284-145 provides for the imposition of an administrative penalty when certain criteria are met. Among them is the criterion that “… having regard to any relevant matters, it is reasonable to conclude that: … an entity that (alone or with others) entered into or carried out the scheme, or part of it, and did so with the sole or dominant purpose of that entity or another entity getting a scheme benefit from the scheme …”. That criterion is found in s 284-145(1)(b)(i) and was considered in Federal Commissioner of Taxation v Star City Pty Ltd (No 2).[119] Although in dissent on another issue, Dowsett J considered what was meant by the criterion in s 284-145(1)(b) saying:
“… On a literal construction, the section prescribes an assessment of the adequacy of the available information to support an inference that the relevant purpose existed. Using that approach the decision-maker must decide whether one could reasonably draw that inference, not whether he or she should draw it. The alternative approach is to construe the section as requiring that the decision-maker decide whether the purpose actually existed, acting reasonably, and having regard to all relevant matters.
… I am inclined to the view that the question posed by s 284-145(b)(i) is whether a reasonable person could conclude that the relevant entity had the identified purpose. The language used in the section is not apposite to require an actual decision as to purpose. It rather addresses the availability of an inference. Had Parliament intended that the Commissioner form an actual opinion as to purpose, it would have said so.”[120]
[118] Leask v The Commonwealth [1996] HCA 29; (1996) 187 CLR 579; 140 ALR 1; 70 ALJR 995; Brennan CJ, Dawson, Toohey, Gaudron, McHugh, Gummow and Kirby JJ at 599; 13; 1003
[119] [2009] FCAFC 122; (2009) 180 FCR 448; Goldberg, Dowsett and Jessup JJ
[120] [2009] FCAFC 122; (2009) 180 FCR 448 at [73]-[74]; 465-466
The majority did not address the standard of proof issue considered by Dowsett J. What is clear from his Honour’s judgment and from the wording of both s 284-145(1)(b)(i), with which he was concerned, and qualification (e) to Item 1 of s 170(1) of ITAA36, with which I am concerned, is that the what it is reasonable to conclude must be decided on objective grounds. It is not a subjective test determined by the particular views of the person called upon to decide whether it is reasonable to conclude that the particular situation is so. The fact that the standard of proof is a standard other than that of the balance of probabilities does not alter the fact that a taxpayer carries the burden of proof.
I have set out the definition of a “scheme” at [111] above. Mr T submitted that the Commissioner should have had regard to the matters set out in s 177D in determining whether or not there is a scheme. I do not agree that this is required for s 177D describes those schemes to which Part IVA applies. This is not a case in which Part IVA is relied upon. It has the meaning given to it by s 995-1(1) being “… any arrangement; or … any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise.”
C.3Applying qualification (e) to Item 1 of s 170(1)
In this case, I refer to [23]-[28] above where I have set out the Commissioner’s summary of arrangements underlying Mr T’s investments in Great Southern. There is no material that suggests any modification of that summary is required. I find that Mr T’s name was included, with others, as one of the partners in the L&T partnership, the A&T partnership and the G&S partnership. There is nothing in the material to suggest that those named in those partnerships ever signed a partnership agreement or that they ever agreed amongst themselves to become partners carrying on a business. While I accept that Mr T knew one or two of the people named in each of the partnerships but I do not have any material suggesting that he either knew or had ever met most of them let alone carried on a business with them.
While I accept that each of the L&T, A&T and G&S partnerships was allocated an Australian Business Number (ABN), that allocation does not mean that those persons named as members of those partnerships were carrying on business. Section 41 of the A New Tax System (Australian Business Number) Act 1999 (ABN Act) defines the word “partnership” more broadly. It provides that the word “partnership has the meaning given by section 995-1 of the *ITAA1997.” Section 995-1(1) of ITAA97 provides that:
“partnership means:
(a)an association of persons (other than a company or a *limited partnership) carrying on business as partners or in receipt of *ordinary income or *statutory income jointly; or
(b)a limited partnership.”
Even in view of that broader definition, it is difficult to say that those named in the L&T, A&T and G&S partnerships were in fact partners for there is no evidence suggesting that they were ever in receipt of ordinary income or statutory income jointly or at all. They incurred losses only and the arrangements were geared towards their incurring losses only.
There is no material suggesting that he had signed any application forms or had entered any management or loan agreements. The material that I have points to Ms Tagent’s promoting an “investment opportunity” to Mr T and, apart from providing the cash, his leaving the details of the way in which he could benefit from that investment opportunity to her. As Mr T said, he left all of those matters to her. These matters satisfy me that there was a scheme in the sense of an arrangement, plan, course of action or course of conduct. It was a scheme carried out by Ms Tagent. Whether she did so alone or with others is not necessary to decide.
The next issue to consider is whether Ms Tagent did so for the sole or dominant purpose of Mr T’s obtaining a scheme benefit in relation to income tax. Beginning with the notion of a “tax benefit”, Mr T submitted that he has not received a tax benefit as no amount was allowable as a deduction in either the 2006 or 2007 income years. He referred to the case of Vincent v Commissioner of Taxation[121](Vincent) in support of his submission that there could be no tax benefit when the claimed benefit under the scheme was disallowed under the general provisions of the law. That meant that there was no effective scheme.
[121] [2002] FCAFC 291; (2002) 124 FCR 350; 193 ALR 686; 51 ATR 18; Hill, Tamberlin and Hely JJ
On the face of the matter, Mr T gained a benefit in the first instance because his taxable income was less than it would have been had the arrangement not been in place i.e. had the losses not been apportioned to him under the arrangements that were in place. The case of Vincent does not lead to a different result for it was dealing with a different situation. It considered the issues in the context of Part IVA and more than four years had passed between the Commissioner’s assessment and amended assessment. If the Commissioner wished to amend the assessment, he had to succeed on his argument that Part IVA applied. As in this case, the deductions that Ms Vincent had claimed were not allowable. In her case, they were not allowable under s 51(1) of ITAA36 for they were for the cost of obtaining six calves and she did not carry on a business. In Mr T’s case, they are not allowable because he was not part of a partnership operating a business.
Beyond that point, the two cases differ. In Ms Vincent’s case, the issue revolved around the particular provisions of ss 177F and 177G in Part IVA. Under s 177F(3), the Commissioner may make a determination cancelling a tax benefit that has been obtained or would, but for s 177F, have been obtained by a taxpayer in connection with a scheme to which Part IVA applies. Section 177G permits amendment of the assessment for the purposes of giving effect to s 177F(3). Section 177F(3) sets out four different scenarios in which the Commissioner may make a determination. They assume that the Commissioner has made a determination in respect of the taxpayer in relation to a scheme under Part IVA but they focus on the amount that has been, or would have been, but for the scheme, included as assessable income, the deduction that would have been allowed or allowable, the capital loss that would have been incurred and the amount that would have been allowed, or allowable, as a foreign income tax offset. Section 177F(3)(b) was relevant:
“Where the Commissioner has made a determination under subsection (1) or (2A) in respect of a taxpayer in relation to a scheme to which this Part applies, the Commissioner may, in relation to any taxpayer (in this subsection referred to as the relevant taxpayer):
(b)if, in the opinion of the Commissioner:
(i)an amount would have been allowed or would be allowable to the relevant taxpayer as a deduction in relation to a year of income if the scheme had not been entered into or carried out, being an amount that was not allowed or would not, but for this subsection, be allowable, as the case may be, as a deduction to the relevant taxpayer in relation to that year of income; and
(ii)it is fair and reasonable that the amount or a part of that amount should be allowable as a deduction to the relevant taxpayer in relation to that year of income;
determine that that amount or that part, as the case may be, should have been allowed or shall be allowable, as the case may be, as a deduction to the relevant taxpayer in relation to that year of income”.
Remembering that, unlike this case, more than four years had passed since the Commissioner made the assessment, the Full Court of the Federal Court said:
“… It is clear from s 177F that the question which is raised for determination is the conclusion as to the dominant purpose of a person who entered into or carried out the scheme or part of it. It would be very unlikely that viewed objectively it would be concluded that the Commissioner would wrongly assess and then not amend the assessment for four years Yet, for the Commissioner’s argument to succeed it would be necessary to ask whether, in a case where a deduction was not allowable as a matter of law (for example, as here, because s 51(1) did not operate to give a deduction) it would be concluded that there was a party who entered into or carried out the scheme or a part of it with the dominant purpose of obtaining a benefit consisting of a deduction which was not allowable, but which was ultimately allowed and which, only as a result of inaction was not reversed within the four year limitation period.”[122]
[122] [2002] FCAFC 291; (2002) 124 FCR 350; 193 ALR 686; 51 ATR 18 at [91]; 372
Mr T’s case does not have the added dimension of inaction by the Commissioner. That cannot be taken to have been part of the benefit for which the scheme was conducted. The benefit was limited to the apportionment of what were described as partnership losses. That is a scheme benefit as defined in s 284-150 of Schedule 1 to the TAA.
That brings me to the question whether any person entered into or carried out the scheme for the sole or dominant purpose of Mr T’s obtaining a scheme benefit in relation to income tax for the 2006 and 2007 income years. On the material, there is no apparent reason for entering such an arrangement other than to gain a benefit of the sort described as a “scheme benefit” within the meaning of s 284-150 of Schedule 1 to the TAA as applied by s 170(14). That is so whether Mr T knew it or not. Ms Tagent has not been called, or was not available, to give evidence. In the absence of Ms Tagent, the material points to her carrying out the scheme, whether alone or with others, for the sole or dominant purpose of, among others, Mr T’s obtaining a scheme benefit in relation to income tax from the scheme in the years in which he and others participated in it.
For these reasons, I have decided that it is reasonable to conclude that Ms Tagent, if not other persons, entered into or carried out the scheme I have described for the sole or dominant purpose of Mr T’s (and others’) obtaining a scheme benefit in relation to income tax from the scheme for the 2006 and 2007 income years. That means that exception (e) to Item 1 in s 170(1) of ITAA36 applies and the Commissioner had four years within which to amend the assessments he had issued for the 2006 and 2007 income years. He issued them within that four year period when he issued them on 3 June 2010 and 9 June 2010.
Was a proper determination made under s 177F of ITAA36?
Mr T submitted that the Commissioner had not made a proper determination under s 177F of ITAA36. I have not considered his submission on this point for s 177F relates to schemes under Part IVA of ITAA36 and the Commissioner has not relied on the provisions of that part. My conclusion under exception (e) to Item 1 of s 170(1) that it is reasonable to conclude that a person has entered into or carried out a scheme for the purposes set out in that provision does not raise the provisions of Part IVA. The two sets of provisions are quite separate. Had the Commissioner relied on Part IVA and had I concluded that it applied, the relevant provision permitting the Commissioner to amend the assessments would not have been s 170 of ITAA36 but s 177G. Section 177G provides:
“Nothing in section 170 prevents the amendment of an assessment at any time if the amendment is for the purpose of giving effect to subsection 177F(3).”
In the barest outline, s 177F(3) gives the Commissioner the power to cancel tax benefits that a taxpayer would, but for Part IVA, obtain under a scheme.
Penalties
Other than to contend that the amended assessments are nullities and that, by implication, the assessments of penalty should be set aside, Mr T has not contended that the assessment of those penalties is excessive. The Commissioner has already reduced the tax shortfall penalty amounts he imposed by 80% to bring Mr T’s situation into line with that of taxpayers to whom, unlike Mr T, he had given an opportunity to make a voluntary disclosure before being given notice of an audit. That means that penalties of $27,293.80 and $18,335.30 have been imposed for the 2006 and 2007 income years.[123]
[123] T documents; T20 at 247-248
Although Mr T is limited to the grounds stated in his taxation objection and he has not asked for leave to go beyond them,[124] I note that the penalties have been imposed under Division 284 of Part 4.25 of the TAA relating to the imposition of penalties relating to statements made by a taxpayer or a taxpayer’s agent. They have been imposed on the basis that the statement made by Mr T or Ms Tagent in claiming partnership losses was false or misleading in a material particular.[125] I am satisfied that this was so.
[124] TAA; Schedule 1; s 14ZZK(1)
[125] TAA; Schedule 1; s 284-75(1)
That statement led to there being a shortfall amount because the amount the Commissioner had to pay or credit Mr T was more than it would have been had the statement not been false or misleading.[126] The Commissioner formed the view that the shortfall amount resulted from recklessness by Mr T or by Ms Tagent as to the operation of a taxation law within the meaning of Item 2 of s 284-90(1) of Schedule 1 to the TAA. That meant that the base penalty was 50% of the shortfall amount. Given that there was no proper basis for claiming that Mr T was part of a partnership, I am satisfied that the shortfall amount resulted from recklessness by either Mr T or Ms Tagent as to the operation of a taxation law.
[126] TAA; Schedule 1; s 284-80(1), Item 2
As I have said, the Commissioner then reduced that base penalty by 80% under s 284-225(3). That was the maximum amount by which he could reduce it under that provision. The only other provision under which the penalty, or part of it, could be remitted is s 298-20. I discussed the parameters of the discretion given to the Commissioner by that provision in Re Simon Harland as Trustee for the PCS Global Discretionary Trust and the Commissioner of Taxation.[127] I adopt that discussion but will set out only my conclusion on the scheme of those provisions:
“164. This brief outline of the penalty scheme established by the TAA shows that the imposition of the penalty is determined by reference to the reasons for a taxpayer’s having a shortfall amount and by reference to the taxpayer’s actions in telling the Commissioner about that shortfall amount, the timing of those actions and, in some instances, any impact that the taxpayer’s actions have in reducing the Commissioner’s workload. Regard is not had to a taxpayer’s actions in informing on other taxpayers. The focus is entirely upon a particular taxpayer.”
[127] [2013] AATA 930 at [158]-[165]
In this case, there is nothing that takes Mr T’s circumstances outside those of other taxpayers who have been in the same situation and who have either made, or been treated as if they had made, voluntary disclosures. I am not satisfied that his circumstances warrant an exercise of the remission power given by s 298-20 of Schedule 1 to the TAA.
DECISION
For the reasons I have given, I affirm the Commissioner’s objection decision dated 14 January 2011 disallowing the objections made by Mr T on 21 June 2010 and 9 September 2010 against amended assessments and assessments of penalty for each of the 2006 and 2007 income years.
The practical outcomes should the return for the 2007 income year be a nullity
Mr T drew my attention to the case of Re Kakavas and Federal Commissioner of Taxation[128] (Kakavas). He did so in support of his submission that the return lodged by Ms Tagent without his knowledge or authority was a nullity. Mr Kakavas’s tax agent had given the Commissioner a letter stating that his client had neither authorised nor been aware that the return had been lodged and that his client had not provided any information with which to prepare them. Mr T then quoted the following passage from Senior Member Fice’s reasons for decision in Kakavas:
“On 17 August 2009 the Commissioner advised Mr Kakavas he accepted that the income tax return lodged by Mr Chrisodoulou in February 2007 was not Mr Kakavas’ return. The Commissioner also formed the view that in light of his acceptance that the return was unauthorised by Mr Kakavas, the assessment of income tax for the year ended 30 June 2006 was a nullity. It was therefore invalid and of no effect and the shortfall penalty assessment consequently was also of no effect. …”[129]
[128] [2011] AATA 48; 2011 ATC 10-173; Senior Member Fice
[129] [2011] AATA 48; 2011 ATC 10-173 at [6]; 3,805
As the reasons indicate, this point was not argued and I express no view upon it.[130] Accepting for the moment that it is a correct view of the law and the assessment is a nullity, the consequences would be these. First, the Commissioner would not be able to issue an amended assessment in relation to the 2007 income year for there would be no assessment to amend. The power given by s 170 of ITAA36 to the Commissioner to amend an assessment is entirely dependent on there being an assessment.
[130] I do note, though, the terms of s 164 that I set out at [76] above. In brief, it deems a return purporting to have been signed by or made on behalf of a person is deemed to have been duly made with that person’s authority “… until the contrary is proved”. If it should be the case that the Commissioner has made an assessment under s 166 of ITAA36 on the basis of a return that is later found to be a nullity, he would do so on the basis of a return deemed to have been duly made by virtue of s 164. It would be deemed to have been duly made “until the contrary is proved”. Assuming that the law accepted in Kakavas is correct, that would mean that the Commissioner’s assessment would not be a nullity “until the contrary is proved”. Any action that he took on the basis of that assessment, such as the payment of a refund, would be properly made on the basis of that assessment.
That, however, would not bring matters to an end for Mr T for the Commissioner would then be in the position that he has made neither an assessment nor an amended assessment. He continues to have the full extent of his powers. Among those powers is the power to make an assessment for he is not required to make an assessment within any particular time. There is nothing in the taxation law requiring him to do so and this is the view reached by Heerey J in Marijancevic v Deputy Commissioner of Taxation.[131] In the absence of a return from Mr T, the Commissioner would make that assessment under s 167 of ITAA36. That would mean that he may make the “… assessment of the amount upon which in his or her judgment income tax ought to be levied, and that amount shall be the taxable income of that person for the purpose of section 166.”[132] There would be nothing in law to prevent the Commissioner from making an assessment in terms that, for all practical purposes, reflected the terms of the amended assessment in relation to the 2007 income year.
[131] [2004] FCA 1084; (2004) 56 ATR 625
[132] ITAA36; s 167
That would not necessarily be an end of the matter for Mr T. When referring to the case of Kakavas, Mr T referred to only part of [6] from Senior Member Fice’s reasons for decision. The remainder reads:
“… Furthermore the Commissioner had formed the view that the application for review lodged with the Tribunal was invalid. On 19 August 2009 the Commissioner issued to Mr Kakavas a fresh notice of assessment for the year ended 30 June 2006 and a notice of assessment and liability to pay a penalty for failing to provide a return or other document. Mr Kakavas objected to that notice of assessment and the penalty notice on 8 September 2009.”[133]
[133] [2011] AATA 48; 2011 ATC 10-173 at [6]; 3,805
The reference to Mr Kakavas’s liability to pay a penalty for failing to provide a return or other document was a reference to the application of s 286-75 of Schedule 1 to the TAA. Section 286-75(1) provides:
“You are liable to an administrative penalty if:
(a)you are required under a *taxation law to give a return, notice, statement or other document to the Commissioner in the appropriate form by a particular day; and
(b)you do not give the return, notice, statement or document to the Commissioner in the approved form on that day.”[134]
[134] The Note forms part of the section: TAA; s 3AA(3) and Income Tax Assessment Act 1997 (ITAA97); s 950-100(1).
The amount of the penalty is calculated under s 286-80. First, the base penalty amount is worked out by reference to the number of days by which the document is overdue. One penalty unit is allocated to each period of 28 days by which it is overdue but no more than five penalty units may be allocated.[135]
[135] TAA; Schedule 1, s 286-80(2) The value of a penalty unit was $110 as at June 2010 and is currently $170.00: Crimes Act 1914; s 4AA(1).
The operation of s 286-75(1) is ameliorated when a taxpayer has engaged, among others, a registered tax agent for the taxpayer is:
“… not liable to an administrative penalty under subsection (1) if:
(a)you engage a *registered tax agent or BAS agent; and
(b)you give the registered tax agent or BAS agent all relevant taxation information to enable the agent to give a return, notice, statement or other document to the Commissioner in the *approved form by a particular day; and
(c)the registered tax agent or BAS agent does not give the return, notice, statement or other document to the Commissioner in the approved form by that day; and
(d)the failure to give the return, notice, statement or other document to the Commissioner did not result from:
(i)intentional disregard by the registered tax agent or BAS agent of a *taxation law; or
(ii)recklessness by the agent as to the operation of a taxation law.”[136]
Section 286-75(1B) provides that, if a taxpayer wishes to rely on this ameliorating provision, that taxpayer will “… bear an evidential burden in relation to paragraph (1A)(b).”[137]
[136] TAA; Schedule 1, s 286-75(1A)
[137] How s 286-75(1B) relates to the more broadly cast burden imposed on a taxpayer by s 14ZZK(b)(i) in a case such as this to prove that an assessment (of penalties as well as of income tax) is excessive is not a matter which arises for resolution in this case.
The “approved form” is the subject of s 388-50. Among other requirements, a document will only be in the approved form if it contains a declaration signed by a person or persons as the form requires.[138] Section 388-75(2) provides for the situation in which an agent gives a return, notice, statement, application or other document to the Commissioner. If the document so requires, it must contain a declaration signed by the taxpayer. If the document so requires, it must contain the agent’s signature.
[138] TAA; Schedule 1; s 388-50(1)(b)
In addition, provision is made in s 388-65 of the TAA for declarations to be made between taxpayer and tax agent. I have set out that provision at [74] above. On his own evidence, Mr T had not approved the return submitted to him by the day required for its lodgement i.e. 15 May 2007. Whether or not it contained the information he wanted in it, he had not signed it and so it was not in an approved form. That would raise a question whether Mr T could meet the criterion in the ameliorating provision in s 286-75(1A). The criterion in s 286-75(1)(d) would prove a greater stumbling block. In the absence of Ms Tagent, whom Mr T understands now lives overseas, he would face a grave difficulty in establishing that “the failure to lodge the return … to the Commissioner did not result from … (i) intentional disregard by the registered tax agent … of a *taxation law; or (ii) recklessness by the agent as to the operation of a taxation law.” (emphasis added) Ms Tagent’s letter gives no insight into why she lodged a return that was not signed by Mr T and so was not in the approved form. Her correspondence in November 2008 seems to indicate no particular regard for the fact that the return she is then proposing to lodge for the 2007 income year is out of time by a considerable amount. It makes no reference to the fact that she has already lodged a return. That would suggest that she was reckless as to the consequences of her obligations, and those of Mr T, under the taxation law.
I certify that the one hundred and forty five preceding paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie,
Signed: ………..[sgd]................................................
Leah Berardi Associate
Date of Hearing 30 October 2013
Date of Last Submission 16 December 2013
Date of Decision 24 January 2014
Self-represented Applicant Mr T
Counsel for the Respondent Mr S Linden
Solicitor for the Respondent Mr M Sadhu
ATO Dispute Resolution
27. Accordingly, a tax agent who had previous been engaged by the taxpayer over a number of years to prepare other income tax returns or activity statements, and who subsequently lodges fictitious income tax returns or activity statements in the name of the taxpayer, with the intention of contriving a refund, without being engaged to do so, would be deemed to have committed a fraud on the Commonwealth as they would have acted without the authority of the taxpayer.”
“If it is established that at any time within three hours after an alleged offence against paragraph (a) or (b) of s 49(1) a certain concentration of alcohol was present in the blood or breath of the person charged with the offence it must be presumed, until the contrary is proved, that not less than that concentration of alcohol was present in the person’s blood or breath (as the case requires) at the time at which the offence is alleged to have been committed.”
In Director of Public Prosecutions v Mitchell [2008] VSC 130 at [12]; Curtain J said: “The wording of the section is unambiguous. It creates a statutory presumption and reverses the onus of proof. It casts upon the defendant the burden of establishing on the balance of probabilities that at the time at which the offence is committed the concentration of alcohol was less than that alleged.” The same reasoning applies to s 164 of ITAA36.
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