CREATIVE BOTTLE DECORATORS And COMMISSIONER OF TAXATION

[2010] AATA 847

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 847

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2009/3108, 2009/3109

TAXATION APPEALS DIVISION		)
Re		CREATIVE BOTTLE DECORATORS PTY LTD

Applicant

And COMMISSIONER OF TAXATION

Respondent

DECISION

Tribunal Mr Frank O'Loughlin, Senior Member

Date27 September 2010

PlaceMelbourne

Decision

The Applicant has been notified in writing that the decisions in relation to which applications for review have been lodged, do not appear to be reviewable by the Tribunal.

The Applicant has been unable to show within 14 days after being notified that the decisions are reviewable by the Tribunal.

Pursuant to s 42A(4) of the Administrative Appeals Tribunal Act 1975, the Tribunal dismisses the applications.

....................[signed].......................

Senior Member

PRACTICE AND PROCEDURE – Jurisdiction of the Tribunal – Assessment the subject of the objection decision reduced to nil after the objection decision

REASONS FOR DECISION

1 November 2010 Mr Frank O'Loughlin, Senior Member     

INTRODUCTION

1.The John Trimble Family Trust (the Trust) was established in 1978.  The Applicant was a beneficiary of the Trust for the 2004 and 2005 years of income.

2.Before an audit of the affairs of the Trust, the Applicant had adopted the position that it did not have any taxable income for the 2004 and 2005 years and that no tax was payable.

3.Following an audit of the Trust’s and the Applicant’s affairs, the Commissioner issued assessments to the Applicant for the 2004 and 2005 years of income.

4.The Applicant objected to these assessments and the Commissioner allowed those objections in part.  Amended assessments were issued to give effect to the objection decisions.  The amended assessments did not remove all taxable income or reduce the tax liability to nil.

5.The Applicant was dissatisfied with the objection decisions and sought review in the Tribunal.

6.After the applications for review of the objection decisions were filed with the Tribunal, the Commissioner issued further amended assessments to the Applicant for the 2004 and 2005 years.  The further amended assessments reduced the taxable income for these years to nil and the tax payable to nil.

7.The Applicant continues to be dissatisfied with the further amended assessments but does not assert that there is a positive taxable income for either the 2004 or the 2005 year of income.

8.On 27 September 2010 the Applicant’s applications were dismissed on the ground that there was no jurisdiction for the review sought.

9.A taxpayer may be dissatisfied with a constituent element of an assessment and therefore the result of the assessment in a broad sense.  However, if the assessment is that there is no taxable income or that there is an amount of taxable income but no tax is payable, the affected taxpayer has no right of objection unless an increase in tax liability is sought.[1]

[1]Income Tax Assessment Act 1936, s 175A(2), applicable for the 2005 year.

10.In the present circumstances, the Applicant has such a nil assessment but does not assert that it should be a higher amount, which is necessary for at least the 2005 year[2] for there to be a continuing dispute.

[2]See footnote 1.

11.If an amended assessment is made after an objection decision but before the hearing of an application for review of the objection decision, and that amended assessment reduces the assessments to nil taxable income and/or nil tax payable, the subject matter of the controversy, the objection decision, has ceased to exist.  The objection decision has been overtaken by the subsequent amended assessment.[3]

[3]See Hutchins; Re Stuart Tyre Services Pty Ltd v Commissioner of Federal Taxation (1988) 20 FCR 29; (1988) 17 ALD 144 per Jenkinson J.

12.In the present circumstances, the Applicant’s controversy with the objection decisions has ceased to exist in the relevant sense.

13.If it was the case that there were some remaining tax liability, or that the taxpayer sought an increased liability meeting the terms of s 175A(2), then there would be an ongoing, reviewable dispute.

14.In this case, the Applicant does not seek an increased liability and cannot, as a consequence, bring the matter that was before the Tribunal within the terms of s 175A(2).

15.Because the Applicant is prevented from objecting to a nil assessment by s 175A(2) and/or the subject matter of the controversy has ceased to exist, the Applicant has no further right to have the events that led to the present assessment position for the 2004 and 2005 years reviewed.

DECISION

16.For these reasons, the Tribunal dismissed the applications.

I certify that the sixteen [16] preceding paragraphs are a true copy of the reasons for the decision herein of:
Mr Frank O'Loughlin, Senior Member

Signed:         ............................[signed]...............................................
  Associate                  Grace Horzitski

Date of Decision  27 September 2010
Date of Written Reasons          1 November 2010
Counsel for the Applicant         Dr B. Orrow
Solicitor for the Applicant          William Buck (Vic) Pty Ltd
Solicitor for the Respondent     Ms A. Smyth, ATO Legal Services Branch