Cumins and Commissioner of Taxation

[2008] AATA 716

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 716

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/0859

TAXATION APPEALS DIVISION		)
Re		BRIAN CUMINS

Applicant

And COMMISSIONER OF TAXATION

Respondent

DECISION

Tribunal Mr A Sweidan, Senior Member

Date14 August 2008

PlacePerth

Decision The Tribunal dismisses the application on the grounds that the Tribunal has no jurisdiction in this matter.

......(sgd) Mr A Sweidan..............

Senior Member

CATCHWORDS

Income Tax - objections and appeals - Tribunal's jurisdiction on extension of time application - no jurisdiction where rights of review already exhausted

LEGISLATION

Taxation Administration Act 1953 (Cth) S 14ZZ

CASES

Commissioner of Taxation v Dalco (1990) 168 CLR 614
FCT v ANZ Savings Bank Ltd (1994) 181 CLR 466
HR Lancey Shipping Co. Pty Ltd v Federal Commissioner of Taxation (1951) 9 ATD 267 at 273
Lighthouse Philatelics Pty Ltd v Commissioner of Taxation (1991) 32 FCR 148
Szajntop v Commissioner of Taxation (1993) 42 FCR 318
The Taxpayer v Commissioner of Taxation [2004] AATA 1304

REASONS FOR DECISION

14 August 2008	Mr A Sweidan, Senior Member
Background and History

1.      On 26 February 2008 the applicant lodged an application to extend the time for lodging an application for review of a decision of the respondent made on 19 December 2001 in respect of what was described as "the disallowance of interest claimed in respect of the Infomercial Projects".  No other relevant reviewable objection decision is identified in the application.

2.      The respondent contends that on the material before the Tribunal it should find that the Tribunal has no jurisdiction to review the disallowance of the interest claim as the disallowance of interest claim is not the subject of any reviewable objection decision. 

3. The objection decision of 19 December 2001 was made in respect of the applicant's objection dated 20 December 2000. In support of the present application the applicant seeks leave under s 14ZZK of the Taxation Administration Act 1953 ("the TAA") to extend or amend the grounds of objection set out in his objection dated 20 December 2000.

4.      The relevant  chronology relating to the  objection of 20 December 2000 and the current application is as follows:

4.1the respondent issued the relevant amended assessment for the 1998 year on 23 November 2000 ("the amended assessment");

4.2the applicant filed an objection against the amended assessment on 20 December 2000;

4.3the respondent disallowed the objection on 19 December 2001;

4.4the applicant filed an application to the Tribunal for review of the objection decision of 19 December 2001 on 4 February 2002 – WT 2002/20-21;

4.5following a hearing in application WT2002/20-21 the Tribunal made a decision on 7 December 2004 affirming the objection decision of 19 December 2001 under review;

4.6the applicant filed an appeal in the Federal Court against the decision of the Tribunal on 21 December 2004 – WAD291/2004;

4.7the Court made orders dismissing the appeal by consent of the parties on 10 February 2005.

4.8the applicant filed the current application with the Tribunal to extend the time for lodging an application to review the same objection decision of 19 December 2001 on 26 February 2008;

4.9on 21 April 2008 the applicant filed submissions in support of both the application for an extension of time and for amendment or extension of the grounds of the objection.

5.      The applicant's submissions identify what is said to be the relevant reason for decision as the notice of decision on objection made on 19 December 2001 in respect of the amended assessment issued on 23 November 2000 for the income year ending 30 June 1998 (T102 in the section 37 documents in WT2002/20‑21).   The applicant has identified the objection which is said to be the subject of the relevant objection decision as the applicant’s objection against the amended assessment of 23 November 2000 for the year ended 30 June 1998 which was lodged on 20 December 2000 (T100). 

6.      The adjustments made in the year ending 30 June 1998 to the applicant’s taxable income by the amended assessment of 23 November 2000 (T99) are set out in the schedule for the 1998 year which was attached to the letter from the respondent to the applicant dated 15 November 2000 (which is annexed to the application to extend time) and also in the tax and penalty calculation adjustment sheets at T97.  In summary, the adjustments made by the amended assessment of 23 November 2000 were in respect of three different matters:

6.1adjustments relating to the Position Paper titled "Cost Base of Cash Converters International Ltd Shares" totalling $329,716.00;

6.2adjustments relating to the Position Paper titled "Sale of Cash Converters International Ltd Shares" totalling $3,057,537.00;

6.3an adjustment described in the schedule annexed to the letter of 15 November 2000 as "Interest re monies borrowed re: Infomercials" in an amount of $9,375.00.

7.      The applicant's objection of 20 December 2000 against the amended assessment of 23 November 2000 for the year ended 30 June 1998 (T100) was lodged by the applicant's accountant although signed by the applicant.  In the Tribunal’s view it is plain from the terms of the objection document that the applicant was objecting to only two of the adjustments made by the amended assessment of 23 November 2000, namely:

7.1"The adjustment based upon the cost base of Cash Converters International Limited Shares" (paragraph 1 of the objection); and

7.2"The adjustment based upon the sale price of the Cash Converters International Limited Shares" (paragraph 2 of the objection).

8.      In the Tribunal’s opinion the terms of the notice of objection can only be read as disclosing that the applicant was objecting only to those two adjustments.  The words "and that all adjustments made and objected to in the above objection should be reversed" in the paragraph commencing "Further the Taxpayer claims that ..." in the objection make it clear that these were the only adjustments to which objection was taken.  The reference to consequential adjustments in that paragraph should properly in the Tribunal’s view be read as including only adjustments consequential upon the reversal of the adjustments referred to in paragraphs 1 and 2 of the objection.  The applicant's submission that the words should be given a broader meaning is contrary to the plain meaning of the words used and is rejected by the Tribunal.

9.      Furthermore in the Tribunal’s opinion, it is clear from the terms of the relevant Notice of Decision on Objection (T102) that, firstly, the respondent understood the notice of objection of 20 December 2000 raised objections only to the two adjustments referred to above, and, more importantly, that the respondent's decision on the objection dealt only with those two adjustments to the 1998 year income.

10.     This is further underlined by the applicant’s application lodged with the Tribunal for review of the respondent's objection decision in proceedings WT2002/20‑21 and the manner in which that application to the Tribunal was dealt with and eventually dismissed by the Tribunal in December 2004.  (The Taxpayer v Commissioner of Taxation [2004] AATA 1304). The Tribunal notes that at no time in the course of those Tribunal proceedings was there any suggestion that the respondent's objection decision which was the subject of the review in those proceedings encompassed more than the two adjustments which were specifically referred to in paragraphs 1 and 2 of the objection lodged by the applicant in December 2000.

11.     In the Tribunal’s view the Full Federal Court decision in Szajntop v Commissioner of Taxation (1993) 42 FCR 318 on which the applicant placed reliance does not assist the applicant's position. The form of the objection considered by the Full Court in that case was quite different from the objection lodged by the applicant in the present case. In the Szajntop case the Full Court was considering whether an objection expressed in very general terms was a valid objection.  Black CJ and Burchett J (Gray J dissenting) found that in the particular circumstances of that case there was a valid objection.  In doing so, the Full Court referred to the statement of Williams J in HR Lancey Shipping Co. Pty Ltd v Federal Commissioner of Taxation (1951) 9 ATD 267 at 273:

“The grounds of objection need not be stated in legal form, they can be expressed in ordinary language, but they should be sufficiently explicit to direct the attention of the respondent to the particular respects in which the taxpayer contends that the assessment is erroneous and his reasons for this contention.  (See also Cajkusic v Commissioner of Taxation (2006) 155 FCR 430.”

12.     In the view of the Tribunal the objection lodged by the applicant in December 2000 was clear and explicitly directed the attention of the respondent to the particular adjustments made by the amended assessment which the applicant contended were erroneous, namely the adjustments referred to in paragraphs 1 and 2 of the objection.  The Full Court decision in Szajntop is not authority for the proposition that an objection which is expressed in explicit terms should be read in general terms so as to include matters other than those explicitly referred to.

13. Under s 25 of the Administrative Appeals Tribunal Act 1975 the jurisdiction of the Tribunal is bestowed by an enactment. In relation to a taxation decision that is an assessment against which an objection may be lodged under s 175A of the Income Tax Assessment Act 1936 ("ITAA 1936") and s 14ZY of the Taxation Administration Act 1953 ("the TAA"), the enactment which gives the Tribunal the jurisdiction to review is s 14ZZ of the TAA. That section provides that a person dissatisfied with the respondent's objection decision can apply to the Tribunal for a review of their decision.

14. An applicant has no right of review by the Tribunal against a taxation decision that is an assessment unless and until the respondent has made and notified a decision on the objection lodged by the taxpayer against the assessment, unless there is a deemed decision under s 14ZYA(3) of the TAA, which is not contended by the applicant. It is not sufficient to give the Tribunal jurisdiction that a taxpayer has lodged an objection to an assessment. The Tribunal's jurisdiction to review only arises where the respondent has made and notified a decision on an objection.

15. It is clear therefore that in any event, for the Tribunal to have jurisdiction to review the adjustment of $9,375.00 made by the amended assessment of 23 November 2000, it is necessary to identify an objection decision of the Commissioner that relates to that adjustment. It is not sufficient to identify an objection which relates to the adjustment. Insofar as the applicant seeks to rely upon the terms of s 14ZZK of the TAA to amend the objection, this is misconceived in the Tribunal’s opinion. The power of the Tribunal to make an order permitting an amendment to the grounds of objection under s 14ZZK(a) of the TAA only arises where the Tribunal otherwise has jurisdiction to review a reviewable objection decision. In the event that, as here, no reviewable objection decision can be identified to give the Tribunal jurisdiction, the applicant cannot seek to rely upon s 14ZZK to address that deficiency.

16.     The applicant also seeks to rely on the Full Federal Court decision in Lighthouse Philatelics Pty Ltd v Commissioner of Taxation (1991) 32 FCR 148 (Lighthouse) in support of this application and his application to seek to amend the grounds of objection under s14ZZK of the TAA.

17.     The Tribunal accepts that the Full Federal Court decision in Lighthouse is authority that:

17.1an objection is against an assessment itself, not a particular of an assessment (Lighthouse at p154);

17.2the real substance of an objection is contained in the grounds upon which the taxpayer objects to the assessment. The taxpayer is confined by what is now s14ZZK of the TAA to those grounds unless the Tribunal otherwise orders (Lighthouse at p155);

17.3The decision on the objection which the Commissioner gives is a decision on the objection made by the taxpayer to the assessment, it is not confined to a particular claim as to taxable income or deduction (Lighthouse at p155);

17.4when the matter comes before the Tribunal or a court the issue in the ordinary case is whether the assessment is excessive (Lighthouse at p155 and see Commissioner of Taxation v Dalco (1990) 168 CLR 614).

18.     However, the Tribunal notes that the applicant's reliance on the Lighthouse decision ignores the fact that the applicant had previously exercised his rights in proceeding WT2002/20-21 to apply to the Tribunal for review of the respondent's decision of 19 December 2001 on his objection dated 20 December 2000, and that those rights of review have accordingly been exhausted.

19.     The Tribunal finds that the Tribunal does not have jurisdiction to review for a second time the objection decision of 19 December 2001 and that the applicant’s rights to review were extinguished when the appeal to the Federal Court against the Tribunal’s decision of 7 December 2004 was dismissed by consent.

20. The Tribunal notes that notwithstanding the absence of any ground in the objection of 20 December 2000 to the disallowed interest amount of $9,375, the applicant could have applied to the Tribunal prior to the decision in WT2002/WT21-22 to amend the grounds of objection under s14ZZK of the TAA to include that amount. The fact that he did not do so does not mean that the whole of the amended assessment to which the objection of 20 December 2000 was made was not before the Tribunal in WT2002/21-22, as part of the Tribunal's consideration of whether that amended assessment was excessive.

21.     In this regard the High Court in  FCT v ANZ Savings Bank Ltd (1994) 181 CLR 466 for the reasons set out in the joint judgment of Brennan, Deane, Dawson and Toohey JJ held that, although in a review of an objection decision the court or tribunal may review only the parts of the assessment particularised in the objection, it is the whole of the Commissioner’s objection decision which is before the court or tribunal:

“…..Section 189 makes abundantly clear that what is referred to the Tribunal or to a court is “a decision on an objection” and that the referral constitutes either the making of an application to the Tribunal for a review of “the decision” or the institution of an appeal against “the decision”….
     it is a very large and, in our view, unwarranted step to say that the only matter before the Federal Court was that part of each objection decision with which the taxpayer was dissatisfied. It is the Commissioner's decision which, in each case, was referred to the Court. True it is that the decision was referred by the taxpayer so that the inclusion of income by the Commissioner might be challenged. But it does not follow that the Court was not then seized of the decision in its entirety. The power of the Court in these circumstances is to:

‘make such order in relation to the decision to which the appeal relates as it thinks fit, including an order confirming or varying the decision.’

This power is expressed in the widest terms. An appeal relates to the objection decision made by the Commissioner albeit a taxpayer is dissatisfied with only part of that decision. A power to make such order as the Court thinks fit is clearly not unconstrained but there is nothing in s. 199 to suggest that the Federal Court may not make such order in relation to the objection decision as is appropriate in all the circumstances once the subject matter of the taxpayer's dissatisfaction with the assessment has been resolved.” [at pages 475-476]

22. The Tribunal finds that as the applicant has already exercised his rights under Part IVC of the TAA in WT2002/20‑21 (T1) and WAD291/2004 he cannot do so again by this application.

23. In the opinion of the Tribunal it is clear that the Tribunal in WT2002/20‑21 has already finally determined the applicant's rights to review of the objection decision of 19 December 2001 by its decision of 7 December 2004 affirming the objection decision. The Federal Court's dismissal of the appeal lodged by the applicant had the effect that the Tribunal's decision affirming the objection decision was final (s 44(4) of the AAT Act 1975 and s 14ZZL of the TAA). No further review by the Tribunal or the Federal Court of the same objection decision is possible.

24.     The Tribunal therefore finds that the combined effect of the Tribunal's decision of 7 December 2004 affirming the objection decision of 19 December 2001 and the dismissal by the Federal Court of the applicant's appeal is that the applicant no longer has any right to apply to the Tribunal for review of the objection decision of 19 December 2001. 

25. The Tribunal further finds that the applicant is not able to rely upon the Tribunal's powers to allow an amendment to the grounds of the objection under s 14ZZK(a) of the TAA to support this application The Tribunal's power under s 14ZZK(a) can only be exercised "on an application for review of a reviewable objection decision". In the circumstances here as set out above there is no reviewable objection decision in respect of which any application for review can now be made.

26. The Tribunal notes that if the applicant's contention that it can rely on the Tribunal's power under s 14ZZK of the TAA to grant leave to amend the grounds of objection to support the present application were correct, it would effectively mean that taxpayers could in this way seek to re-open decisions of the Tribunal under s 43 of the Administrative Appeals Tribunal Act 1975 to review again whether the same assessment was excessive but based on different grounds. The Tribunal is of the view that this cannot be so.

27.     The Tribunal concludes that it has no jurisdiction to deal with the present application to extend time to lodge an application for review of the objection decision of 19 December 2001 and the application including the application to amend the grounds of objection is accordingly dismissed.

I certify that the 27 preceding paragraphs are a true copy of the reasons for the decision herein of Mr A Sweidan, Senior Member

Signed: ..(sgd)T Freeman...........................................
  Associate

Date of Hearing  22 May 2008
Date of Final Submissions       30 May 2008
Date of Decision  14 August 2008
Counsel for the Applicant         Mr M Holler
Solicitors for the Applicant        Q Legal (at Hearing)
  Brickhills (following Hearing)
Counsel for the Respondent     Mr T Burrows
Solicitor for the Respondent     Australian Government Solicitor