Davsa Forty-Ninth Pty Ltd atf Krongold Ford Bus Unit Trust v Commissioner of Taxation
[2012] AATA 317
•25 May 2012
[2012] AATA 317
Division TAXATION APPEALS DIVISION File Number(s)
2011/1945
Re
Davsa Forty-Ninth Pty Ltd ATF Krongold Ford Bus Unit Trust
APPLICANT
And
Commissioner of Taxation
RESPONDENT
REFUSAL OF SUMMONSES DECISION
Tribunal Senior Member Frank O'Loughlin
Date 25 May 2012 Place Melbourne Decision Summary The Tribunal refuses the request of summonses.
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Senior Member Frank O'Loughlin
Catchwords
TAXATION - Summons to ATO officials - whether should be issued - Rules of evidence - applicability in AAT proceedings.
Legislation
A New Tax System (Goods and Services Tax) Act 1999 (Cth)
Administrative Appeals Act 1975 (Cth); s 43(1) & (6)
Administrative Appeals Act 1975 (Cth); s 33(1)(c)Cases
Shi v Migration Agents Registration Authority (2008) 235 CLR 286
Drake v Minister for Immigration (1979) 24 ALR 577
McKinnon v Secretary, Department of Treasury (2006) 228 CLR 423REASONS FOR DECISION
Senior Member Frank O'Loughlin
The substantive application involves disputed entitlements to input tax credits associated with what the applicant claims is a motor vehicle trading business.
Through its representatives, the applicant seeks permission to examine three employees of the respondent under oath; something that the respondent resists. Without a summons from the Tribunal, it will not be possible for the applicant to conduct the examination it wants to conduct.
To resolve the disputed substantive issues a significant threshold conclusion is required as to whether or not the input tax credits claimed by the applicant were referable to creditable acquisitions. To establish that, it is necessary for the applicant's activities, or the series of activities which the applicant conducted, to have constituted a business or a venture or concern in the nature of trade such that they comprised an enterprise as defined the A New Tax System (Goods and Services Tax) Act 1999 (Cth). If those activities are properly capable of being characterised as a business or as a venture or concern in the nature of trade, then they will constitute the carrying on of an enterprise and the acquisitions under review in this application will potentially be creditable acquisitions. There are some other downstream issues that also need to be resolved, but whether a business was carried on is a threshold question.
The applicant's contention is that it was carrying on a business and that three particular Australian Taxation Office (ATO) employees will be able to corroborate, or provide essential corroborative support to, that contention. The applicant also seeks to examine these employees on the basis that upon any appeal to the Federal Court, it will be unable to lead additional evidence.
The three ATO employees concerned did not work in the applicant's business. Rather, it appears that two of them have examined evidence of the activities undertaken by the applicant and formed conclusions as to the operation of the relevant legislation, including whether or not those activities constituted the carrying on of a business or a businesslike activity. The third has been involved in subsequent reviews of the earlier conclusions, including preparation associated with the present application.
The applicant accepts that the activities that it undertook and the facts that it relies on are within the knowledge of its director, its accountants and the non-ATO employees it proposes to call as witnesses. The applicant also accepts that the only evidence that the ATO employees can give is evidence of what the applicant and the applicant's accountants told them about its business.
The role of the Tribunal in a matter such as the present substantive application is to make the correct or preferable decision.[1] In this regard, the Tribunal stands in the shoes of the Commissioner and starts afresh.[2] Whatever the ATO officials thought about the character of the applicant's activities and whether or not they constitute the carrying on of a business is now irrelevant.
[1]See Shi v Migration Agents Registration Authority (2008) 235 CLR 286 and the endorsement of Drake v Minister for Immigration (1979) 24 ALR 577 at 589 per Bowen CJ and Deane J and the explanation of these terms in McKinnon v Secretary, Department of Treasury (2006) 228 CLR 423 at 427 per Gleeson CJ and Kirby J
[2]See for example Administrative Appeals Act 1975 (Cth); s 43(1) & (6)
While the Tribunal is not bound by rules of evidence and can inform itself as it sees appropriate in the circumstances,[3] the Tribunal regularly applies the rules of evidence. There is good reason for doing so. The rules of evidence are rules that have been developed over a long period with a view to regulating litigious processes and providing a sound and reliable foundation for conclusions necessary to resolve disputes between parties.
[3]See Administrative Appeals Act 1975 (Cth); s 33(1)(c)
The ordinary rules of evidence are appropriate in the present circumstances. In the present case, the only evidence that could be led from the three ATO employees is hearsay evidence. Moreover, the sources of the hearsay evidence are witnesses in the proceeding in any event. In these circumstances, it is neither necessary nor appropriate that the evidence of the three ATO employees be allowed to be led. Further, the Tribunal apprehends that that evidence would also be excluded in any subsequent proceeding for the same reasons as indicated above. Accordingly, not being able to lead evidence on appeal does not support the applicant's present application.
The Tribunal refuses the application for summonses to be issued to the three ATO employees as sought by the applicant.
I certify that the preceding 10 (ten) paragraphs are a true copy of the reasons for the decision herein of F. D. O’Loughlin (Senior Member)
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Administrative Assistant
Dated
Date of hearing
25 May 2012
25 May 2012
Advocate for the Applicant Mr D Beed - Grinwald, Beed & Associates Advocate for the Respondent Mr L Shiels - Australian Taxation Office,
ATO Legal Services Branch