Dermatis and Commissioner of Taxation (Taxation)

[2023] AATA 13

Dermatis and Commissioner of Taxation (Taxation) [2023] AATA 13 (13 January 2023)

Division:TAXATION AND COMMERCIAL DIVISION

File Numbers:         2022/9600 & 2022/9601

Re:Alexandros Dermatis

APPLICANT

AndCommissioner of Taxation

RESPONDENT

Decision

Tribunal:Deputy President Britten-Jones

Date:13 January 2023

Place:Melbourne

The application is dismissed under s 42A of the Administrative Appeals Tribunal Act 1975 (Cth) for lack of jurisdiction.

....[sgd]................................... ...............

Deputy President Britten-Jones

CATCHWORDS

PRACTICE AND PROCEDURE – jurisdiction question – decision of Commissioner of Taxation to refuse a request to remit a shortfall interest charge – applicant seeks to review decision - application to dismiss for lack of jurisdiction – right to object against such a decision provided the shortfall interest charge that was not remitted is more than 20% of the tax shortfall amount – shortfall interest charge less than 20% - definition of “taxation decision” under the Taxation Administration Act 1953 (Cth) - application dismissed

LEGISLATION

Administrative Appeals Tribunal Act 1975 (Cth)
Taxation Administration Act 1953 (Cth)

CASES

Federal Commissioner of Taxation v Administrative Appeals Tribunal (2011) 191 FCR 400

REASONS FOR DECISION

Deputy President Britten-Jones

13 January 2023

1. The applicant has applied to the Tribunal for review of a decision made by the Commissioner of Taxation on 18 October 2022. That decision was a refusal of a request to remit a shortfall interest charge totalling $17,901.55 applied to income tax assessments for 2017 and 2018.

2. The respondent, Commissioner of Taxation (Commissioner) contends that the Tribunal does not have jurisdiction to review the decision. If satisfied that the decision is not reviewable then the Tribunal may dismiss the application for review under s 42A(4) of the Administrative Appeals Tribunal Act 1975 (AAT Act).

3. The facts were set out by the Commissioner in written submissions as follows.

   “1. On 18 October 2022, the Respondent, Commissioner of Taxation (Commissioner) advised the Applicant, Mr Alexandros Dermatis of her decision not to remit any or all of the shortfall interest charge (SIC) totalling $17,901.55 applied to his amended income tax assessments for the 2017 and 2018 income years (the SIC remission decision).

   2. The Commissioner also advised Mr Dermatis that he could not object to the SIC remission decision as the SIC balance payable is equal to or less than 20% of the tax shortfall amount. Further, Mr Dermatis was advised that if he did not agree with this decision, then he may apply to the Federal Court or the Federal Circuit Court for a review within 28 days of receiving this decision.

   3. On or around 22 November 2022, Mr Dermatis lodged an application in the Administrative Appeals Tribunal (AAT) seeking review of the SIC Remission Decision (the Application).

   4. On 21 December 2022, the AAT issued a listing notice for an interlocutory hearing (by telephone) to be held on 13 January 2023 in relation to the question of whether the AAT has jurisdiction to consider the Application.

   FACTS

   5. On 1 April 2021, a notice of amended assessment was issued to Mr Dermatis for the year ended 30 June 2018, which included a tax shortfall amount of $251,985.80 and SIC of $17,613.80.

   6. On 6 April 2021, a notice of amended assessment was issued to Mr Dermatis for the year ended 30 June 2017, which included a tax shortfall amount of $2,392.65 and SIC of $287.75.

   7. On or around 6 October 2022, a request via the tax agent portal was received by the ATO, requesting the remission of all shortfall interest and general interest charged on Mr Dermatis’ income tax account between 25 March 2021 to date. A subsequent message via the tax agent portal was received by the ATO on or around 11 October 2022, noting that SIC was still showing on Mr Dermatis’ account.

   8. On 18 October 2022, the Commissioner notified Mr Dermatis in writing of the SIC remission decision not to remit the SIC amount of $17,901.55, attaching reasons for the decision.”

   Consideration and Decision

4. The Tribunal has no general review powers; it may only review those decisions in relation to which it has been given jurisdiction pursuant to s 25 of the AAT Act.

5. The legislation conferring jurisdiction in relation to the review of taxation decisions in the Tribunal can be found in Division 4 of Part IVC of the Taxation Administration Act 1953 (TAA). The Full Court of the Federal Court considered the issue of the Tribunal’s jurisdiction under these provisions in Federal Commissioner of Taxation v Administrative Appeals Tribunal (2011) 191 FCR 400:

   “14. The AAT has jurisdiction to review decisions only where an enactment authorises it to do so: s 25(1) of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act). Part IVC of the TAA provides that a person may make a taxation objection and apply to the AAT for review of a “reviewable objection decision”. The AAT has jurisdiction to review only decisions that are reviewable objection decisions.

   15. Part IVC of the TAA contains the objection, review and appeal procedures to be followed if a person dissatisfied with a “taxation decision” made under a Commonwealth Tax Act wants to challenge that decision. It was inserted into the TAA by the Taxation Laws Amendment Act (No 3) 1991 (Cth). Part IVC commenced on 1 March 1992. Part IVC was described in the Explanatory Memorandum (EM) that accompanied the amending Bill as:

   “One set of generic, modern language provisions governing taxation objection, review and appeal procedures will be included in the [TAA]. … These changes will apply to all taxation decisions made on or after 1 March 1992 (the date fixed for proclamation), including decisions in relation to assessments made before that date … ”

   16. The text of Pt IVC of the TAA makes plain that for the Part to apply there are two requirements. First, there must have been a “taxation decision”. A “taxation decision” is defined in s 14ZQ of the TAA as “the assessment, determination, notice or decision against which a taxation objection may be, or has been, made”. Secondly, there must be a provision of another Act or of regulations which provides that a person who is dissatisfied with that taxation decision may object against it in the manner set out in Pt IVC. In this regard, s 14ZL(1) provides:

   “This Part applies if a provision of an Act or of regulations (including the provision as applied by another Act) provides that a person who is dissatisfied with an assessment, determination, notice or decision … may object against it in the manner set out in this Part.”

   17. It is the objection to a taxation decision which is known as a “taxation objection”: s 14ZL(2) of the TAA.

   18. Part IVC of the TAA enables taxpayers to seek review of some decisions made by the Commissioner under that Part while leaving taxpayers to exercise other rights of review in relation to other decisions. The distinction between the two categories of decision is achieved through the definition of ‘taxation decision’ in Pt IVC.

   19. The first category of decisions which constitutes a “taxation decision” against which a person who is dissatisfied with that taxation decision may object in the manner set out in Pt IVC includes ss 45D(4), 82KL(9), 102UR(5), 128P, 136AF(6), 175A, 177EA(9), 177EB(9) and 177F(7) of the Income Tax Assessment Act 1936 (Cth) (the 1936 Act). There are provisions having similar effect in the 1997 Act: eg ss 87-85, 197-80(5), 202-85(6), 203-55(7), 204-55, 207-136, 214-80, 220-50(3), 250-295(3), 820-965, 974-112(5) of the 1997 Act. See also s 3-5(3) of the 1997 Act. In each case, the provision is in substantially the same terms providing:

   “If a taxpayer to whom a determination relates is dissatisfied with the determination, the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953.”

   20. There are, however, other provisions of taxing Acts or Regulations which empower the Commissioner to make a decision or determination but which do not provide that a person affected may object under Pt IVC of the TAA. As a result, those decisions are not within the definition of a ‘taxation decision’ for the purposes of Pt IVC and Pt IVC does not apply to them. The affected person must seek another remedy. Provisions which empower the Commissioner to make a decision to which Pt IVC does not apply are not unusual.

   ….

   22. Other decisions may affect the liability of a taxpayer but, nevertheless, may not be challenged by proceedings brought under Pt IVC. These include:

   1. A decision not to remit, either in whole or in part, shortfall interest charge or general interest charge pursuant to s 8AAG of the TAA. And that is so even though the amount of the liability often appears on the notice of assessment itself. This sort of decision may, however, be subject to judicial review (where an error of law exists) in proceedings brought in the Federal Court under s 39B of the Judiciary Act 1903 (Cth) or the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ADJR Act);

   ….”

6. It is apparent from the above decision of the Federal Court that the question of jurisdiction is determined by reference to the definition of a “taxation decision”. If a taxpayer does not have the right to object against a decision in accordance with Part IVC of the TAA, it is not a “taxation decision”.

7. In relation to a decision by the Commissioner not to remit an amount of shortfall interest charge, a taxpayer has the right to object against such a decision provided the shortfall interest charge that was not remitted is more than 20% of the tax shortfall amount pursuant to s 280-170 of Schedule 1 to the TAA. Conversely, there is no provision that permits a review of a decision under Part IVC where the amount of the shortfall interest charge that was not remitted is less than 20% of the shortfall amount.

8. In this case, the applicant has no statutory right to object to the decision to not remit the shortfall interest charge because the shortfall interest charge amounts for the 2017 and 2018 income years totalling $17,901.55 were less than 20% of the tax shortfall amounts for each of those years. Consequently, as the applicant has no right to object, there is no taxation decision that can be the subject of review by the Tribunal.

9. I am satisfied that the decision to not remit the shortfall interest charge is a decision that is not reviewable by the Tribunal and, accordingly, the application for review is dismissed under s 42A(4) of the AAT Act.

1.       I certify that the preceding nine (9) paragraphs are a true copy of the reasons for the decision herein of Deputy President Britten-Jones.

...[sgd]............................................................

Associate

Dated: 13 January 2023

Date of interlocutory hearing:	13 January 2023
Applicant:	Self-represented
Advocate for the respondent:	S Chowdhury & E Saltnes
Solicitors for the respondent:	Commissioner of Taxation