Dr Ageless Pty Ltd and Commissioner of Taxation (Taxation)
[2016] AATA 136
•8 March 2016
Dr Ageless Pty Ltd and Commissioner of Taxation (Taxation) [2016] AATA 136 (8 March 2016)
Division: TAXATION AND COMMERCIAL DIVISION
File Number: 2015/3477
Re: DR AGELESS PTY LTD
APPLICANT
And:COMMISSIONER OF TAXATION
RESPONDENT
DECISION
Tribunal Deputy President S A Forgie
Date 8 March 2016
Place Melbourne
The Tribunal decides:
upon being satisfied that:
1.a fee is payable by the applicant under the Administrative Appeals Tribunal Regulation 2015 in respect of an application for review of a decision of the respondent dated 21 May 2015; and
2.it has not been paid;
to dismiss the application under s 69C(1) of the Administrative Appeals Tribunal Act 1975.
…………[sgd]………….
Deputy President
CATCHWORDS – PRACTICE AND PROCEDURE – FEES – reduced fee – corporate applicant requested fee reduction on basis of financial hardship – request on basis of financial hardship not restricted to applicants who are individuals – request for reduction refused – no application for review of decision.
PRACTICE AND PROCEDURE – DISMISSAL – prescribed fee not paid on lodgement or subsequently – request for reduced fee on basis of concessional circumstances refused – opportunity to provide further information to support request for reduced fee – further information provided relating to garnishee notice but not to financial circumstances – prescribed fee not paid – appropriate opportunity given to pay prescribed fee or provide further information – application dismissed.
LEGISLATION
Acts Interpretation Act 1901 ss 2C and 2C(1)
Administrative Appeals Tribunal Act 1975 ss 27, 27(2), 29(1)(b), 69C, 69C(1), 69C(2) and 70
Administrative Appeals Tribunal Regulation 2015 s 19, 20(1)(a), 21, 21(a), 21(d), 21(h), 23(1), 23(2), 23(3), 24(1), 24(2), 25(1)(d), 26, 27 and 27(2)
Corporations Act 2001 Part 2M.3
Legal Aid Commission Act 1979 (NSW) s 37(1)(b)
Taxation Administration Act 1953 s 41ZX and Schedule 1, ss 260-5, 340-5, 340-5(3) and 340-10CASES
Saint-Gobain RF Pty Ltd v Maax Spa Corporation Pty Ltd [2004] VSC 335
Queensland Maintenance Services Pty Ltd v Commissioner of Taxation [2012] FCAFC 152
REASONS FOR DECISION
In a letter dated 21 May 2015, the Commissioner of Taxation (Commissioner) gave notice that he had disallowed the objections made on behalf of Dr Ageless Pty Ltd (DAPL) to the amended assessments he had issued for the tax periods commencing 1 July 2010 and ending on 30 June 2013. The decisions were made under Part IVC of the Taxation Administration Act 1953 (TA Act) and are objection decisions. Reasons for the Commissioner’s decisions were enclosed with the letter. On 16 July 2015, DAPL lodged an application for review of those decisions. The prescribed fee was not paid on lodgement and has not been paid since. DAPL’s sole director, Mr Shane Charter, requested a fee reduction on the basis that payment of the prescribed fee of $861 would cause it financial hardship within the meaning of r 21(h)[1] of the Administrative Appeals Tribunals Regulation 2015 (AAT Regulation). I have decided to dismiss DAPL’s application for review under s 69C(1) of the Administrative Appeals Tribunal Act 1975 (AAT Act).
LEGISLATIVE BACKGROUND
[1] I note that provisions of the Administrative Appeals Tribunals Regulation 2015 are referred to as “sections”. In these reasons, I have referred to them as “regulations” or by the abbreviation of “r” or “rr” to avoid inevitable confusion with provisions of the Administrative Appeals Tribunal Act 1975, which are also referred to as “sections”. An example arose in the course of writing these reasons when I referred to both s 25 of the AAT Act and r 25 of the AAT Regulation. My reference to the provisions as regulations is consistent with the reference made to them as “regulations” in provisions such as s 69C of the AAT Act. I will, of course, reproduce the text of any regulation I quote accurately with its references to sections.
Requirement to pay a fee
When an application for review of a decision is made to the Tribunal, s 29(1)(b) of the AAT Act provides that it must be accompanied by any prescribed fee. Section 69C provides that, except in the case of an application for review of a decision that is reviewable in the Tribunal’s Migration and Refugee Division:[2]
[2] AAT Act; s 69C(2)
“The Tribunal may dismiss an application to the Tribunal if:
(a)regulations under section 70 prescribe a fee to be payable in respect of the application; and
(b)the fee has not been paid by the time worked out under regulations under section 70.”[3]
The effect of r 24(2) of the AAT Regulation is that an applicant has six weeks within which to pay the fee. That six week period begins on the day on which the application is lodged. Until the fee is paid, the Tribunal “… is not required to deal with the application …”.[4]
What is the amount of the prescribed fee?
[3] AAT Act; s 69C(1)
[4] AAT Regulation; r 24(1)
A. Standard application fee
The prescribed fee is determined according to Part 6 of the AAT Regulation,[5] which is made under s 70 of the AAT Act. The starting point is r 20(1) of the AAT Regulation, which sets out the standard application fee but it is qualified by other provisions of the AAT Regulation. Regulation 20(1) provides that a fee of $861 is prescribed in respect of, among others:
“… an application for review of a decision (other than an application referred to in subsection (2) or section 22)”.[6]
[5] Part 6 does not apply in relation to a decision that is reviewable in the Tribunal’s Migration and Refugee Division: AAT Regulation; r 19.
[6] AAT Regulation; r 20(1)(a) In my reasons for decision, I will refer to “subsection (2) or section 22”, to which reference is made in r 20(1)(a), as rr 20(2) or 22.
B.Exceptions to standard fee based on nature of decision to be reviewed
Regulation 22 excludes from the payment of any fee those applications made for review of any one of the classes of decisions it stipulates. A decision made by the Commissioner is not among those decisions.
The exception referred to in r 20(2) relates to an application for review of a decision that falls into one or other of three groups. The common feature of each of those groups is that the decision of which review is sought has been made under the TA Act. In the case of the first two groups, dealt with in rr 20(2)(a) and (b), the decision of which review is sought is a reviewable objection decision made under Part IVC of the TA Act. The third group is the subject of r 20(2)(c). It concerns a decision made under the TA Act but not a reviewable objection decision. I will now expand on each.
Regulation 20(2)(a) prescribes a reduced fee of $85 if either the application states that the amount that the applicant considers to be the amount of tax in dispute is less than $5,000 or, after the application is made but before the start of the hearing of that application, the applicant gives written notice to the Tribunal that he, she or it considers the amount of tax in dispute to be less than that amount.[7] DAPL has not made such a statement in its application to the Tribunal or since.
[7] See [10] below for the prescribed fee should the Tribunal not consider that the amount of tax in dispute is less than $5,000.
Regulation 20(2)(b) prescribes a reduced fee of $85 if the reviewable objection decision relates to an application made under s 340-5 of Schedule 1 to the TA Act. Section 340-5 provides that certain entities may apply to the Commissioner for release, in whole or in part, from a liability to which s 340-10 applies provided the condition specified in s 340-5(3) in respect of that entity is satisfied. The entities and conditions that are specified are:
“Entity and condition
Item
Entity
Condition
1
an individual
you would suffer serious hardship if you were required to satisfy the liability
2
a trustee of the estate of a deceased individual
the dependants of the deceased individual would suffer serious hardship if you were required to satisfy that liability”
DAPL’s application did not seek review of a decision made under s 340-5.
The third group for which r 20(2) of the AAT Regulation prescribes a fee of $85 is set out in r 20(2)(c). It comprises those applications seeking review of a decision refusing a request for an extension of time within which to make a taxation objection under s 14ZX of the TA Act. DAPL’s application is not an application of that sort for it made a taxation objection and the Commissioner made an objection decision on it.
C. Exceptions to standard fee based on the applicant’s circumstances
The fees prescribed under rr 20(1) and (2) are revised every two years according to the indexation formula set out in r 27. This means that, in due course, the fee of $85 prescribed in r 20(2) will exceed $100. That has to be kept in mind when reading r 20(3), which prescribes a fee of $100 instead of the fee referred to in rr 20(1) or (2) if:
“(a) the amount of the fee prescribed under subsection (1) or (2) is more than $100; and
(b)the circumstances in section 21 exist.”
The Tribunal may also order that an amount of $100 prescribed by r 20(3) is the prescribed fee if the circumstances in r 21 exist and if:
“(a) an applicant paid the fee mentioned in subsection 20(2) on the basis that the applicant considers that the amount of tax in dispute is less than $5 000; and
(b)the Tribunal considers that the amount of tax in dispute is not less than $5 000; …”.
That is the effect of r 25(1)(d). If the Tribunal considers that the amount of tax in dispute is not less than $5,000 but does not consider that the circumstances in r 21 exist, it may order that the prescribed fee is the fee prescribed by r 20(1) i.e. currently $861.[8]
[8] AAT Regulation; r 25(1)(c)
The circumstances for the purposes of rr 20(3)(b) and 25(1)(d) are the following:
“(a) the applicant has been granted legal aid, under a legal aid scheme or service established under Commonwealth or State law or approved by the Attorney-General, for the matter to which the fee relates;
(b)the applicant is the holder of a concession card within the meaning of the Social Security Act 1991;
(c)the applicant is the holder of any other card issued by the Commonwealth that certifies entitlement to Commonwealth health concessions;
(d)the applicant is an inmate of a prison or is otherwise lawfully detained in a public institution;
(e)the applicant is a child under the age of 18 years;
(f)the applicant is in receipt of a youth allowance, or an austudy payment, within the meaning of the Social Security Act 1991;
(g)the applicant is in receipt of benefits under the Commonwealth student assistance scheme known as the ABSTUDY Scheme;
(h)the Registrar makes an order that, having regard to the applicant’s income, expenses, liabilities and assets, the Registrar considers that the payment of an amount would cause, or has caused, financial hardship to the applicant.”
D. Exceptions to standard fee based on multiple applications
Regulation 23 provides for situations in which more than one application relates to the same applicant. If, in the opinion of the Registrar, the applications may be conveniently heard before the Tribunal at the same time, the Registrar may order that only one prescribed fee is payable. In the case of multiple applications for which the same prescribed fee would have been payable in respect of each, a single prescribed fee in that same amount is payable.[9] If different prescribed fees would have been payable in respect of each, the prescribed fee is equal to the higher or highest prescribed fee that would otherwise have been payable.[10]
[9] AAT Regulation; r 23(1)
[10] AAT Regulation; r 23(2) and (3)
MAY A CORPORATE BODY APPLY FOR A FEE REDUCTION?
While the AAT Regulation does not prescribe a form that an applicant must use in order to request payment of a prescribed fee other than the standard fee, the Tribunal has made a form available on its website.[11] It is entitled “Request for Fee Reduction” and is drafted in terms that suggest that the applicant must be an individual rather than a person in the broader sense of including a body politic or corporate as well as an individual. So, for example, it asks for an applicant’s full name being his or her family name and given name or names, his or her occupation and the name of his or her employer. The second page of the form is headed “Statement of Financial Position – Individual”, which reinforces the impression on the first page of the form that it is directed only to persons who are individuals and not to others who could be expected to come within that description.[12]
[11] Section 2C(1) of the Acts Interpretation Act 1901 provides that “In any Act, expression used to denote persons generally (such as ‘person’, ‘party’, ‘someone’ ‘anyone’, ‘no-one’, ‘one’, ‘another’, and ‘whoever’), include a body politic or corporate as well as an individual.”
Given that the form has not been prescribed by the AAT Regulation, its contents cannot influence the interpretation of r 21 or of Part 6 generally. By their very nature, six of the eight circumstances prescribed in r 21 must relate to an applicant who is an individual. Four of the six relate either to those in receipt of specified income maintenance payments or entitled to health concessions. By the nature of the payments and concessions, they must relate to an applicant who is an individual. A prisoner or person lawfully detained in a public institution and a child under the age of 18 years are also individuals.
That leaves the circumstances specified in rr 21(a) and (h). The first of these relates to an applicant who has been granted legal aid. Whether a grant of legal aid may be given to a person depends on the Commonwealth or State legislation under which it is granted. Taking the relevant New South Wales legislation as an example, I note that, subject to one proviso, an applicant for legal aid may be a corporation as well as an individual. The proviso is that the Legal Aid Commission must be “… of the opinion that the legal aid granted will protect the interests of other persons who are eligible for legal aid”.[13]
[13] Legal Aid Commission Act 1979 (NSW); s 37(1)(b)
The circumstances set out in r 21(h) are those in which the Registrar considers that payment of the prescribed amount would cause, or has caused,[14] financial hardship to the applicant. In carrying out that consideration, the Registrar has regard to the applicant’s income, expenses, liabilities and assets. There is nothing on the face of r 21(h) that limits financial hardship to an individual. The language of financial hardship is equally appropriate to describe the circumstances of a corporation as it is the circumstances of an individual. Taking two examples only, the language of financial hardship has been used when consideration is given to whether a defendant corporation should be ordered to give security for the costs of the applicant corporation in defending its counterclaim.[15] It has also been used by the Full Court of the Federal Court when considering the impact of a decision by the Commissioner to issue a notice under s 260-5 of the TA Act requiring payment to the Commissioner of moneys otherwise payable to the taxpayer.[16]
[14] If the Registrar comes to that conclusion after an applicant has paid a prescribed fee higher than $100 and makes an order under s 20(3), provision is made in Item 4 of s 26 for the refund of the difference between the fee paid and the lower fee.
[15] Saint-Gobain RF Pty Ltd v Maax Spa Corporation Pty Ltd [2004] VSC 335 at [66]-[69]; Habersberger J
[16] Queensland Maintenance Services Pty Ltd v Commissioner of Taxation [2012] FCAFC 152 at [13]; Lander, Jessup and Foster JJ
A reading of the circumstances in rr 21(a) (where permitted by the relevant legal aid scheme) and (h) to include those of a corporation as well as of an individual is supported by a reading of s 27 of the AAT Act. Section 27 sets out those persons who may apply to the Tribunal. Its terms may be modified by a particular enactment providing for applications to be made to the Tribunal but a reading of s 27 supports a conclusion that Parliament has intended that the “persons” who may apply for review of a decision are limited only by their being persons whose interests are affected by that decision. There is nothing to suggest that there is any restriction on the meaning ordinarily ascribed to the word “person” as understood by s 2C of the Acts Interpretation Act 1901 (AI Act). Therefore, their identity as a body corporate, body politic or as an individual is irrelevant. Section 27(2) of the AAT Act gives a clear indication that an applicant may be given a meaning that goes beyond that of a “person” for it draws in an organisation or association of persons, whether incorporated or not, by providing that it is taken to have interests affected by a decision if it seeks review of a decision relating to a matter included in its objects or purposes. Section 27 provides:
“(1) Where this Act or any other enactment (other than the Australian Security Intelligence Organisation Act 1979) provides that an application may be made to the Tribunal for a review of a decision, the application may be made by or on behalf of a person or persons (including the Commonwealth or an authority of the Commonwealth or of Norfolk Island or an authority of Norfolk Island) whose interests are affected by the decision.
Note:…
(2)An organization or association of persons, whether incorporated or not, shall be taken to have interests that are affected by a decision if the decision relates to a matter included in the objects or purposes of the organization or association.
(3)Subsection (2) does not apply in relation to a decision given before the organization or association was formed or before the objects or purposes of the organization or association included the matter concerned.”
Having regard to those who may make an application for review of a decision and to the concessional circumstances set out in r 21 of the AAT Regulation, it seems to me that there is no restriction on those who may apply for a reduced fee other than those inherent in the description of each concessional circumstance. An applicant who is an inmate of a prison, for example, must be an individual for a corporate body cannot be imprisoned. The exclusion of a corporation is inherent in the description of the concessional circumstance set out in r 21(d). For the reasons I have given above, the concessional circumstance set out in a provision such as r 21(a) and arising when an applicant has been granted legal aid, may apply to either an individual or a corporate body just as r 21(h) may apply to an individual or a corporate body suffering hardship. The restrictions must be found in the circumstances themselves for, to imply a broader restriction, would be to use the AAT Regulation to limit the right to apply given by the relevant enactment when read with s 25(1) of the AAT Act.
The basis on which financial hardship is determined in the case of a person after having regard to that person’s income, expenses, liabilities and assets. The Request for Fee Reduction form is appropriate to the task of obtaining an indication of that information in the case of an individual but it is less so for a corporation. There is, however, no requirement that the form be followed. A corporate body might wish to provide the information required by r 21(h) by lodging copies of the financial statements it is required to keep under Part 2M.3 of the Corporations Act 2001. There may be other avenues but it is not relevant to explore them further at this stage.
DISMISSAL OF APPLICATION FOR NON-PAYMENT OF APPLICATION FEE
DAPL has been given an opportunity to lodge information relevant to its Request for Fee Reduction. It has lodged three such requests with one dated 21 July 2015, another 7 August 2015 and the third 26 August 2015. DAPL also lodged two printouts from the Commonwealth Bank (CBA) showing the balance in a particular account in the name of “Dr Agless” (sic) as 1 July 2015 and 1 August 2015. It was not an account in the name of DAPL. Following correspondence between the Deputy District Registrar (DDR) and DAPL asking for further information about its financial circumstances, she notified it on 11 September 2015 that she was not satisfied that payment of the full application fee would cause financial hardship to it. The DDR advised DAPL that, if the full fee were not received, the Tribunal could dismiss its application. DAPL has not sought review of this decision, which was made under r 21(h).
On 16 November 2015, DAPL lodged a copy of a garnishee notice issued by the Commissioner to the CBA and dated 7 September 2015. It required the CBA to forward to the Australian Taxation Office (ATO) any money due to DAPL. Moneys to be deducted were to the value of $222,103.33 or such lesser amount as the bank held. That had the effect of freezing the particular bank account to which it was directed but, by providing that notice to the Tribunal, DAPL did not give the Registrar any information about its income, expenses, liabilities and assets on which she or her delegate, the DDR, could make a decision. Even though the form of Request for Fee Reduction is directed to an individual, it is clear from the form that this is the type of information that is required. Reference is made on that form to r 21 of the AAT Regulation and a reading of that provision would have clearly indicated that the information requires is the same for any applicant seeking to pay a concessional or reduced fee.
Power given to the Tribunal by s 69C(1) of the AAT Act to dismiss an application if the fee is not paid in respect of an application within six weeks of lodgement of that application. At the Directions Hearing held on 4 December 2015, I told Mr Charter that I would look at this matter after Christmas and gave him an opportunity to put forward any views he had on the nature of the power given to the Tribunal before that date. He has not done so up to the date these reasons are published.
The power given by s 69C(1) of the AAT Act is a power expressed in discretionary, rather than mandatory, terms. Section 24(1) of the AAT Regulation is drafted in terms consistent with its being a discretionary power. It provides that, if the application is not accompanied by the prescribed fee, “… the Tribunal is not required to deal with the application unless, and until, the fee is paid.” (emphasis added) Although I do not wish to come to a conclude view on the subject, it is arguable that Parliament has left dismissal to the discretion of the Tribunal for there may be instances in which payment of even the reduced or concessional fee would cause such financial hardship that the applicant would be prevented from making an application in circumstances in which he or she has reasonable prospects of success.
I do not need to explore that possibility further for this is a case in which DAPL has not given sufficient information on which a decision can be made on its second and third Requests for Fee Reduction under r 21(h) of the AAT Regulation. That is so despite the Tribunal’s Registry having asked for further information on more than one occasion. Mr Charter said at the Directions Hearing that DAPL was happy to pay the fee if the ATO unfroze its account with the CBA. Given that the CBA’s records of 1 July 2015 and 1 August 2015 showed that there were insufficient funds in the account to pay the prescribed fee of $861, Mr Charter’s statement suggests that other amounts have since been paid into the account even if, as Mr Charter stated, they do not amount to $222,000 odd. Alternatively, it may suggest that DAPL has had access to other funds but, whether it has that access or not, is not a matter on which I intend to speculate. DAPL has not given information to the Tribunal about its financial situation so that its further requests for payment of a reduced fee could be considered and the DDR’s decision dated 11 September 2015 that she was not satisfied that payment of the full application fee would cause financial hardship to DAPL stands. It has not paid the prescribed fee despite being given far longer than the prescribed six weeks in which to do so. This is a situation in which its application should be dismissed under s 69C(1) of the AAT Act.
My decision does not prevent DAPL from lodging a further application for review but it could only do so after successfully applying for an extension of the time within which to lodge an application. That raises different issues including whether DAPL would have reasonable prospects of success if permitted to make that application.
I certify that the 25 preceding paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie,
Signed: ………...............[sgd]........................................
Associate
Date of Telephone Directions Hearing 4 December 2015
Date of Decision 8 March 2016
For the Applicant Mr S Charter
Solicitor for the Respondent not required to attend
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