Evans and Commissioner of Taxation (Taxation)
[2016] AATA 80
•20 January 2016
Evans and Commissioner of Taxation (Taxation) [2016] AATA 80 (20 January 2016)
Division
TAXATION & COMMERCIAL DIVISION
File Number(s)
2015/2115
Re
Simon Evans
APPLICANT
And
Commissioner of Taxation
RESPONDENT
DECISION
Tribunal Professor R Deutsch, Deputy President
Date 20 January 2016 Date of written reasons 17 February 2016 Place Sydney The decision under review is affirmed.
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Professor R Deutsch, Deputy President
CATCHWORDS
TAXATION AND REVENUE – amendment to income tax return – request for an extension of time to lodge objection - Commissioner’s discretion to treat objection valid – matters to be considered when exercising discretion – applicant has no arguable case
LEGISLATION
Taxation Administration Act 1953 (Cth) ss 14ZW, 14ZX
CASES
Brown v Federal Commissioner of Taxation (1999) 42 ATR 118
REASONS FOR DECISION
Professor R Deutsch, Deputy President
17 February 2016
This is an application for review of a decision made by the Respondent on 23 January 2015 in which the Respondent refused the Applicant’s request for an extension of time to lodge an amendment to his income tax returns for the years ending 2006, 2007 and 2008. The factual background of the case is set out in detail in the Respondent’s Statement of Facts, Issues and Contentions dated 24 July 2015 and I do not propose to repeat those broad facts here.
Critically however, the Applicant made a request on 22 October 2014 seeking amendments to his income tax returns for the three years in question. He formalised this request as an objection which was made on 30 November 2014. For an objection to be valid, section 14ZW of the Taxation Administration Act 1953 (Cth) requires it to be lodged within two years of the taxpayer receiving the original notice of assessment.
The relevant notices of assessment were issued and presumably received on or around 2 June 2009. Thus, the two year period expires on or around 2 June 2011. Accordingly, this objection was made more than three and a half years after the expiry of the time frame in which it expected it would normally be made. Section 14ZX of the Taxation Administration Act 1953 (Cth) gives the Commissioner the discretion to treat the objection as valid even if lodged after the end of the two year period.
In exercising that discretion it is clear from the case law, but most particularly from the decision of Hill J in Brown v Federal Commissioner of Taxation (1999) 42 ATR 118 that the Commissioner and this Tribunal in a review such as this should consider the following matters in particular:
(a)the taxpayer’s explanation for the delay in lodging an objection against the assessment within the time stipulated by parliament;
(b)the circumstances attendant upon that delay;
(c)whether the objection is one which on its face is frivolous or which in law must fail or one in which the taxpayer has no arguable case;
(d)other matters which are relevant to the circumstance of the particular case including such prejudice as may be shown to exist to the Commissioner and any prejudice which may arise to a taxpayer who has by reason of the failure to object in time, lost the right to review the assessment.
Having considered these matters, they are to be weighed against each other so that ultimately an extension is granted in circumstances where the justice of the case requires the granting of such an extension. In this case all four matters are of relevance but of greatest relevance is the strength of the Applicant’s case.
In my considered view based on all the information currently available, the Applicant does not have an arguable case. The Applicant’s objection on its face must inevitably fail in law because the deduction or the carried forward loss that the Applicant seeks to claim was said to be an estimated income value that, in the Applicant’s belief, he should have received from an income protection insurance policy.
Accordingly, the claim is simply an amount of alleged income that the Applicant did not receive whether or not he was entitled to it. Therefore, the Applicant did not actually incur a loss or outgoing either in carrying on a business or in deriving his assessable income. Under the law as it stood at all relevant times the Applicant is not entitled to claim a deduction for the alleged income that he did not receive, nor is there anything for him to claim as a carried forward loss.
In my view he has no arguable case.
In relation to his explanation for the delay, I readily accept that the Applicant has at all times been self-represented and he may not have been aware of the two year time limit imposed under the statute. However, he was advised of the two year limitation on a number of occasions by the Respondent and his lack of knowledge cannot now be used to support an extension of time application.
Apart from the correspondence with the Respondent, the Applicant took no steps to enquire with any third party whether he needs to proactively lodge an objection. The Applicant suggests that he has no obligation to seek professional help and I agree, he does not have such an obligation. But that simply puts greater responsibility on his shoulders, the consequence of which he cannot now avoid.
Finally, I will mention two other things. First, the Applicant is out of time here by over three and a half years and in my view, the longer he is out of time, the more difficult his position becomes and more onerous is the responsibility which he has to demonstrate to this Tribunal why an extension of time should be granted.
Secondly, the Applicant has had a real issue with the fact that the Respondent at first issued him with a refund based on the deduction he claimed but then sought to reverse that position. The Applicant clearly fails to understand Australia’s income tax system which is based on a concept of self-assessment. This means that information which is provided by the taxpayer to the ATO is initially accepted as being true and correct when a return is lodged. Under the self-assessment system, the taxpayer bears the onus to ensure that his tax return complies with the taxation laws. A taxpayer must show all assessable income and claim only the deductions to which he, she or it is entitled.
For the income tax year ended 30 June 2006, the Applicant incorrectly included an amount of over $95,000 as a deduction in his income tax return. Accordingly, the Applicant received a refund of almost $11,500 when in reality he should only have been entitled to a refund of something a little under $3,000. Similarly, in the income year ended 30 June 2007, the Applicant incorrectly included in his income tax return an amount of just over $95,000 as a deduction and an amount of just over $93,000 as a carried forward loss. The Applicant’s return was adjusted by the Commissioner prior to issuing the notice of assessment. Clearly the Commissioner accepted the Applicant’s position as presented in his tax returns but on review considers that the Applicant has claimed a deduction which he was not entitled to and received a refund. The Commissioner has correctly taken the position that those deductions were not available.
Accordingly, I conclude that the decision under review is affirmed.
I certify that the preceding 14 (fourteen) paragraphs are a true copy of the reasons for the decision herein of Professor R Deutsch, Deputy President ..................................[sgd]......................................
Associate
Dated 17 February 2016
Date(s) of hearing 20 January 2016 Applicant In person Solicitors for the Respondent ATO Review and Dispute Resolution Group
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