Fenton and Commissioner of Taxation
[2003] AATA 137
•13 February 2003
Administrative
Appeals
Tribunal
DECISION AND REASONS FOR DECISION [2003] AATA 137
ADMINISTRATIVE APPEALS TRIBUNAL NºVT2002/82
TAXATION APPEALS DIVISION
Re: MICHAEL FENTON
Applicant
And: COMMISSIONER OF TAXATION
Respondent
DECISION
Tribunal: Mr B.H. Pascoe, Senior Member
Date: 13 February 2003
Place: Melbourne
Decision:The Tribunal affirms the decision under review.
(sgd) B.H. Pascoe
Senior Member
TAXATION – self‑funded retirees supplementary bonus – whether business and wages income for 1999‑2000 exceeded $1000.00 – lump sum for unused annual leave from prior period – whether assessable income in year of receipt – payment of bonus as result of claim – subsequent demand for repayment – whether estoppel against respondent
A New Tax System ( Bonuses for Older Australians) Act 1999
Income Tax Assessment Act 1997
Holt v Markham (1923) 1 KB 504
Federal Commissioner of Taxation v Wade (1951) 84 CLR 105
REASONS FOR DECISION
13 February 2003 Mr B.H. Pascoe, Senior Member
This is an application to review a decision of the respondent dated 23 January 2002, to disallow an objection to a determination that the applicant was not qualified for the self‑funded retiree's supplementary bonus (supplementary bonus) under A New Tax System (Bonuses for Older Australians) Act 1999 (the BOA Act).
At the hearing the applicant, Mr M. Fenton, was unrepresented and the respondent was represented by Mr A. Crowther, an officer of the respondent. The Tribunal had the documents provided by the respondent pursuant to s.37 of the Administrative Appeals Tribunal Act1975. Mr Fenton had filed with the Tribunal a statement of facts and contentions, together with copies of some documents considered relevant.
There was no dispute as to the facts of this case. Mr Fenton was born on 7 April 1937 and was 63 years of age on 1 July 2000. His last employment was with New England Institute of TAFE (NEIT) which he ceased on 14 November 1995 due to ill health. After July 1996, he received no remuneration from NEIT. In February 1999, he received a lump sum settlement of a worker's compensation claim and, as part of that settlement formally resigned from NEIT. After an apparent period of confusion in relation to that notice of resignation, Mr Fenton received a letter from NEIT dated 3 February 2000 which advised that an amount of $7669.81 had been deposited to his account on 20 January 2000. This amount represented $14,882.21 accumulated leave less income tax of $7212.40. Some 12 months later he received advice of the calculation of the leave entitlement as 64.19 days accumulated from 17 January 1994 to 15 February 1999.
At a date which is not clear but after 30 June 2000, Mr Fenton lodged with the respondent a claim under the BOA Act. Against question 15 on the form, Mr Fenton stated that he did not have business or wage income of more than $1000.00 in the 1999‑2000 financial year. He received a payment of $2000.00 as the supplementary bonus in August 2000. By letter of 8 March 2001 from Centrelink, he was advised that he was not entitled to the $2000.00 and was required to repay that amount by 16 April 2001. Mr Fenton sought reasons for the alleged incorrect payment and, by letter of 14 September 2001, was advised by the respondent that his income tax return for the year ended 30 June 2000 showed salary and wage income in excess of $1000.00 and that he had incorrectly claimed the supplementary bonus.
The BOA Act provided for one‑off tax-free bonus payments to individuals over 55 years of age. It consisted of an Aged Persons Savings Bonus (APSB) of up to $1000.00 and a supplementary bonus of up to $2000.00. The maximum APSB was payable where the person had a taxable income of less than $30,000.00 and income from savings and investments of more than $1000.00 in either the 1998‑1999 year or the 1999‑2000 year. A further entitlement to the maximum supplementary bonus arose if the person did not have business or wages income of more than $1000.00 in the 1999‑2000 year and was not in receipt of certain pensions or benefits under the Social Security Act 1991 or the Veterans' Entitlements Act 1986.. The respondent accepted that Mr Fenton satisfied all of the requirements for the supplementary bonus under s.41(3) of the BOA Act other than the requirement that salary and wage income for the 1999‑2000 year did not exceed $1000.00. It was clear that the amount of $14,882.00 was included as assessable income in his return of that year.
Mr Fenton argued that the $14,882.00 represented payment for an entitlement while accrued between 1994 and 1999 and was derived prior to the year ended 30 June 2000. He maintained that NEIT had been in breach of its legal obligation to pay the amount of accrued leave within the time provided by the relevant legislation and he should not be penalised by such breach. Mr Fenton argued, further, that the respondent made a decision to pay the $2000.00 into his bank account so indicating that he was entitled to the supplementary bonus, it was received by him in good faith and spent and the respondent is now estopped from reclaiming such amount. He relied on a 1922 King's Bench decision in Holt v Markham (1923) 1 KB 504.
In relation to the first argument, s.36 of the BOA Act defines business and wage income, insofar as is relevant to this matter, as …all of the individual's assessable income that is PAYE earnings other than eligible termination payments included as assessable under s.27B or s.27C of the Income Tax Assessment Act 1997 (the Assessment Act). PAYE earnings has the meaning contained in s.221A of the Assessment Act which specifically includes amounts to which s.26AC of the Assessment Act applies. Section 26AC includes in assessable income of a year, amounts paid to a taxpayer in that year in respect of unused annual leave and paid in a lump sum in consequence of retirement of the taxpayer from any employment. It is clear that the amount of $14,882.00 was properly included in assessable income of the year ended 30 June 2000, having been received during that year. It is clear, also, that the amount constitutes PAYE earnings and wages income under the BOA Act.
It follows that Mr Fenton had business and wages income for the year ended 30 June 2000 which exceeded $1000.00 so that he did not qualify for the supplementary bonus. There is no basis under either the BOA Act or the Assessment Act for treating the amount as income in the years in which the leave entitlement accrued and it can be assessable income only in the year of receipt. It is accepted that, if NEIT had paid the amount immediately after the resignation in February 1999 and prior to 1 July 1999, Mr Fenton would have qualified for the supplementary bonus. However, the fact was that the amount was received after that date and assessable in the critical year ended 30 June 2000. Nothing can now change that fact. Even if the question was properly before the Tribunal, which it is not, there was no properly tested evidence to allow any view to be expressed as to attribution of blame for the delay.
In relation to Mr Fenton's argument on estoppel, it is clear from many decisions of the Court, including Federal Commissioner of Taxation v Wade (1951) 84 CLR 105, that no conduct on behalf of the Commissioner of Taxation can operate as an estoppel against the operation of a taxing statute. Here, it is clear that the provisions of the BOA Act precluded Mr Fenton from any entitlement to a supplementary bonus. There was no mistake of fact or law by the respondent. Mr Fenton lodged a claim stating that he was so entitled. Any mistake was made by him in stating that he did not have business or wage income in excess of $1000.00 in the year ended 30 June 2000. He may well have honestly thought that this was true at the time but he was incorrect. The circumstances in Holt v Markham were quite different. Here, Mr Fenton made an incorrect claim which was shown to be incorrect when his return of income for the year was examined and the respondent correctly seeks repayment.
It follows from the foregoing that the decision under review should be affirmed.
I certify that the ten [10] preceding paragraphs are a true copy of the reasons for the decision herein of
Mr B.H. Pascoe, Senior Member
(sgd) Catherine Thomas
Clerk
Date of Hearing: 4 February 2003
Date of Decision: 13 February 2003
Solicitor for the applicant: NIL — IN PERSON
Solicitor for the respondent: Mr A. Crowther, with Australian Taxation Office
0
1
0