Flack and Commissioner of Taxation

[2004] AATA 1407

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2004] AATA 1407

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No TT2004/2

TAXATION APPEALS DIVISION		)
Re		JOHN FLACK

Applicant

And COMMISSIONER OF TAXATION

Respondent

DECISION

Tribunal Member Ann Cunningham

Date24 December 2004

PlaceHobart

Decision The appeal is dismissed.  

..............................................

Member

CATCHWORDS

Income Tax – eligible termination payment, withholding tax – no legislature provision for review of withholding tax due – no reviewable decision – appeal dismissed.

Taxation Administration Act 1953 – ss14ZL, 14ZY

REASONS FOR DECISION

24 December 2004   Member Ann Cunningham

1.      The applicant, as one of the two trustees of the J Flack Superannuation Fund (“the Fund”)  is seeking a variation of the amount payable by the Fund for Pay As You Go (PAYG) withholding tax.

2.      In its Instalment Activity Statement for the quarter ended 31 December 2002 the Fund indicated that the amount of the PAYG tax withheld was in the sum of $92,917.00.  Mr Flack, by letter dated 19 February 2003 objected to the withholding tax amount of $92,917.00 and advised that he would pay $42,917.00 and retain the balance of $50,000.00 by way of “compensation”.

3. The respondent calculated the amount that should have been held by J Flack Superannuation Fund at $120,314.76 and refused Mr Flack’s objection and his decision to retain the balance of the self-assessed amount of PAYG Withholding Tax of $50,000.00. Mr Flack’s application to the Administrative Appeals Tribunal was made on 24 February 2004. The respondent contends that the Tribunal has no jurisdiction to hear the appeal as there is no reviewable decision within the meaning of sub-section 25 (4) of the Administrative Appeals Tribunal Act 1975.

4.      Mr Flack did not dispute the amount of the withholding tax of $92,917.00.  What he contended was that the Fund was justified in retaining $50,000.00 in compensation because of the additional amount payable in the form of surcharge assessment.  The obligation to pay superannuation surcharge had arisen since Mr Flack entered into the deed which established the Fund on 11 May 1992. 

5.      Under Section 14ZZ of the Taxation Administration Act 1953 (TAA) a person may seek the review of a Commissioner’s decision by applying either to the Administrative Appeals Tribunal or the Federal Court.

6.      Section 14ZY states that:

(1) If the taxation objection has been lodged with the Commissioner within the required period, the Commissioner must decide whether to:

(a) allow it, wholly or in part;  or

(b) disallow it.

(2) Such a decision is in this Part called an objection decision.

(3) The Commissioner must cause to be served on the person written notice of the Commissioner’s objection decision.

7.      A “reviewable objection decision” is defined in Section 14ZR as an objection decision that is not (a) an ineligible income tax remission decision or (b) an ineligible sales tax remission decision. 

8.      A “taxation objection” is defined in Section 14ZR as having the meaning given by Section 14ZL.  Section 14ZL states:

(1) 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.

(2) Such an objection is in this Part called a taxation objection.

9. The provisions in the TAA governing the PAYG withholding system are found in Part 2-5 of Schedule 1. The requirement to withhold from an ATP is found in Section 12-85 “An entity must withhold an amount from an eligible termination payment it makes to an individual”. Section 15-10 states that the amount to be withheld is worked out under the withholding schedules made under Section 15-25 or under the prescribed regulations. There is no dispute as to the amount specified to be withheld but what is in dispute is whether Mr Flack is justified in retaining a portion of this assessed amount.

10. The issue currently before the Tribunal is whether it has jurisdiction to hear Mr Flack’s application for review. The respondent contends that it does not. The respondent contends that there is no reviewable decision within the meaning of the applicable legislation. Mr Ong on behalf of the Commission contended that there is no legislative provision allowing Mr Flack to object to the amount payable or to vary the amount required to be withheld. Therefore there can be no valid taxation objection within the meaning of Part IVC of the TAA. Mr Flack conceded that the legislation does not make provision for the review of the amount of withholding tax due. The Tribunal concurs and accordingly dismisses the appeal lodged by the applicant on the basis that the Tribunal has no jurisdiction to review.

I certify that the 10 preceding paragraphs are a true copy of the reasons for the decision herein of Member Ann Cunningham

Signed:  K L Miller (Administrative  Assistant)

Date/s of Hearing  6 December 2004
Date of Decision  24 December 2004
Counsel for the Applicant         Applicant appeared on his own behalf. 
Solicitor for the Applicant           
Counsel for the Respondent     Mr Damien Ong 
Solicitor for the Respondent      Australian Taxation Office