GOSWELL INVESTMENTS PTY Ltd and Commissioner Of State Revenue - [2008] WASAT 212

JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL

STREAM: COMMERCIAL & CIVIL

ACT: TAXATION ADMINISTRATION ACT 2003 (WA)

CITATION: GOSWELL INVESTMENTS PTY LTD and COMMISSIONER OF STATE REVENUE [2008] WASAT 212

MEMBER: JUSTICE M L BARKER (PRESIDENT)

HEARD: 19 AUGUST 2008

DELIVERED : 12 SEPTEMBER 2008

FILE NO/S: CC 1059 of 2008

BETWEEN: GOSWELL INVESTMENTS PTY LTD
Applicant
AND
COMMISSIONER OF STATE REVENUE
Respondent

Catchwords:

State revenue - Availability of review of refusal to make a reassessment of stamp duty - Whether decision 'affects the taxpayer's liability to taxation' - Overall structure and scheme of assessment, objection and reassessment provisions

Legislation:

Administrative Decisions (Judicial Review) Act 1977 (Cth)
Stamp Act 1921 (WA), s 76C
Taxation Administration Act 2003 (WA), s 16(1), s 16(2)(b), s 16(5), s 17, s 17(1), s 31, s 34, s 36, s 40(1), Pt 3, Pt 4

Result:

Application dismissed for want of jurisdiction

Category: A

Representation:

Counsel:

Applicant: Mr T Papaelias (Agent)
Respondent: Mr B Prentice

Solicitors:

Applicant: Ernst & Young (Agent)
Respondent: State Solicitor's Office

Case(s) referred to in decision(s):

WorldAudio Ltd v Australia Communications and Media Authority [2006] FCA 8; (2006) 228 ALR 733

REASONS FOR DECISION OF THE TRIBUNAL:

Summary of Tribunal's decision

The applicant sought review in the State Administrative Tribunal of a decision of the Commissioner of State Revenue not to make a reassessment of stamp duty following the taxpayer’s application for reassessment. As a preliminary issue the Tribunal had to consider whether or not the taxpayer had a right to review in the Tribunal.
The Tribunal considered the relevant provisions of the Taxation Administration Act 2003 (WA), and in particular whether there was a relevant decision under a taxation Act that ‘affects the taxpayer’s liability to taxation’ pursuant to s 34(1)(b). The Tribunal found that the decision not to make a reassessment was not a decision that affected the taxpayer’s liability to taxation.
The Tribunal considered that the Taxation Administration Act 2003 intends that a taxpayer, if they wish to challenge the correctness of an assessment, should use the objection proceedings, and that it was not intended that the reassessment process would be used for that purpose.
Accordingly, the applicant did not have a right to review in the Tribunal, and the application for review was dismissed.

Issue

A preliminary issue has arisen in these proceedings as to whether or not the applicant taxpayer has a right to seek review in respect of a decision of the Commissioner of State Revenue (Commissioner) not to make a reassessment of stamp duty following an application of the taxpayer for a reassessment pursuant to s 16(2)(b) of the Taxation Administration Act 2003 (WA) (TA Act).

Background to the issue

Div 1 of Pt 3 of the TA Act deals with 'Assessments' of tax.
Section 16 specifically deals with the topic of reassessments in the following terms:
(1)The Commissioner must make a reassessment -
(a)if specifically required to do so under a taxation Act;
(b)if specifically required to do so under a direction given in the course of review proceedings; or
(c)if a taxation Act provides for a rebate or refund of tax in particular circumstances, and the circumstances were not taken into account when the previous assessment was made.
(2)Subject to subsection (5), the Commissioner may also make a reassessment -
(a)on his or her own initiative, if it appears that a previous assessment is or may be incorrect for any reason; or
(b)on the application of the taxpayer.
(3)A reassessment may be made whether or not any amount of tax has been paid on the previous assessment.
(4)A reassessment may consolidate 2 or more separate assessments into a single assessment.
(5)If an assessment is based on a particular interpretation of the applicable law or a particular practice of the Commissioner that was generally applied to assessments of that kind when the assessment was made, then the Commissioner cannot make a reassessment based on the ground that the interpretation or practice is or was erroneous.
It will be noticed that while s 16(1) requires the Commissioner to make a reassessment in certain cases - 'must make a reassessment' - s 16(2), subject to s (16)(5), is discretionary. In particular, s 16(2)(b) provides that 'Subject to subsection (5), the Commissioner may also make a reassessment on the application of the taxpayer' (emphasis added).
Section 16(5) provides that if an assessment is based on a particular interpretation of the applicable law or a particular practice of the Commissioner that was generally applied to assessments of that kind when the assessment was made, then the Commissioner cannot make a reassessment based on the ground that the interpretation or practice is or was erroneous.
Section 17(1) of the TA Act places a time limit on reassessment so that a taxpayer is not entitled to apply for reassessment more than five years after the original assessment was made.
It is clear enough that s 16(2)(b), when read with s 17(1), provides a taxpayer with an entitlement to apply for reassessment.
The right of the taxpayer to seek a reassessment is to be contrasted, on the face of it, with objections and review proceedings in respect of an initial assessment.
Objections and review proceedings are dealt with specifically by Pt 4 of the TA Act.
Section 31 specifically deals with the procedure for challenging assessments in these terms:
A taxpayer is not entitled to challenge the validity or correctness of an assessment, or of any other decision for which rights of objection or review are conferred by this Act, except -
(a)in proceedings by way of objection or in review proceedings; or
(b)in any other manner specifically provided in a taxation Act.
The right to object is enshrined in s 34. Section 34(1) provides:
A taxpayer may object to -
(a)an assessment; or
(b)another decision under a taxation Act that affects the taxpayer's liability to taxation; or
(c)a decision made on a pretransaction decision request made under the Duties Act 2008 section 261, unless any exemption granted under that Act for the transaction to which the request relates has been revoked; or
(d)a decision made on a presection 270 decision request made under the Duties Act 2008 section 269, unless the Commissioner has already decided under the Duties Act 2008 section 270(1) to disregard the scheme that was the subject of the request.
Section 34(2) provides however, that an objection cannot be made against:
(a)the determination of an objection;
(b)an assessment of an amount of duty and penalty tax that is assessed under a taxation Act and specified in a traffic infringement notice issued under the Road Traffic Act 1974 section 102, unless the amount has been paid;
(d)a decision in respect of which a taxation Act specifically provides other procedures for objection or appeal.
Section 36 provides the times for lodging objections, as follows:
(1)An objection to an official assessment must be lodged within 60 days after -
(a)the assessment notice is issued;
(b)if the assessment is indicated by endorsement in accordance with section 23(2)(b) - the date on which the document was endorsed; or
(c)if a taxpayer has requested a statement of grounds in accordance with section 25(2)(a) within 30 days of the issue of the assessment - the date on which the Commissioner serves a statement of the grounds.
(2)An objection to a self‑assessment must be lodged within 60 days after the due date for lodging the return related to the assessment.
(3)An objection to another decision must be lodged within 60 days after the day on which the person affected by the decision was notified of the decision.
(4)However, the Commissioner may, on application by the taxpayer, extend the time for lodging an objection.
(5)An application for an extension of time -
(a)must be made within 12 months after the date on which the objection was to have been lodged under subsection (1), (2) or (3), but may be made before or after that date; and
(b)must set out in detail the grounds on which the applicant asks for an extension of time.
(6)If objection is taken to a decision about selfassessment of tax, the date of the decision is taken to be the date by which the first return affected by the decision is to be lodged by the taxpayer after the taxpayer receives notice of the decision.
A person has a right if dissatisfied with the Commissioner's decision on an objection, or on an application for an extension of time for lodging an objection, to apply to the State Administrative Tribunal (Tribunal) for review of the decision: s 40(1) of the TA Act.
The time for seeking review is limited to 60 days after notice of the decision is served on the taxpayer: s 42 of the TA Act.
Accordingly, a taxpayer may seek review of the Commissioner's decision not to allow an objection to an assessment.
The first point to note is that, as set out above, under s 34(1), the taxpayer may object to:
(a)an assessment; or
(b)another decision under a taxation Act that affects the taxpayer's liability to taxation.
In this case, the taxpayer recognises that there is no relevant objection to an initial assessment in respect of which it seeks review of the Tribunal. Rather, the taxpayer says that its liability to taxation has been affected by the refusal of the Commissioner to exercise, or to exercise in its favour, the power to reassess following the taxpayer's application for reassessment pursuant to s 16(2)(b).
The Commissioner argues that the taxpayer is not entitled to seek review of the Commissioner's decision not to make a reassessment.
The factual circumstances in which the issue arises are as follows. The Commissioner issued an assessment for stamp duty dated 15 May 2003 to the taxpayer, as trustee for the Prosser Unit Trust, trading as Prosser Toyota, for an amount of $99,315.68 for the period 1 July 1996 to 30 June 2002. The assessment was issued under s 76C of the Stamp Act 1921 (WA) (Stamp Act).
The taxpayer says the assessment for the most part was based upon the Commissioner's view that the value for the stamp duty on the registration of motor vehicles was understated for fleet vehicles. The Commissioner based the values used in the assessment upon his Circular dated August 2000 which stated the market value for fleet sales was higher than the actual selling prices. Prior to that date, the Commissioner's practice for stamp duty values for fleet vehicles was based upon the 1995 Circular in which it was accepted that the market selling price equated to the market value for motor vehicles.
However, the amounts relating to market value were solely the liability of individual licensees (or customers) under the Stamp Act. The taxpayer says this is not being disputed by the Commissioner. However, the Commissioner issued the assessment with the full knowledge that the liability was not lawfully that of the taxpayer and at all times represented to them that the assessment was only in respect of the taxpayer's liabilities under the Stamp Act.
The taxpayer says it is not a contention of the Commissioner that the liabilities assessed are not those of the taxpayer, but in fact relate to the individual licensees or customers. It is, however, the Commissioner's contention that he is under no obligation to correct this breach because an objection was not lodged within 60 days of the assessment being issued.
The taxpayer goes so far to allege that the Office of State Revenue 'used coercion and threats of increased costs if the taxpayer disputed the assessment that was to be issued'. The taxpayer says it has available evidence to support this contention.
The taxpayer says that when it became aware that the liabilities under the assessment were falsely represented as belonging to it, action to redress the situation commenced. An initial request for refund was made in August 2005 but it became apparent that the taxpayer's rights would best be protected through the process of requesting a reassessment.
A request for reassessment was lodged on 20 April 2007.
A response was then sent in June 2007. From the taxpayer's point of view it did not address the issues raised nor was it a decision made in connection with the taxpayer's request for reassessment.
The letter written on behalf of the Commissioner dated 29 June 2007 noted that s 16(2) of the TA Act provides in part that the Commissioner 'may' make an assessment. Attention was also drawn to s 16(5) of the TA Act. The inference to be drawn from the letter was that there was no entitlement to a reassessment or indeed any obligation on the Commissioner to make one.
By letter dated 14 September 2007, the taxpayer's accountant wrote to the Commissioner of State Taxation claiming that they had not received a response since lodging the request for reassessment in April 2007.
The Commissioner's office then provided a copy of the letter dated 29 June 2007, to which the taxpayer's accountants responded by letter dated 9 October 2007 claiming it did not deal with the issue raised. That letter stated that the statement that the Commissioner 'may make a reassessment is not conclusive nor does it discharge the Commissioner's obligations to answer the request for reassessment'.
The Commissioner responded by letter dated 15 February 2008 explaining the interaction between the various provisions of the TA Act, from his point of view, and stating that the reassessment process is not an alternative method of challenging assessments but permits assessments that are clearly erroneous to be corrected within a five year time limit.
The letter written on behalf of the Commissioner also dealt with the question of alleged threats and stated that in view of the facts set out in the letter, the allegation of threats made to the taxpayer by an investigations officer were 'unsupportable'. The letter repudiated the claims that the investigation officer had failed to act with integrity and impartiality.
An objection dated 11 April 2008 was then lodged by the taxpayer against the Commissioner's 'decision' set out in the letter dated 15 February 2008, purportedly in accordance with s 34(1)(b) of the TA Act, on the basis that the Commissioner's decision of 15 February 2008 affected the liability of the taxpayer through the refusal to make a reassessment.
By further letter dated 6 May 2008, on behalf of the Commissioner, the Office of State Revenue further endeavoured to address the issues and explain to the taxpayer why the taxpayer does not have any statutory right to seek review in the Tribunal.

Taxpayer's position

The taxpayer's position has largely been set out in the course of the background discussion.
In short, the taxpayer says it is a person dissatisfied with the Commissioner's decision on an objection.
The taxpayer says that the Commissioner has made a decision on an objection, because the taxpayer has a right to object, under s 34(1)(b), not only to an assessment itself, but 'another decision under a taxation Act that affects the taxpayer's liability to taxation'.
The taxpayer says that the Commissioner's refusal to make a reassessment under s 16(2) is a decision under a taxation Act that affects the taxpayer's liability to taxation.

Commissioner's position

The Commissioner in short maintains the position the Commissioner has maintained throughout, namely that there is a difference between the reassessment provisions on the one hand, and the making of an objection to an initial assessment and later, if dissatisfied with the decision on the objection, seeking review in the Tribunal under s 40. In that case, it is the objection to the assessment recognised by s 34(1)(a) that creates the right to review in the Tribunal.
The Commissioner disputes the view of the taxpayer that the decision in relation to the application of the taxpayer for reassessment is one that 'affects the taxpayer's liability to taxation'.

Tribunal's determination of the issue

As noted, a person dissatisfied with the Commissioner's decision on an objection may apply to the Tribunal for a review of the decision: s 40(1) of the TA Act.
This then draws attention to the question of the objection proceedings set out in Div 1 of Pt 4 of the TA Act. Section 34(1), as noted earlier, provides that:
A taxpayer may object to -
(a)an assessment; or
(b)another decision under a taxation Act that affects the taxpayer’s liability to taxation; or
…
The taxpayer does not claim in this case that it has objected to 'an assessment' and so does not say it has made a relevant objection under s 34(1)(a). What the taxpayer does argue, however, is that it was entitled to object and did object to 'another decision under a taxation Act that affects the taxpayer's liability to taxation', and so made a relevant objection under s 34(1)(b) which was later disallowed.
The question arises then whether, in this case, for the purposes of s 34(1)(b):
•There is a relevant 'decision';
•There is a relevant decision 'under a taxation Act'; and
•There is a relevant decision under a taxation Act that 'affects the taxpayer's liability to taxation'.
There is no doubt that in response to an application made by the taxpayer to the Commissioner requesting a reassessment under s 16(2)(b) of the TA Act, the Commissioner declined to do so.
In such circumstances it does not advance matters terribly far to ask whether or not the Commissioner's actions were positive, by positively deciding not to make a reassessment, or negative, by simply not acting on the application for a reassessment. While one might observe that the obligation on the Commissioner to make a reassessment in certain cases under s 16(1) constitutes an obligation that might be enforced by a court, whereas the Commissioner's power to make a reassessment under s 16(2) is discretionary - and probably a court would not oblige the Commissioner to exercise the power - the fact remains that a taxpayer does have an entitlement to apply for reassessment under s 17(1) and the Commissioner may make a reassessment where such an application is made under s 16(2).
In these circumstances, there is a reasonable expectation that the Commissioner will make a decision. If an application is in fact made and the Commissioner decides not to act on it, then at the very least it is reasonable to conclude that the failure to make a decision nonetheless constitutes a decision. There is a reasonably long line of authority under the Administrative Decisions (Judicial Review) Act 1977 (Cth) to the effect that a refusal to do something that an applicant is entitled to ask for nonetheless constitutes a decision: see, for example, WorldAudio Ltd v Australia Communications and Media Authority [2006] FCA 8; (2006) 228 ALR 733 at [30], and the authorities referred to there. The Commissioner does not contend otherwise in this case.
There is also little doubt that if there is a relevant decision here, it is a decision 'under a taxation Act'. This is because s 3(1) of the TA Act identifies the enactments that are taxation Acts for the purpose of the TA Act, and includes the TA Act itself: see s 3(1)(a) of the TA Act.
The remaining question then is whether the Commissioner's decision under the TA Act not to make a reassessment is a decision 'that affects the taxpayer's liability to taxation'. In my view, it is not.
The word 'affect' is defined by dictionaries in similar ways. The Shorter Oxford English Dictionary (Fifth Ed) defines 'affect' to mean relevantly:
Move, touch, (in mind or feelings); influence; make a material impression on.

The Macquarie Dictionary has a similar meaning being 'to act on; produce an effect or a change in'.
The Commissioner contends that these definitions connote change in the sense of altering, influencing or moving.
The taxpayer says that the word 'affect' has a meaning broader than the term 'effect' in that it can include change but can alternatively merely have influence. The taxpayer refers to the Oxford Dictionary (Online) definition of the word 'affect':
To affect something is to change or influence it. To effect something is a rather formal way of saying 'to make it happen' [Emphasis in original].
Accordingly, the taxpayer submits that the term 'affect' as it appears in the TA Act was carefully chosen by Parliament not to restrict a taxpayer's right of objection to only those decisions that are made by the Commissioner to increase a taxpayer's liability as distinct from refusing a request to decrease a taxpayer's liability through reassessment.
The taxpayer therefore contends that it seems more likely that the purpose was to include a right of objection to those decisions that influenced or had the potential to influence liability, either through a refusal to accept the taxpayer's contention on lower liability or a decision that could lead to an increase. It is not intended to apply to decisions that directly increase liabilities, as those decisions are made by way of assessments.
In my view, a decision of the Commissioner under s 16(2)(b) of the TA Act, following application from a taxpayer for a reassessment, is not a decision that 'affects the taxpayer's liability to taxation'.
The decision that affects the taxpayer's liability to taxation is the initial assessment. In this case, the initial assessment that the taxpayer is liable to stamp duty created that liability. The decision not to make a reassessment does not affect that existing liability to pay tax. The decision not to make a reassessment does not have any effect on that liability either materially or otherwise. It makes no material impression on that liability. It does not alter or distinguish that liability in any relevant sense. It has no influence on that liability.
While it might reasonably be argued that the Commissioner's decision not to make a reassessment is a decision 'in relation to' the existing revenue liability of the taxpayer, it is another thing to say that it 'affects' the taxpayer's liability to taxation. In my view, it has no material effect on that liability. It is simply a decision in relation to tax liability by way of refusal to make a reassessment.
In general terms I consider this interpretation of the statutory expression to be consistent with the overall construction of provisions of the TA Act which provide a taxpayer with the opportunity to challenge decisions creating a tax liability. In this regard it is important to notice that Pt 4 of the TA Act deals with 'Objections and review proceedings'. The first section in Div 1 - 'Procedures and restrictions' - is s 31, which is headed 'Procedure for challenging assessments'. The terms of s 31 are as follows:
A taxpayer is not entitled to challenge the validity or correctness of an assessment, or of any other decision for which rights of objection or review are conferred by this Act, except -
(a)in proceedings by way of objection or in review proceedings; or
(b)in any other manner specifically provided in a taxation Act.
The section, as can be seen, expressly says a taxpayer is 'not entitled to challenge the validity or correctness of an assessment' except in certain cases, which include 'proceedings by way of objection or in review proceedings'.
The TA Act plainly intends that a taxpayer, if they wish to challenge the validity or correctness of an assessment, should ordinarily use the objection proceedings. It is not anticipated by s 31 that the process of seeking reassessment can be used to 'challenge the validity or correctness of an assessment'.
In my view, this understanding of how the objection procedure works along side the reassessment procedure emphasises the fact that a decision of the Commissioner not to make a reassessment upon a request by a taxpayer is not a decision that relevantly 'affects the taxpayer's liability to taxation'. In the case of the reassessment power under s 16(2)(b) of the TA Act, the Commissioner has the discretionary power to alter an initial assessment. It is not readily amenable to review by this Tribunal.
While the taxpayer in this case specifically contends that the introduction of an entitlement of a taxpayer to request the Commissioner to make a reassessment suggests something of a new day for taxpayers, I do not share that view as a matter of proper interpretation of the TA Act provisions.
It seems to me that if this were right, then notwithstanding the failure of a taxpayer within the time limits prescribed by the relevant legislation to make an objection to an initial assessment (and if dissatisfied to seek review in the Tribunal), the taxpayer could circumvent these requirements by, at any time during the five year period during which the TA Act permits a taxpayer to apply to the Commissioner for reassessment, seeking reassessment and, if unsuccessful, applying for review of the refusal in the Tribunal. This cannot have been intended by Parliament to be a mechanism for challenging an assessment.
For these reasons I consider that the Commissioner's decision not to make a reassessment on the application of the taxpayer pursuant to s 16(2)(b) is not a decision in respect of which the taxpayer has a right of review under s 40(1) of the TA Act.
In these circumstances the Tribunal considers that the application made by the taxpayer for review of the Commissioner's decision should be dismissed.

Conclusion and order

For the reasons given above, the Tribunal considers that the taxpayer's application should be dismissed.
The Tribunal orders:
1.The application of the applicant dated 4 July 2008 for review of the Commissioner of State Revenue's decision to refuse to make a reassessment is dismissed for want of jurisdiction in the State Administrative Tribunal.
2.No order as to costs.

I certify that this and the preceding [72] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
JUSTICE M L BARKER, PRESIDENT