Haritos v Commissioner of Taxation - [2015] FCAFC 92

FEDERAL COURT OF AUSTRALIA
Haritos v Commissioner of Taxation [2015] FCAFC 92

Citation:

Haritos v Commissioner of Taxation [2015] FCAFC 92

Appeal from:

Haritos v Commissioner of Taxation [2014] FCA 96

Parties:

GEORGE HARITOS and ALEX KYRITSIS v COMMISSIONER OF TAXATION

File number:

VID 144 of 2014

Judges:

ALLSOP CJ, KENNY, BESANKO, ROBERTSON AND MORTIMER JJ

Date of judgment:

30 June 2015

Catchwords:

ADMINISTRATIVE LAW – appeal from the Administrative Appeals Tribunal (Tribunal) – scope of s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) – whether grounds of appeal to primary judge stated question or questions of law – whether appeal competent – whether question of law may include so-called mixed question of fact and law – whether in exercising its appellate jurisdiction on an appeal from a judge of the Court, the Court may deal with question or questions of law not previously raised before the primary judge

INCOME TAX – income tax assessments under ss 167(b), 167(c) and 170(1) of the Income Tax Assessment Act1936 (Cth) – appeal from the Administrative Appeals Tribunal (Tribunal) – whether amended notice of appeal raised questions of law – whether Tribunal’s reasoning process was illogical, irrational or lacking a basis in findings or inferences of fact supported on logical grounds and thus made a decision it was not authorised to make – whether Tribunal misconstrued the burden of proof in Taxation Administration Act1953 (Cth), s 14ZZK – whether Tribunal erred in law in concluding that payments made to associates were ordinary income within Income Tax Assessment Act 1997 (Cth) s 6-5 – whether Tribunal erred in law by applying Part III Division 7A as amended by the Tax Laws Amendment (2010 Measures No 2) Act 2010 (Cth) where transitional provision provided that the amendments applied to payments made, loans made and debts forgiven on or after 1 July 2009

Legislation:

Administrative Appeals Tribunal Act 1975 (Cth) ss 7, 44 and 45

Federal Court of Australia Act 1976 (Cth) s 24

Income Tax Assessment Act 1936 (Cth) s 44(1), Part III Division 7A

Income Tax Assessment Act 1997 (Cth) s 6-5

Tax Laws Amendment(2010 Measures No. 2) Act 2010 (Cth) sch 1, item 35

Taxation Administration Act 1953 s 14ZZK

Federal Court Rules 2011 (Cth) r 33.12

Cases cited:

A v New South Wales [2007] HCA 10; 230 CLR 500
ABB Australia Pty Ltd v Federal Commissioner of Taxation [2007] FCA 1063
Agfa-Gevaert Ltd v Collector of Customs [1994] FCA 664; 124 ALR 645
Allan v Transurban City Link Ltd [2001] HCA 58; 208 CLR 167
Attorney-General (NSW) v Quin [1990] HCA 21; 170 CLR 1
Australian Fisheries Management Authority v PW Adams Pty Ltd [1995] FCA 1026; 61 FCR 314
Australian Gas Light Co v Valuer-General (1940) 40 SR (NSW) 126
Australian Securities and Investments Commission v Saxby Bridge Financial Planning Pty Ltd [2003] FCAFC 244, 133 FCR 290
Australian Telecommunications Corporation v Lambroglou [1990] FCA 689; 12 AAR 515
Avetmiss Easy Pty Ltd v Australian Skills Qualifications Authority [2014] FCA 314
B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187; 74 NSWLR 481
Barghouthi v ING Custodians Pty Ltd [2003] FCA 1272
Bass v Permanent Trustee Co Ltd [1999] HCA 9; 198 CLR 334
Bell v Commissioner of Taxation [2013] FCAFC 32; 90 ATR 7
Birdseye v Australian Securities and Investments Commission [2003] FCA 232; 76 ALD 321
Board of Trustees of the State Public SectorSuperannuation Scheme v Edington [2011] FCAFC 8; 119 ALD 472
Brown v Repatriation Commission [1985] FCA 236; 7 FCR 302
City of Enfield v Development Assessment Commission [2000] HCA 5, 199 CLR 135
Clements v Independent Indigenous Advisory Committee [2003] FCAFC 143; 131 FCR 28
Collector of Customs v Agfa-Gevaert Ltd [1996] HCA 36; 186 CLR 389
Collector of Customs v Cliffs Robe River Iron Associates [1985] FCA 96; 7 FCR 271
Collins v Administrative Appeals Tribunal [2007] FCAFC 111; 163 FCR 35
Comcare v Etheridge [2006] FCAFC 27; 149 FCR 522
Comcare v Martinez (No 2) [2013] FCA 439; 212 FCR 272
Commissioner for Consumer Protection v Carey [2014] WASCA 7
Commissioner of Taxation v Brixius [1987] FCA 612; 16 FCR 359
Commissioner of Taxation v Cooper [1991] FCA 190; 29 FCR 177
Commissioner of Taxation v Crown Insurance Services Ltd [2012] FCAFC 153; 207 FCR 247
Commissioner of Taxation (Cth) v Dalco [1990] HCA 3; 168 CLR 614
Commissioner of Taxation v Trail Bros Steel & Plastics Pty Ltd [2010] FCAFC 94; 186 FCR 410
Commissioner of Taxation (Cth) v Sun Alliance Investments Pty Limited (In Liquidation) [2005] HCA 70; 225 CLR 488
Condell v Commissioner of Taxation [2007] FCAFC 44; 66 ATR 100
Copperart Pty Ltd v Commissioner of Taxation [1994] FCA 216; 50 FCR 345
Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Limited [2014] VSCA 353
Coulton v Holcombe [1986] HCA 33; 162 CLR 1
Culley v Australian Securities and Investments Commission [2010] FCAFC 43; 183 FCR 279
Cyonara Snowfox Pty Ltd v Commissioner of Taxation [2012] FCAFC 177; 208 FCR 471
Da Costa v R [1968] HCA 51; 118 CLR 186
De Simone v Commissioner of Taxation [2009] FCAFC 181; 77 ATR 936
Decor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 844; 33 FCR 397
Drake v Minister for Immigration and Ethnic Affairs 46 (1979) FLR 409; 24 ALR 577
Eastman v Commissioner for Social Housing [2011] ACTCA 12; 252 FLR 278
Ekinci v Civil Aviation Safety Authority [2014] FCAFC 180; 227 FCR 459
Epping Hotels Pty Ltd v Serene Hotels Pty Ltd [2015] VSC 104
Ergon Energy Corp Ltd v Commissioner of Taxation (Cth) [2006] FCAFC 125; 153 FCR 551
Federal Commissioner of Taxation v Cooke and Sherden [1980] FCA 46; 10 ATR 696
Federal Commissioner of Taxation v Raptis [1989] FCA 557; 89 ATC 4994
Federal Commissioner of Taxation v White [2010] FCA 730; 79 ATR 498
Fitzpatrick v Inland Revenue Commissioners [1994] 1 WLR 306
Haritos v Commissioner of Taxation [2014] FCA 96; 141 ALD 369; 62 AAR 467
Harris v Director-General of Social Security [1985] HCA 1; 59 ALJR 194
HBF Health Funds Inc v Minister for Health and Ageing [2006] FCAFC 34; 149 FCR 291
Hope v Bathurst City Council [1980] HCA 16; 144 CLR 1
Hussain v Minister for Foreign Affairs [2008] FCAFC 128; 169 FCR 241
Interfaith Community Org. v. Honeywell Intl., Inc., 399 F.3d 248 (3d Cir. 2005)
Jedko Game Co Pty Ltd v Collector of Customs (NSW) [1987] FCA 74; noted 12 ALD 491
Johnstone v Sutton (1786) 1 TR 510 at 545; 99 ER 1225
Jones v First-tier Tribunal [2013] UKSC 19; 2 AC 48
Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32; 241 CLR 390
Kowalski v Military Rehabilitation and Compensation Commission [2010] FCAFC 10; 114 ALD 8
Kuswardana v Minister for Immigration and Ethnic Affairs [1981] FCA 64; 35 ALR 186
Lourey v Legal Profession Complaints Committee [2012] WASCA 112
Ma v Commissioner of Taxation [1992] FCA 530; 37 FCR 225
Maurici v Chief Commissioner of State Revenue [2003] HCA 8; 212 CLR 111
Minister Administering the Crown Lands Act v La Perouse Local Aboriginal Land Council [2012] NSWCA 359; 193 LGERA 276
Minister for Immigration and Citizenship v SZMDS [2010] HCA 16; 240 CLR 611
Minister for Immigration and Ethnic Affairs v Teo [1995] FCA 246; 57 FCR 194
Minister for Immigration and Multicultural Affairs v Rajamanikkam [2002] HCA 32; 210 CLR 222
Mir Bros Unit Constructions Pty Ltd v Roads and Traffic Authority (NSW) [2006] NSWCA 314
Neal v Secretary, Department of Transport [1980] FCA 49; 29 ALR 350
Nelson v Commissioner of Taxation [2014] FCAFC 163
Nepean Country Club Ltd v Paterson & Roberts [2009] VSC 436; 32 VAR 37
New South Wales Associated Blue-Metal Quarries Ltd v Commissioner of Taxation [1956] HCA 80; 94 CLR 509
NSW Aboriginal Land Council v Minister Administering the Crown Lands Act [2007] NSWCA 281; 157 LGERA 18
Osland v Secretary to the Department of Justice [2010] HCA 24; 241 CLR 320
Owners of Ship Shin Kobe Maru v Empire Shipping Co Inc [1994] HCA 54; 181 CLR 404
P v Child Support Registrar [2014] FCAFC 98; 225 FCR 378
Parker v State of Western Australia [2008] FCAFC 23; 167 FCR 340
Paridis v Settlement Agents Supervisory Board [2007] WASCA 97; 33 WAR 361
Price Street Professional Centre Pty Ltd v Commissioner of Taxation [2007] FCAFC 154; 243 ALR 728
R v JS [2007] NSWCCA 272; 230 FLR 276
R v PL [2009] NSWCCA 256; 261 ALR 365
Rana v Repatriation Commission [2011] FCAFC 124; 126 ALD 1
Rasic v R [2009] NSWCCA 202
Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30; 198 ALR 59; 77 ALJR 1165
Re Refugee Review Tribunal; Ex Parte Aala [2000] HCA 57; 204 CLR 82
Repatriation Commission v Hill [2002] FCAFC 192; 69 ALD 581
Repatriation Commission v O’Brien [1985] HCA 10; 155 CLR 422
Repatriation Commission v Owens (1996) 70 ALJR 904; noted 187 CLR 704
Repatriation Commission v Warren [2008] FCAFC 64; 167 FCR 511
Ridley v Whipp [1916] HCA 76; 22 CLR 381
Roads and Traffic Authority of New South Wales v Peak [2007] NSWCA 66
Roncevich v Repatriation Commission [2005] HCA 40; 222 CLR 115
Rosenberg v Percival [2001] HCA 18; 205 CLR 434
Roy Morgan Research Pty Ltd v Commissioner of Taxation [2010] FCAFC 52; 184 FCR 448
Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vic) [2001] HCA 49; 207 CLR 72
Screen Australia v EME Productions No 1 Pty Ltd [2012] FCAFC 19; 200 FCR 282
Sharp Corporation of Australia Pty Ltd v Collector of Customs [1995] FCA 707; 59 FCR 6
Spirovski v Univest Asset Merchants Syndicators Pty Ltd [2013] VSC 728
Straits Exploration (Australia) Pty Ltd v The Kokatha Uwankara Native Title Claimants [2011] SASCFC 9
Sullivan v Civil Aviation Safety Authority [2014] FCAFC 93; 226 FCR 555
Sullivan v Department of Transport [1978] FCA 48; 20 ALR 323
Summers v Repatriation Commission [2015] FCAFC 36
TNT Skypak International (Aust) Pty Ltd v Commissioner of Taxation [1988] FCA 198; 82 ALR 175
Tarrant v Australian Securities and Investments Commission [2015] FCAFC 8; 317 ALR 328
Tefonu Pty Ltd v Insurance & Superannuation Commissioner [1993] FCA 588; 44 FCR 361
The Hospital Benefit Fund of Western Australia Inc v Minister for Health, Housing and Community Services [1992] FCA 911; 39 FCR 225
Times Consultants Pty Ltd v Collector of Customs (Qld) [1987] FCA 488; 16 FCR 449
Tindal v Brown (1786) 1 TR 167; 99 ER 1033
Trautwein v Federal Commissioner of Taxation [1936] HCA 77; 56 CLR 63
Tuite v Administrative Appeals Tribunal [1993] FCA 113; 40 FCR 483
Vetter v Lake Macquarie City Council [2001] HCA 12; 202 CLR 439
Virgin Blue Airlines Pty Ltd v Hopper & Ors [2007] QSC 75
Waterford v The Commonwealth [1987] HCA 25, 163 CLR 54
Williams v The Queen [1986] HCA 88; 161 CLR 278

Articles and Texts:

Aronson M and Groves M, Judicial Review of Administrative Action (5th ed, Thomson Reuters, 2013)

Starkie T, A Practical Treatise of the Law of Evidence (3rd ed, Stevens and Norton, 1842) pp 520-521

Starkie T, A Practical Treatise of the Law of Evidence (1st ed, Clark, 1824) Vol 1, pp 421-423

Endicott T “Questions of law” (1998) 114 LQR 292 at 300

Laws J “Law and fact” (1999) British Tax Review 159

Date of hearing:

16 and 17 February 2015

Date of last submissions:

18 February 2015

Place:

Melbourne

Division:

GENERAL DIVISION

Category:

Catchwords

Number of paragraphs:

262

Counsel for the Appellants:

Mr RM Niall QC with Mr T Mitchell

Solicitor for the Appellants:

Stephen Peter Byrne

Counsel for the Respondent:

Mr PJ Hanks QC with Ms MA Schilling

Solicitor for the Respondent:

Minter Ellison

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

VID 144 of 2014

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN:
GEORGE HARITOS
First Appellant

ALEX KYRITSIS
Second Appellant

AND:
COMMISSIONER OF TAXATION
Respondent

JUDGES:

ALLSOP CJ, KENNY, BESANKO, ROBERTSON AND MORTIMER JJ

DATE OF ORDER:

30 JUNE 2015

WHERE MADE:

MELBOURNE

THE COURT ORDERS THAT:
1.The application for leave to appeal be granted.
2.The appeal be allowed.
3.The orders of the Court made on 20 February 2014 be set aside and in lieu thereof order that:
(a)the decision of the Administrative Appeals Tribunal dated 1 March 2013 be set aside; and
(b)the matter be remitted to the Administrative Appeals Tribunal to be heard and determined according to law and the reasons herein.

4.Unless a party notifies the Court in writing within 14 days of today that an order as to costs has been agreed between them, the parties are to file and serve submissions as to costs (limited to 3 pages) by 4.00 pm on 31 July 2015.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY

GENERAL DIVISION

VID 144 of 2014

ON APPEAL FROM THE FEDERAL COURT OF AUSTRALIA

BETWEEN:
GEORGE HARITOS
First Appellant

ALEX KYRITSIS
Second Appellant

AND:
COMMISSIONER OF TAXATION
Respondent

JUDGES:

ALLSOP CJ, KENNY, BESANKO, ROBERTSON AND MORTIMER JJ

DATE:

30 JUNE 2015

PLACE:

MELBOURNE

REASONS FOR JUDGMENT
THE COURT
Introduction

Mr George Haritos and Mr Alex Kyritsis (applicants) bring this application for leave to appeal under s 24(1A) of the Federal Court of Australia Act 1976 (Cth) (FCA Act) from the judgment and orders of a judge of this Court made on 20 February 2014 dismissing the proceeding as incompetent for failing to disclose a question of law: Haritos v Commissioner of Taxation [2014] FCA 96; 141 ALD 369; 62 AAR 467. The proceeding was a purported appeal from the Administrative Appeals Tribunal (Tribunal) under s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) in relation to income tax assessments under ss 167(b), 167(c) and 170(1) of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936) for the years of income ended 30 June 2005 to 30 June 2009. The Commissioner of Taxation (respondent) filed a draft notice of contention which was amended, by leave, after the hearing before us.
The relevant provisions of the AAT Act are as follows:
44 Appeals to Federal Court of Australia from decisions of the Tribunal
Appeal on question of law
(1)A party to a proceeding before the Tribunal may appeal to the Federal Court of Australia, on a question of law, from any decision of the Tribunal in that proceeding.
Appeal about standing
(2)Where a person has applied to the Tribunal for a review of a decision, or has applied to be made a party to a proceeding before the Tribunal for a review of a decision, and the Tribunal decides that the interests of the person are not affected by the decision, the person may appeal to the Federal Court of Australia from the decision of the Tribunal.
When and how appeal instituted
(2A)     An appeal by a person under subsection (1) or (2) shall be instituted:
(a)not later than the twenty‑eighth day after the day on which a document setting out the terms of the decision of the Tribunal is given to the person or within such further time as the Federal Court of Australia (whether before or after the expiration of that day) allows; and
(b)in such manner as is prescribed by rules of court made under the Federal Court of Australia Act 1976.
…
Jurisdiction
(3)The Federal Court of Australia has jurisdiction to hear and determine appeals instituted in that Court in accordance with subsections (1) and (2) and that jurisdiction:
(a)       may be exercised by that Court constituted as a Full Court;
(b)       shall be so exercised if:
(i)the Tribunal’s decision was given by the Tribunal constituted by a member who was, or by members at least one of whom was, a presidential member; and
(ii)after consulting the President, the Chief Justice of that Court considers that it is appropriate for the appeal from the decision to be heard and determined by that Court constituted as a Full Court; and
(c)shall be so exercised if the Tribunal’s decision was given by the Tribunal constituted by a member who was, or by members at least one of whom was, a Judge.
Powers of Federal Court
(4)The Federal Court of Australia shall hear and determine the appeal and may make such order as it thinks appropriate by reason of its decision.
(5)Without limiting by implication the generality of subsection (4), the orders that may be made by the Federal Court of Australia on an appeal include an order affirming or setting aside the decision of the Tribunal and an order remitting the case to be heard and decided again, either with or without the hearing of further evidence, by the Tribunal in accordance with the directions of the Court.
Constitution of Tribunal if Federal Court remits case etc.
…
Federal Court may make findings of fact
(7)If a party to a proceeding before the Tribunal appeals to the Federal Court of Australia under subsection (1), the Court may make findings of fact if:
(a)the findings of fact are not inconsistent with findings of fact made by the Tribunal (other than findings made by the Tribunal as the result of an error of law); and
(b)it appears to the Court that it is convenient for the Court to make the findings of fact, having regard to:
(i)the extent (if any) to which it is necessary for facts to be found; and
(ii)the means by which those facts might be established; and
(iii)the expeditious and efficient resolution of the whole of the matter to which the proceeding before the Tribunal relates; and
(iv)the relative expense to the parties of the Court, rather than the Tribunal, making the findings of fact; and
(v)the relative delay to the parties of the Court, rather than the Tribunal, making the findings of fact; and
(vi)whether any of the parties considers that it is appropriate for the Court, rather than the Tribunal, to make the findings of fact; and
(vii)such other matters (if any) as the Court considers relevant.
(8)For the purposes of making findings of fact under subsection (7), the Federal Court of Australia may:
(a)have regard to the evidence given in the proceeding before the Tribunal; and
(b)       receive further evidence.
(9)Subsection (7) does not limit the Federal Court of Australia’s power under subsection (5) to make an order remitting the case to be heard and decided again by the Tribunal.
(10)The jurisdiction of the Federal Court of Australia under subsection (3) includes jurisdiction to make findings of fact under subsection (7).
…
45 Reference of questions of law to Federal Court of Australia
(1)The Tribunal may, of its own motion or at the request of a party, refer a question of law arising in a proceeding before the Tribunal to the Federal Court of Australia for decision but:
(a)a question must not be so referred without the concurrence of the President; and
(c)in respect of a proceeding before the Small Taxation Claims Tribunal—in so referring a question, the interests of the applicant seeking review of a relevant taxation decision must be taken into account.
(2)The Federal Court of Australia has jurisdiction to hear and determine a question of law referred to it under this section and that jurisdiction shall be exercised by that Court constituted as a Full Court.
(3)Where a question of law arising in any proceeding has been referred to the Federal Court of Australia under this section, the Tribunal shall not, in that proceeding:
(a)give a decision to which the question is relevant while the reference is pending; or
(b)proceed in a manner, or make a decision, that is inconsistent with the opinion of the Federal Court of Australia on the question.
By s 7 of the AAT Act, only the President and Deputy Presidents of the Tribunal are required to be lawyers.

Rule 33.12 of the Federal Court Rules 2011 (Cth) provides:
33.12 Starting an appeal—filing and service of notice of appeal
(1)A person who wants to appeal to the Court under the AAT Act must file a notice of appeal, in accordance with Form 75.
Note:The notice of appeal must be filed within the time mentioned in section 44(2A) of the AAT Act, being not later than the 28th day after the day that a document setting out the terms of the decision is given to the person.
(2) The notice of appeal must state:
(a) the part of the decision the applicant appeals from or contends should be varied; and
(b) the precise question or questions of law to be raised on the appeal; and
(c) any findings of fact that the Court is asked to make; and
(d) the relief sought instead of the decision appealed from, or the variation of the decision that is sought; and
(e) briefly but specifically, the grounds relied on in support of the relief or variation sought.
Note:The Court can only make findings of fact in limited circumstances—see section 44(7) of the AAT Act.
…
Proposed notice of appeal
The applicants pressed six questions said to be contained in their amended notice of appeal before the primary judge: questions 4 and 5 and questions 2, 7, 8 and 9 as to parts. The proposed further amended draft notice of appeal to the Full Court, as pressed, was as follows:
1.The primary judge erred in holding that the notice of appeal disclosed no question of law and the appeal was therefore incompetent.
Particulars
(a)The notice of appeal stated that the decision of the Tribunal below was unauthorised because the Tribunal’s reasoning process was illogical, irrational or lacking in findings or inferences of fact supported on logical grounds, and articulated that ground as a question of law (question of law 4).
(b)The notice of appeal stated that the decision of the Tribunal below was so unreasonable that no reasonable decision-maker could have made it, and articulated that ground as a question of law (question of law 5).
(c)The notice of appeal stated that the Tribunal misunderstood and/or misapplied the test in section 14ZZK(b)(i) of the Taxation Administration Act 1953, and articulated that ground as a question of law (question of law 2).
(d)The notice of appeal stated that the Tribunal erred in the proper construction of Division 7A of the Income Tax Assessment Act 1936, and articulated that ground as a question of law (question of law 8)
(e)The notice of appeal stated that the Tribunal erred in the proper construction of s. 6-5 of the Income Tax Assessment Act 1997, and articulated that ground as a question of law (question of law 9).
(f)The notice of appeal stated that the Tribunal erred in the proper construction of s. 44(1) of the Income Tax Assessment Act 1936, and articulated that ground as a question of law (question of law 7).
2. The primary judge should have held that the appeal was competent and allowed the appeal against the orders of the Administrative Appeals Tribunal made on 1 March 2013.
Particulars
(a)The decision of the Tribunal below was unauthorised because the Tribunal’s reasoning process was illogical, irrational or lacking in findings or inferences of fact supported on logical grounds (question of law 4).
(b)The decision of the Tribunal below was so unreasonable that no reasonable decision-maker could have made it (question of law 5).
(c)The decision of the Tribunal below was vitiated by a misunderstanding of the test in section 14ZZK(b)(i) of the Taxation Administration Act 1953, (question of law 2).
(d)The decision of the Tribunal below was vitiated by the application of the wrong test for determining distributable surplus, for the purpose of calculating the amount of any deemed dividend under Division 7A of the Income Tax Assessment Act 1936 (question of law 8 insofar as it incorporates sub-paragraph (f)).
(e)The Tribunal erred in holding that payments made by the company were income derived by the appellants under s. 6-5(4) of the Income Tax Assessment Act 1997 or s. 44(1) of the Income Tax Assessment Act 1936, merely because as directors of the company the appellants directed the funds be paid to their recipient.
It is also necessary to set out the amended notice of appeal dated 10 December 2013 which was before the primary judge. So far as presently relevant, it took the following form:
Questions of law
2.        Whether, on the evidence before the Tribunal namely:
a.The evidence given by the Applicants that funds deposited in the Westpac account were used for the purposes of AES Services Pty Ltd (non-private purposes);
b.The evidence given by Glenys Murray in relation to the preparation of MYOB records of sub-contractor payments and director loans;
c.The evidence that all deposits into and withdrawals from the Westpac account were accounted for in full and that the sole issue [sic] the verification of the final destination of the withdrawals.
d.        The evidence of the Applicants and that of Glenys Murray:
i.was accepted by the administrator of AES Services Pty Ltd in carrying out his duties as the administrator and in settling the dispute with the Commissioner;
ii.was consistent with the costs incurred during the administration of AES Services Pty Ltd by the administrator;
iii.was consistent with the costs incurred by AES Services Pty Ltd after the administration period;
e.The evidence given by Andrew Yeo about the cost structure of AES Services Pty Ltd and that the cost [sic] incurred by the Applicants were consistent with his experience in carrying on the business of AES Services Pty Ltd during its administration by him;
f.        The evidence given by:
i.Stephen Adrian that the costs were reasonable and consistent with industry benchmarks;
ii.Ivan Dalla Costa that the costs were reasonable and consistent with industry benchmarks and practice;
iii.Jonathan Karlovsky that the costs were reasonable and consistent with industry benchmarks and practice;
iv.Greg Meredith (called by the Commissioner) that the costs were reasonable and consistent with industry benchmarks;
g.The acceptance by the Commissioner of those costs in negotiating his claim against AES Services Pty Ltd;
and the findings of fact made by the Tribunal [76–158], the Tribunal misunderstood and/or misapplied the test in section 14ZZK(b)(i) of the Taxation Administration Act 1953 [4] and [sic] concluding that the Applicants failed to discharge the burden cast upon them by that section 14ZZK(b)(i).
4.Whether, given the matters in questions 2(a)-(g), the Tribunal’s reasoning process was illogical, irrational or lacking a basis in findings or inferences of fact supported on logical grounds and the [sic] made a decision it was not authorised to make.
5. Whether, given the matters particularised in ground 5 (a)-(f) the Tribunal [sic] decision was so unreasonable that no reasonable decision maker could have made [sic] and in so doing failed to act judicially.
6.        …
7.        Whether, on the evidence before the Tribunal, namely:
a.        …;
b.        …;
c.The withdrawals from the Westpac account were made to confer a benefit upon the associated [sic] of the Applicants and not the Applicants personally;
d.        …;
e.        …;
f.        …;
g.        …;
h.In the years 2005–2008 AES did not have a distributable surplus or profits to sustain a distribution of dividend;
the Tribunal erred in the proper construction and application of section 44(1) of the Income Tax Assessment Act 1936 and in deciding [4, 602–786] that the withdrawals from the Westpac account were assessable to the Applicants as dividend under that section 44(1).
8.        Whether, on the evidence before the Tribunal, namely:
a.        …;
b.        …;
c.The withdrawals from the Westpac account were made to confer a benefit upon the associated [sic] of the Applicants and not the Applicants personally;
d.        …;
e.        …;
f.In the years 2005–2008 AES did not have a distributable surplus or profits to sustain a distribution of dividend;
the Tribunal erred in the proper construction and application of Division 7A of the Income Tax Assessment Act 1936 and in deciding, on alternative basis [sic], [4, 787–828] that the withdrawals from the Westpac account were assessable to the Applicants as deemed dividend under that Division.
9.        Whether, on the evidence before the Tribunal, namely:
a.        …;
b.        …;
c.The withdrawals from the Westpac account were made to confer a benefit upon the associated [sic] of the Applicants and not the Applicants personally;
d.        …;
e.        …;
the Tribunal erred in the proper construction and application of section 6–5 of the Income Tax Assessment Act 1997 and in deciding, on a further alternative basis, [829–838] that the withdrawals from the Westpac account were assessable to the Applicants as income on ordinary concepts within that section 6–5.
10.      …
11.      …
…
Grounds relied on
…
5.The Tribunal adopted a process of reasoning that was so illogical, irrational or lacking a basis in findings or inferences of fact supported on logical grounds that its reasoning was affected by errors of law and [sic] has made a decision that was so unreasonable that no reasonable decision maker would have made it, in that:
a.The Tribunal was not satisfied [613-658] that any sub-contract payments were made from the Westpac account despite evidence that:
i.The business of AES Services Pty Ltd was labour intensive and required the engagement of sub-contractors;
ii. AES Services Pty Ltd engaged subcontractors to perform cleaning services in the ordinary course of its business;
iii. The sub-contractors were actually paid from the Westpac account;
iv. Invoices were obtained from sub-contractors. Some of the invoices were lost and some of the invoices were confiscated by the Australian Federal Police;
v. MYOB records of the payments to sub-contractors, which records were based on Westpac bank statements and hand-written notes of the directors, were prepared;
vi. The Applicants engaged and paid sub-contractors in respect of services provided to AES Services Pty Ltd from the Westpac account;
vii. The amount paid by the directors to sub-contractors was accepted by the administrator of AES Services Pty Ltd;
viii.The amount paid by the directors to sub-contractors was accepted by the Commissioner in negotiating a deed of company arrangement in respect of his claim against AES Services Pty Ltd;
ix. The amount paid by the directors to sub-contractors was less than the costs incurred by the administrators during the period of administration;
x. The amount paid by the directors to sub-contractors was consistent with costs incurred after the period of administration;
xi. The amount paid by the directors to sub-contractors was accepted as reasonable and consistent with benchmarks by three experts called by the Applicants, namely Stephen Adrian, Jonathan Karlovsky and Ivan Dalla Costa; and
xii. The amount paid by the directors to sub-contractors was accepted as reasonable and consistent with benchmarks by Greg Meredith – a witness called by the Commissioner.
b.The Tribunal found that the MYOB records [640-675] in relation to subcontractor payments were not reliable despite evidence:
i.The records were based on hand-written notes prepared by the directors and reconciled with Westpac bank statements;
ii.        There was one version of those accounts;
iii.If there was more than one version, the evidence of Stephen Adrian and Greg Meredith that the difference between the two version [sic] was not material; and
iv.That the records were consistent with the evidence as particularised in 5(a).
c.The Tribunal was not satisfied [700-710] that AES Services Pty Ltd made loans to the Applicants [as contended at 468] to the extent of the drawings from the Westpac account applied by the Applicants for private purposes despite:
i.Evidence given by the Applicants that they considered the drawings to be loans;
ii.The drawings were recorded in MYOB accounts of AES Service Pty Ltd as loans;
iii.The drawings were accepted by the administrator of AES Service Pty Ltd as loans;
iv.The drawings were accepted by the Commissioner as loans when negotiating the deed of company arrangement;
v.Documents exchanged between the Commissioner, the Applicants as directors of AES Service Pty Ltd and the administrator of AES Service Pty Ltd treat those drawings as loans;
vi.The deed of company arrangement treated those drawings as loans;
vii.Payments by the Applicants to AES Service Pty Ltd pursuant to the deed of company arrangement were made upon the premise that the drawings were loans; and
viii.With respect to the 2009 year of income, the drawings were treated as loans by the Commissioner in a letter upon which the Applicants and AES Service Pty Ltd relied to negotiate the deed of company arrangement.
d.The Tribunal was not satisfied [711-713] that Alex Kyritsis made a loan to George Haritos in the 2009 income year despite:
i.Evidence given by both Applicants that the relevant amount was a loan;
ii.Documents exchanged between the Commissioner, the Applicants as directors of AES Service Pty Ltd and the administrator of AES Service Pty Ltd treat those drawings as loans; and
iii.The deed of company arrangement treated that amount as a loan.
e.The Tribunal was not satisfied that the Applicants discharged the burden of proof in respect of the transactions listed at [722-762] despite:
i.        Evidence given by the Applicants of those transactions;
ii.Evidence given by Stephen Adrian, Ivan Dalla Costa, Jonathan Karlovsky and Greg Meredith that the profitability of AES Services Pty Ltd was consistent with relevant industry profitability and benchmarks;
iii.       The report of the administrator; and
iv.       The evidence of Andrew Yeo.
f.The Tribunal was satisfied [818-828] that the distributable surplus of AES Services Pty Ltd was sufficient to support the deeming of a dividend under Division 7A of the Income Tax Assessment Act 1936 despite:
i.Evidence that, in calculating the distributable surplus, the Commissioner did not take into account liabilities of AES Services Pty Ltd including taxation liabilities, penalties and interest payable under the Taxation Administration Act 1953;
ii.Evidence that the Commissioner did not exercise his discretion under section 109Y(2) of the Income Tax Assessment Act 1936 to substitute an alternative value for the assets of AES Services Pty Ltd or alternatively, it was open for the Commissioner to exercise that discretion on the evidence before him; and
iii.Evidence as to the distributable surplus of AES Services Pty Ltd given by Stephen Adrian.
The parties’ submissions
In their outline of submissions the applicants pressed “six questions of law discernible from the notice of appeal below”:
A.Whether a decision that was irrational, illogical or not based upon findings or inferences supported by logical grounds, is authorised by s. 43 the AAT Act?
B.Whether a proper construction of s. 14ZZK of the Taxation Administration Act 1953 (Cth) (the TAA Act) requires a taxpayer to prove that an assessment is excessive and disprove any further excess before the Tribunal may set aside or vary an assessment?
C.Whether on a proper construction of s. 44(1) of the Income Tax Assessment Act 1936 (Cth) (ITAA 36), company funds paid at the direction of a director who is also a shareholder, to the director’s associate and not for the director’s benefit, constitute dividends paid to the director?
D.Whether on a proper construction of s. 6-5(4) of the Income Tax Assessment Act 1997 (Cth) (ITAA 97), company funds paid at the direction of a taxpayer company director to his associate and not for the director’s benefit constitute income derived by the taxpayer?
E.Whether on a proper construction of s. 109C(3) of the ITAA 36, company funds paid at the direction of a director who is also a shareholder, to the director’s associate and not for the director’s benefit, constitute payments to the director within s. 109C(3)?
F.Whether the calculation of a distributable surplus under s. 109Y of the ITAA 36 for the financial years ending June 2004 to 2009 should be undertaken in accordance with s. 109Y as current at the end of each financial year, or in accordance with an amendment that regulated payments occurring from 1 July 2009?
The applicants submitted that each of these questions of law was raised by the amended notice of appeal below, but in a different form. Because each of the questions of law was raised in the notice of appeal, the applicants submitted, the primary judge erred in declining to resolve them.
The applicants submitted that question A restated question of law 4 in the amended notice of appeal before the primary judge. The applicants submitted this was the legal error identified by the High Court in Minister for Immigration and Citizenship v SZMDS [2010] HCA 16; 240 CLR 611. We assume that question A was also intended to restate question of law 5 in the amended notice of appeal before the primary judge which invoked Wednesbury unreasonableness.
The applicants submitted that question B was contained in question 2 in the amended notice of appeal before the primary judge.
The applicants submitted that questions C, D and E appeared as questions 7, 8 and 9 in the amended notice of appeal before the primary judge in so far as each incorporated its sub-paragraph (c).
The applicants submitted that question F arose from question of law 7 before the primary judge as it incorporated sub-paragraph (h) and question of law 8 as it incorporated sub-paragraph (f).
The respondent submitted that the Court should not permit what were, in substance, new questions to be raised in this appeal by way of elaboration (or particularisation) of abstract questions purportedly before the primary judge below. To do so would be inconsistent with the principles governing s 44 appeals; the provisions of r 33.12(2)(b) of the Federal Court Rules; and the principle that new questions cannot be added on an appeal from such a decision of a primary judge to the Full Court. The respondent submitted that raising new questions would be prejudicial to the respondent in circumstances where the applicants carried the burden of establishing the competency of the appeal and were represented by solicitors and counsel both in the hearing before the primary judge and in the Tribunal.
The respondent submitted that question A in the applicants’ outline did not restate question 4 in the amended notice of appeal before the primary judge.
The respondent submitted that question B did not restate question 2 in the amended notice of appeal.
The respondent submitted that the proposed amended draft notice of appeal to the Full Court did not refer to any prospective appeal from the decision of the primary judge on the competency of question 7 of the amended notice of appeal. Further, the respondent submitted, as to questions 7, 8 and 9 in the amended notice of appeal and questions C, D and E in the applicants’ outline it was plain from the invitation to examine “the evidence before the Tribunal” that the Court was being invited to reconsider the Tribunal’s factual findings. That conclusion was reinforced by the fact that the asserted “fact” in sub-paragraph (c) was inconsistent with the Tribunal’s findings, at [837], that the payments to associates conferred a benefit on the applicants personally.

As to question F in the applicants’ outline, the respondent submitted that it was raised for the first time on the appeal and the respondent objected to the court considering it in the absence of leave and opposed the grant of leave.
As to the respondent’s amended draft notice of contention, filed on 18 February 2015, it took the following form:
1.   If, contrary to the findings of the primary Judge, any of Questions 2, 4, 5, 7, 8 and 9 in the Amended Notice of Appeal filed on 10 December 2013 (the NOA) disclosed a proper question of law for the purposes of s 44 of the Administrative Appeals Tribunal Act 1975 (the AAT Act), the appeal from the Administrative Appeals Tribunal (the Tribunal) to the Federal Court should nevertheless have been dismissed by reason of:
1.1the finding of the primary Judge that the so-called facts and findings on which the Appellants relied in each of questions 2, 4 and 5 misstated, alternatively were inconsistent with, the Tribunal’s actual findings: paragraphs 26 and 27 of his Honour’s reasons for judgment;
1.2the finding of the primary Judge that, before his Honour, the Applicants [sic] did not assert that the Tribunal’s factual findings were not open to the Tribunal: paragraph 27 of his Honour’s reasons for judgment; and
1.3the fact that the Appellants did not invite the primary Judge to make any additional findings of fact pursuant to s 44(7) of the AAT Act.
1.4the asserted facts on which questions 7, 8 and 9 were premised misstated, alternatively were inconsistent with, the Tribunal’s actual findings
2. Further and alternatively:
2.1          In respect of Question 2 of the NOA:
(a)The factual matters identified in Questions 2(a) to 2(g) of the NOA, and the findings of fact made by the Tribunal in paragraphs 76–158 of the Tribunal’s Reasons for Decision, did not disclose that the Tribunal misunderstood or misapplied s 14ZZK(b)(i) of the Taxation Administration Act 1953.
(b)The Appellants did not dispute the Tribunal’s findings at paragraphs 678, 679 and 681 of the Tribunal’s Reasons for Decision; and, accordingly, the Tribunal’s finding at paragraph 696 of its Reasons for Decision in respect of the quantum of subcontractor expenses was relevant only in respect of the 2007 income year.
(c)Before the primary Judge, the Appellants did not challenge the Tribunal’s factual findings at paragraph 719-746 of the Tribunal’s Reasons for Decision in respect of Issues 4, 5, 7, 8 and 10, all of which were relevant to AES’s operating profits during the relevant period. Accordingly, any error by the Tribunal, in finding that the Appellants had failed to discharge their onus of proof in respect of AES’s subcontractor expenses, could not have affected the outcome of the appeal.
2.2In respect of Question 4 of the NOA, as found by the primary Judge at paragraph 28 of his Honour’s reasons for judgment, the factual matters identified in Questions 2(a) to 2(g) (which were incorporated by reference into Question 4), did not disclose any irrationality in the Tribunal’s findings or reasoning process.
2.3          In respect of Question 8 of the NOA:
(a)Having regard to the Tribunal’s findings at paragraphs 696 and 719-746 of the Tribunal’s Reasons for Decision, any error by the Tribunal in the construction or application of Division 7A of the Income Tax Assessment Act 1936 (Division 7A) could not have affected the outcome of the appeal.
2.4Further and alternatively, as found by the primary Judge at paragraph 29 of his Honour’s reasons for judgment, the factual matters identified in Questions 7(a) to 7(h), Questions 8(a) to 8(f) and Questions 9(a) to 9(b) of the NOA did not disclose any error in the Tribunal’s construction or application of s 44, s 6-5 or Division 7A.
The respondent’s written submissions, at [61]-[65], dealt with “Questions 7, 8 and 9 of the [Amended Notice of Appeal] in so far as they incorporated sub-paragraph (c)”. The respondent contended, at [61], that if those questions disclosed a proper question of law the appeal should nevertheless be dismissed on the basis that the Tribunal made findings at [710], [836] and [837] which were not challenged by the applicants in the appeal below, and, accordingly, it was open to the Tribunal to conclude that the payments from the Westpac account (defined at [23] below), to the extent that they were made to associated entities, were ordinary income: s 6-5(4) of the Income Tax Assessment Act 1997 (ITAA 1997). The provisions of s 6-10(3) of the ITAA 1997 and s 109C(3) of the ITAA 1936 provide for similar rules of constructive receipt in relation to statutory income.
In our opinion, in assessing the competing submissions, care should be taken to distinguish between whether or not the amended notice of appeal before the primary judge invoked the jurisdiction of the Court under s 44 of the AAT Act, on the one hand, and the merit of any question or questions of law, on the other hand.
The decision of the AAT
Before turning to the detail of the reasons of the Tribunal, it is necessary to make two important preliminary points. First, the Tribunal upheld the assessments subject to some adjustments which are not material for present purposes. The Tribunal did so on the same three independent grounds which were relied on by the respondent. They were that the payments in issue were dividends paid to the applicants as shareholders of AES Services Pty Ltd (company) within s 44(1) of the ITAA 1936. In the alternative, the payments were deemed dividends within Part III Division 7A of the ITAA 1936. In the further alternative, the payments to the applicants or their associates were income according to ordinary concepts within s 6-5 of the ITAA 1997. For reasons we will give in relation to question F, the Tribunal committed an error of law in its analysis of the second ground of liability (i.e., deemed dividends), and the Tribunal’s decision cannot be upheld on that ground. Secondly, the Tribunal addressed a large number of issues and its reasons are over 400 pages long. The issues raised by the questions of law relate to only some of the issues addressed by the Tribunal, and our examination of the Tribunal’s reasons will be restricted to those issues. Broadly speaking, our examination will relate primarily to two matters advanced by the applicants in their case before the Tribunal. First, the applicants contended that the company’s profits could only be assessed after taking into account very substantial payments the company made in discharge of obligations it owed to subcontractors (subcontractor expenses). A key issue before the Tribunal was whether those alleged payments to subcontractors were made. Secondly, the applicants contended that payments made by the company to them or their associates were, in fact, loans by the company to the applicants. Another key issue before the Tribunal was whether those payments were loans.
The company was incorporated on 8 October 2004. Mr Haritos and Mr Kyritsis were directors of the company, and Mr Haritos was also the secretary of the company. Mr Haritos and Mr Kyritsis each held 50 shares in the company. The company’s issued share capital consisted of 100 ordinary class shares. The Tribunal said that, in earlier times, other persons had owned shares in the company, but that fact was of no importance to the Tribunal’s decision.
The company carried on a service business on a large scale of cleaning trains. It had two major clients and a number of smaller clients. The Tribunal referred to the major clients as client A and client Z. The company provided the cleaning services through subcontractors rather than through employees. The Tribunal said that the company’s employees consisted of two operation managers, nine contract managers, and two secretaries.
The company operated two bank accounts, a cheque account with overdraft facilities with the Commonwealth Bank of Australia (CBA account), and a business cheque account in the names of Mr Haritos and Mr Kyritsis trading as AES Services Pty Ltd with the Westpac Banking Corporation (Westpac account). The destination and characterisation of substantial payments into the Westpac account by clients of the company were, for reasons which will become clear, critical issues.
On 6 December 2009, the company was placed into administration by a resolution of its directors. Three partners of the firm Pitcher Partners were appointed joint and several administrators of the company. On 9 July 2010, the company’s creditors resolved that the company enter into a deed of company arrangement and it did that on 28 July 2010. Under the deed, the company’s officers continued to manage the company and its business, but the administrators established a deed administration fund into which various amounts were paid.
Prior to the incorporation of the company, another company, AES Property Pty Ltd (AES Property) carried on the service business of cleaning trains, and Mr Haritos and Mr Kyritsis, and their respective wives, were directors of AES Property. Unlike the company, AES Property provided the cleaning services through its own employees. AES Property sold its business to the company and, although Tribunal did not make a finding as to the exact date of transfer, it found that instructions for the preparation of the contract of sale were given in the middle of November 2004. On 22 October 2006, AES Property changed its name to Lake Services Pty Ltd and, on 17 October 2006, a liquidator was appointed to the company. The Tribunal found that Lake Services Pty Ltd was wound up under s 509 of the Corporations Act 2001 (Cth) on 19 May 2008.
The Tribunal found that Mr Haritos and Mr Kyritsis were directors of a number of other companies, some of which were nominee or family companies. It also found that each of them, either alone or with their respective wives, held a number of bank accounts. It is not necessary for us to set out the details.
The Tribunal also found that during the four income years from 2005 to 2008, Mr Haritos and Mr Kyritsis purchased seven properties. The registered proprietors of those properties were either Mr Haritos or Mr Kyritsis, or family members, or nominee or family companies of each of them. The details were set out in tabular form by the Tribunal and, again, it is not necessary for us to set out the details.
Mr Haritos gave evidence that between 1 July 2004 and 30 June 2008, clients of the company paid an amount of $34,359,772 into the Westpac account. He gave evidence that during the same period, an amount of $34,514,547 was paid from the Westpac account to subcontractors of the company. He explained the difference between monies in and monies out by the fact he or his associated entities had paid an amount of $979,953 to subcontractors on the company’s behalf. He gave evidence as to the procedure adopted for the payment of invoices rendered by the company’s subcontractors. He said that generally, a cheque to “Cash” was drawn. He accepted that various personal expenses of himself and his family, and Mr Kyritsis and his family, were paid out of the Westpac account.
As part of their involvement as administrators of the company, Pitcher Partners carried out an investigation of the company’s financial affairs for the purpose of reaching “a conclusion as to what amount we can recover in the event of liquidation against the directors”. As part of that investigation, Pitcher Partners had to determine the amounts which had been used to pay subcontractors. Pitcher Partners prepared a report which was before the Tribunal. That report was not included in the papers before this Court and the applicants were content to rely on the Tribunal’s conclusions as to the contents of the report.
Pitcher Partners concluded that between March 2005 and December 2009, an amount of $46,149,772 was paid into the Westpac account, and an amount of $46,074,248 was paid out. Of the amount paid out, Pitcher Partners was able to identify the sum of $11,961,367 as paid out for the private use of Mr Haritos and Mr Kyritsis.
Pitcher Partners did not have invoices rendered by the company’s subcontractors to assist them in determining the amount paid to subcontractors. They had 1,962 of the 2,405 cheques effecting payments from the account. Of the 1,962 cheques they had, 1,752 were made payable to cash.
Pitcher Partners concluded that at least an amount of $5,053,631 was paid to subcontractors from the Westpac account being the amount of $2,121,127 which they assumed had been paid from the Westpac account to one subcontractor (Akimbo Pty Ltd), and an amount of $2,932,504 paid out by cheque to another subcontractor (Crown International Property Management).
Pitcher Partners prepared a reconstruction of the company’s accounts on the basis of, among other things, an assumed amount of $23,993,809 “claimed by the directors to have been paid to subcontractors in the income years 2005 to 2009”. By reference to their experience of a profitability model for a business of a similar nature to that of the company and the company’s trading whilst in administration, Pitcher Partners concluded that the claim by the directors that the sum of $23,993,809 of the total amount of $46,074,248 withdrawn from the Westpac account was made up of likely payments to subcontractors and that they were reasonable costs and likely to be correct.
Mr Haritos said that the invoices from the subcontractors were thrown out by mistake in about the middle of May 2009. He also said that the company had not returned as income any of the income in the Westpac account during the four incomes years. The company’s financial statements prepared at the time did not include information from the Westpac account with respect to income or expenditure.
The applicants advanced in support of their case, records of the company described as MYOB records. The Tribunal described the circumstances surrounding the creation of these records at some length. The short points to note are that the Tribunal found that the MYOB records were prepared some considerable time after the events they purported to record, and were not books kept by the company within s 1305 of the Corporations Act or business records within s 69 of the Evidence Act 1995 (Cth).
The applicants called evidence from various witnesses regarding the benchmarks applicable in the service industry in which the company was engaged to support their case concerning the payments made to subcontractors from the Westpac account. These witnesses were Mr Dalla Costa, Mr Karlovsky, and Mr Adrian of the firm Moore Stephens. The evidence of these witnesses was not included in the papers before this Court, and, again, the applicants were content to rely on the Tribunal’s conclusions as to their evidence and reports.
Mr Dalla Costa was engaged either as chief financial officer or as group executive officer of a group of companies engaged in the same industry as the company from 2002 to 2010. He was asked to provide his opinion on the average cost of labour as a percentage of turnover or revenue in the relevant service industry generally and, in particular, for companies similar to the company between the years 2005 to 2009 (inclusive). He was also asked to provide an opinion on whether, given the nature and structure of the company’s business, the labour costs said by the company to be expenses in those years were an appropriate level of expenditure for labour costs.
Mr Dalla Costa prepared a business model and he gave evidence of the average ratio between total direct cost and average total direct labour cost, and between gross revenue and total direct labour costs. To do this, he had relied on his own information which he had not disclosed because he was subject to a confidentiality obligation with respect to that information. The Tribunal said that in all other respects, Mr Dalla Costa had relied on Mr Adrian’s calculations.
Mr Dalla Costa then expressed an opinion about the company’s financial performance relying in part on the combined final balance calculated by Mr Adrian as his starting point for the four income years, and, as far as the figures for 2010 and 2011 were concerned, he relied on the figures in the Pitcher Partners report when that firm was managing the business. Mr Dalla Costa’s conclusion was that, having regard to his benchmarking data, the direct labour costs for the company which he was asked to assume were appropriate given the size of the company and the nature of the work it undertook in each year.
Mr Karlovsky was a partner in the Enterprise Advisers Business Unit of PKF, a firm of chartered accountants and business advisers. The Tribunal found that he had experience in taxation, management accounting and consulting, compliance, audit and financial planning, and that he had been a chartered accountant for 18 years. He was asked to give an opinion on the same matters addressed by Mr Dalla Costa.
Mr Karlovsky had information about labour costs as a percentage of revenue incurred by four companies engaged in providing similar services to the company in the four income years, and in 2009. He had access to all the relevant financial data of one company which he did not name, and the financial statements of the other three companies (which he did name). He performed a comparison between the four companies and the company. He expressed opinions on whether the labour cost of the company as shown in Mr Adrian’s report was in line with industry standards. He said that it was for the years 2005, 2006 and 2008. It was slightly lower than industry standards for 2009. It was slightly higher than industry standards for 2007, and he identified some matters which might explain that fact.
Mr Adrian was a forensic accountant who was engaged by the applicants to prepare financial statements for the company in accordance with generally accepted accounting principles, to review the reasonableness of the financial statements, and to determine the net profit and distributable surplus in terms of the ITAA 1936 of the company during the period. Mr Adrian was given a large amount of material to assist him in performing this exercise. It is fair to say that none of this material objectively established the subcontractor expenses for the relevant period. The company’s MYOB material did not do that for reasons set out below. Mr Adrian assumed the correctness of the MYOB material. Having reconstructed the financial statements, Mr Adrian identified profit margins and compared them with industry benchmark figures. Mr Adrian reviewed the profitability of the company and “benchmarked it” against comparable businesses. He reviewed the relevant industry reports from the IBIS World Industry Report, the Australian Bureau of Statistics, and the Australian Taxation Office. He carried out that exercise to gain “comfort that the financial statements accurately reflected the business performance and profitability”.
The Tribunal decided that it would not accept Mr Haritos’ evidence as to the subcontractor expenses without corroboration. It is apparent from the Tribunal’s reasons that he was cross-examined at length on a number of matters. The Tribunal identified the areas in which it was unimpressed by Mr Haritos’ evidence, including Mr Haritos’ inability to remember the subcontractors, the fact that he gave inconsistent evidence about the timing of entries into a spreadsheet, the fact that his evidence as to the reasons income paid into the Westpac account was not declared was unconvincing, the fact that he relied on experts in an attempt to disassociate himself from the documents, the fact that his view of matters changed according to the purpose for which he was describing matters, and the fact that he had a tendency to interpret events and requirements to suit his view of what was required rather than what was required. The Tribunal also relied on examples of Mr Haritos’ unreliable memory. It was not suggested by the applicants that it was not open to the Tribunal to take the view that it would not accept Mr Haritos’ evidence without corroboration.

The Tribunal found that Mr Kyritsis’ evidence did not advance the applicants’ case. He was not involved in the management of the company’s arrangements with clients A or Z or with the payments into, or, in respect of the payments said to have been made to subcontractors, out of the Westpac account. He was not involved in recording any of these transactions or in arranging the preparation of certain schedules or the MYOB records prepared in relation to the Westpac account.
The Tribunal was prepared to place very little weight on the MYOB records because, among other things, they were prepared some considerable time after the events they purported to record, and they could not be independently verified by reference to either invoices issued by subcontractors who were said to have been paid, or by reference to evidence of the subcontractors themselves. It was not suggested by the applicants that it was not open to the Tribunal to take the view it did as to the weight to be placed on the MYOB records.
The Tribunal considered the evidence which potentially corroborated Mr Haritos’ evidence. It characterised Mr Adrian’s expert evidence as expert advice rather than an expert opinion. It said that he could not corroborate Mr Haritos’ evidence because his evidence was based on Mr Haritos’ evidence. Except to a very limited extent, Mr Adrian had been unable to verify the accuracy of Mr Haritos’ evidence.
The Tribunal said that the evidence of Mr Dalla Costa and Mr Karlovsky that the company’s labour costs came within their benchmarking figures, or was at least consistent with them, did not advance the applicants’ case because their evidence was “based on” the conclusions reached by Mr Adrian. In any event, they did not prove the company’s costs and its assessment of its on‑costs. A further point made by the Tribunal was that consistency with industry standards did not of itself prove the amount by which the assessments were excessive and, in order to succeed, an applicant was bound to establish the extent of the excess. We will consider the Tribunal’s reasons for rejecting the evidence said to corroborate Mr Haritos’ evidence in more detail in the context of our consideration of question 4.
The Tribunal rejected the applicants’ contention that the payments to them and their associates were loans to them by the company. The Tribunal’s reasons for rejecting that contention included the lack of documentation evidencing the loans, the fact that the applicants had never paid interest to the company, the fact that the payments were not recorded as loans in the company’s books, or in the books of at least some of the companies which were associated with the applicants. The Tribunal also found that the properties which were purchased with some of the monies were not (as the applicants had contended) purchased for asset preservation purposes. Again, we consider the Tribunal’s reasons for rejecting the contention that the payments were loans in more detail in the context of our consideration of question 9(c).
As we have said at [20] above, the Tribunal’s conclusion that the payments were deemed dividends within Part III Division 7A of the ITAA 1936 cannot stand, and we do not need to consider the Tribunal’s findings in relation to that matter: see further [63] and [256]-[257] below.
The third alternative basis of liability, namely that the payments were income within s 6-5 of the ITAA 1997, can be dealt with briefly. As they had with the first basis of liability, the applicants argued that the payments were loans by the company. The Tribunal referred to the reasons it had already given for rejecting this contention. The Tribunal rejected the other argument advanced by the applicants as to why the payments were not income, and that was that they did not receive a benefit, even if their associates did. The Tribunal rejected that argument because it considered that the applicants did obtain a benefit because they dealt with the funds as their own and were able to direct where payments were to be made.
The judgment of the primary judge
As stated above, the primary judge dismissed the appeal as incompetent. His Honour’s reasoning so far as presently relevant was as follows.
Having considered what was said to be the first question of law, involving procedural fairness (question 1) the primary judge said, at [24]-[26]:
The other questions of law which were set out in the amended notice of appeal are similarly complaints about the Tribunal’s decision on the evidence which was available to the Tribunal and are not questions of law. Many take the form of asserting a misunderstanding by the Tribunal of the terms of a statutory provision, but the taxpayers do not identify a misconstruction in some way except to contend that the Tribunal should have decided the case in their favour. Thus, for example, question 2 was, in essence, whether the Tribunal had misunderstood or misapplied s 14ZZK(b)(i) of the 1953 Act in light of the evidence before the Tribunal. The question was purportedly expressed in the form of a question of law but it was no more than a complaint that the Tribunal ought to have reached a different conclusion on the evidence in the exercise of its statutory jurisdiction. The reformulation of question 2 made clear the taxpayers’ desire to challenge the Tribunal’s decision on the facts rather than raising a question of law. Questions 3, 4 and 5 are in the same position.
…
The formulation of the questions in this way reveals how each question fails to identify a question of law but seek [sic], rather, merits review. The questions do not identify any error of principle in the Tribunal’s reasoning beyond the complaint that the Tribunal ought to have reached a different conclusion.
A further difficulty with questions 2, 3, 4 and 5, and the grounds upon which they are based, is that the facts do not support what is asserted as the factual foundation upon which the questions are based, and, at times, the factual assertions contained in the questions mis-state the facts as revealed by the Tribunal’s reasons. Question 2(a), for example, is predicated in part upon the description of the evidence before the Tribunal as being that:
The evidence given by the [taxpayers] that funds deposited in the Westpac account were used for the purposes of AES Services Pty Ltd (non-private purposes).
However, the evidence recited by the Tribunal is significantly different. At [102] of the Tribunal’s reasons the Tribunal recorded that Mr Haritos did not dispute that the funds identified in the Pitcher Partners report had been withdrawn for the taxpayer’s own use. The relevant paragraph stated:
102. [Mr Haritos] said in cross examination that he agreed with the outcome of Pitcher Partners’ forensic accounting that in excess of $46,149,772 had been deposited in the [AES Services] Westpac account in the period from March 2005 to December 2009. The majority had been deposited by Clients A and Z with significant amounts by two other clients and multiple “Other” clients depositing $2,753,871. He did not dispute Pitcher Partners’ assessment that $46,074,248 had been withdrawn from that account. He did not dispute their finding that $11,961,373 had been withdrawn for their own use.
It is conceivable that what appeared at [102] of the Tribunal’s reasons does not fully address the asserted evidence upon which question 2(a) in part depends, but the passage in the Tribunal’s reasons undermines the foundation upon which the question is based and shows, again, that the taxpayers seek to challenge conclusions which were open to the Tribunal upon the evidence rather than that they identify a question of law said to have been erroneously answered by the Tribunal.
The primary judge then reproduced a table prepared by the respondent in which the respondent identified inconsistencies, misstatements or errors between, on the one hand, the statements of facts or findings in the Tribunal’s reasons and, on the other hand, the statements of the factual findings as described in the taxpayers’ amended notice of appeal forming part of the questions or the grounds relied upon in support of the questions. The primary judge continued, at [27]:
A comparison between (a) the facts and findings of the Tribunal as described by the taxpayers and (b) those facts and findings as stated in the Tribunal’s reasons for decision reveals that the former do not accurately reflect the latter. I will not repeat the taxpayers’ questions and grounds nor set out the lengthy material in the Tribunal’s reasons or in the transcript which were referred to, but adopt the summary provided by the Commissioner as a convenient, and accurate, summary of the extent to which the taxpayers’ proposed grounds depend upon their mis-description of the facts and findings of the Tribunal. The extent of material differences between the fact asserted in the amended notice of appeal (either directly in the question or by incorporation in the question from the grounds) and the fact as set out in the Tribunal’s reasons or as found in the transcript tells against the taxpayers’ contentions that the questions posed were ones of law where the Tribunal can be shown to have committed some error in legal principle. The taxpayers’ case was, at best, that there must have been an error of law because they ought to have succeeded on the evidence. In no instance have the taxpayers contended, or established, that the findings made by the Tribunal were not open to the Tribunal in the sense of there being no evidence to support the finding: Minister for Immigration and Multicultural Affairs v Al-Miahi (2001) 65 ALD 141 at 149 [34]-[35]; Tisdall v Webber (2011) 193 FCR 260 at 270-271 [31]-[32], 295-298 [124]-[131]. The taxpayer may be unhappy about the weight given to the evidence before the Tribunal, but the weight which may be given to evidence is a matter within the Tribunal’s domain: Rawson Finances v Commissioner of Taxation [2013] FCAFC 26 at [119].
The primary judge then referred to question 6, which does not form part of the application to the Full Court.
At [29], the primary judge said in relation to questions 7, 8 and 9 in the amended notice of appeal that these were also not questions of law and also sought to engage in merits review. Having set out those questions, as well as questions 10 and 11 which do not form part of the application to the Full Court, the primary judge said, at [29]-[30]:
In each case the question is expressed as a question concerning the proper construction of a statutory provision, but in none of the questions is there identified what construction the Tribunal gave to the provisions which might [be] said to be erroneous. At most, in relation to questions 7, 8 and 9, there was [sic] identified specific facts said to be the foundation of an erroneous construction but none of the questions reveal a legal error in contrast with an attempt to engage in merits review …
Furthermore, if it were necessary to consider the matter, it appears that many of the asserted facts in the questions, or in the grounds upon which they are supported, are either wrong in fact or depend upon erroneous view[s] of the law. It is not desirable to deal further with erroneous statements of the facts, or of erroneous statements of law where the appeal is not otherwise competent and where the mis-statements are not material to that conclusion, other than to give an example. Thus, question 7(g) appears to assert that the operation of s 44(1) of the 1936 Act required there to be a “formal or informal resolution authorising a distribution”. However, the law does not require what the fact asserted implies: see ss 6(1) and 44(1) of the 1936 Act; Federal Commissioner of Taxation v Blakely (1981) 82 CLR 388 at 400 and 406, s 109C(3) of the Income Tax Assessment Act 1997 (Cth), 3D Scaffolding Pty Ltd v Commissioner of Taxation [2009] FCAFC 75 at [53]. For present purposes it is sufficient to conclude that the appeal is incompetent.
In construing s 44 of the AAT Act, the primary judge cited Comcare v Etheridge [2006] FCAFC 27; 149 FCR 522 at [19]; TNT Skypak International (Aust) Pty Ltd v Commissioner of Taxation [1988] FCA 198; 82 ALR 175 at 178, and HBF Health Funds Inc v Minister for Health and Ageing [2006] FCAFC 34; 149 FCR 291.
In considering the relationship between the pleaded questions of law and grounds of appeal his Honour applied Osland v Secretary to the Department of Justice [2010] HCA 24; 241 CLR 320 at 333 [21] and Australian Telecommunications Corporation v Lambroglou [1990] FCA 689; 12 AAR 515 at 524 per Ryan J.
The application for leave to appeal
The principles to be applied in deciding whether or not leave to appeal should be granted from an interlocutory decision are well-known: Decor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 844; 33 FCR 397 at 398-399. They are whether the decision is attended with sufficient doubt to warrant its being reconsidered by the Full Court and whether substantial injustice would result if leave were refused, supposing the decision to be wrong.
The applicants submitted that if the primary judge was satisfied that none of the grounds were made out, having effectively analysed them, his Honour should have made an order dismissing the appeal. The applicants also submitted that questions of law were raised before the primary judge and the questions of law pressed on the appeal should have been heard on their merits by the primary judge. The applicants further submitted that the questions of law raised by the appeal should be resolved by the Full Court in the applicants’ favour. The respondent opposed the grant of leave to appeal but developed his submissions by reference to the absence of questions of law and the absence of merit in any such questions.
We grant leave to appeal. As will appear below, in our opinion, the decision of the primary judge is attended with sufficient doubt to warrant its being reconsidered by the Full Court and substantial injustice would result if leave were refused, supposing the decision to be wrong. The substantial injustice would be that the applicants’ liability to income tax may be increased as a result of an error or errors of law by the Tribunal. We also conclude that leave to appeal should be granted in any event, given the form of the orders made by the primary judge that the appeal was incompetent, in circumstances where the primary judge nevertheless considered to some extent the merits of the grounds. In those circumstances the appropriate order would have been to dismiss the appeal.
In consequence of the grant of leave to appeal, the draft notice of appeal is to be taken to be filed as the notice of appeal and the draft notice of contention is to be taken to be filed as the respondent’s notice of contention. We refer to these documents in this way in the following discussion; and hereafter we refer to Mr Haritos and Mr Kyritis as the appellants, rather than the applicants.
Summary of conclusions in relation to s 44 of the AAT Act
We now turn to consider the more general questions raised by the appeal in relation to s 44 of the AAT Act. In summary, our conclusions are as follows:
(1)The subject-matter of the Court’s jurisdiction under s 44 of the AAT Act is confined to a question or questions of law. The ambit of the appeal is confined to a question or questions of law.
(2)The statement of the question of law with sufficient precision is a matter of great importance to the efficient and effective hearing and determination of appeals from the Tribunal.
(3)The Court has jurisdiction to decide whether or not an appeal from the Tribunal is on a question of law. It also has power to grant a party leave to amend a notice of appeal from the Tribunal under s 44.
(4)Any requirements of drafting precision concerning the form of the question of law do not go to the existence of the jurisdiction conferred on the Court by s 44(3) to hear and determine appeals instituted in the Court in accordance with s 44(1), but to the exercise of that jurisdiction.
(5)In certain circumstances it may be preferable, as a matter of practice and procedure, to determine whether or not the appeal is on a question of law as part of the hearing of the appeal.
(6)Whether or not the appeal is on a question of law is to be approached as a matter of substance rather than form.
(7)A question of law within s 44 is not confined to jurisdictional error but extends to a non-jurisdictional question of law.
(8)The expression “may appeal to the Federal Court of Australia, on a question of law, from any decision of the Tribunal” in s 44 should not be read as if the words “pure” or “only” qualified “question of law”. Not all so-called “mixed questions of fact and law” stand outside an appeal on a question of law.
(9)In certain circumstances, a new question of law may be raised on appeal to a Full Court. The exercise of the Court’s discretion will be affected not only by Coulton v Holcombe [1986] HCA 33; 162 CLR 1 considerations, but also by considerations specific to the limited nature of the appeal from the Tribunal on a question of law, for example the consideration referred to by Gummow J in Federal Commissioner of Taxation v Raptis [1989] FCA 557; 89 ATC 4994 that there is difficulty in finding an “error of law” in the failure in the Tribunal to make a finding first urged in this Court.
(10)Earlier decisions of this Court to the extent to which they hold contrary to these conclusions, especially to conclusions (3), (4), (6) and (8), should not be followed to that extent and are overruled. Those cases include Birdseye v Australian Securities and Investments Commission [2003] FCA 232; 76 ALD 321, Australian Securities and Investments Commission v Saxby Bridge Financial Planning Pty Ltd [2003] FCAFC 244, 133 FCR 290, Etheridge, HBF Health Funds and Hussain v Minister for Foreign Affairs [2008] FCAFC 128; 169 FCR 241.
Whether a new question of law may be raised on appeal to a Full Court
A separate issue arose in relation to a matter which the appellants accepted was not before the primary judge. It related to Div 7A of the ITAA 1936, and it was that the Tribunal applied the wrong provision in that the provision it applied was not in force at the time of the relevant assessments in 2005 to 2009. This was said to be picked up in grounds 7(h) and 8(f), which we have set out above. Item 35 of Schedule 1 to the Tax Laws Amendment (2010 Measures No. 2) Act 2010 (Cth) provided that the amendments made by Schedule 1 applied in relation to: (a) payments made; and (b) loans made; and (c) debts forgiven on or after 1 July 2009. It was Schedule 1 which amended, amongst other things, s 109Y(2) of the ITAA 1936. The impact of applying the amended provision rather than the earlier provision was set out at appendix A to the appellants’ written submissions.
The respondent submitted that an entirely new question could not be raised as the basis of an application for leave to appeal from a primary judgment dismissing an appeal as incompetent because there was no question of law. The respondent submitted that if the appellants’ complaint was that the primary judge erred in dismissing the appeal as incompetent, the appellants must demonstrate that the questions of law in the original or the amended notice of appeal were truly questions of law. The appellants could not, the respondent submitted, come to the Full Court with reformulated questions or new questions and seek to persuade the Full Court that the reformulated questions, or the new questions, were questions of law. This submission by the respondent went not only to the admittedly new question about the wrong provision being applied, but also to the formulation of the grounds of appeal in the proposed notice of appeal.
The respondent submitted that once the notice of appeal or, as here, the amended notice of appeal, had been settled before the primary judge, then that was the document that identified what were said to be the questions of law on which the Court’s jurisdiction was based. The respondent submitted that this was a rational approach because the complaint that was mounted against a judge who dismissed an appeal as incompetent was that the judge should not have taken that course. The presence or absence of error on the part of the primary judge was critical to determining whether leave to appeal should be granted and, if granted, the appeal should be allowed. The presence or absence of error could only be determined by evaluating the asserted questions of law stated in the notice of appeal. If they did answer the description of questions of law, leave to appeal would be granted and the appeal may well be allowed. If they did not answer that description, there was no point in allowing leave to appeal because there was no error on the part of the primary judge.

The approach by the Tribunal involved an error of law. The error was, as the appellants submitted, the drawing of a conclusion about the nature or character of Mr Dalla Costa’s evidence that was irrational, illogical and not based on findings or inferences supported by logical grounds. The material, being the evidence of Mr Dalla Costa, simply did not admit of a conclusion rationally reached that it was based on assertions of Mr Haritos and Mr Kyritis or material that could not be verified. So to conclude was not merely a wrong finding of fact; it was to make a finding effectively without any material, such was the mischaracterisation of the evidence. If a witness (witness 1), whose reliability is such as to demand corroboration, says fact X occurred, and witness 2, whose reliability is not in question, says fact Y occurred and fact Y is corroborative of fact X occurring, and witness 2 gives a basis for stating that fact Y occurred independently of witness 1, for a Tribunal to reject witness 2 as corroborative because of an asserted source in witness 1’s evidence that is not present in the evidence, is irrational or illogical in the sense referred to in SZMDS. It can be seen as equivalent to finding a fact with no evidence: Kostas; or to drawing a conclusion that it was reasonably open to make a finding, when it was not so open: TNT Skypak at 182.
So to conclude is not to enter into the field of merits review or fact finding. It is to supervise the legality of the fact finding process of the Tribunal. A Tribunal cannot, at least in relation to central and important evidence, say that material cannot be considered as of any weight because it derives from a tainted source, when an examination of that material (without the need for any weighing of evidence or choosing between available inferences or findings) reveals that it does not derive from the source said to be tainted. This is to fail to deal in the review process with possibly significant evidence for a reason that has no evidential foundation or for a reason that is sufficiently irrational or illogical as to be legally unreasonable.
The consequence of this legal error was two-fold. First, it meant that the review function was left incomplete insofar as the extent to which Mr Haritos’ evidence could be accepted had yet to be assessed. His evidence was left as unreliable, subject to corroboration and available potential corroboration was not analysed for the purpose of completing an assessment of Mr Haritos’ evidence. Secondly, and related thereto, the obligation upon the taxpayer to demonstrate the extent of any excessiveness of the assessment was not addressed using the material available in the review process. Not only might Mr Della Costa’s evidence lead to the acceptance of parts of Mr Haritos’ evidence, it might, in that respect, lead to a foundation for being able to find on the material the extent to which the assessment was excessive.
We reach these conclusions for the following reasons.
The Tribunal did not reject Mr Dalla Costa’s evidence on the basis that he was not a witness of truth, or that he lacked the expertise to express an opinion on the ratio of average total direct labour cost to total direct cost, or of total direct labour cost to gross revenue in the relevant industry. It is true that Mr Dalla Costa’s evidence related to Mr Adrian’s calculations in the sense that he compared his benchmarking figures with Mr Adrian’s calculations, and that the latter’s calculations were substantially based on information provided by Mr Haritos. However, Mr Dalla Costa’s evidence as to the benchmarking figures had an independent basis, and was unrelated to Mr Adrian’s calculations for the reasons submitted by the appellants. Mr Dalla Costa’s evidence was capable of corroborating Mr Haritos’ evidence about the expenses of the company in relation to subcontractors.
The Tribunal put forward a further reason or reasons for placing no weight on Mr Dalla Costa’s evidence. It said that his evidence did not point to information that could show the company’s costs and assessment of its on-costs. In the next paragraph of its reasons under the heading, “Consistency with industry benchmarks”, the Tribunal said that even if it was satisfied that the assessments were excessive, it would not be satisfied of the extent to which they were excessive because it had no factual foundation upon which it was able to come to a conclusion. The Tribunal said, at [696]:
I have assessments as to whether they would seem to have come within industry benchmarks but I have no verification of whether they did or did not. It is not enough to reach a conclusion that the assessments might have been excessive. I need to know the extent to which it is excessive for, if I do not, I would become engaged in a guessing game as to the amount of [Mr Haritos’] and [Mr Kyritsis’] assessable income.
The precise meaning of this passage is not clear. Subject to the appellants’ arguments in relation to question 2, they accepted that Federal Commissioner of Taxation v Dalco [1990] HCA 3; 168 CLR 614 at 626 and earlier cases (see, for example Trautwein v Federal Commissioner of Taxation [1936] HCA 77; 56 CLR 63 at 88, per Latham CJ) provide that, in order to succeed, a taxpayer must show not only that an assessment is excessive, but also the extent to which it is excessive. The benchmarking figures did not establish the precise figures for this particular company and, on the case advanced by the appellants before the Tribunal, only acceptance of Mr Haritos’ evidence could establish, with the required degree of precision, the amount by which the assessments were excessive. All of this may be accepted, but it does not answer the point that Mr Dalla Costa’s evidence was capable of corroborating Mr Haritos’ evidence, and was not to be put to one side because it did not corroborate the precise figures put forward by Mr Haritos. The process of consideration of Mr Haritos’ evidence, and the review itself, was incomplete without a consideration of the effect of the evidence of Mr Della Costa that was of a character which was capable of amounting to corroboration.
In his outline of submissions filed before the hearing, the respondent sought to meet the appellants’ argument by reference to the principle that, in this case, the appellants were required to prove not only that the assessments were excessive, but also the extent to which they were excessive. We reject that argument for the reasons given in the previous paragraph. As it happened, during the course of the hearing of the application for leave to appeal, counsel for the respondent conceded (correctly in our view) that it was “not wrong” to say the Tribunal’s reasoning was illogical to the extent that it said that Mr Dalla Costa relied on Mr Haritos’ evidence.
Counsel for the respondent did not make the same concession in relation to the other witnesses identified in the appellants’ submission, and it is to those witnesses that we now turn.
We think that, as a matter of principle, the same conclusions apply to the evidence of Mr Karlovsky and Mr Adrian. Both gave opinions by reference to industry standards and there was nothing to suggest that they were not witnesses of truth or lacked the relevant expertise. We say “as a matter of principle” because Mr Karlovsky’s evidence might be accorded less weight than that accorded to the evidence of Mr Dalla Costa because he did not have the actual “hands on” industry experience of the latter, and Mr Adrian’s evidence might be accorded even less weight again because his benchmarking was rather general and was done in a context where the exercise he undertook was closely related to figures provided by Mr Haritos and the company’s MYOB records. The position is perhaps less clear as far as the report of Pitcher Partners is concerned. As far as we can see, the appellants did not call a witness from Pitcher Partners who could give evidence in support of the conclusions in the report. Furthermore, it is not clear reading the Tribunal’s reasons precisely how the appellants sought to deploy the report. Nevertheless, as a matter of principle, aspects of the Pitcher Partners report, being the trading figures during the administration, and their evidence based on their experience of profitability models for a business of the relevant type, were capable of corroborating Mr Haritos’ evidence.
The Tribunal erred in law in its approach to Mr Haritos’ evidence in relation to the subcontractor expenses and the evidence which potentially corroborated that evidence. The error was not one which related to the preferring of one witness over another or the weight to be attached to the evidence. It involved a basic approach to the significance of relevant evidence. The respondent did not argue that the error was of no consequence as far as the Tribunal’s conclusion in relation to subcontractor expenses was concerned and, in fact, he did not argue that the Tribunal’s decision could be upheld insofar as it was based on the conclusion that the payments were dividends within s 44(1) of the ITAA 1936. Rather, the respondent argued that the Tribunal’s decision ought to be upheld on the basis (found by the Tribunal) that the payments made to the appellants and their associates were ordinary income within s 6-5 of the ITAA 1997. We will consider the respondent’s submissions to that effect as part of our consideration of question 9(c).
Question 5
In question 5 of the amended notice of appeal before the primary judge, the appellants relied on the same matters they relied on in question 4 to challenge the Tribunal’s finding in relation to the subcontractor expenses. They contended that the Tribunal’s conclusion was so unreasonable that no reasonable decision-maker could have made it. We have already held in connection with question 4 that the Tribunal’s conclusion cannot stand. The appellants did not put forward any submissions in support of question 5 and, in the circumstances, it is unnecessary for us to consider it.
Question 2
The appellants submitted that the Tribunal misconstrued the burden of proof section in the Taxation Administration Act 1953 (Cth), s 14ZZK, in considering the issue of subcontractor expenses. There is an overlap between this alleged error and the alleged error raised by question 4, and in view of our conclusions in relation to question 4, it is not strictly necessary for us to consider this question. However, the matter was fully argued and we will deal with it. We do so on the assumption that we are wrong in holding that the Tribunal’s decision in relation to subcontractor expenses was irrational and illogical.
There were a number of strands to the appellants’ argument and to some degree they overlap. First, they submitted that the Tribunal used the burden of proof provision in an impermissible way in that it used it to constrain the review function of the Tribunal. In Copperart Pty Ltd v Commissioner of Taxation [1994] FCA 216; 50 FCR 345, Davies J (with whom Gummow and French JJ agreed) said (at 353):
Although the onus is on the taxpayer to show that the assessment was excessive, an assessment is not, in a review, itself evidence of the facts on which it was found. It is the Tribunal’s duty to come to its own conclusions of fact and to give effect to them.
As we understood the appellants’ argument, it was that it was one thing to apply the burden of proof section to the facts as found, it was another (and impermissible) to use it as a reason for not accepting the appellants’ evidence. In other words, the Tribunal (so the appellants argued) should have approached Mr Haritos’ evidence in the normal way and decided whether to accept or reject it without regard to the burden of proof section.
In support of their argument that the Tribunal had indeed made this error, the appellants identified a passage in the Tribunal’s reasons which we have referred to in our discussion of the issues relating to question 4, (see [222]). The Tribunal made an error in this part of its reasons which we have previously identified (at [217]-[221] and [223]). However, we do not think it made an error of the type we are now considering. If, contrary to our conclusions in connection with question 4, the Tribunal was entitled to consider Mr Haritos’ evidence without regard to the evidence which potentially corroborated it, then we think it rejected his evidence for reasons which are unobjectionable and quite unrelated to the burden of proof.
The second way in which the appellants put their argument that the Tribunal had misconstrued or misapplied the burden of proof section was to contend that the section did not, contrary to the Tribunal’s view, require exact proof of the amount by which the assessment was excessive. The appellants referred to Ma v Commissioner of Taxation [1992] FCA 530; 37 FCR 225 where Burchett J, after referring at length to the decision of the High Court in Commissioner of Taxation (Cth) v Dalco [1990] HCA 3; 168 CLR 614, said, at 233:
Furthermore, the making of estimates upon inexact evidence, which is so much a feature of both judicial and administrative decision-making, cannot be uniquely excluded from appeals against betterment assessments. To refuse to consider the credit, not only of the applicant, but also of his independent and unchallenged witnesses, simply because the effect of the evidence was to support his accountant's generalisations about double-counting rather than to hit upon a precise figure, was to fall into an error of law.
The proposition which the appellants sought to derive from this passage was that in performing its review function, the Tribunal may be required to make an estimate upon inexact evidence, and it cannot avoid its responsibility to make findings by relying on the burden of proof section. This proposition may be accepted for present purposes. The difficulty for the appellants is that, subject to the third argument dealt with below, they are unable to identify the estimate they contend the Tribunal should have made and the evidence by reference to which the estimate should have been made. It is true that the Tribunal appears to have thought it likely that there were subcontractor expenses of a reasonably substantial amount, but the appellants have not identified any findings of the Tribunal, or evidence referred to by it, that could form the basis of even an estimate upon inexact evidence. At one point the appellants foreshadowed a challenge to the Tribunal’s decision on the basis that it had not provided adequate reasons, but that line of attack was not pursued. The appellants did not suggest that the Tribunal erred in not selecting a figure advanced by one of the witnesses who gave evidence which potentially corroborated Mr Haritos’ evidence and, of course, a rational basis for the selection would need to be identified.
The third way in which the appellants put their argument that the Tribunal had misused the burden of proof section is related to the second. The appellants submitted that even if Mr Haritos’ evidence was correctly rejected, they had nevertheless established subcontractor expenses of at least a certain amount. The Tribunal was not entitled to adopt what the appellants described as an “all or nothing” approach. If an “at least” figure was established on the evidence, then the Tribunal should have made a finding in accordance with that evidence.
We think that proposition is correct. If a taxpayer claims his or her expenses were $10.00, but fails to prove that fact because their evidence is rejected, this does not prevent the Tribunal from finding that the expenses were $5.00 where there is other satisfactory evidence establishing expenses of at least that amount. In our opinion, the burden of proof section does not dictate a different conclusion.
In this case, the only “at least” figure clearly identified was the figure of $5,053,631 referred in the report of Pitcher Partners. Although it is not entirely clear, we think the Tribunal accepted that figure, and we think the Tribunal (assuming that it did not err in the manner indicated in our discussion of question 4) erred in law in not finding subcontractor expenses of that amount.
Question 9(c)
The appellants submitted that the Tribunal erred in law in concluding that payments from the company made to their associates were ordinary income within s 6(5) of the ITAA 1997 in circumstances where those payments, albeit made at the direction of a taxpayer company director (as the appellants put it), were not for the director’s benefit.
The appellants submitted that the ordinary concept of income was what goes into the taxpayer’s pocket. They referred to the High Court’s decision in Commissioner of Taxation (Cth) v Sun Alliance Investments Pty Limited (In Liquidation) [2005] HCA 70; 225 CLR 488 where, after referring to the difference between a cash basis of accounting and an accruals basis, the Court said (at [43]; footnote references omitted):
But “[f]or the most part, the law expresses an ordinary usage notion of derivation of a receipt”. Thus the notion of income directs one’s attention to “receipts” by a taxpayer – or, as Lord Macnaghten put it, “what goes into his pocket”.
The appellants submitted that the case which the Tribunal relied on to find that they had received income according to ordinary concepts – ABB Australia Pty Ltd v Federal Commissioner of Taxation [2007] FCA 1063; 162 FCR 189 – was distinguishable because in that case, the amounts paid to a third party by a company discharged the company’s obligation to the alleged recipient of the payment, and was credited to the alleged recipient in its dealings with the third party (at [172]).
We reject the appellants’ submission. We think that the Tribunal was correct to conclude that the payments at the appellants’ direction to the accounts of their wives and children, or to third parties to discharge loans, were income according to ordinary concepts. The Tribunal said that the appellants dealt with the funds as their own funds and that was enough to conclude that they had derived a benefit. The benefit was in the form of money and, therefore, income according to ordinary terms.
It is well-established that although according to ordinary concepts, items of income are to be money or to be reckoned as money, it is not necessary that they be paid over to the taxpayer. It is sufficient “according to ordinary concepts and usages” that it be dealt with on his behalf or as he directs (Federal Commissioner of Taxation v Cooke and Sherden [1980] FCA 46; 10 ATR 696 at 703. See also Federal Commissioner of Taxation v White [2010] FCA 730; 79 ATR 498 at [25] per Gordon J).
The position is confirmed by s 6-5(4) of the ITAA 1997 which provides as follows:
In working out whether you have derived an amount of ordinary income, and (if so) when you derived it, you are taken to have received the amount as soon as it is applied or dealt with in any way on your behalf or as you direct.
As we have said, the respondent submitted that even if there was an error of law of the type we have identified in our consideration of question 4 that only related to the subcontractor expenses and the first basis of liability, and the Tribunal’s decision could be upheld by reference to the conclusion that the payments to the appellants and their associates were ordinary income.
The appellants sought to meet the respondent’s submission by making two submissions.
First, they submitted that the Tribunal’s conclusion with respect to ordinary income does not include all of the assessable income in the assessments they challenged. They referred to a conclusion by Pitcher Partners and a table set out in the Tribunal’s reasons in support of that proposition. We reject this submission. Although the position does not emerge as clearly as it might from the Tribunal’s long reasons for decision, it does when regard is had to the respondent’s reasons for decision on the appellants’ objections to the assessments and a document entitled “Amended Annexure A” which was provided to the Court after the hearing. Amended Annexure A makes it clear that the assessments which were challenged were based on amounts received by the appellants or their associates.

Secondly, the appellants submitted that the error of law which we have identified in connection with question 4 also affected the Tribunal’s conclusions that the amounts received by the appellants or their associates were ordinary income. That was because the Tribunal rejected their argument that the amounts paid to them or their associates were loans to them by the company and it did so, in part at least, on the basis that it did not accept that Mr Haritos was a creditable and reliable witness. Put simply, the appellants submitted that had the Tribunal adopted the correct approach to the evidence which potentially corroborated Mr Haritos’ evidence in relation to the subcontractor expenses, it might have accepted Mr Haritos as a credible and reliable witness in relation not only to the subcontractor expenses, but also in relation to the appellants’ case that the payments to them or their associates were loans by the company. This argument probably falls within question 9(d) in the amended notice of appeal before the primary judge. In any event, the respondent raised no objection to the appellants putting it.
The respondent’s response to this argument was to submit that Mr Haritos’ credit and reliability played no part, or no significant part, in the Tribunal’s conclusion that the payments were not loans by the company.
The Tribunal reached the conclusion that the payments were not loans by the company to the appellants by reference to a number of matters. We now expand on the matters which we previously summarised.
First, the Tribunal said there have never been any formal loan agreements between the company on the one hand, and either Mr Haritos or Mr Kyritsis on the other. The appellants admitted that they had never paid interest on any such loan.
Secondly, the Tribunal said that had the payments from the Westpac account by cheques made out to “cash” been loans, then it would have expected to see some indication that that was so, either by way of a formal document recording the fact, or some form of recognition of the fact in the company’s financial statements, or by arrangements to repay the amounts. The Tribunal said that one might also expect to see some form of security offered for repayment of the monies “and so on”. The Tribunal examined the financial statements and information in the report of Pitcher Partners, and the financial statements of some of the associated companies, and reached the conclusion that the appellants had not established that the payments from the Westpac account were loans to the appellants or other entities.
In the context of an amount paid from the Westpac account in 2009 and an allegation that the unequal amounts paid to Mr Haritos and Mr Kyritsis could be explained by the fact that there was a loan from Mr Kyritsis to Mr Haritos, the Tribunal said that it accepted that there did not need to be a written agreement in order for there to be a loan. The Tribunal then said, at [712]:
For the reasons I have given earlier, I need more than [Mr Haritos’] evidence. For reasons I come to later, [Mr Kyritsis] has gone along with what [Mr Haritos] has done and so I need more than his evidence.
The Tribunal then addressed a further issue that arose out of the appellants’ case that the payments from the Westpac account were loans by the company and that concerned the purchase of substantial properties in the names of the appellants’ associates by the use of such monies. The appellants’ case was that these properties were purchased for asset preservation purposes. The Tribunal rejected that case saying that information filed in a proceeding in the Supreme Court seeking the lifting of freezing orders was inconsistent with an understanding by the registered proprietors of the properties that they held the properties on trust for the company.
As we have said, the Tribunal expressly said in the particular case of the alleged loan from Mr Kyritsis to Mr Haritos in 2009, that it needed more than Mr Haritos’ evidence. We think that that indeed was the premise of the whole of the Tribunal’s analysis of the appellants’ case that the payments from the Westpac account were loans by the company. It follows that we think that the Tribunal’s erroneous approach to the evidence which potentially corroborated Mr Haritos’ evidence in relation to the subcontractor expenses and, therefore, Mr Haritos’ credit and reliability, has also led to an error of law in the conclusion that the payments from the Westpac account were income according to ordinary concepts. The legally flawed failure to address the potential corroboration of Mr Haritos’ evidence by the evidence of Mr Della Costa, Mr Karlovsky and Mr Adrian cannot be quarantined. It is not for this Court to consider how a Tribunal should view Mr Haritos’ evidence once it is assessed by the Tribunal, including by reference to potentially corroborative evidence. Unless it be the case (which it is not) that the corroboration could not possibly affect the finding of fact that the payments were income according to ordinary concepts, that matter must be seen as affected by the error to which we have earlier referred.
We reach this conclusion with some reluctance because there was a good deal to be said against the appellants’ case, particularly their case that the payments from the Westpac account were loans by the company, and significant aspects of the Tribunal’s reasons are unexceptional. However, unless it is quite clear that the result would have been no different without the error of law (and it is not in this case), it is not for this Court to reach its own conclusions on the papers (Rosenberg v Percival [2001] HCA 18; 205 CLR 434; Minister for Immigration and Multicultural Affairs v Rajamanikkam [2002] HCA 32; 210 CLR 222).
Question F: the new question of law
The Tribunal applied Part III Division 7A as amended by the Tax Laws Amendment (2010 Measures No 2) Act 2010 (Cth) (the amending Act). As we have said, the transitional provision in the amendment provided that the amendments applied to payments made, loans made and debts forgiven on or after 1 July 2009.
The Tribunal should have applied the Division as it was before the amendments introduced by the amending Act. The respondent did not argue to the contrary. Nor did he argue the result would have been no different had the Tribunal applied Division 7A as it was before the amendments. The effect of this error of law is that the Tribunal’s decision cannot be upheld on the basis that the payments were deemed dividends within Part III Division 7A of the ITAA 1997.
Other questions
We have set out above what were said to be the relevant questions of law in the amended notice of appeal before the primary judge (at [5]).
Questions 7(c) and 8(c) raise a similar point to that raised by Question 9(c) except that they do so in the context of dividends and deemed dividends respectively. We have dealt with Question 9(c) above (at [238]-[255]). The appellants did not suggest that the argument was any different in relation to Questions 7(c) and 8(c), and that would suggest that those questions suffer a similar fate to Question 9(c). However, for reasons already given, the Tribunal’s decision cannot be upheld on the basis of dividends or deemed dividends, and as the arguments in relation to Questions 7(c) and 8(c) were not developed, we will refrain from expressing a concluded view.
Questions 7 (h) and 8(f) were said by the appellants to raise question F, but for the reasons we have given at [207] above we reject that contention. The appellants did not put any other arguments in support of questions 7(h) and 8(f).
Conclusions
Leave to appeal should be granted and the appeal allowed. The orders of the primary judge made on 20 February 2014 should be set aside and in lieu of those orders, there should be orders setting aside the decision of the Tribunal and requiring the Tribunal to hear and determine the appellants’ applications for review according to law. We would leave to the President of the Tribunal the question of how the Tribunal should be constituted on the rehearing but we note that the Tribunal as constituted and which made the decision the subject of the present appeal made credit findings adverse to the appellants’ case.
The parties should be heard as to the costs before the primary judge and before this Court. They should be granted a period of 14 days in which either to agree on the costs orders which should be made or, failing agreement, to file and serve their written submissions of no more than three pages.

I certify that the preceding two hundred and sixty-two (262) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Allsop, Justice Kenny, Justice Besanko, Justice Robertson and Justice Mortimer.

Associate:
Dated: 30 June 2015

Citation:	Haritos v Commissioner of Taxation [2015] FCAFC 92
Appeal from:	Haritos v Commissioner of Taxation [2014] FCA 96
Parties:	GEORGE HARITOS and ALEX KYRITSIS v COMMISSIONER OF TAXATION
File number:	VID 144 of 2014
Judges:	ALLSOP CJ, KENNY, BESANKO, ROBERTSON AND MORTIMER JJ
Date of judgment:	30 June 2015
Catchwords:	ADMINISTRATIVE LAW – appeal from the Administrative Appeals Tribunal (Tribunal) – scope of s 44 of the Administrative Appeals Tribunal Act 1975 (Cth) – whether grounds of appeal to primary judge stated question or questions of law – whether appeal competent – whether question of law may include so-called mixed question of fact and law – whether in exercising its appellate jurisdiction on an appeal from a judge of the Court, the Court may deal with question or questions of law not previously raised before the primary judge INCOME TAX – income tax assessments under ss 167(b), 167(c) and 170(1) of the Income Tax Assessment Act1936 (Cth) – appeal from the Administrative Appeals Tribunal (Tribunal) – whether amended notice of appeal raised questions of law – whether Tribunal’s reasoning process was illogical, irrational or lacking a basis in findings or inferences of fact supported on logical grounds and thus made a decision it was not authorised to make – whether Tribunal misconstrued the burden of proof in Taxation Administration Act1953 (Cth), s 14ZZK – whether Tribunal erred in law in concluding that payments made to associates were ordinary income within Income Tax Assessment Act 1997 (Cth) s 6-5 – whether Tribunal erred in law by applying Part III Division 7A as amended by the Tax Laws Amendment (2010 Measures No 2) Act 2010 (Cth) where transitional provision provided that the amendments applied to payments made, loans made and debts forgiven on or after 1 July 2009
Legislation:	Administrative Appeals Tribunal Act 1975 (Cth) ss 7, 44 and 45 Federal Court of Australia Act 1976 (Cth) s 24 Income Tax Assessment Act 1936 (Cth) s 44(1), Part III Division 7A Income Tax Assessment Act 1997 (Cth) s 6-5 Tax Laws Amendment(2010 Measures No. 2) Act 2010 (Cth) sch 1, item 35 Taxation Administration Act 1953 s 14ZZK Federal Court Rules 2011 (Cth) r 33.12
Cases cited:	A v New South Wales [2007] HCA 10; 230 CLR 500 ABB Australia Pty Ltd v Federal Commissioner of Taxation [2007] FCA 1063 Agfa-Gevaert Ltd v Collector of Customs [1994] FCA 664; 124 ALR 645 Allan v Transurban City Link Ltd [2001] HCA 58; 208 CLR 167 Attorney-General (NSW) v Quin [1990] HCA 21; 170 CLR 1 Australian Fisheries Management Authority v PW Adams Pty Ltd [1995] FCA 1026; 61 FCR 314 Australian Gas Light Co v Valuer-General (1940) 40 SR (NSW) 126 Australian Securities and Investments Commission v Saxby Bridge Financial Planning Pty Ltd [2003] FCAFC 244, 133 FCR 290 Australian Telecommunications Corporation v Lambroglou [1990] FCA 689; 12 AAR 515 Avetmiss Easy Pty Ltd v Australian Skills Qualifications Authority [2014] FCA 314 B & L Linings Pty Ltd v Chief Commissioner of State Revenue [2008] NSWCA 187; 74 NSWLR 481 Barghouthi v ING Custodians Pty Ltd [2003] FCA 1272 Bass v Permanent Trustee Co Ltd [1999] HCA 9; 198 CLR 334 Bell v Commissioner of Taxation [2013] FCAFC 32; 90 ATR 7 Birdseye v Australian Securities and Investments Commission [2003] FCA 232; 76 ALD 321 Board of Trustees of the State Public SectorSuperannuation Scheme v Edington [2011] FCAFC 8; 119 ALD 472 Brown v Repatriation Commission [1985] FCA 236; 7 FCR 302 City of Enfield v Development Assessment Commission [2000] HCA 5, 199 CLR 135 Clements v Independent Indigenous Advisory Committee [2003] FCAFC 143; 131 FCR 28 Collector of Customs v Agfa-Gevaert Ltd [1996] HCA 36; 186 CLR 389 Collector of Customs v Cliffs Robe River Iron Associates [1985] FCA 96; 7 FCR 271 Collins v Administrative Appeals Tribunal [2007] FCAFC 111; 163 FCR 35 Comcare v Etheridge [2006] FCAFC 27; 149 FCR 522 Comcare v Martinez (No 2) [2013] FCA 439; 212 FCR 272 Commissioner for Consumer Protection v Carey [2014] WASCA 7 Commissioner of Taxation v Brixius [1987] FCA 612; 16 FCR 359 Commissioner of Taxation v Cooper [1991] FCA 190; 29 FCR 177 Commissioner of Taxation v Crown Insurance Services Ltd [2012] FCAFC 153; 207 FCR 247 Commissioner of Taxation (Cth) v Dalco [1990] HCA 3; 168 CLR 614 Commissioner of Taxation v Trail Bros Steel & Plastics Pty Ltd [2010] FCAFC 94; 186 FCR 410 Commissioner of Taxation (Cth) v Sun Alliance Investments Pty Limited (In Liquidation) [2005] HCA 70; 225 CLR 488 Condell v Commissioner of Taxation [2007] FCAFC 44; 66 ATR 100 Copperart Pty Ltd v Commissioner of Taxation [1994] FCA 216; 50 FCR 345 Cosmopolitan Hotel (Vic) Pty Ltd v Crown Melbourne Limited [2014] VSCA 353 Coulton v Holcombe [1986] HCA 33; 162 CLR 1 Culley v Australian Securities and Investments Commission [2010] FCAFC 43; 183 FCR 279 Cyonara Snowfox Pty Ltd v Commissioner of Taxation [2012] FCAFC 177; 208 FCR 471 Da Costa v R [1968] HCA 51; 118 CLR 186 De Simone v Commissioner of Taxation [2009] FCAFC 181; 77 ATR 936 Decor Corporation Pty Ltd v Dart Industries Inc [1991] FCA 844; 33 FCR 397 Drake v Minister for Immigration and Ethnic Affairs 46 (1979) FLR 409; 24 ALR 577 Eastman v Commissioner for Social Housing [2011] ACTCA 12; 252 FLR 278 Ekinci v Civil Aviation Safety Authority [2014] FCAFC 180; 227 FCR 459 Epping Hotels Pty Ltd v Serene Hotels Pty Ltd [2015] VSC 104 Ergon Energy Corp Ltd v Commissioner of Taxation (Cth) [2006] FCAFC 125; 153 FCR 551 Federal Commissioner of Taxation v Cooke and Sherden [1980] FCA 46; 10 ATR 696 Federal Commissioner of Taxation v Raptis [1989] FCA 557; 89 ATC 4994 Federal Commissioner of Taxation v White [2010] FCA 730; 79 ATR 498 Fitzpatrick v Inland Revenue Commissioners [1994] 1 WLR 306 Haritos v Commissioner of Taxation [2014] FCA 96; 141 ALD 369; 62 AAR 467 Harris v Director-General of Social Security [1985] HCA 1; 59 ALJR 194 HBF Health Funds Inc v Minister for Health and Ageing [2006] FCAFC 34; 149 FCR 291 Hope v Bathurst City Council [1980] HCA 16; 144 CLR 1 Hussain v Minister for Foreign Affairs [2008] FCAFC 128; 169 FCR 241 Interfaith Community Org. v. Honeywell Intl., Inc., 399 F.3d 248 (3d Cir. 2005) Jedko Game Co Pty Ltd v Collector of Customs (NSW) [1987] FCA 74; noted 12 ALD 491 Johnstone v Sutton (1786) 1 TR 510 at 545; 99 ER 1225 Jones v First-tier Tribunal [2013] UKSC 19; 2 AC 48 Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32; 241 CLR 390 Kowalski v Military Rehabilitation and Compensation Commission [2010] FCAFC 10; 114 ALD 8 Kuswardana v Minister for Immigration and Ethnic Affairs [1981] FCA 64; 35 ALR 186 Lourey v Legal Profession Complaints Committee [2012] WASCA 112 Ma v Commissioner of Taxation [1992] FCA 530; 37 FCR 225 Maurici v Chief Commissioner of State Revenue [2003] HCA 8; 212 CLR 111 Minister Administering the Crown Lands Act v La Perouse Local Aboriginal Land Council [2012] NSWCA 359; 193 LGERA 276 Minister for Immigration and Citizenship v SZMDS [2010] HCA 16; 240 CLR 611 Minister for Immigration and Ethnic Affairs v Teo [1995] FCA 246; 57 FCR 194 Minister for Immigration and Multicultural Affairs v Rajamanikkam [2002] HCA 32; 210 CLR 222 Mir Bros Unit Constructions Pty Ltd v Roads and Traffic Authority (NSW) [2006] NSWCA 314 Neal v Secretary, Department of Transport [1980] FCA 49; 29 ALR 350 Nelson v Commissioner of Taxation [2014] FCAFC 163 Nepean Country Club Ltd v Paterson & Roberts [2009] VSC 436; 32 VAR 37 New South Wales Associated Blue-Metal Quarries Ltd v Commissioner of Taxation [1956] HCA 80; 94 CLR 509 NSW Aboriginal Land Council v Minister Administering the Crown Lands Act [2007] NSWCA 281; 157 LGERA 18 Osland v Secretary to the Department of Justice [2010] HCA 24; 241 CLR 320 Owners of Ship Shin Kobe Maru v Empire Shipping Co Inc [1994] HCA 54; 181 CLR 404 P v Child Support Registrar [2014] FCAFC 98; 225 FCR 378 Parker v State of Western Australia [2008] FCAFC 23; 167 FCR 340 Paridis v Settlement Agents Supervisory Board [2007] WASCA 97; 33 WAR 361 Price Street Professional Centre Pty Ltd v Commissioner of Taxation [2007] FCAFC 154; 243 ALR 728 R v JS [2007] NSWCCA 272; 230 FLR 276 R v PL [2009] NSWCCA 256; 261 ALR 365 Rana v Repatriation Commission [2011] FCAFC 124; 126 ALD 1 Rasic v R [2009] NSWCCA 202 Re Minister for Immigration and Multicultural Affairs; Ex parte Applicant S20/2002 [2003] HCA 30; 198 ALR 59; 77 ALJR 1165 Re Refugee Review Tribunal; Ex Parte Aala [2000] HCA 57; 204 CLR 82 Repatriation Commission v Hill [2002] FCAFC 192; 69 ALD 581 Repatriation Commission v O’Brien [1985] HCA 10; 155 CLR 422 Repatriation Commission v Owens (1996) 70 ALJR 904; noted 187 CLR 704 Repatriation Commission v Warren [2008] FCAFC 64; 167 FCR 511 Ridley v Whipp [1916] HCA 76; 22 CLR 381 Roads and Traffic Authority of New South Wales v Peak [2007] NSWCA 66 Roncevich v Repatriation Commission [2005] HCA 40; 222 CLR 115 Rosenberg v Percival [2001] HCA 18; 205 CLR 434 Roy Morgan Research Pty Ltd v Commissioner of Taxation [2010] FCAFC 52; 184 FCR 448 Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vic) [2001] HCA 49; 207 CLR 72 Screen Australia v EME Productions No 1 Pty Ltd [2012] FCAFC 19; 200 FCR 282 Sharp Corporation of Australia Pty Ltd v Collector of Customs [1995] FCA 707; 59 FCR 6 Spirovski v Univest Asset Merchants Syndicators Pty Ltd [2013] VSC 728 Straits Exploration (Australia) Pty Ltd v The Kokatha Uwankara Native Title Claimants [2011] SASCFC 9 Sullivan v Civil Aviation Safety Authority [2014] FCAFC 93; 226 FCR 555 Sullivan v Department of Transport [1978] FCA 48; 20 ALR 323 Summers v Repatriation Commission [2015] FCAFC 36 TNT Skypak International (Aust) Pty Ltd v Commissioner of Taxation [1988] FCA 198; 82 ALR 175 Tarrant v Australian Securities and Investments Commission [2015] FCAFC 8; 317 ALR 328 Tefonu Pty Ltd v Insurance & Superannuation Commissioner [1993] FCA 588; 44 FCR 361 The Hospital Benefit Fund of Western Australia Inc v Minister for Health, Housing and Community Services [1992] FCA 911; 39 FCR 225 Times Consultants Pty Ltd v Collector of Customs (Qld) [1987] FCA 488; 16 FCR 449 Tindal v Brown (1786) 1 TR 167; 99 ER 1033 Trautwein v Federal Commissioner of Taxation [1936] HCA 77; 56 CLR 63 Tuite v Administrative Appeals Tribunal [1993] FCA 113; 40 FCR 483 Vetter v Lake Macquarie City Council [2001] HCA 12; 202 CLR 439 Virgin Blue Airlines Pty Ltd v Hopper & Ors [2007] QSC 75 Waterford v The Commonwealth [1987] HCA 25, 163 CLR 54 Williams v The Queen [1986] HCA 88; 161 CLR 278
Articles and Texts:	Aronson M and Groves M, Judicial Review of Administrative Action (5th ed, Thomson Reuters, 2013) Starkie T, A Practical Treatise of the Law of Evidence (3rd ed, Stevens and Norton, 1842) pp 520-521 Starkie T, A Practical Treatise of the Law of Evidence (1st ed, Clark, 1824) Vol 1, pp 421-423 Endicott T “Questions of law” (1998) 114 LQR 292 at 300 Laws J “Law and fact” (1999) British Tax Review 159
Date of hearing:	16 and 17 February 2015
Date of last submissions:	18 February 2015
Place:	Melbourne
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	262
Counsel for the Appellants:	Mr RM Niall QC with Mr T Mitchell
Solicitor for the Appellants:	Stephen Peter Byrne
Counsel for the Respondent:	Mr PJ Hanks QC with Ms MA Schilling
Solicitor for the Respondent:	Minter Ellison

IN THE FEDERAL COURT OF AUSTRALIA
VICTORIA DISTRICT REGISTRY
GENERAL DIVISION	VID 144 of 2014

JUDGES:	ALLSOP CJ, KENNY, BESANKO, ROBERTSON AND MORTIMER JJ
DATE OF ORDER:	30 JUNE 2015
WHERE MADE:	MELBOURNE

JUDGES:	ALLSOP CJ, KENNY, BESANKO, ROBERTSON AND MORTIMER JJ
DATE:	30 JUNE 2015
PLACE:	MELBOURNE