HV/LV Solutions Pty Ltd and Commissioner of Taxation (Practice and procedure)

[2025] ARTA 976

HV/LV Solutions Pty Ltd and Commissioner of Taxation (Practice and procedure) [2025] ARTA 976 (7 July 2025)

Applicant:HV/LV Solutions Pty Ltd

Respondent:  Commissioner of Taxation

Tribunal Number:                2024/8661

Tribunal:General Member C .Willis   

Place:Melbourne

Date:7 July 2025

Decision:The Tribunal sets aside the decision under review and in substitution decides that the Applicant’s Objection dated around 24 February 2024 be taken to have been lodged with the Respondent within the period required by section 14ZW of the Taxation Administration Act 1953 (Cth).

.......................[SGD].................................................

General Member C .Willis

Catchwords

PRACTICE AND PROCEDURE – refusal of request for extension of time to lodge objection against GST assessments and GST amended assessments – factual matters in objection common to other review applications before Tribunal – factors relevant to exercise of discretion to extend time for lodgement – substantiation of reasons for late lodgement of objection - decision refusing request for extension of time set aside.

Legislation

Taxation Administration Act 1953 (Cth), ss 14ZX, 14ZW

Cases

Clark and Commissioner of Taxation [2021] AATA 2446
Commissioner of Taxation v Brown [1999] FCA 1198
Commissioner of Taxation v Primary Health Care Limited [2017] FCAFC 131
Hunter Valley Developments Pty Ltd v Cohen (1984) 3 FCR 844
Minister for Aboriginal Affairs v Peko Wallsend Ltd (1968) CLR 24

Secondary Materials

Practice Statement PS LA 2003/7 – How to treat a request to lodge a late objection

Statement of Reasons

BACKGROUND

1. This matter relates to a refusal by the Commissioner of Taxation (the Respondent) to agree to a request by HV/LV Solutions Pty Ltd (the Applicant) for an extension of time for the Applicant to lodge an objection against assessments and amended assessments of goods and services tax (GST) for the majority[1] of the monthly tax periods from 1 January 2004 to 30 June 2010 (‘Disputed Tax Periods’).

   [1] The periods from 1 March to 31 March 2004 and 1 August to 31 August 2004 were not the subject of the request or this proceeding.

2. The Applicant was incorporated in 1999 and conducts a business of providing specialist technical services relating to high voltage electrical equipment, often in relation to major projects.  Its business is based in the Northern Territory.  Mr Gavin Arkell (Mr Arkell Junior) is the sole director of the Applicant.  His father, Mr Geoff Arkell (Mr Arkell Senior) supports his son and the Applicant’s business by providing bookkeeping services for the Applicant.

3. This proceeding arises in the context of a wider dispute (or set of disputes) between the Applicant and Respondent in relation to assessments and amended assessments of GST in relation to tax periods across a number of years.  This has given rise to multiple audits by the Respondent of the Applicant. 

4. In relation to those audits the Applicant has so far lodged two objections.  The Respondent has disallowed those objections[2] and those two objection decisions are the subject of separate applications filed by the Applicant for review by this Tribunal.[3]  

   [2] In relation to one of these objection decisions the Respondent did accept that the Applicant was carrying on an enterprise, which had been in dispute.

   [3] One of those proceedings (Tribunal reference 2023/1104) relates to an objection decision dated 22 June 2022 for the monthly tax period of September 2018.  The other proceeding (Tribunal reference 2024/1379) relates to an objection decision dated 29 January 2021 for monthly tax periods from July 2020 to December 2014.

5. Legal proceedings involving the Applicant are part of the background to the taxation dispute.  The Applicant’s representative told the Tribunal that around 2009 the Applicant entered into a sub-contract for the provision of services to a third party (the ‘Principal Contractor’) in relation to a major project.  Tax invoices were raised in relation to these services.  Initially the Principal Contractor paid on time but subsequently stopped making payments under the invoices. Other disputed matters arose under the sub-contract.  The Applicant was subsequently awarded approximately $690,000 following a determination by an adjudicator under a Northern Territory construction contracts dispute resolution scheme but the Principal Contractor went into bankruptcy and the Applicant did not receive the amount awarded.  In 2018 the Applicant decided to write off this amount as a bad debt and seek a refund of the GST referable to this lost income.[4]

   [4] The Applicant prepared its accounts and BAS on an accruals basis, such that it had recognised income based on the tax invoices which it had not actually received.

6. One of the other applications before the Tribunal relates to a GST decreasing adjustment claimed by the Applicant for the bad debt.  The second application before the Tribunal relates to assessments of GST for monthly tax periods between July 2010 and December 2014.  The ability to obtain a decreasing adjustment is in part dependent on demonstrating that GST was previously returned.

7. As set out below, the Applicant did not lodge an objection in relation to the assessments for the Disputed Tax Periods within the time ordinarily allowed for the lodgement of an objection under Part IVC of the Taxation Administration Act 1953 (Cth) (‘TAA 1953’). However, it subsequently sought to lodge an objection for these periods.

8. The parties agree that the same general factual background has relevance to the two ‘objection review’ applications already before the Tribunal and the issues relating to the Disputed Tax Periods, and therefore believe it is appropriate for the Tribunal to determine first whether the Applicant should be permitted to lodge an objection for the Disputed Tax Periods.  If the Tribunal were to find in favour of the Applicant in this regard, any resulting objection decision(s) could be reviewed by the Tribunal at the same time as the objection decisions already before the Tribunal.  If however the Tribunal decides that the Applicant should not be given further time to lodge an objection for the Disputed Tax Periods, then the other applications before the Tribunal should be able to proceed immediately.

9. The Respondent identified several items of correspondence sent to the Applicant between April 2007 and September 2010 advising that the Applicant’s business activity statements (‘BAS’) for various periods within the Disputed Tax Periods were overdue.[5] The Respondent also provided file notes of telephone calls with Mr Arkell Junior in September 2006, May 2011, July 2011 and April 2012 in relation to outstanding lodgements of BAS and other returns.[6]  A common theme of these calls was the apparent acknowledgement by Mr Arkell Junior that there were outstanding lodgements for the Disputed Tax Periods and that the Applicant was endeavouring to rectify this.  Mr Arkell Junior said that he was obtaining assistance from his father with completing BAS and returns.

   [5] T4 to T10.

   [6] T3, ST1 to ST5.

10. BAS for most of the Disputed Tax Periods are recorded by the Respondent as having been received between August 2017 and February 2018. [7]  The Respondent referred to a file note of a further telephone call with Mr Arkell Junior in November 2017 relating to numerous outstanding lodgements including in relation to the Disputed Tax Periods.[8]  Mr Arkell Junior advised at this time that a family bereavement and illness had caused lodgement delays.

    [7] T12 to T88.  These are extracts from the Respondent’s Integrated Client Account system which note the ‘original received date’ and ‘received date.’

    [8] ST7.

11. Statement of Facts, Issues and Contentions (SFIC) under the heading ‘2018 Audit’ the Respondent stated that it advised the Applicant in May 2018 that the Applicant’s BAS for the periods from 1 July 2017 to 31 December 2017 were being audited, and in July 2018 the Applicant provided information for those periods in response.[9]  The Respondent issued an audit decision on 7 November 2018, however this audit decision covered the Disputed Tax Periods rather than any period in 2017.[10]  The relationship between the original audit advice and the audit decision is not clear.[11]  If the copy of the audit decision letter provided to the Tribunal is complete, it does not provide details of the audit commencement date or other processes other than referring to a discussion with Mr Arkell Junior on 11 September 2018, confirming lodgement dates for the relevant activity statements and thanking him for the information and help he provided during the audit.

    [9] See paragraphs 31 and 32 of the Respondent’s SFIC and T89.

    [10] See paragraph 33 of Respondent’s SFIC and ST8.  If the copy of the audit decision at ST8 is complete, it does not provide details of the audit commencement or process other than referring to a discussion between the parties on 11 September 2018.

    [11] In its Objection the Applicant said that it had initiated a discussion around tax periods in 2009/2010 following the Respondent’s request for information relating to 2017:  T180, paragraph 5.1.3.

12. The outcome of this 2018 Audit was that in relation to the Disputed Tax Periods:

    (a)The Applicant was not entitled to a refund or credit of the net GST amount claimed on the monthly activity statements. The Respondent said that the Applicant had lodged the relevant BAS more than four years after the end of the tax period to which those BAS related, and had not notified the Respondent of its entitlement to a refund or credit within those four years. Therefore, under section 105-55 of Schedule 1 to the TAA 1953 the Applicant was unable to claim a refund or credit on any of those BAS.

    (b)The Applicant was required to remit the net GST amount reported on two of the BAS from January 2004 to June 2010.  This was because the Respondent had notified the Applicant of unpaid GST amounts on those BAS within four years of the date on which the unpaid GST became due and payable.  In relation to the remaining BAS (being the BAS for the Disputed Tax Periods) where the Respondent had not notified the Applicant of unpaid GST within four years of the due date, the net GST amount had ceased to become payable. [12]

    [12] These are the activity statements for March and August 2004.

13. On 8 November 2018 the Respondent:

    (a)Initiated audit amendments of the BAS for the Disputed Tax Periods (except for the May 2005 period where the amendment was made on 16 November 2018).[13]

    (b)Issued Notices of Assessments of Net Amount arising from the Disputed Tax Periods (‘November 2018 Assessments’).[14] The net assessed amount in each tax period was reduced to nil. 

    [13] T91 to T169.

    [14] T90, T91.

14. The Respondent conducted a further audit (the ‘2019 Audit’) in relation to tax periods from 1 July 2010 to 31 December 2014.[15]  An audit decision was notified to the Applicant by letter dated 3 April 2019.[16]  The outcome of the 2019 Audit was consistent with the outcome and reasoning for the 2018 Audit, based on the Respondent’s position that the Applicant had not lodged the BAS within 4 years of the end of the relevant tax period (and the Respondent had not notified the Applicant of unpaid GST within 4 years of the due date for payment of the GST).  Notices of assessment were issued reflecting the audit decision and the Applicant lodged an objection[17] in May 2019 against those assessments (the ‘2019 Audit Objection’).  The Respondent made a decision dated 29 January 2021 (the ‘2019 Audit Objection Decision’) which confirmed the assessments.

    [15] Excluding the monthly tax periods for November 2011, February 2012 and March 2012.

    [16] T170.

    [17] T171.

15. Around February 2022 the Applicant reported a decreasing adjustment for the bad debt in its BAS for the September 2018 tax period.  On 7 June 2022 the Respondent issued an amended assessment for that tax period (‘Decreasing Adjustment Amended Assessment’)[18], denying the adjustment and assessing the net GST amount as nil.  This was apparently on the basis of the Respondent’s view at the time that the Applicant was not carrying on an enterprise. The Applicant objected against the Decreasing Adjustment Amended Assessment on 22 June 2022 (‘Decreasing Adjustment Objection’).  In a decision dated 19 December 2022 (‘Decreasing Adjustment Objection Decision’) the Respondent accepted that the Applicant was carrying on an enterprise but decided that the Applicant was not entitled to the decreasing adjustment. 

    [18] T173.

16. In February 2024 the Applicant:

    (a)Lodged an objection in relation to the November 2018 Assessments (the ‘Objection’), and

    (b)Made a request for an extension of time to lodge that Objection (the ‘Objection EOT Request’).[19] 

    [19] The Applicant’s letter setting out the grounds for its request is dated 18 February 2024 but the Respondent’s refusal decision records the request as being dated 22 February 2024.

17. The Applicant indicated the following bases for its Objection[20]:

    (a)The Applicant had made taxable supplies to the Principal Contractor and other clients during the Disputed Tax Periods.

    (b)The GST from those supplies was attributed on the Applicant’s BAS during the Dispute Tax Periods.

    (c)The Principal Contractor owed the Applicant an amount, the writing off of which was the writing off of a bad debt for the purposes of Division 21 of the GST Act.

    (d)The Applicant was therefore entitled to a decreasing adjustment.

    (e)The Applicant was also entitled to ‘the return of all GST credits accrued’ and retained by the Respondent.

    [20] At paragraph 43 of its SFIC the Respondent describes these reasons as being given in relation to the Objection EOT Request rather than as the grounds for the Objection.  The Tribunal’s reading of the materials at T175 is that these reasons relate to the Objection.

18. Included with the Objection was a letter from the Applicant dated 18 February 2024 in which it acknowledged that the time limit for the Objection had been exceeded and explained the basis for its Objection EOT Request.  The Applicant described a number of economic and legal challenges it had faced during the audit as well as outlining concerns about the actions and processes of the Respondent.  The Applicant also referred to health issues affecting the Applicant’s personnel.  The Applicant said that it believed that it had objected to the November 2018 Assessments or had otherwise indicated its disagreement with those assessments during the course of its engagement with the Respondent on tax matters relating to other periods.[21]

    [21] T175.B.

19. On 25 March 2024 there was a telephone discussion during which the Respondent told the Mr  Arkell Senior in relation to the Objection EOT Request:

    (a)The Applicant needed to provide reasons as to why the Objection had not been lodged within time.

    (b)Those reasons had to be specific to the assessment objected against, being the November 2018 Assessments.

    (c)The reasoning and grounds given by the Applicant in its Objection related to other assessments for other periods which were the subject of Tribunal proceedings.[22]

    [22] T176 is the Respondent’s record of that call.

20. On 2 April 2024 the Applicant sent to the Respondent a number of documents comprising copies of tax invoices issued by the Applicant during the Disputed Tax Periods (and later periods), handwritten summaries of the tax invoices, copies of correspondence previously sent by the Respondent to the Applicant, copies of emails exchanged between the Respondent and Applicant and a copy of a 2022 request for remission of GIC prepared by an accounting firm acting for the Applicant.[23]  The bundle included a letter from the Applicant to the Respondent dated 5 May 2022 which set out some history of the engagement between the parties and outlined business challenges faced by the Applicant including a significant bad debt, economic downturn and the impact of COVID-19.

    [23] T177, numbering approximately 1200 pages.

21. On 22 April 2024 an officer of the Respondent contacted Mr Arkell Senior by telephone to say that (in the Respondent’s view) the Applicant had not provided any grounds for the Objection and offering to arrange a telephone conference with the Applicant and its representatives to explain this.  Mr Arkell Senior asked that the Respondent email him instead as he was working remotely with limited communications access.[24]

    [24] See Respondent’s file note of this call at T179.

22. On 30 April 2024 the Respondent wrote to the Applicant advising that the Objection was invalid because the Applicant had not ‘stated fully and in detail the ground for the objection.’  However, the Applicant could still lodge a valid objection and could make the previous objection valid by providing ‘the grounds which are precise enough to direct the Commissioner to the aspects of the assessment that you consider to be incorrect and to give reasons why you consider the assessment to be incorrect.’ [25]

    [25] T178

23. On 14 May 2024 the Applicant provided a document entitled ‘Notice of Objection’ which set out the grounds for objection and a statement of the Applicant’s position.  In particular the Applicant disputed that the BAS for the Disputed Tax Periods should be treated as lodged between August 2017 and February 2018.  The Applicant said that the BAS for the Disputed Tax Periods were sent by regular mail to the Respondent at its Adelaide GPO Box by the due date for the lodgement of those BAS.  Further, the Applicant said that after being contacted by the Respondent in 2017, it had retransmitted all of these BAS to the Respondent by fax.  The Notice of Objection document also set out a number of grievances with various administrative processes of the Respondent, although at least some of these appear to relate to tax periods after the Disputed Tax Periods.[26]

    [26] T180.

24. There was a discussion between the Respondent and the Applicant’s legal representative about the Objection on 24 June 2024.[27]  On 14 August 2024 the Applicant’s legal representative forwarded to the Respondent an email response from the Applicant addressing matters relating to their view that the BAS were lodged on time.[28]

    [27] T181.

    [28] T182.

25. The Respondent issued a decision dated 7 October 2024 refusing the Applicant’s Objection EOT Request (‘EOT Refusal Decision’).[29]  The reasons given by the Respondent for refusing the Objection EOT Request reflected the matters set out in the Respondent’s Practice Statement PS LA 2003/7[30] and included:

    (a)Parliament has expressed a legislative purpose that the tax system is best served by objections being lodged within a particular time.  The Objection was lodged significantly after the statutory time limit. The Respondent did not accept that the Applicant’s circumstances were exceptional.

    (b)The Applicant understood how to lodge objections because it had done so in relation to the 2019 Audit Objection and the Decreasing Adjustment Objection.

    (c)The Applicant did not lodge its Objection and Objection EOT Request as soon as circumstances permitted.

    (d)The Applicant’s explanation for failing to lodge the Objection within time was not satisfactory.  The reasons given did not have direct impact on the ability of the Applicant to lodge the Objection, and the Applicant was able to lodge the other two objections within time.

    (e)The Respondent said there was no evidence that the Applicant kept it informed that it contested the 2018 Audit decision, and that the Applicant only decided to lodge the Objection after it commenced proceedings in the Tribunal in the other matters.

    (f)There was no arguable case for the Objection to be allowed in part or in full.  The Respondent did not accept that the Applicant lodged any of the BAS for the Disputed Tax Periods prior to August 2017.

    (g)Given the length of time that has passed since the BAS were originally due, consideration of the Objection by the Respondent would be prejudiced by reason of that delay.  Some material documents were no longer available due to a change of recording systems by the Respondent around 2010.

    [29] T2.

    [30] Law Administration Practice Statement PS LA 2003/7 – How to treat a request to lodge a late objection

1. On 25 October 2024 the Applicant applied to the Tribunal for a review of the EOT Refusal Decision.  The reason given for the application was that the Respondent ‘did not adequately take into account the material provided by the Applicant in support of that extension request, and used selective records of the ATO office that suited the Commissioner's view without regard to the material provided by the Applicant.’

   PRINCIPLES RELATING TO GRANT OF EXTENSION OF TIME TO OBJECT

2. Subsection 14ZW(1) of the Taxation Administration Act 1953 (‘TAA 1953’) sets out the time within which various types of objection must be lodged. Where an objection is made under Subdivision 155-C of Schedule 1 to the TAA 1953, the relevant period is 4 years from the date on which the notice of assessment is given: paragraphs 14ZW(1)(bg), 155-35(2)(a).

3. However, where the period for lodging an objection has passed, a person may nevertheless lodge the objection together with a written request asking the Respondent to deal with the objection as if it had been lodged within the relevant time:  subsection 14ZW(2).

4. Such a request must ‘state fully and in detail the circumstances concerning, and the reasons for, the person’s failure to lodge the objection … within the required period’:  subsection 14ZW(3).

5. The Respondent must consider the request and decide whether to agree to it or refuse it:  subsection 14ZX(1).  If the Respondent decides to agree to the request, then the objection is taken to have been lodged within the required period:  subsection 14ZX(3).

6. If the Respondent decides to refuse the request, the person may apply to the Tribunal for a review of the decision: subsection 14ZX(4).

7. Sections 14ZW and 14ZY do not set out particular matters that the Respondent (or the Tribunal upon review) must consider. Previous decisions of courts and of this Tribunal have suggested the following matters of relevance:

   (a)As the person is required by section 14ZW to provide reasons for their failure to lodge their objection within time, their explanation or reasons are a ‘mandatory consideration.’[31]

   (b)Any prejudice to the Respondent from granting an extension of time should be considered. This includes ‘forensic prejudice’ where the passage of time would make it more difficult for the Respondent to obtain a full and reliable picture of the circumstances. [32]

   (c)Prejudice to the Applicant may also be relevant.[33]

   (d)The Tribunal is not precluded from taking into account ‘the apparent strength or weakness of taxpayer’s case’ if the overall circumstances are such that the strength or weakness of the case may be properly regarded as a relevant consideration. [34]

   (e)An overarching principle is that time limits set down by the legislature should not be departed from without good reason.[35] 

   (f)Other relevant considerations may be inferred from the subject, scope and purpose of the provisions.[36]

   [31] Clark and Commissioner of Taxation [2021] AATA 2446 (‘Clark’) at [11] and [12] per Senior Member Olding.

   [32] Commissioner of Taxation v Primary Health Care Limited (‘Primary Health Care’) [2017] FCAFC 131 at [15] per Kenny, Perram and Robertson JJ.

   [33] Clark at [13].

   [34] Commissioner of Taxation v Brown [1999] FCA 1198 (‘Brown’) at [28] per Drummond, Sackville and Hely JJ.

   [35] Clark at [15].

   [36] Clark at [10] citing Minister for Aboriginal Affairs v Peko Wallsend Ltd (1968) 62 CLR 24.

8. The Respondent has published PS LA 2003/7 which is an instruction and guidance to its staff as to how to treat ‘out of time’ objections as if they were lodged within time.  The Respondent has followed this guidance in making its EOT Refusal Decision. The Tribunal is not bound to follow PS LA 2003/7, although it observes that several of the factors described in PS LA 2003/7 reflect principles set out in relevant case authority.

   SHOULD AN EXTENSION OF TIME BE GRANTED?

9. The Tribunal observes that the SFICs filed by both parties contained statements that were confusing and potentially inaccurate.  In the ‘Background’ discussion above the Tribunal has identified instances where it believes statements made in the SFICs are inconsistent with the content of T Documents or Supplementary T Documents filed with the Tribunal.  At the hearing the Respondent advised the Tribunal that it wished to withdraw a contention it had made in relation to the Applicant having a burden of proof arising under paragraph 14ZZK(b)(ii).  The Applicant’s representative also advised the Tribunal that a number of matters raised in its SFIC should be treated by the Tribunal as providing context only to the issues discussed at the hearing.

10. The Objection relates to assessments (or amended assessments) for multiple tax periods spanning a number of years. The task of the Tribunal for the purposes of subsection 14ZX(4) of the TAA 1953 is to review the Respondent’s decision to refuse the request for an extension of time to lodge the Objection (that is, the EOT Refusal Decision). The focus is therefore on the circumstances surrounding the lodgement of the Objection, although some factual matters relating to the individual BAS lodgements and subsequent assessments may provide context to those circumstances.

11. Both parties agree that the factors set out in Brown and Hunter Valley are relevant to the Tribunal’s consideration of this matter. They have significantly different positions as to how these factors should be viewed in the Applicant’s circumstances.

    Reasons for the delay in lodging the Objection

12. In relation to the reason for the late lodgement of the Objection, the Applicant said that:

    (a)The wider dispute between the Applicant and Respondent had been ongoing for some years.

    (b)The Applicant had experienced a period of significant hardship to which economic downturn in the Northern Territory, the COVID-19 pandemic, the litigation with the Principal Contractor, increasing costs and supply chain difficulties contributed.

    (c)Key personnel of the Applicant had suffered adverse health conditions.

    (d)The Applicant had relied on Mr Arkell Senior, who worked on his own and was effectively a volunteer assisting his son, to prepare its activity statements and engage with the Respondent. The Applicant had limited knowledge of taxation matters.  It did not have the benefit of legal advice during the period when the Objection could have been lodged within time and only obtained legal representation in 2023 after a referral from ASBFEO.[37]

    (e)The Applicant had not understood how to correctly object to the November 2018 Assessments and thought that they had objected against those assessments when they lodged the 2019 Audit Objection or by otherwise indicating their disagreement with the Respondent’s position.

    [37] The Australian Small Business and Family Enterprises Ombudsman which provides services to small business including assistance in finding professional representation for tax disputes.

13. Mr Arkell Senior told the Tribunal that the Applicant had been on a growth trajectory when it encountered the legal issues giving rise to the bad debt.  Their ability to manage the dispute with the Principal Contractor was subject to the constraints of the Northern Territory adjudication process.  He and his son had to work a substantial number of additional hours to ensure that their creditors would be paid, and were working all over the Northern Territory, often in remote locations.  This had an adverse impact on their health.  Mr Arkell Senior had faced multiple health issues and had been hospitalised.  During this time where was no-one else to attend to bookkeeping requirements.  Mr Arkell Junior also became unwell due to overwork.  They had sought assistance from the Respondent, including in relation to resolution options and debt payment plans, without success.   These matters led to the Applicant’s difficulty in lodging the Objection within time.

14. The Respondent said that:

    (a)It did not accept that any economic decline in the Northern Territory would have affected the Applicant’s ability to lodge an objection.

    (b)It also did not accept that health conditions explained the failure to lodge the Objection within time in circumstances where the Applicant was able to lodge two other objections within time. The Applicant had not provided any evidence in support of the adverse health conditions claimed.

    (c)The Applicant could not have genuinely believed that its interactions with the Respondent more broadly after the 2018 Audit amounted to an ‘objection.’

    (d)A misunderstanding as to how to lodge an objection was not an adequate reason for the delay, particularly in circumstances where the relevant Notices of Assessment provided information as to how to make a valid objection.  Further the Respondent pointed to the Applicant’s reference in its 2019 Audit Objection to specific case and decision identifiers as inconsistent with its statement that it thought it was objecting to the November 2018 Assessments.

15. The Tribunal agrees with the Respondent that there was no evidence provided by the Applicant to corroborate its statements relating to the economic downturn in the Northern Territory and the health conditions of the Applicant’s personnel, and in particular the duration of the impact of these circumstances and how they explained the delay in lodging the Objection.  The statements made by the Applicant and Mr Arkell Senior are to the effect that these circumstances had an impact on the ability of the Applicant to complete administrative and compliance tasks over a broad period of time, however it is not clear that those circumstances were prevailing across the period when the Objection could have been lodged within time, and how those circumstances contributed to the delay in lodging the Objection. The Applicant was able to lodge the 2019 Audit Objection and the Decreasing Adjustment Objection in 2019 and 2022 respectively.

16. There is evidence of the legal action with the Principal Contractor and the Tribunal accepts that this would have had an impact on the business operations of the Applicant.  However, the Applicant has not explained how this affected its ability to lodge the Objection on time, particularly in light of its lodging other objections in 2019 and 2022.

17. The Tribunal accepts that the Applicant and the Arkells do not have a taxation or legal professional background and that in the context of multiple audits, assessments and other engagement with the Respondent confusion or misunderstanding may have arisen as to the subject of particular objection or review processes.  However, this would not be an adequate reason of itself to agree to a request for an extension of time to lodge the Objection.

    Action taken by Applicant to contest the 2018 Audit and November 2018 Assessments

18. The Applicant emphasises that even though the Objection may not have been lodged until February 2024, the Applicant had constant and ongoing engagement with the Respondent about its tax matters such that the Respondent must have been aware that the Applicant disputed the assessments for the Disputed Tax Periods.  The Applicant had requested assistance from the Respondent’s Dispute Assist area, had been referred to the Tax Clinic at Charles Darwin University, had made a complaint to IGTO[38] and had engaged an accountant.  The Applicant had not rested on its rights.

    [38] Inspector-General of Taxation and Taxation Ombudsman.

19. The Respondent contended that the Applicant had indeed rested on its rights, at least in  relation to the 2018 Audit.  The Respondent noted that the Applicant had lodged the 2019 Audit Objection 44 days after the relevant assessments issued and had objected against the Decreasing Adjustment Amended Assessment within 15 days, whereas 1932 days elapsed between the outcome of the 2018 Audit and the lodgement of the Objection.  The Respondent suggested that the Applicant only took action in February 2024 to lodge the Objection (and the Objection EOT Request) after becoming aware that the Respondent’s position in one of the other Tribunal proceedings related to matters involving the Disputed Tax Periods.  The Respondent also notes that the Applicant waited until 2024 to raise its assertion that the BAS for the Disputed Tax Periods were actually lodged within time.[39]

    [39] This assertion first seems to appear in the revised form of Objection lodged in May 2024.

20. The materials filed in this proceeding are consistent with the Applicant’s claims of ongoing engagement between the parties, albeit in the context of the broader dispute including the 2019 Audit and Decreasing Adjustment Amended Assessment, from late 2018 and into 2022.  Mr Arkell Senior said that the materials filed by the Respondent do not capture all of the telephone calls he had with officers of the Respondent.  He was not able to provide file notes or even the dates of such calls but the Tribunal is willing to accept that there may have been such additional contact.  For example, the letter sent in November 2018 by the Respondent to the Applicant advising the outcome of the 2018 Audit refers to a discussion between the Respondent and Mr Arkell Junior in September 2018, the content of which does not appear to be recorded in any other document filed by the Respondent.

21. The Tribunal believes the circumstances of the Applicant are different to that of the applicant in Bird and Commissioner of Taxation[40] to which the Respondent referred.   In that matter the Respondent had explained in some detail to Mrs Bird (on behalf of her husband, the applicant) the review rights arising in relation to an objection decision.  Over a period of years Mrs Bird gave various excuses such as overseas travel and seeking finance, made unfulfilled promises of partial payment of tax debts as well as simply not returning telephone calls from the Respondent, for not taking action to seek a review.  Not surprisingly DP Hack SC concluded that Mr Bird had made a conscious choice not to seek a review closer to the time of the objection decision and thus ‘rested on his rights’ such that the Respondent was entitled to conclude that Mr Bird was not pursuing the matter.[41]

    [40] Bird and Commissioner of Taxation [2006] AATA 654.

    [41] Ibid at [6] and [8].

22. The details of how and when the Applicant realised or decided that it needed to lodge the Objection is not clear.[42]  The Tribunal is also unclear as to why the Applicant did not identify its belief that the BAS for the Disputed Tax Periods had been lodged on time until 2024.  However, the Tribunal accepts that the Applicant was proactively engaged with the Respondent on the broader dispute over its GST treatment, particularly as it related to the bad debt. 

    [42] The revised ‘Notice of Objection’ lodged by the Applicant dated 14 May 2024 (T181) sets out different grounds to the original Objection lodged in February 2024 (T175).

23. This factor tends in favour of granting the extension of time.

    Strengths and weaknesses of the Applicant’s underlying case

24. In considering a request for an extension of time to seek review of a substantive application it is not the role of the Tribunal to undertake a trial of the merits of the substantive question.  However, the merits of the substantive application are a relevant matter to be taken into account, in the sense of whether the Applicant’s version of events discloses an arguable case as opposed to one which is ‘frivolous.’[43]

    [43] Hunter Valley Developments at [22] per Wilcox J, Brown at [29] and [58] per Hill J.

25. The Respondent contended that the Applicant’s substantive case in relation to the Objection for the Disputed Tax Periods must fail because the Applicant did not claim GST refunds under the relevant BAS within four years after the end of the tax periods to which those BAS applied, nor did the Applicant notify the Respondent of its entitlement to credits before that time expired.  The Respondent correctly stated it does not have any discretion to extend this time limit.  Therefore, the Respondent’s position is that the Applicant does not have an arguable case.

26. The Applicant accepts that the four year time limit applies in relation to claim GST credits under section 105-55 of the TAA 1953 and that the Respondent does not have a discretion to extend that time limit. However, the Applicant’s argument, at least since it lodged the revised form of its Objection[44], is that as a matter of fact it did lodge the BAS for the Disputed Tax Periods within that four year period.  The Applicant said that after faxing its lodgements for a period it was advised around ‘2004/2005’[45] that the Respondent would no longer accept faxes and the Applicant switched to posting its BAS via regular mail to the Respondent’s GPO box in Adelaide.  The Respondent noted that the BAS forms make it clear that regular mail should be sent to its address in Albury, however Mr Arkell Senior said that he sent correspondence to Adelaide because that was where the officers of the Respondent who had been dealing with the Applicant on its GST matters were based, which is not an unreasonable explanation.  The Applicant claimed that the ‘lodgement dates’ recorded by the Respondent between late 2017 and early 2018 actually reflect the dates on which the Applicant resent previously lodged BAS, as requested by the Respondent in 2017.[46]

    [44] T180.

    [45] Paragraph 19 of the witness statement of Mr Arkell Senior dated 3 March 2025.

    [46] Paragraph 20 of Mr Arkell Senior’s witness statement.

27. It is clear that the Applicant faces significant evidentiary challenges in relation to proving that it lodged the BAS for the Disputed Tax Periods within time.  The Applicant bears the burden of proof in relation to the Objection and the November 2018 Assessments.  It will not be sufficient for the Applicant to merely suggest that the Respondent’s records of telephone calls and receipts of documents might be incomplete, or that the Respondent was slow to process the Applicant’s BAS. Mr Arkell Senior said that he would have file notes of conversations between him and officers of the Respondent (other than those identified in the T Documents), although he will need to look through records that are currently in storage to locate them.  Mr Arkell Senior attached samples of BAS returns to his witness statement, similar to those attached to the Objection.

28. The Respondent rightly suggested that the Tribunal should approach with caution the uncorroborated evidence of a person who has an interest in the outcome of proceedings.[47] The Respondent noted that the sample BAS provided by the Applicant, whilst signed and dated as at the end of particular tax periods, did not evidence when those BAS forms were actually lodged. The Respondent also highlighted correspondence it had sent to the Applicant between 2007 and 2010 advising of overdue lodgements together with several conversations with Mr Arkell Junior in which he seemingly agreed that lodgements were outstanding (which would be rectified).  Nevertheless, a record of a call between the Applicant’s representative and the Respondent on 1 August 2024 suggests that there might have been some slight uncertainty as to whether all records of the Respondent had been transferred to the new system and whether notes of communications between the parties were ‘comprehensive.’[48]

    [47] Commissioner of Taxation v SNF (Australia) [2011] FCAFC 74 at [81] to [82].

    [48] T181.

29. This interlocutory proceeding is not the appropriate forum for a detailed consideration of the reliability of, and weight to be given to, evidence put forward by the parties in relation to the question of when the Applicant lodged its BAS for the Disputed Tax Periods. Having regard to the items set out above, the Tribunal’s view is that the Applicant has an arguable case, albeit not without its challenges.

    Prejudice to the Applicant if extension of time is refused

30. The Applicant submitted that the outcome of the Objection also has implications for the Decreasing Adjustment Objection Decision, which is the subject of another application before the Tribunal.  The Applicant said that to claim a bad debt decreasing adjustment, in addition to proving that the debt has been written off as ‘bad’, it must demonstrate that GST was included in its returns for previous tax periods.  The outcome of the 2018 Audit and 2019 Audit was that the Applicant was not entitled to a refund or credit of GST and any net GST amount had ceased to become payable in respect of most of the tax periods (including the Disputed Tax Periods). Therefore, if the Applicant was not granted an extension of time to lodge its Objection for the Disputed Tax Periods, it would be significantly restricted in (or prevented from) progressing its application before the Tribunal for a review of the Decreasing Adjustment Objection Decision.

1. Again, this interlocutory hearing is not the forum for a detailed consideration of the merits of the parties’ positions in relation to the Decreasing Adjustment Objection Decision.  The Respondent did not challenge the Applicant’s position that there was a potential link between subject matter of the Objection and that of the Decreasing Adjustment Objection. 

2. The risk that the Applicant might be restricted in progressing its review of the Decreasing Adjustment Objection would weigh strongly in favour of granting the request for an extension of time to lodge the Objection.

   Prejudice to the Respondent if extension of time is granted

3. The Disputed Tax Periods extend as far back as January 2004.  The Respondent contended that the significant time that has elapsed since the events relating to these tax periods would adversely affect its ability to defend the November 2018 Assessments.  In the EOT Refusal Decision the Respondent also clarified that some documents would not be available due to a change of the Respondent’s case recording system that occurred in  2010.  Older records might not be available in the new system. 

4. The Applicant disagreed that the Respondent would suffer significant prejudice, noting that the burden of proof was on the Applicant to prove that the assessments were excessive or otherwise incorrect and what the assessments should be.  The Applicant’s representative suggested that if this factor was of concern to the Tribunal, the Tribunal might alternatively consider agreeing to an extension of time for the Applicant to file an objection relating to the tax periods in 2009 and 2010 only.

5. The Applicant has no control over a decision by the Respondent to change its administrative systems or processes.  However, the Tribunal acknowledges that even where an objection was limited to periods in 2009 and 2010, a substantial number of years has still passed since the relevant events and some forensic prejudice could arise.  This matter tends against granting the request for an extension of time.

   Other matters

6. The Applicant’s representative pointed to procedural and administrative efficiencies in hearing the review of the 2019 Audit Objection, the Decreasing Adjustment Objection and the Objection at the same time, as common facts and technical questions underpin those objection decisions. Administrative efficiency relating to proceedings with similar facts and circumstances would not of itself be a sufficient basis for agreeing to the extension of time.  However as set out above, there is a reasonable basis for believing that the outcome of one of those reviews will be dependent on findings in relation either or both of the other reviews.

7. In its SFIC the Applicant suggested that the Tribunal should not place significant weight on legislative intention expressed by section 14ZW that objections should be lodged within the statutory timeframes. The Tribunal believes that this is a significant consideration that must be taken into account. Sections 14ZW and 14ZX provide a statutory mechanism by which a person can be granted additional time to lodge by reference to extenuating circumstances which outweigh the presumption of timely lodgement. This matter suggests the Tribunal give careful consideration before agreeing to extend the statutory period.

8. The Tribunal has also had regard to the objective of the Tribunal in providing an independent mechanism of review, as set out in section 9 of the Administrative Review Tribunal (ART) Act.  The need to ensure that applications are resolved quickly and with as little expense as is appropriate might tend in favour of refusing the Applicant’s request for an extension of time to lodge its Objection, as this would delay the hearings in the other applications.  However, the requirements to be ‘fair and just’ and to improve transparency and quality of government decision making would tend in favour of permitting reviews of the three objection decisions to proceed.

   CONCLUSION

9. With some hesitation the Tribunal has decided to agree to the Applicant’s request for an extension of time to lodge its Objection.  The Tribunal has indicated that it is not entirely satisfied with the high level and general nature of the reasons given by the Applicant for its failure to lodge this Objection within the time otherwise set down by Parliament.  The Tribunal also acknowledges that the Respondent may be at risk of prejudice due to the considerable time that has elapsed since the events relating to the Disputed Tax Periods.  The argument that it would be more efficient or appropriate to review similar facts and issues arising across multiple tax periods in the one proceeding would generally not be sufficient to outweigh these concerns.  Ordinarily the Tribunal would not grant an extension of time in these circumstances. 

10. However, the Tribunal is conscious that in the present circumstances if it refuses to grant the extension of time to lodge this Objection one outcome is that the Applicant will potentially be impeded in putting its case in relation to one or both of the other two objection decisions (which were lodged within time) and which are the subject of separate applications before the Tribunal.  It may be that the Applicant will face difficulties in substantiating its case and discharging its burden of proof in relation to the Disputed Tax Periods, such that it also faces difficulties in making its case in the other proceedings.  Nevertheless, the Tribunal is reluctant to deny the Applicant the opportunity to put its case in relation to the correct GST treatment of the bad debt. The Tribunal also accepts that whatever the reason for not lodging the Objection on time, the Applicant did engage actively with the Respondent in relation to the wider dispute, such that the Respondent should have been aware that the broader GST treatment of the Applicant’s circumstances remained in dispute.

11. The Tribunal therefore sets aside the EOT Refusal Decision and substitutes a decision that the Applicant’s Objection was taken to have been lodged with the Respondent within the period required by section 14ZW of the TAA 1953.

12. The Tribunal also notes that as matters of evidence and substantiation of lodgements appear to underly this dispute, the parties are encouraged to consider whether an alternative dispute resolution process, such as a conciliation, facilitated by the Tribunal might assist the parties in resolving these proceedings.

    Date(s) of hearing:   19 June 2025

    Applicant’s Representative:           Lawyer John Levy from JL Lawyers Pty Ltd

    Respondent’s Representative:     Australian Government Lawyer Emma Schultz-Boylen