Jolly v Federal Commissioner of Taxation

The case of *Jolly v Federal Commissioner of Taxation* concerned an appeal by the taxpayer, John Jolly, to the High Court of Australia following a decision by a Board of Review. The dispute arose from the Commissioner of Taxation's assessment of additional tax under section 67 of the *Income Tax Assessment Act 1922-1934* due to the taxpayer's failure to include assessable income in his return. The Board of Review, by a majority, had held that it lacked the power to remit this additional tax, a decision the taxpayer challenged.

The central legal issue before the High Court was whether the Board of Review possessed the authority, under section 44 of the *Income Tax Assessment Act*, to exercise the Commissioner's discretionary power to remit additional tax as provided in the proviso to section 67(1). This involved determining the scope of the Board's review powers in relation to the Commissioner's administrative and discretionary functions concerning additional tax assessments. A secondary, though not determinative for the majority, consideration was whether section 67(1) itself, particularly the imposition of a minimum sum of one pound, might contravene section 55 of the Constitution by not being a tax upon income.

The majority of the High Court, comprising Rich, Dixon, Evatt, and McTiernan JJ., reasoned that section 44 of the Act grants the Board of Review all the powers and functions of the Commissioner for the purpose of reviewing decisions referred to it. They held that the Commissioner's function under the proviso to section 67(1), which allows for the remission of additional tax, is an integral part of the entire process of assessing additional tax. Therefore, the Board of Review, in its capacity to review such assessments, could exercise this remission power. Starke J., dissenting, held that the remission of tax was a discharge from a liability already ascertained and assessed, and thus not part of the assessment process reviewable by the Board.

The High Court, by majority, answered the questions in the special case in the affirmative, finding that the Board of Review has the power to review the entire process of assessing additional tax and can exercise the Commissioner's function under the proviso to section 67(1) to remit additional tax. Consequently, the matter was to be remitted for the Board to consider the remission of the additional tax.