Lewis and Commissioner of Taxation (Taxation)

[2023] AATA 1930

Lewis and Commissioner of Taxation (Taxation) [2023] AATA 1930 (27 June 2023)

Division:TAXATION AND COMMERCIAL DIVISION

File Number(s):2023/1461  

Re:Elisa Lewis  

APPLICANT

Commissioner of TaxationAnd  

RESPONDENT

DISMISSAL

Tribunal:Deputy President F D O'Loughlin KC

Date:27 June 2023

Date of Written Explanation: 30 June 2023

Place:Melbourne

The Tribunal is satisfied that the relevant decision or decisions that are the subject of the application are not reviewable by the Tribunal and accordingly the application is dismissed pursuant to s 42A(4) of the Administrative Appeals Tribunal Act 1975 (Cth).

...........................................[sgd].............................

Deputy President F D O’Loughlin

CATCHWORDS

PRACTICE AND PROCEDURE – review of penalty imposed under Division 269 of Schedule 1 of the Taxation Administration Act 1953 (director penalty notice) – no jurisdiction – dismissal - oral explanation provided – written explanation requested

LEGISLATION

Administrative Appeals Tribunal Act 1975 (Cth)

Taxation Administration Act 1953 (Cth)

EXPLANATION FOR DISMISSAL

Deputy President F D O'Loughlin KC

30 June 2023

BACKGROUND

1. From 2 December 2016 to 10 September 2017, Ms Lewis was a director of a company that, at least according to the Commissioner,[1] had outstanding tax liabilities that met the terms of Division 269 of Schedule 1 to the Administration Act.[2]

   [1]The present circumstances do not require the Tribunal to form any view as to these liabilities and the Tribunal is not doing so.

   [2]The Taxation Administration Act 1953 (Cth).

2. On or shortly after 5 February 2018 Ms Lewis was given what is colloquially known as a director penalty notice.[3]

   [3]A notice pursuant to s 269-25 of Schedule 1 to the Administration Act.

3. For a variety of reasons, including disputing the amount said to be owing, Ms Lewis was dissatisfied with being given the director penalty notice.  Following a number of discussions with the Commissioner’s personnel Ms Lewis formed the view or belief that it was possible to have the director penalty notice, or the decision to give such a notice, reviewed by the Tribunal.  Accordingly, Ms Lewis filed what purports to be an application for review of the decision to give her the director penalty notice, and/or not to release her from any Division 269 obligations, by the Tribunal.

4. On 27 June 2023:

   (a)the Tribunal ruled that it did not have jurisdiction to review either the decision to issue the director penalty notice or any decision not to release Division 269 liabilities; and

   (b)Ms Lewis subsequently sought a written explanation for the Tribunal’s ruling.

EXPLANATION

1. The Tribunal is a body established by a Commonwealth statute, namely the Tribunal Act.[4]  See in particular s 5 which is in the following terms:

   [4]The Administrative Appeals Tribunal Act 1975 (Cth).

   5Establishment of Tribunal

   There is hereby established an Administrative Appeals Tribunal.

2. What the Tribunal can do is limited by the powers conferred on it by the Tribunal Act and other legislation which in conjunction with the Tribunal Act empower the Tribunal to do what it does.  The Tribunal’s general jurisdiction is conferred by s 25.  As is relevant to reviews of Commonwealth taxation decisions, s 25 is in the following terms:

   25Tribunal may review certain decisions

   Enactment may provide for applications for review of decisions

   (1) An enactment may provide that applications may be made to the Tribunal:

   (a) for review of decisions made in the exercise of powers conferred by that enactment; or

   (b) for the review of decisions made in the exercise of powers conferred, or that may be conferred, by another enactment having effect under that enactment.

   …

   (3) Where an enactment makes provision in accordance with subsection (1) or (2), that enactment:

   (a) shall specify the person or persons to whose decisions the provision applies;

   (b) may be expressed to apply to all decisions of a person, or to a class of such decisions; and

   (c) may specify conditions subject to which applications may
   be made.

   …

3. As is apparent from the terms of s 25:

   (c)it is necessary to look to another piece of legislation which provides that an application may be made to the Tribunal; and

   (d)other legislation conferring powers on the Tribunal to review decisions can specify the person or persons whose decisions are reviewable and the particular of decisions that are reviewable.

4. In a Commonwealth income tax setting, Part IVC of the Administration Act is the relevant other legislation that directly links to, or with, s 25 of the Tribunal Act.  Part IVC of the Administration Act creates objection and objection decision processes, and rights to have objection decisions reviewed by the Tribunal.  Sections 14ZO and 14ZZA (both contained in Part IVC) reveal the linkage:

   (a)s 14ZO provides that:

   14ZODivision 4 —Tribunal review

   Division 4 contains provisions about applications to the Tribunal for review of decisions by the Commissioner in relation to certain taxation objections and requests for extension of time.

   and

   (b)s 14ZZA identifies the Commonwealth taxation decisions that are reviewable by the Tribunal in the following terms:

   14ZZAModified AAT Act to apply

   The AAT Act applies in relation to:

   (a) the review of reviewable objection decisions; and

   (b) the review of extension of time refusal decisions; and

   (c)AAT extension applications;

   subject to the modifications set out in this Division.

5. A reviewable objection decision is an objection decision, other than an ineligible income tax remission decision.[5]  An objection decision is a decision of the Commissioner to allow, either wholly or in part, or disallow an objection lodged by a taxpayer.[6]

   [5]Administration Act, s 14ZQ.  An ineligible income tax remission decision is defined in Administration Act, s 14ZS and is one that relates to remission of prescribed additional taxes.  That type of decision is not presently relevant because the liability imposed on Ms Lewis arises under Division 269 which is not an additional tax payable within the meaning of s 14ZS.

   [6]Administration Act, s 14ZY(1).

6. Drawing these provisions together for the Tribunal to have any jurisdiction to review an action taken by the Commissioner in the present setting, it is necessary for the relevant taxpayer to be affected by an objection decision.  For there to be an objection decision it is necessary for the affected taxpayer to have made an objection.  To do that the affected taxpayer needs to be entitled to object to the course of action taken by the Commissioner.

7. Part IVC of the Administration Act does not create rights to make an objection.  Those rights are created elsewhere.[7]  What Part IVC does is link to objection rights created elsewhere in the following terms:

   [7]For example, Administration Act, Schedule 1, s 359-60 concerning private rulings, and the Income Tax Assessment Act 1936 (Cth), s 175A concerning income tax assessments.

   14ZLPart applies to taxation objections

   (1) This Part applies if a provision of an Act or a legislative instrument (including the provision as applied by another Act) provides that a person who is dissatisfied with an assessment, determination, notice or decision, or with a failure to make a private ruling, may object against it in the manner set out in this Part.

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

8. Not all decisions of the Commissioner are able to be objected to.  Similarly, as contemplated by s 25 of the Tribunal Act, not all decisions of the Commissioner are reviewable by the Tribunal.

9. Division 269 amounts become due by operation of s 269-20.  Director penalty notices are issued pursuant to Division 269 as a step in enforcing payment of those liabilities.

10. What is important for the present application is that Division 269 does not contain any provision enabling a dissatisfied director to object to any Division 269 liability or director penalty notice in accordance with the terms of Part IVC of the Administration Act.  Two consequences follow from this:

    (a)first, there cannot be an objection decision; and

    (b)second, there cannot be any relevant decision which is reviewable by the Tribunal.

11. Accordingly, the Tribunal does not have jurisdiction (which means it does not have power) to review any decision taken by the Commissioner connected with and related to the director penalty notice and/or the calculation of amounts claimed to be payable pursuant to Division 269.

12. Ms Lewis’s application might be also interpreted as a request to review a decision not to release her from the Division 269 liability.

13. Division 340 of Schedule 1 to the Administration Act allows the Commissioner in some circumstances to release taxpayers from liabilities imposed by various taxing statutes. Section 340-10 lists the taxes which the Commissioner is empowered to release. Objections can be made to decisions not to release these tax liabilities.[8]

    [8]Administration Act, Schedule 1, s 340-5(7).

14. Importantly, penalties under Division 269 are not included in liabilities capable of being released.

15. Accordingly, if the present application to the Tribunal were to be interpreted as a request to review a release decision, then it concerns a tax liability in respect of which there is no objection right, and therefore no objection decision, which leads to the same conclusion that the Tribunal does not have any jurisdiction, meaning it does not have any power, to review what has happened within the Commissioner’s offices.

16. The necessary conclusion is that the Tribunal has no jurisdiction (meaning no power) to deal with Ms Lewis’s dissatisfaction with the director penalty notice she received or the situation and circumstances in which she now finds herself.

I certify that the preceding 20 (twenty) paragraphs are a true copy of the
explanation for dismissal herein of
Deputy President F D O'Loughlin, KC.

...[sgd]................................

Associate

Dated: 30 June 2023

Date(s) of hearing:	27 June 2023
Applicant:	Ms Elisa Lewis
Solicitors for the Respondent:	Mr Alexander Gherbaz Fama and Mr Preesan Pillay, Office of the Chief Tax Counsel, Australian Tax Office