Matheson Constructions (Qld) Pty Ltd and Commissioner of Taxation

[2005] AATA 768

Administrative

Appeals

Tribunal

 

DECISION AND REASONS FOR DECISION [2005] AATA 768

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          QT2005/69-70

TAXATION APPEALS  DIVISION		)
Re		MATHESON CONSTRUCTIONS (QLD) PTY LTD

Applicant

And COMMISSIONER OF TAXATION

Respondent

DECISION

Tribunal Deputy President Don Muller

Date10 August 2005

PlaceBrisbane

Decision The Tribunal, pursuant to subsection 29(7) of the Administrative Appeals Tribunal Act 1975, extends the time for the making by the Applicant of applications to the Tribunal for review of the decisions the subject of this application, to 9 September 2005.

................SIGNED..............................

D.W. MULLER

DEPUTY PRESIDENT

CATCHWORDS

PRACTICE AND PROCEDURE – application for extension of time – 13 months out of time – poor legal advice – justice of the situation requires matter be heard – no prejudice to respondent – extension of time granted

Administrative Appeals Tribunal Act 1975: s.29(7)

REASONS FOR DECISION

Deputy President Don Muller        

1.      The Applicant, Matheson Constructions (Qld) Pty Ltd seeks an extension of time for the making of applications to the Tribunal for review of decisions relating to its liability to pay goods and services tax (GST).

2.      The Respondent opposes the application for extension of time on the grounds that:

(a)The application is about 13 months out of time;

(b)The reasons given by the Applicant for the delay are flimsy;  and

(c)The likelihood of success is minimal.

3.      The Tribunal had before it an affidavit of the Applicant’s current solicitor and submissions by Mr. Robertson of counsel for the Applicant and by Mr. Looney of counsel for the Respondent.

4.      For the purpose of these proceedings the Tribunal does not intend to embark on a hearing on the merits, nor on an assessment of the material upon which the Applicant’s solicitor based her knowledge expressed in her affidavit.

5. The decisions sought to be reviewed by the Applicant concern objection decisions by the Respondent to disallow the Applicant’s objection against assessments made under section 22 of the Taxation Administration Act 1953 (the Administration Act) in relation to the GST.

6. The Respondent’s objection decisions were issued on 16 January 2004 and received by the Applicant on 19 January 2004. The time limit for making application to the Tribunal is found in s.29 of the AAT Act, as modified for tax purposes by section 14ZZC of the Administration Act and is 60 days.

7. Accordingly, the Applicant had a right to make an application to the Tribunal for review of the objection decisions on or before 19 March 2004. An application for review made after that date can only be accepted by the Tribunal with the leave of the Tribunal. The Tribunal has a discretionary power to override the 60 day time limit. See subsection 29(7) of the AAT Act.

8.      The Applicant did not apply to the Tribunal until 15 April 2005.  That is, about 13 months after the time limited by the legislation referred to above.

9.      The background to the assessments which were adverse to the Applicant arose out of a building construction contract that was supposed to be completed by 30 June 2000, but was not in fact completed until after that date.

10.     The delay in the project arose because the Applicant was not being paid.  It had to take legal action against the owner of the land and was eventually paid compensation.  As a result, the work was not completed until after 1 July 2000.

11.     If the contract had been completed on time there would have been no GST payable, because GST commenced only from 1 July 2000.

12.     The delay in the completion of the contract and the introduction of the GST had two relevant effects:

(a)The Applicant became liable to GST for payments for work done after 1 July 2000.  However, the Applicant contends that the incorrect amount has been imposed because of an incorrect valuation and because of a misapplication of section 19 of the GST Transition Act.

(b)The Applicant was finally paid for work done prior to 1 July 2000.   The Respondent has also imposed GST in relation to this payment. The Applicant contends that the imposition of GST on this payment is “plainly doomed to failure” because the payment was a recovery by the Applicant of a pre-GST debt owing to it by the landowner.

13.     The Applicant did not initially delay in challenging the objection decisions.  It chose the wrong forum. On 8 March 2004 it sought assistance from the Tax Ombudsman.  It was a strange mistake to make when it is considered that the objection decisions of 16 January 2004 had attached to them information about the appeal process, the AAT and the time limit of 60 days.

14.     On 10 March 2004, the Tax Ombudsman wrote to tell the Applicant that the AAT was the proper forum to review the objection decisions.  The Tax Ombudsman also told the Applicant that the time limit was nearly up and that the Applicant should make its application to the AAT as soon as possible or otherwise it would have to seek an extension of time.

15.     Notwithstanding the good advice from the Tax Ombudsman, the Applicant did not then make application to the AAT.  Apparently the Applicant’s directors accepted some poor quality advice from their then accountant.

16.     In early 2005, the Applicant’s directors were forced to think more clearly about their position when, on 15 February 2005, the Applicant was served with a Statutory Demand for the payment of the debt, issued by the Respondent.

17.     The Applicant’s directors engaged a firm of solicitors, who in turn engaged counsel, for advice on how to proceed.  As a result of the advice received:

(a)the Applicant took proceedings in the Supreme Court of Queensland on 4 March 2005 to set aside the Statutory Demand;  and

(b)the Applicant’s solicitors filed this application with the Tribunal on 15 April 2005.

18.     In this case the most important factor to be taken into account in deciding whether or not to grant the extension of time relates to the question of the Applicant’s liability to pay GST in the two circumstances noted above.  If the assessments are not correct, or if there is an arguable case that the assessments are not correct, the Applicant should not be denied the opportunity to have a review of its affairs.  A taxpayer should not be put in the position of having to pay more tax than the legislation allows.

19.     In my view there is little prejudice to the Respondent.  The litigation between the parties has been ongoing, including proceedings a month or so before this application was made.  Whilst a hearing in the matter will probably involve some evidence as to the value of work done before 1 July 2000 and the value of work done after 1 July 2000, the main part of a hearing will involve legal argument as to the liability to pay GST in the factual circumstances of this case.

20.     I also take into account the fact that one of the directors of the Applicant had serious ongoing health problems in 2004.

21.     The Tribunal grants the extension of time and allows until 9 September 2005 for the Applicant to make the applications for review of the decisions referred to above.

I certify that the 21 preceding paragraphs are a true copy of the reasons for the decision herein of Deputy President Don Muller

Signed:         .....................................................................................
           R. Link, Associate

Date/s of Hearing  26 May 2005 
Date of Decision  10 August 2005
Counsel for the Applicant           Mr. M. Robertson
Solicitor for the Applicant            Michael Sing Lawyers
Counsel for the Respondent       Mr. P. Looney