McAndrew v Federal Commissioner of Taxation

The case of *McAndrew v Federal Commissioner of Taxation* concerned an appeal to the High Court of Australia against an amended income tax assessment. The appellant, Ms. McAndrew, had lodged a tax return for the year ended 30 June 1952, and an initial assessment was issued. Subsequently, following an investigation, the Commissioner of Taxation issued an amended assessment that increased Ms. McAndrew's tax liability. Ms. McAndrew objected to this amended assessment, her objection was disallowed, and she then requested that her objection be treated as an appeal to the High Court.

The central legal issue before the Full Court was whether, in an appeal against an amended assessment made under section 170(2) of the *Income Tax and Social Services Contribution Assessment Act 1936-1955*, the onus rested on the Commissioner to prove the conditions precedent to his power to amend, namely that the taxpayer had not made a full and true disclosure of material facts and that there had been an avoidance of tax. The Court was also asked to consider the extent to which the Commissioner's power of amendment was limited by the avoidance of tax and whether the Commissioner's burden of proof, if any, should be determined preliminarily.

The High Court, comprising Dixon C.J., McTiernan, Webb, Kitto, and Taylor JJ., held that the onus of proof rested on the taxpayer. The Court reasoned that section 177(1) of the Act gives conclusive evidentiary effect to a notice of assessment regarding its due making and the correctness of its amount and particulars, except in proceedings on appeal. While an appeal allows a taxpayer to challenge an assessment, section 190(b) expressly places the burden of proving that an assessment is excessive upon the taxpayer. The Court determined that the term "excessive" in section 190(b) extends to situations where the Commissioner's power to amend under section 170(2) was not validly exercised, as an invalid amendment would result in an excessive assessment. Therefore, if the taxpayer contends that the conditions for amendment under section 170(2) were not met, they bear the onus of proving those facts.

Consequently, the Court answered the first question in the case stated in the negative, finding that the respondent Commissioner did not bear the burden of proving the conditions precedent to his power to amend the assessment. As the remaining questions were contingent on an affirmative answer to the first, they did not require further consideration.