NAIF v MIMIA

The National Australia Bank (NAB) sought to recover from the Commonwealth of Australia (Commonwealth) amounts paid by NAB to the Commissioner of Taxation (Commissioner) under a notice issued by the Commissioner pursuant to s 264 of the *Income Tax Assessment Act 1936* (Cth) (the Act). NAB claimed these payments were made under a mistake of law and were therefore recoverable. The Commissioner, acting on behalf of the Commonwealth, argued that the payments were not recoverable. The matter came before the High Court of Australia.

The central legal issue before the High Court was whether money paid by a taxpayer to the Commissioner of Taxation under a notice issued pursuant to s 264 of the *Income Tax Assessment Act 1936* (Cth) could be recovered by the taxpayer on the basis that the payment was made under a mistake of law. This involved considering the nature of the obligation imposed by a s 264 notice and the principles governing the recovery of money paid under a mistake of law in the context of taxation.

The High Court held that a s 264 notice does not create a legal obligation to pay money. Instead, it is a notice requiring a person to attend before the Commissioner and provide information or produce documents. Any payment made in response to such a notice, if not otherwise legally required, is not a payment made under a mistake of law in the sense that would render it recoverable. The Court reasoned that the obligation imposed by s 264 is one of cooperation with the Commissioner's information-gathering powers, not an obligation to pay tax or any other sum. Therefore, payments made in response to a s 264 notice, absent any other legal basis for the payment, are not recoverable as money paid under a mistake of law.

The High Court dismissed NAB's appeal, finding that the payments made were not recoverable.