Pratten and Commissioner of Taxation (Practice and Procedure)

[2025] ARTA 161

Pratten and Commissioner of Taxation (Practice and Procedure) [2025] ARTA 161 (26 February 2025)

Applicant:  Timothy Charles Pratten

Respondent:  Commissioner of Taxation

Tribunal Number:                 2011/4963-4970

Tribunal:Deputy President G Lazanas

Place:Sydney

Date:26 February 2025

Decision:The Applicant’s application for the issue of summonses to Mr Barns and Mr Murray are dismissed.

The Applicant’s application for the Respondent to be required to provide further and better particulars is dismissed.

The Applicant’s objection to the Respondent’s reliance on the Applicant’s criminal conviction is disallowed at this stage of the proceedings and the weight to be given to the conviction is to be determined at the hearing.

..............................[SGD]..........................................

Deputy President G Lazanas

26 February 2025

Catchwords

PRACTICE AND PROCEDURE – where applicant has applied for the issue of summonses to a current taxation officer and a former taxation officer to attend to give evidence – where applicant has applied for an order requiring the respondent to provide further and better particulars – applications dismissed – where applicant objects to the respondent relying on applicant’s prior criminal conviction in these proceedings – applicant found guilty of dishonestly obtaining a financial advantage by deception by Supreme Court of New South Wales – consideration of when weight (if any) is to be given to criminal conviction in tax review proceedings – objection to reliance on criminal conviction disallowed at this stage of the proceedings and to be determined at substantive hearing

Legislation

Administrative Appeals Tribunal Act 1975 (Cth) s 40A
Administrative Review Tribunal Act 2024 (Cth) ss 9, 49, 52, 55, 56, 74
Administrative Review Tribunal (Consequential and Transitional Provisions No 1) Act 2024 (Cth) item 24 in schedule 16
Income Tax Assessment Act 1936 (Cth) ss 44, 47A, 167, 170, 264
Income Tax Assessment Act 1997 (Cth) s 6-5

Taxation Administration Act 1953 (Cth) ss 14ZYA, 14ZZA, 14ZZK

Cases

BAE Systems Australia (NSW) Pty Ltd v Federal Commissioner of Taxation (2008) 69 ATR 567
Binetter v Federal Commissioner of Taxation (2016) 249 FCR 534
Buzadic v Commissioner of Taxation (2024) 119 ATR 24
Commissioner of Taxation v Ross (2021) 174 ALD 77
Davsa Forty-Ninth Pty Ltd ATF Krongold Ford Bus Unit Trust and Commissioner of Taxation (2012) 83 ATR 245
Denver Chemical Manufacturing v Commissioner of Taxation (NSW) (1949) 79 CLR 296
Eldridge v Commissioner of Taxation (1990) 21 ATR 897
Federal Commissioner of Taxation v Administrative Appeals Tribunal (2011) 191 FCR 400
Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146
General Merchandise & Apparel Group Pty Ltd v Chief Executive Officer of Customs [2009] AATA 988; (2009) 51 AAR 1
George v Rocket (1990) 170 CLR 104
Kennedy v Administrative Appeals Tribunal (2008) 168 FCR 566
Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563
Lowe and Commissioner of Taxation [2013] AATA 549
Millar v Federal Commissioner of Taxation (2015) 101 ATR 827
Nguyen v Commissioner of Taxation (2018) 265 FCR 355
Phillips and Inspector-General in Bankruptcy [2011] AATA 25; (2011) 54 AAR 132
Pratten and Commissioner of Taxation [2024] AATA 439
Pratten v R [2014] NSWCCA 117
Pratten v R [2021] NSWCCA 251
Prior v Mole (2017) 261 CLR 265
Rawson Finances Pty Ltd v Commissioner of Taxation (2013) 296 ALR 307
Rogerson v Commissioner of Taxation (1998) 40 ATR 492
R v Pratten (No 12) [2014] NSWSC 396
R v Pratten (No 25) [2016] NSWSC 539
Saffron v Commissioner of Taxation (1991) 30 FCR 578
Seven Network (Operations) Limited v Fairfax Media Publications Pty Limited [2023] FCAFC 185
Steele and Comcare (Compensation) [2018] AATA 481; (2018) 74 AAR 327
Wong v Sklavos (2014) 319 ALR 378

WT95/13-14 and Commissioner of Taxation [1996] AATA 62; (1996) 32 ATR 1152

Secondary Materials

Revised Explanatory Memorandum to the Administrative Review Tribunal Bill 2024 (Cth)

Statement of Reasons

INTRODUCTION

1. This decision relates to a number of interlocutory applications made by Mr Pratten, namely, an application by Mr Pratten that the Tribunal issue summonses to two persons who had involvement with his tax case at the Australian Taxation Office (ATO) to attend to give evidence at the final hearing, and an application that the Commissioner of Taxation be required to provide further and better particulars to him. Mr Pratten also sought to obtain a Tribunal ruling on whether his prior criminal conviction would be allowed to be referenced and relied on by the Commissioner at the Tribunal hearing. Mr Pratten sought to prevent the Commissioner from relying on his criminal conviction on the basis that this was not relevant to his tax review proceedings.

2. I deal with each of these issues below, but first set out the procedural background relevant to these applications, and the relevant statutory provisions and principles. As these reasons will explain, I have dismissed Mr Pratten’s applications for the issue of the two summonses and for the request for further and better particulars by the Commissioner. Additionally, I have concluded that Mr Pratten’s objection to the Commissioner referencing his criminal conviction is disallowed because it is appropriate for the evidentiary weight (if any) to be determined by the Tribunal when it makes the substantive decision, after all the evidence and submissions are placed before it.

   THE FACTUAL AND PROCEDURAL BACKGROUND

3. It is necessary to briefly set out the key factual and procedural background to Mr Pratten’s tax dispute with the Commissioner, as it provides the relevant context.

4. On 31 May 2010, Mr Steven Barns, an officer of the ATO issued a tax audit position paper (the Position Paper) to Mr Pratten on behalf of the Commissioner. Mr Barns is one of the individuals that Mr Pratten wishes to be summonsed by the Tribunal to give evidence at the hearing.

5. On 28 June 2010, solicitors acting on behalf of Mr Pratten asked for a three-week extension to provide comments in relation to the Position Paper, and Mr Barns wrote to the solicitors confirming the extension had been granted. On 19 July 2010, another ATO officer advised the solicitors acting for Mr Pratten that no further extension would be granted.

6. On 26 July 2010, a document titled ‘Fraud or Evasion Submission’ was given by Mr Barns to another ATO officer who was a director of Operation Wickenby, a joint agency taskforce aimed at combating international tax evasion. The submission maintained that an opinion may be formed that there was evasion of tax by Mr Pratten with respect to the financial years ending 30 June 2002 to 30 June 2005.

7. On 27 July 2010, the Commissioner formed an opinion that there was an evasion of tax.[1] It was a Deputy Commissioner acting under delegation from the Commissioner – not Mr Barns – who formed the opinion that there was avoidance of tax due to evasion in the financial years ending 30 June 2002 to 30 June 2005. This was in accordance with internal ATO procedures.

   [1] T39-988 (volume 2).

8. On 4 August 2010, the Commissioner issued Mr Pratten with amended assessments of income tax with respect to the financial years ending 30 June 2002 to 30 June 2009 and penalty assessments for the same years. The income tax assessments were made by the Commissioner under s 167 of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936). 

9. On 2, 3 and 17 August 2010, Mr Barns, on behalf of the Commissioner, sent notices pursuant to former s 264 of the ITAA 1936 to various entities seeking information identified in the Position Paper and, on 28 August 2010, a ‘Report of Audit’ was issued to Mr Pratten.[2]

   [2] T39-1286 to T39-1417 (volume 3).

10. It is common ground that, were it not for the Commissioner’s opinion that Mr Pratten had engaged in evasion of tax, the Commissioner would have been constrained from amending Mr Pratten’s tax returns for the financial years ending 30 June 2002 to 30 June 2005, as the assessments would otherwise fall outside the time limits for review: s 170(1) of the ITAA 1936.

11. On 20 September 2010, Mr Pratten lodged objections against the amended assessments of income tax and penalty assessments.[3]

    [3] T28-199 - T37-256 (volume1).

12. On 15 February 2011, on behalf of the Commissioner, another officer of the ATO wrote to Mr Pratten asking for additional information relating to Mr Pratten’s objections.

13. On 3 May 2011, the solicitors acting on behalf of Mr Pratten wrote to the ATO advising that Mr Pratten does “not propose to voluntarily produce any further information” to “minimise any risk of self-incrimination”.[4]

    [4] T39-1515 (volume 3).

14. On 22 July 2011, Mr Phillip Murray, an officer of the ATO at that time, wrote on behalf of the Commissioner to the solicitors acting for Mr Pratten advising that he was the new case officer in relation to Mr Pratten’s objections. He invited Mr Pratten to clarify the grounds of his objection.[5] Mr Murray is one of the individuals that Mr Pratten wishes to be summonsed to give evidence at the hearing, on the basis that he had involvement with Mr Pratten’s tax affairs while working at the ATO. Mr Murray is no longer working with the ATO according to the Commissioner’s information.

    [5] T39-1556 to T39-1558 (volume 3).

15. On 29 July 2011, the solicitors acting for Mr Pratten gave the Commissioner a written notice under s 14ZYA of the Taxation Administration Act1953 (Cth) (TAA) requiring him to make an objection decision within 60 days.[6]

    [6] T39-1565 to T39-1566 (volume 3).

16. On 27 September 2011, the Commissioner made the objection decision disallowing Mr Pratten’s objections to the Commissioner’s amended assessments and to the penalties imposed.

17. On or about 22 November 2011, Mr Pratten applied to the Administrative Appeals Tribunal (AAT) for review of the objection decision made by the Commissioner.

18. On 27 August 2013, the AAT “adjourned” Mr Pratten’s proceedings due to concurrent criminal proceedings in the Supreme Court of New South Wales in which Mr Pratten faced tax fraud charges linked to the amended assessments. The AAT proceedings were re-activated in 2022 following the conclusion of Mr Pratten’s criminal proceedings.

19. On 21 December 2023, Mr Pratten requested the AAT to issue a summons to Mr Barns to give evidence at the hearing.[7] Mr Pratten withdrew that request on 29 February 2024. However, as stated at [27] below, Mr Pratten applied again for a summons to be issued by the Tribunal to Mr Barns.

    [7] Pratten and Commissioner of Taxation [2024] AATA 439, [40] (Senior Member Lazanas).

20. On 12 March 2024, the AAT made a decision in relation to applications by Mr Pratten to issue summons to the Commissioner and to the Commissioner’s lawyers to produce documents: Pratten and Commissioner of Taxation (Taxation) [2024] AATA 439. Broadly, Mr Pratten sought production of documents from the Commissioner which he did not have but with the desire that the Commissioner should retrieve these from the Australian Federal Police (AFP). It was unclear whether the AFP had possession of the documents, but Mr Pratten maintained that the Commissioner should investigate and confirm the position. The AAT decided to refuse the application as there was no legitimate forensic purpose in issuing a summons for documents which the Commissioner did not have possession or control of. Regardless, the AAT was not convinced that the documents would have been relevant to Mr Pratten discharging the onus of proving his assessments were excessive.

21. On 19 April 2024, the Commissioner filed with the AAT and gave to Mr Pratten his Statement of Facts, Issues and Contentions (SFIC). The Commissioner stated as follows under the heading ‘Preamble’:

    1)The Respondent (Commissioner) was not a party to any of the transactions relevant to this proceeding and his knowledge of the facts is primarily derived from documents and information obtained by him from third parties.

    2)The Commissioner sets out below the facts and issues as he perceives them … Except for those matters expressly identified in this [SFIC], the Commissioner makes no admissions and relies on s 14ZZK … to put the Applicant to proof of the facts on which he relies. The Commissioner is entitled to rely upon any deficiencies in the Applicant’s proof of the excessiveness of the amount assessed in seeking to uphold the assessment.

    3)The Commissioner makes the following Statement of Facts, Issues and Contentions based on the information presently available to him and in response to the Applicant’s second Statement of Facts, Issues and Contentions dated 18 December 2023…The statement of facts below does not purport comprehensively to set out the facts relevant to this application for review. Rather, it attempts to identify the most relevant facts within the Commissioner’s knowledge and is without prejudice to his reliance upon the documents before this Tribunal.

    4)The Commissioner reserves the right to rely on additional facts and to amend or vary this statement.

    …

    7)The proceedings essentially concern the characterisation of monies received by the Applicant, applied for his benefit or otherwise paid as he directed, during the 2002 to 2009 income years… It is the Commissioner’s primary position that the Applicant has not discharged his onus of proving that the amount of the Amended Assessments is excessive (Primary Position).

    8)Without limiting the Primary Position, the Commissioner contends that the Applicant has not established that amounts assessed to him:

    a.do not have the character of ordinary income that is assessable under s 6-5 of the Income Tax Assessment Act 1997 (Cth) (ITAA 1997); and

    b.are not deemed dividends assessable pursuant to ss 44 and 47A of the ITAA 1936.

    9)Finally, without limiting the contentions in paragraph [8] to the extent that the Applicant contends that monies received by him, or applied for his benefit or at his direction, represented monies advanced as loans, the Commissioner contends that any conduct or documents purporting to evidence such loans were shams intended to conceal the true arrangement between Applicant and the putative lender. The parties to any apparent loan intended that the Applicant would receive the monies, or enjoy the benefit of the relevant amounts, without any obligation to repay the relevant amount.

22. On 26 April 2024, the AAT directed Mr Pratten to give to the Commissioner any request for further and better particulars by 17 May 2024, and for the Commissioner to provide any response to Mr Pratten’s request for particulars by 7 June 2024.

23. On 22 May 2024, Mr Pratten wrote to the Commissioner requesting particulars with respect to certain matters set out in the Commissioner’s SFIC. Mr Pratten’s request, which was also filed with the Tribunal, was in the following terms:

    1. In par’ [18], the Respondent states: “Each of the companies referred to in paragraph [14]a)&b), [15]a)&b), and [16]a)&b) ultimately acted in accordance with the directions and wishes of the Applicant at all relevant times.”

    a. Please particularise whether these alleged directions and wishes were of an immutable nature, meaning that the recipient(s) of the alleged directions and wishes were unequivocally legally obligated to fulfil them?

    i. If the answer is yes, what legal force underpinned the immutability of these directions and wishes?

    • The Respondent’s T-Document material is extensive. Please identify where in these documents the evidence demonstrating the immutability of these directions and wishes can be located.

    ii. If the answer is no, please specify what force, if any, existed obligating these companies to ultimately act in accordance with the directions and wishes of the Applicant? – And, where evidence to that effect is located in the Respondent’s evidence?

    b. In respect to pars’ [1]a.i) and/or [1]a.ii) above, as the case may be, please particularise the dates when each of these directions and wishes were conveyed by the Applicant, and when they were correspondingly fulfilled?

    2. In par’ [20], the Respondent states: “VITCO and IFTCO would follow the directions provided to them by the Applicant from time to time regarding payments to (i) the Applicant, (ii) RGIB, (iii) third parties in respect of the Applicant’s personal expenses, and (iv) third parties in respect of the purchase of real property by PPI and 71 Cowper.”

    a. Please particularise whether these alleged directions, purportedly provided by the Applicant from time to time, were of an immutable nature, meaning that the recipient(s) of the alleged directions was unequivocally legally obligated to fulfil them?

    i. If the answer is yes, what legal force underpinned the immutability of these directions?

    • The Respondent’s T-Document material is extensive. Please identify where in these documents the evidence demonstrating the immutability of these directions can be located.

    ii. If the answer is no, please specify what force, if any, existed obligating these companies to “follow the directions provided to them by the Applicant from time to time”? – And, where evidence to that effect is located in the Respondent’s evidence?

    b. In respect to pars’ [2]a.i) and/or [2]a.ii) above, as the case may be, please particularise the dates when each of these purported directions were provided, and when they were correspondingly fulfilled.

    c. In respect to par’ [2] above, is the expression … “from time to time” … meant to mean that there were times that VITCO and IFCO did not follow such purported directions?

    i. If the answer is yes, please identify where in the T-Documents the evidence is demonstrating where “VITCO and IFTCO did not follow the purported directions provided to them by the Applicant from time to time regarding payments…“?

    d. In respect to par’ [2] above, payments to “third parties” – but for just two examples:

    • Line Item# 196 of the Applicant’s SFC Table [9] identifies $7,395 as a Duplicated Transaction (per Position Paper Appendice (E)) – 21.09.2005

    • Line Item# 231 of the Applicant’s SFC Table [9] identifies $9,637 as a payment to Flight Centre (per Position Paper Appendice (E)) – 01.Sep.2006

    i. The Respondent’s T-Document material is extensive. Please particularise the specific evidence demonstrating that these two payments constituted the Applicant’s assessable income, as distinct from, in the first example an accounting error on the part of the Respondent, and in the second example, a legitimate business travel expense?

    3. In par’ [8], the Respondent states: “The parties to any apparent loan intended that the Applicant would receive the monies, or enjoy the benefit of the relevant amounts, without any obligation to repay the relevant amount.”

    a. Please particularise the specific amounts alleged to constitute such apparent loan(s)?

    • For ease of reference, it may be convenient to refer to Table [9] of the Applicant’s SFC, commencing at page [88], ending at page [97]. Relevantly, each such transaction record follows the same sequential date order of the Respondent’s own Position Paper annexures.

    b. The Respondent’s T-Document material is extensive. Please identify where in these documents the evidence is located demonstrating that such apparent loan(s) was without any obligation to repay the relevant amount(s)?

    4. For the sake of clarification, and to remove any potential element of surprise or ambush, does the Respondent no longer intend to assert an option that the insurance business conducted between RGIB and RGII/CPI was a sham, or likely a sham?

    • As contemplated as an option at par [247] of the Position Paper par’ [171] of the Reasons for Objection Decision)

    5. Similarly, while not strictly a particular sought in respect to evidence, the Applicant feels compelled to seek clarification of a key matter concerning documentation, the absence of which is acknowledged by the Respondent in formulating his opinion regarding the occurrences of fraud or evasion. The Applicant wishes to request the following information from the Respondent, noting that the Tribunal may inform itself of any matter conducive to its role in the proceedings:

    a. Does the Respondent challenge the authenticity and veracity of RGII/CPI's audited financial statements? (Per [SFC-47] to [SFC-51] of the Applicant’s SFC)

    i. If the answer is yes, on what basis?

    b. Does the Respondent maintain his contention that no loan documents in the form of loan agreements ever existed?

    i. If the answer is yes, please identify where evidence in support of that contention is located in the Respondent’s T-Documents?

    c. As distinct from the particular sought in 5.b) above, does the Respondent contend that no agreement(s) of a nature obligating the Applicant to repay said loan(s), whether in verbal or written form, ever existed?

1. On 29 May 2024, the Tribunal varied the deadline for the Commissioner to give to Mr Pratten any response to his request for further and better particulars, to 13 June 2024.

2. On 12 June 2024, the Australian Government Solicitor (AGS), on behalf of the Commissioner, relevantly responded by letter to Mr Pratten in the following terms:

   (a)In relation to paragraph 1(a) of the request:

   5. The request contained in paragraph 1(a) is not a proper request for particulars, for the following reasons.

   6. First, whether or not each entity referred to was "legally obligated' to fulfil your wishes is not a matter necessary to understand the Respondent's position in paragraph 18 of the RSFIC. Either the entities referred to acted in accordance with your wishes, as the Respondent maintains, or they did not. Whether each entity was or was not "legally obligated' to fulfil your wishes is irrelevant.

   7. Secondly, especially in light of its lack of apparent relevance, the request is one, in our view, not directed towards understanding the contention contained in paragraph 18 of the RSFIC, but one which is 'fishing' in nature.

   8. Thirdly, the requests contained in the dot point under paragraph 1(a)(i) and in the second sentence of paragraph (1)(a)(ii) — that the Respondent identify evidence of particular matters —does not reflect the function of particulars. The Respondent is not obliged to identify by particulars the evidence to which he may refer in relation to any specific contention contained in the RSFIC.

   (b)In relation to paragraph 1(b) of the request:

   10. The request contained in this paragraph is excessively broad and the particulars sought by it are not necessary to understand the contention contained in paragraph 18 of the RSFIC. It would not be in keeping with s 2A of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) to provide these particulars.

   11. Moreover, this proceeding concerns your tax affairs. It is for you to establish any fact that demonstrates the Amended Assessments and Penalty Assessments are excessive or otherwise incorrect and what your assessments should have been. A request for particulars cannot be used as a way of attempting to invert that onus of proof. The contention contained in paragraph 18 of the RSFIC is clear. If you do not agree with the Respondent's contention in sub paragraphs (a) and (b) of paragraphs 14 to 16 of the RSFIC, then it is open to you to identify, as a part of your case, those instances where you maintain the entities referred to did not act in accordance with your directions and wishes.

   (c)In relation to paragraph 2(a) of the request:

   14. The Respondent responds to this request in the same way he responds to paragraph 1(a) of your request.

   15. First, whether or not each entity referred to was legally obligated to comply with your directions is not a matter necessary to understand the Respondent's position in paragraph 20 of the RSFIC. Either the entities identified in paragraph 20 of the RSFIC acted in accordance with your directions, as the Respondent maintains, or they did not. Whether each entity was or was not "legally obligated' to comply with your directions is irrelevant.

   16. Secondly, especially in light of its lack of apparent relevance, the request, in our view, is not one directed towards understanding the contention contained in paragraph 20 of the RSFIC, but one which is 'fishing' in nature.

   17. Thirdly, the request contained in the dot point under paragraph 2(a)(i) and in the second sentence of paragraph (1)(a)(ii)— that the Respondent identify evidence of particular matters —does not reflect the function of particulars. The Respondent is not obliged to identify by particulars evidence to which he may refer in relation to any specific contention contained in the RSFIC.

   (d)In relation to paragraph 2(b) of the request:

   19. The Respondent responds to this request in the same way he responds to paragraph 1(b) of your request.

   20. The request contained in this paragraph is excessively broad and the particulars sought by it are not necessary to understand the contention contained in paragraph 20 of the RSFIC. It would not be in keeping with s 2A of the AAT Act to provide these particulars.

   21. Moreover, this proceeding concerns your tax affairs. It is for you to establish any fact that demonstrates the Amended Assessments and Penalty Assessments are excessive or otherwise incorrect and what your assessments should have been. A request for particulars cannot be used as a way of attempting to invert that onus of proof. The contention contained in paragraph 20 of the RSFIC is clear. If you do not agree with the Respondent's contention in paragraph 20, then it is open to you to identify, as a part of your case, those instances where you maintain the entities referred to did not act in accordance with your directions.

   (e)In relation to paragraph 2(c) of the request:

   23. This request involves a misreading of paragraphs 19 and 20 of the RSFIC. Paragraphs 19 and 20 of the RSFIC maintains that VITCO and IFTCO would follow the directions provided by you from time to time. Put another way, you would provide instructions directed to VITCO and IFTCO at various times and those instructions were followed. The request contained in paragraph 2(c) incorrectly treats paragraph 20 of the RSFIC as reading something along the lines of VITCO and IFTCO from time to time complied with directions the Applicant provided.

   24. The contention contained in paragraph 20 of the RSFIC is clear and requires no particularisation. Additionally, sub-paragraph (i) is not a proper request for the same reasons identified in paragraph 17 above.

   (f)In relation to paragraph 2(d) of the request:

   27. The request contained in the second dot point under paragraph 2(d) and in sub-paragraph (i) is not a proper request for the following reasons.

   28. First, the Respondent has made the Amended Assessments pursuant to s 167 of the Income Tax Assessment Act 1936, which authorises the Respondent to form a judgement as to the amount on which tax ought to be levied and that amount forms taxable income. The amounts that have been treated as assessable income have been clearly identified. If you maintain that the sum of $9,637 does not represent your assessable income, it is for you to demonstrate how. You must positively prove what your taxable income was, and show that this is less than the amount assessed by the Respondent. Your request improperly seeks to invert the onus of proof in this proceeding.

   29. Secondly, the request does not reflect the function of particulars. The Respondent is not obliged to identify by particulars evidence to which he may or may not refer.

   (g)In relation to paragraph 3 of the request:

   31. This is not a proper request for particulars for the following reasons.

   32. The Respondent has made the Amended Assessments. The amounts that have been treated as assessable income have been clearly identified. If you maintain that some assessed amount does not represent income because, for example, you maintain it reflects a loan, it is for you to identify that amount and prove why it is not assessable income. Your request improperly seeks to invert the onus of proof in this proceeding.

   33. Moreover, the request in paragraph (b) does not reflect the function of particulars. The Respondent is not obliged to identify by particulars evidence to which he may or may not refer.

   (h)In relation to paragraph 4 of the request:

   35. The Respondent does not contend that the insurance business referred to was a sham—no such contention is contained in the RSFIC. If the Respondent does form a view that the insurance business was a sham, he will seek the appropriate leave to file an amended RSFIC raising that contention.

   (i)In relation to paragraph 5 of the request:

   38. In relation to the request contained in paragraph 5(a), the Respondent:

   38.1. Does not challenge the authenticity of the financial statements referred to. That is to say, the documents are what they purport to be: financial statements prepared for the years ended 31 December 2003 to 2006 and the year ended 30 June 2009 for CPI

   38.2. Does challenge the correctness of the financial statements. Broadly, the Respondent will maintain that insofar as they record a debt owed by you to CPI, the financial statements are not correct. The Respondent will also maintain:

   a. the financial statements are not prima facie evidence, or otherwise, of a debt owed by you to CPI and cannot be used to prove the existence of the underlying transactions which give rise to the entries made in them;

   b. section 1305 of the Corporations Act 2001 (0th) has no application and cannot be relied upon by you in relation to the financial statements because they were not part of books kept under a requirement of that Act;

   c. if the financial statements offer in any way evidence of a debt owed by you to CPI, that evidence is rebutted by other evidence;

   d. the financial statements do not prove the existence of any loans between you and CPI.

   39.The request contained in paragraph 5(b) seeks to impermissibly invert the onus of proof in this proceeding. The Respondent's position on this issue is set out in paragraphs 47(a) and 65 of the RSFIC. Moreover, the request in paragraph 5(b)(i) does not reflect the function of particulars. The Respondent is not obliged to identify by particulars evidence to which he may or may not refer.

   40.The request contained in paragraph 5(c) seeks to impermissibly invert the onus of proof in this proceeding. Again, the Respondent's position on this issue is set out in the RSFIC. We refer to paragraphs 46 to 47 and 65 to 69 of the RSFIC where the Respondent disputes the existence of any loan and maintains any purported loan is a sham.

3. On 27 August 2024, Mr Pratten applied to the AAT seeking rulings on a number of issues, including his request for further and better particulars from the Commissioner as set out above. Additionally, Mr Pratten objected to the Commissioner referring to and relying on his criminal conviction at the final hearing, on the basis that it had no relevance to the Tribunal’s review of the Commissioner’s objection decision and the determination of his tax liability.

4. On or about 24 September 2024, Mr Pratten applied to the AAT for the issuing of summonses to five persons to give evidence, including Mr Barns. On 8 October 2024, the Commissioner informed the Tribunal of his opposition to the issuing of a summons to Mr Barns.

5. On 14 October 2024, the Administrative Review Tribunal (Tribunal or ART) commenced operations and replaced the AAT. If a proceeding in the AAT was not finalised, the proceeding must be continued and finalised by the Tribunal in a manner that the Tribunal considers is efficient and fair: see item 24 in Sch 16 to the Administrative Review Tribunal (Consequential and Transitional Provisions No 1) Act 2024 (Cth).

6. On 17 October 2024, Mr Pratten applied to the Tribunal for the issue of a summons to Mr Murray.

7. Mr Pratten filed written submissions in support of his applications, the subject of this interlocutory decision, at various times including on or about 22 May 2024 (initially only in relation to the request for the further and better particulars), 27 August 2024, 24 September 2024 and 22 November 2024. The Commissioner filed his written submissions opposing Mr Pratten’s applications on 5 December 2024.

8. On 13 December 2024, Mr Pratten applied to the Tribunal for, amongst other things, his applications regarding the issue of the summonses to Messrs Barns and Murray to be referred to the Tribunal’s Guidance and Appeals Panel (GAP) for determination.

9. On 18 December 2024, the President of the Tribunal decided to refuse the request for this interlocutory proceeding to be referred for hearing and determination by the GAP. The request was refused on the basis that it did not raise any issue of significance to administrative decision-making as, amongst other reasons, the factual issues raised in the proceeding are specific to the applicant’s circumstances. The President also determined that even if this proceeding had qualified for referral to the GAP, he would have exercised his discretion to not refer it to the GAP because the request for referral relates to issues of practice and procedure, rather than a substantive issue in the proceeding; and the issues of practice and procedure were already listed for an interlocutory hearing on 19 December 2024. Furthermore, the President stated that it was in the interests of justice for this long-standing matter to be heard and determined as soon as possible.

10. On 19 December 2024, the Tribunal heard oral submissions from the parties in relation to the above issues.

    THE RELEVANT STATUTORY PROVISIONS AND LEGAL PRINCIPLES

    Part IVC Proceedings and the Role of the Tribunal

11. It is convenient to begin with the statutory provisions and principles relevant to ART reviews of taxation decisions. Mr Pratten’s applications for review of the objection decisions relating to his tax assessments were brought under s 14ZZK in Part IVC of the TAA, which at the relevant time that the assessments were issued provided as follows:

    SECTION 14ZZK Grounds of objection and burden of proof

    On an application for review of a reviewable objection decision:

    (a)  the applicant is, unless the Tribunal orders otherwise, limited to the grounds stated in the taxation objection to which the decision relates; and

    (b)  the applicant has the burden of proving that:

    (i) if the taxation decision concerned is an assessment… — the assessment is excessive; or

    …

    (iii) in any other case — the taxation decision concerned should not have been made or should have been made differently.

12. Accordingly, Mr Pratten bears the burden of proving, in relation to the income tax assessments, that they were excessive. In relation to the remission decisions regarding the penalties, Mr Pratten bears the burden of proving that the relevant decisions should not have been made or should have been made differently. The standard of proof adopted is the balance of probabilities.

13. The legal principles applicable to the onus in the context of review of assessments issued under s 167 of the ITAA 1936 were helpfully summarised by Derrington J in Commissioner of Taxation v Ross (2021) 174 ALD 77 at [48]. His Honour observed at [48(9)], as follows:

    The ultimate question in Part IVC proceedings relating to an assessment made under s 167 is whether the amount of the assessment is excessive. That places no burden on the Commissioner to show that the assessments were correctly made: Dalco at 623–624. The manner in which the taxpayer can discharge the burden may vary with the circumstances but “absent agreement with the Commissioner to confine the issues for determination in a Pt IVC proceeding, the Commissioner is entitled to rely upon any deficiency in the taxpayer’s proof of the excessiveness of the amount assessed in seeking to uphold the assessment”: Gashi [61].

14. The law is well established as to the Tribunal’s role in Part IVC proceedings, as follows. First, the Tribunal engages in de novo merits review, within the confines of a taxpayer’s grounds of objection. Contrary to Mr Pratten’s submission, the Tribunal does not engage in the review in an inquisitorial manner. As Foster J made clear in Eldridge v Commissioner of Taxation (1990) 21 ATR 897 at 912: “even though the Tribunal does over again the work of the Commissioner, it does it in a significantly different way. Although it could be said to be part of an administrative hierarchy, its functions partake far more of the court than of the office desk. It is clearly not cast in the role of the inquisitor. …”

15. The Tribunal’s role has its foundation in s 9 of the Administrative Review Tribunal Act 2024 (Cth) (ART Act) which sets out the objective of the Tribunal. It states, as follows:

    The Tribunal must pursue the objective of providing an independent mechanism of review that:

    a.is fair and just; and

    b.ensures that applications to the Tribunal are resolved as quickly, and with as little formality and expense, as a proper consideration of the matters before the Tribunal permits; and

    c.is accessible and responsive to the diverse needs of parties to proceedings; and

    d.improves the transparency and quality of government decision - making; and

    e.promotes public trust and confidence in the Tribunal.

16. Secondly, the Tribunal’s task is to make the “correct or preferable decision in relation to the proceeding” and “achieve the objective in section 9”, in respect of which the decision-maker and any person representing the decision-maker must use their best endeavours to assist the Tribunal: s 56 of the ART Act. Significantly, the effect of s 14ZZK of the TAA is that, by virtue of s 14ZZA of the TAA, the powers of the Tribunal are modified in relation to a review of a taxation decision. Jagot J explained in Rawson Finances Pty Ltd v Commissioner of Taxation (2013) 296 ALR 307 at [116] the Tribunal’s task in taxation review proceedings, as follows:

    In a case where s 14ZZK(b)(i) of the TA Act applies the correct or preferable decision is to set aside the decision under review if the applicant has discharged the burden of proving that the assessment is excessive and to dismiss the review application if the applicant has not discharged that burden. The fact that the Tribunal cannot be satisfied that the Commissioner’s assessments represent the correct or preferable decision does not mean that the applicant must succeed and the Commissioner fail. This would involve not only the casting of an onus of proof on the Commissioner but would also relieve the applicant of the applicant’s burden of proof. Both would be impermissible.

17. Therefore, it is for the taxpayer to disprove the basis of assessment by establishing, amongst other things, the relevant facts. It is not for the Commissioner to prove anything, nor for the Commissioner to place the relevant facts before the Tribunal. It also follows that no part of the Tribunal’s function involves the Tribunal reviewing how, or on what basis, the Commissioner made the amended assessments and the objection decisions. The Commissioner’s processes are not able to be investigated in proceedings before the Tribunal and are, therefore, completely irrelevant to what the Tribunal must decide.

18. Moreover, this proceeding involves a dispute about facts of which the Commissioner has no direct knowledge and where the Commissioner has not confined the issues in dispute (see extracts from the Commissioner’s SFIC in [21] above). Consequently, the Commissioner makes no admissions of fact. Indeed, the Commissioner relies on s 14ZZK of the TAA to require Mr Pratten as the taxpayer to prove all facts upon which he seeks to rely, in showing that the assessments the subject of the proceeding are excessive and, in the case of the penalties assessments, incorrect and what they should have been.

19. Additionally, in a case such as this one where the Commissioner has formed the opinion that there was evasion by the taxpayer, the taxpayer bears the burden of showing that such an opinion should not have been formed. In Binetter v Federal Commissioner of Taxation (2016) 249 FCR 534 at [93] Perram and Davies JJ (with whom Siopis J agreed) held that:

    Although the Tribunal re-examines whether, on the evidence before it, there was an avoidance of tax due to fraud or evasion, and is able to substitute its opinion for that of the Commissioner, the issue for the Tribunal is whether the taxpayer has discharged the onus of showing that the opinion that there was fraud or evasion should not have been formed, and therefore, that the statutory condition for the power to amend is not satisfied. Unless the taxpayer discharges that onus, the assessments are not shown to be excessive and the effect of s 14ZZK is that the Tribunal must affirm the amended assessments, such assessments having been made by the Commissioner in compliance with the statutory requirements…

1. Justices Perram and Davies also referred in Binetter at [93] to the decision of Millar v Federal Commissioner of Taxation (2015) 101 ATR 827 and stated “[i]n Millar Griffiths J correctly held that on a merits review before the Tribunal, the onus of proof imposed by s 14ZZK places on the taxpayer the burden of disproving fraud or evasion.”

   Tribunal’s Powers to Issue Summons

2. Turning to the powers of the Tribunal to issue summonses, the Tribunal, like its predecessor the AAT, is expressly conferred with the power to issue summonses. The respective powers of the Tribunal and AAT to issue summonses to give evidence are set out below starting with the section of the now repealed Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act).

3. Section 40A(1) of the AAT Act relevantly provided that:

   (1)   For the purposes of a proceeding before the Tribunal, … the Tribunal may summon a person to do either or both of the following, on the day, and at the time and place, specified in the summons:

   …

   b)    appear before the Tribunal to give evidence;

4. The word “may” in s 40A(1) imported a discretion. It was for the AAT to decide who should be summonsed to give evidence and produce documents.[8]

   [8] General Merchandise & Apparel Group Pty Ltd v Chief Executive Officer of Customs [2009] AATA 988; (2009) 51 AAR 1, 78 [222] (Deputy President Forgie).

5. The principles developed by the Courts in relation to subpoenas have provided a “sound guide” to the manner in which summonses were issued and refused by the former AAT.[9] It is expected that the same principles applicable by the Courts to subpoenas which were adopted by the AAT will continue to be applied by the new Tribunal, subject to some textual differences in the ART Act, as outlined immediately below. Importantly, a party who seeks the issue of a subpoena must identify expressly and precisely a legitimate forensic purpose.[10]

   [9] Phillips and Inspector-General in Bankruptcy [2011] AATA 25; (2011) 54 AAR 132, 134 [6] (Deputy President Forgie). See also Steele and Comcare (Compensation) [2018] AATA 481; (2018) 74 AAR 327, 334 [14]-[15] (Deputy President Boyle).

   [10] Wong v Sklavos (2014) 319 ALR 378, 381 [12] (Jacobson, White and Gleeson JJ). See also Seven Network (Operations) Limited v Fairfax Media Publications Pty Limited [2023] FCAFC 185, [37] (Wheelahan, Anderson and Jackman JJ).

6. Section 74(1)(a) of the ART Act states:

   (1) If the Tribunal has reasonable grounds to believe that a person has information… relevant to a proceeding in the Tribunal, the Tribunal may, in writing, summon the person to…on the day, and at the time and place, specified in the summons:

   (a)appear before the Tribunal to give evidence;

7. It is appropriate to make some preliminary observations about s 74 of the ART Act as there are textual differences in the statutory provision. First, the power of the Tribunal to issue a summons to give evidence is conditioned upon it having “reasonable grounds to believe that a person has information…relevant to a proceeding”’ in the Tribunal. The stipulated condition is one found in many statutes and is generally interpreted to include the following requirements: (1) the subject matter of the belief must be identified; (2) the test of reasonable grounds to believe is objective as in there must exist facts or objective circumstances which are sufficient to induce that state of mind in a reasonable person; and (3) belief is more than suspicion or apprehension, it is an actual inclination of the mind.[11] Secondly, similar to s 40A(1) of the AAT Act, the inclusion of the word “may” in s 74(1) of the ART Act imports a discretion.

   [11] Prior v Mole (2017) 261 CLR 265, 292 [73] (Nettle J); George v Rocket (1990) 170 CLR 104, 116 (Mason CJ, Brennan, Deane, Dawson, Toohey, Gaudron and McHugh JJ).

8. The Commissioner submitted that although the Revised Explanatory Memorandum to the Administrative Review Tribunal Bill 2024 (Cth) states that s 74(1) of the ART Act is equivalent to s 40A(1) of the AAT Act and only has “minor updates to reflect modern drafting practices” that “do not affect the operation or effect of the provision”, there are relevant differences. Notwithstanding, the Commissioner also maintained that the outcome of Mr Pratten’s requests do not turn on how the Tribunal interprets s 74(1). This is because irrespective of whether the Tribunal draws on the principles built up around former s 40A(1) or applies the “reasonable grounds to believe test” in s 74(1), both lead to the same conclusion, namely, the summonses should not be issued to Messrs Barns and Murray because any evidence they could give would be entirely irrelevant to the issues in this proceeding. That is, the summonses lacked a legitimate forensic purpose.

9. Section 49 of the ART Act, which is relevant to orders the Tribunal may make in relation to procedure, provides:

   (1)  The procedure of the Tribunal in a proceeding is within the discretion of the Tribunal.

   (2)  In exercising its discretion, the Tribunal must have regard to the circumstances of the proceeding.

   (3)  Subsections (1) and (2) are subject to this Act and the rules.

   SHOULD THE SUMMONSES BE ISSUED TO MESSRS BARNS AND MURRAY?

10. As stated above, Mr Pratten has asked the Tribunal to issue a summons to each of Mr Barns and Mr Murray, who were ATO officers involved in the taxation audit and review of his objection decision, to attend to give evidence at the hearing.

11. Mr Pratten maintains that the evidence of Messrs Barns and Murray is of “critical importance” to “ensuring proper scrutiny” of the “transparency and quality”’ of the “decision-making processes” undertaken by the Commissioner, including how he “considered available information and sought additional information…”  

12. Besides s 74(1) of the ART Act, Mr Pratten relied on ss 9, 52 and 55 of the ART Act. As stated at [38] above, s 9 sets out the objective of the Tribunal. Broadly, s 52 that states that the Tribunal is not bound by the rules of evidence, but may inform itself on any matter in such manner as it considers appropriate. Section 55 relevantly states that each party to a proceeding must be given a reasonable opportunity to present their case, make submissions and adduce evidence. Mr Pratten maintained that “[t]his procedural flexibility is fundamental to ensuring the Tribunal has access to all relevant and probative information necessary for a just and informed determination. The evidence sought from Messrs Barns and Murray is pivotal in examining the allegations of fraud or evasion that form the foundation of the Respondent’s case.”

13. Mr Pratten added that the Tribunal “[d]enying [him] the opportunity to summons Messrs Barns and Murray to give evidence could preclude [him] from adducing evidence potentially critical to the Tribunal’s deliberations. Such a decision risks undermining the fairness and completeness of the review process…”

14. More specifically, Mr Pratten maintained that Messrs Barns and Murray:

    … could shed light on the considerations, the weight accorded to competing factors, and the reasonableness of the assumptions and conclusions underpinning the making of the amended assessments and

    the subsequent disallowance of my objections—matters that fall squarely within the materially inquisitorial purview of the Tribunal.

15. Mr Pratten submitted the evidence of Messrs Barns and Murray may clarify the procedural and substantive bases underlying the formation of the Commissioner’s opinions and conclusions, which led to the amended assessments, imposition of penalties and disallowance of his objections. Moreover, Mr Pratten argued that without the evidence of Messrs Barns and Murray, he would be unduly restricted in presenting his case and “challenging the propriety, fairness and accuracy” of the default assessments.

16. Although Mr Barns is a current ATO officer, Mr Pratten rightly pointed out he does not possess any immunity or privilege and is a compellable witness. Mr Pratten submitted that Mr Barns has a direct connection to the matters before the Tribunal because he was the auditor at the ATO who “formed the opinion, purportedly supported by factual findings detailed in the Position Paper, that the Applicant had engaged in fraudulent or evasive activities.”  Mr Pratten asserted that Mr Barns formed the opinion that he had engaged in fraud or evasion, notwithstanding that it was expressly stated “he did not have in his possession all the material facts when making the amended assessment” and “[he] did not hold full records of all transactions and cash follows, structures and legal relationships”.

17. Mr Pratten also claimed that “Mr Barns is expected to be able to give specific and nuanced evidence that will assist the Tribunal in fulfilling its review obligation” and that “summonsing Mr Barns to give evidence is imperative for a comprehensive review of the matters before this Tribunal … delving into allegations of fraud or evasion underlying each amended assessment”. Mr Pratten maintained that “Mr Barns is uniquely positioned to assist the Applicant in fleshing out his case, and will provide invaluable insights essential for the Tribunal’s considerations.”

18. Mr Pratten submitted that “Mr Barns stands as the sole witness available for the Applicant to examine in detail as to the inferences drawn that give rise to the Respondent’s opinion and purported factual conclusions of the occurrence of fraud or evasion.” In his oral submissions, Mr Pratten insisted that he should be allowed to cross-examine as to the person’s state of mind involved in forming the opinion as there had to be a person – as distinct from a document – that he could question.

19. In relation to Mr Murray, Mr Pratten stated that he was the Respondent’s officer tasked with the statutory duty of evaluating Mr Pratten’s objections to the amended assessments. Mr Pratten noted that “Mr Murray did not materially deviate from the purported facts and conclusions set out in the Position Paper upon which the amended assessments were based, including as to the claims of fraud and evasion.”

20. Mr Pratten asserted that Mr Murray was aware that Mr Pratten’s “rationale for not rebutting the “listed propositions” or “providing information” was grounded in [his] exercise of the fundamental right to silence, due to the then-concurrent criminal proceedings”. Mr Pratten surmised that “the Respondent may have been misled into the erroneous opinion that the disputed transactions constituted income, and that [he] had deliberately or recklessly engaged in fraud or evasion”.  

21. Mr Pratten related that “[h]ad Mr Murray duly acknowledged my exercise of a legal right in the report, the Respondent may have reconsidered his opinion regarding fraud or evasion, and/or reserved his position without formally making the amended assessments prior to the finalisation of the then-concurrent criminal proceedings. Alternatively, he may have allowed my Objections, either in full or in part. Certainly, Mr Murray’s portrayal of me in such a poor light warrants thorough interrogation.”

22. The Commissioner objected to the summonses being issued by the Tribunal because Mr Pratten had proceeded upon a fundamental misunderstanding of the Tribunal’s task in reviewing the objection decisions under Part IVC proceedings. The Commissioner maintained that it is neither the function nor duty of the Tribunal to review the process of assessment. Accordingly, the Commissioner argued that any evidence Messrs Barns and Murray could give would be entirely irrelevant to the issues in the Tribunal proceedings.

23. The Commissioner also pointed out that Mr Pratten had on two previous occasions commenced judicial review proceedings in the Federal Court challenging the making of the amended assessments.

24. I agree with the Commissioner’s position that the summonses should not be issued by the Tribunal to Messrs Barns and Murray. My reasons are as follows. First, I cannot find any legitimate forensic purpose in requiring them to attend to give evidence. In this regard, I was not persuaded that Messrs Barns and Murray have information “relevant to a proceeding” such that their evidence would be of any importance to what the Tribunal has to decide for the purposes of s74(1) of the ART Act. The historical views and opinions of Messrs Barns and Murray as taxation officers, as well as the investigations they undertook at the time of the issue of the amended assessments and in relation to making the objection decision are irrelevant to the task of the Tribunal, which is to provide an independent mechanism of review. Put simply, the subjective views of ATO officers and their interactions during the course of examining Mr Pratten’s tax affairs will be of no meaningful assistance or relevance to the Tribunal. The Tribunal is required to make findings of fact and apply the law independently, consistent with its objective as set out in s 9 of the ART Act. As the taxpayer, Mr Pratten bears the onus of proof in Part IVC proceedings.

25. Secondly, I also agree with the Commissioner’s view that the inclusion of the words “the Tribunal has reasonable grounds to believe” in s 74(1) of the ART Act is not a minor update and the words import a condition on the exercise of the power in s 74(1) of the ART Act not found in s 40A(1) of the AAT Act. Clearly, the words of the statute must be applied on their terms, and it is not appropriate to substitute the explanation provided in the abovementioned Revised Explanatory Memorandum (see [50] above). In these circumstances and having particular regard to the role of the Tribunal in Part IVC taxation review proceedings, there is no proper basis for the Tribunal to have “reasonable grounds to believe” that the information which Messrs Barns and Murray may have will be “relevant to a proceeding”. I am fortified in my view that the summonses should not be issued to Messrs Barns and Murray by the following cases, where the AAT similarly refused summonses to ATO officers to attend or to produce documents on the basis of s 40A(1) of the AAT Act in the context of Part IVC proceedings.

26. In Davsa Forty-Ninth Pty Ltd ATF Krongold Ford Bus Unit Trust and Commissioner of Taxation (2012) 83 ATR 245 at [7], Senior Member O’Loughlin relevantly stated that “[t]he role of the Tribunal … is to make the correct or preferable decision. In this regard, the Tribunal stands in the shoes of the Commissioner and starts afresh. Whatever the ATO officials thought about the character of the applicant’s activities and whether or not they constitute the carrying on of a business is now irrelevant.” (citations omitted)

27. In Lowe and Commissioner of Taxation [2013] AATA 549 at [5], Deputy President Hack SC refused to require the Commissioner to produce draft reasons for decision for a related entity because “…the Commissioner’s objection decision, which is in draft form, simply records the Commissioner’s view of the facts. It would not, in my view, constitute taxable facts in themselves. That the Commissioner may have taken a view of certain evidence regarding one taxable entity does not have any adjectival relevance to another, even related, taxpayer.”

28. In revoking a summons to produce documents issued to the Deputy Commissioner of Taxation in WT95/13-14 and Commissioner of Taxation (1996) 32 ATR 1152, Deputy President Barnett observed:

    Tribunal proceedings are by way of a de novo consideration of the decision under review. In general, the Tribunal is not concerned whether or not the decision-maker was right or wrong in his or her approach or whether or [sic] he or she was influenced by extraneous considerations.

    It is not usually relevant to know the internal machinations within the Australian Taxation Office, or whether, the decision under review is or is not consistent with previous decisions of the Deputy Commissioner of Taxation or his officers, or whether the actual decision-makers were acting under the influence of internal directions. It is up to each party to call evidence and make submissions upon what is the preferable decision for the Tribunal to make in this application.

    The Tribunal finds that the matters sought by these summonses are not relevant for its consideration of this matter.[12]

    [12] WT95/13-14 and Commissioner of Taxation [1996] AATA 62; (1996) 32 ATR 1152.

29. Thirdly, Mr Pratten has made plain that the evidence of Messrs Barns and Murray is sought to enable him to challenge the “propriety, fairness and accuracy of the amended assessments”. This suggests Mr Pratten wishes to put the validity of the amended assessments in issue, as also evident from a number of statements in Mr Pratten’s Statement of Facts and Contentions dated 19 December 2023. For example, Mr Pratten suggested Mr Barns was impartial and the AFP played a role in shaping the tax audit outcomes. Mr Pratten’s arguments are misplaced as the Tribunal is not empowered to review the audit process nor the Position Paper nor the validity of the assessments.[13] The Tribunal exercises administrative, not judicial power in undertaking the merits review.[14] Mr Pratten had separately commenced judicial review proceedings in the Federal Court. While the Tribunal is obliged to afford each party a reasonable opportunity to present its case and adduce evidence pursuant to s 55 of the ART Act, it is not an opportunity to treat the proceeding as if it were a quasi-judicial review and seek to challenge the making of the amended assessments. Challenging an assessment outside of Part IVC proceedings is limited to situations where the assessment process was not undertaken bona fide, for example, because there was corrupt conduct or conscious maladministration.[15] Additionally, the flexibility which the Tribunal allows parties within proceedings is still subject to the ART Act. Here, s 74 of the ART Act specifically applies with respect to the issue of summonses.

    [13] Kennedy v Administrative Appeals Tribunal (2008) 168 FCR 566, 573 [22]-[23] (French, Tamberlin and Mansfield JJ). See also Federal Commissioner of Taxation v Administrative Appeals Tribunal (2011) 191 FCR 400, 405 [22] (Keane CJ and Gordon J).

    [14] Nguyen v Commissioner of Taxation (2018) 265 FCR 355, 385 [142-148] (Kenny J).

    [15] Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146.

30. Fourthly, as stated above, the Commissioner issued default assessments under s 167 of the ITAA 1936 for the years ended 30 June 2002 to 30 June 2009. The Commissioner formed an opinion that there had been evasion of tax by Pratten in respect of the years ended 30 June 2002 to 30 June 2005. By virtue of s 14ZZK(b)(i) of the TAA, the onus is on Mr Pratten as the taxpayer to prove that the amount of tax assessed is excessive. Mr Pratten must also discharge the onus of proving to the satisfaction of the Tribunal that there was no evasion of tax by him and that the opinion of evasion should not have been formed. In relation to the issue of evasion, he must “discharge the burden of proving to the satisfaction of the Tribunal that there was no blameworthy conduct on his part.”[16] Relevantly, evasion has the meaning articulated by Dixon J in Denver Chemical Manufacturing v Commissioner of Taxation (NSW) (1949) 79 CLR 296 at 313, with whom McTiernan and Webb JJ agreed. It is a “blameworthy act or omission on the part of the taxpayer” and “[a]n intention to withhold information lest the commissioner should consider the taxpayer liable to a greater extent than the taxpayer is prepared to concede, is conduct which if the result is to avoid tax would justify evasion”.  

    [16] Buzadzic v Federal Commissioner of Taxation (2024) 119 ATR 24 at [38] (Bromwich, Abraham and McEvoy JJ).

31. Mr Pratten’s reliance on the High Court decision of Krakowski v Eurolynx Properties Ltd (1995) 183 CLR 563 in arguing the Commissioner had to prove fraud was misplaced. That decision concerns allegations of fraud, whereas the Commissioner formed an opinion that there was evasion. More importantly, Krakowski takes no account of the operation of s 14ZZK(b)(i) in Part IVC taxation review proceedings. It follows that, in circumstances where the Commissioner does not have to prove anything including that the opinion on evasion was correct, the summonsing of Messrs Barns and Murray to give evidence at the hearing would be redundant.

1. Finally, none of Mr Pratten’s various other arguments as to why Messrs Barns and Murray should be summonsed were persuasive. The Tribunal does not need to hear from Messrs Barns and Murray to determine the correct or preferable decision in this Part IVC proceeding. To review the objection decision, the Tribunal does not need to know how Messrs Barns and Murray personally considered the facts or what they read and knew about Mr Pratten at the time, or who informed them and how they (or another tax officer) formed the opinion regarding the avoidance of tax due to evasion. It would be pointless for the Tribunal to summons taxation officers in these circumstances. While s 52 of the ART Act provides that the Tribunal may inform itself on any matter in such manner as it considers appropriate, it is not appropriate for the Tribunal to give primacy to that provision in circumstances where s 74(1) of the ART Act specifically provides the conditions to be satisfied for the issuing of summons. The onus of proof rests with the taxpayer in Part IVC proceedings and a taxpayer does not succeed by proving deficiencies in the Commissioner’s process of assessment or poking holes in the Commissioner’s opinion as to the avoidance of tax by fraud or evasion. Mr Pratten’s submission that Messrs Barns and Murray were required to be summonsed to show that the Commissioner had been misled by them resulting in poor decision-making by the Commissioner - even if this was true - is irrelevant to the Tribunal’s role of undertaking an independent mechanism of review and deciding the outcome in this Part IVC proceeding.

2. For the reasons given, Mr Pratten has not established that the issue of the summonses to Messrs Barns and Murray is for a legitimate forensic purpose and his application is dismissed.

   SHOULD THE COMMISSIONER BE REQUIRED TO GIVE FURTHER PARTICULARS?

3. As set out at [51] above, s 49 of the ART Act states that the procedure of the Tribunal in a proceeding is within the discretion of the Tribunal. Therefore, the Tribunal may order the respondent to provide further and better particulars where it is appropriate to do so, having regard to all the circumstances. In support of his request for further and better particulars to be supplied by the Commissioner, on 22 May 2024, Mr Pratten stated that the particulars are “aimed to ensure that the cases of both parties are fully exposed and refined, thereby assisting the Tribunal in making well-informed decisions. Such an approach aligns with the requirements of the AAT Act…” Mr Pratten added that “the request for particulars seeks additional details and clarifications regarding the Respondent’s case. As such, these requested particulars aim to provide more specific information to ensure a clearer understanding of the key issues in dispute…” Furthermore, “the causal pathway to each of the amended assessments [the] subject of dispute, is the opinion of fraud or evasion… There being a complete absence of evidence of fraud or evasion, the allegations were nevertheless asserted without the Commissioner having in his possession all the material facts when making the amended assessment ... or records of all transactions, cash flows, structures, and legal relationships.” 

4. Mr Pratten urged the Tribunal to require the Commissioner to provide the particulars on the basis that “[w]ithout material answers to these particulars, the [Tribunal] will be hindered from fully understanding the matrix of facts as they relate to the assertions versus direct evidence.”

5. As stated at [25] above, the Commissioner provided some particulars in response to Mr Pratten’s request. However, the Commissioner declined to provide other particulars where Mr Pratten sought information from the Commissioner about matters which were considered to be irrelevant or where the Commissioner was asked to identify evidence of particular matters, including T-Documents relied on by the Commissioner. The Commissioner appropriately also explained his reasons for not providing particulars including that he was not obliged to do so as they were not proper requests for particulars.

6. I agree with the Commissioner’s position and, therefore, dismiss Mr Pratten’s application requiring the Commissioner to provide further and better particulars. This is not a case where the Commissioner’s SFIC is inadequate such that it needs to be supplemented with particulars.[17] As stated at [21] above, the Commissioner’s SFIC records a number of qualifications. However, after setting out the facts as the Commissioner perceives them and referencing relevant entities over which Mr Pratten is said to have had control, the Commissioner provides details in respect of various arrangements between those entities which he considered to be relevant to the assessments. The Commissioner’s SFIC then sets out the following 7 issues:

   Issue 1: Has the Applicant discharged his onus to prove that the Amended Assessments are excessive by proving his taxable income in the Relevant Period?

   Issue 2: Are the amounts assessed to the Applicant in the Relevant Period ordinary income within the meaning of s 6-5 of the 1997 Act?

   Issue 3: Are the amounts assessed to the Applicant in the Relevant Period assessable as deemed dividends pursuant to s 44 and 47A of the 1936 Act?

   Issue 4: Are the so called “loans” entered into by the Applicant shams?

   Issue 5: Are the Penalty Assessments excessive?

   Issue 6: Whether the Commissioner’s opinion as to fraud or evasion should have been made?

   Issue 7: What weight, if any, should the Tribunal place on the Conviction in determining issues above?

   [17] Cf BAE Systems Australia (NSW) Pty Ltd v Federal Commissioner of Taxation (2008) 69 ATR 567.

7. The Commissioner also sets out his contentions in paragraphs [42] to [77] of his SFIC and, in doing so, outlines those matters which are disputed. For example, in relation to certain amounts that Mr Pratten asserts have the character of loans, the Commissioner articulates his views as to why he disputes the amounts are loans. Accordingly, the Commissioner’s SFIC includes sufficient information to convey to Mr Pratten the case he has to meet on that issue.

8. The Commissioner also pointed out that it was Mr Pratten who gave the Commissioner a written notice under s 14ZYA of the TAA dated 29 June 2011 requiring the Commissioner to make an objection decision within 60 days (see [15] above). In other words, notwithstanding Mr Pratten having advised the Commissioner on 3 May 2011 that he did not wish to volunteer any further information in relation to his objection, at the risk of self-incrimination, Mr Pratten compelled the Commissioner to make an objection decision on the limited information available to the Commissioner at that time. It is somewhat ironic, therefore, that Mr Pratten complained about the taxation officers not having had comprehensive information before making the objection decision and is now insisting on the supply of further and better particulars.

9. In all the circumstances, the issues for determination by the Tribunal are sufficiently identified in the Commissioner’s SFIC and Mr Pratten should have clarity about the case and what he has to prove in these Part IVC proceedings. This is especially so, having regard to the extensive history of this proceeding and various interlocutory applications, as well as his separate judicial review proceedings (see [71] above). It is not appropriate for the Commissioner to be required to identify evidence and lay out his submissions for Mr Pratten as this is not the function of particulars nor is it to answer questions about matters which are peculiarly within the taxpayer’s knowledge.

   SHOULD THE COMMISSIONER BE ALLOWED TO RELY ON THE CRIMINAL CONVICTION?

10. It suffices to note the following litigation background in relation to Mr Pratten’s criminal proceedings, which is based on the Commissioner’s SFIC.

11. On 13 June 2012, following a jury trial before the Supreme Court of New South Wales, Mr Pratten was found guilty of seven offences of dishonestly obtaining a financial advantage by deception based on him filing deliberately understated tax returns for certain years (the Offences) contrary to s 134.2 of the Criminal Code Act 1995 (Cth). Subsequently, Mr Pratten was convicted and sentenced for the Offences: R v Pratten (No 12) [2014] NSWSC 396.

12. On 1 July 2014, the Court of Criminal Appeal of the Supreme Court of New South Wales allowed Mr Pratten’s appeal and quashed his convictions: Pratten v R [2014] NSWCCA 117.

13. On 9 September 2015, following a retrial before the Supreme Court of New South Wales, a jury found Mr Pratten guilty of the Offences. On 26 April 2016, Mr Pratten was convicted of the Offences and sentenced to a term of imprisonment: R v Pratten (No 25) [2016] NSWSC 539 (the Conviction).

14. On 25 October 2021, the Court of Criminal Appeal of the Supreme Court of New South Wales dismissed Mr Pratten’s appeal against the Conviction: Pratten v R [2021] NSWCCA 251. On 5 May 2022, the High Court of Australia refused Mr Pratten an extension of time within which to seek special leave to appeal from the judgment dismissing his appeal against conviction.

15. As stated at [79] above, one of the issues identified by the Commissioner which is before the Tribunal for determination is: what weight, if any, should the Tribunal place on the Conviction in determining the issues before it? The Commissioner acknowledged in his SFIC and at the interlocutory hearing that the Conviction does not prevent Mr Pratten in these Part IVC proceedings from challenging the essential facts on which it is based.[18] The Commissioner contended in his SFIC that the Conviction is relevant and should be afforded significant evidentiary weight in determining the issues: Rogerson v Commissioner of Taxation (1998) 40 ATR 492. Briefly, the Commissioner submitted that, amongst other things, there is substantial overlap between the “taxable facts” of the amended assessments and the facts upon which the Conviction is based; and that the Conviction should be taken into account in these Tribunal proceedings.

    [18] Saffron v Commissioner of Taxation (1991) 30 FCR 578 at 582 where Davies J (with whom Lockhart J agreed) held in response to a submission “the conviction is conclusive proof of the essential facts on which the conviction was based. That is not the law.”

16. On the other hand, Mr Pratten submitted that the jury’s findings of guilt were not determinative of his civil liability to pay income tax and that the Conviction has no bearing on the present matter and should, therefore, be disregarded and given no weight.

17. The Tribunal is not in a position at this stage of the proceedings to give a ruling as to what weight (if any) is to be given to the Conviction. That is a matter that can only be properly evaluated and determined at the hearing once the evidence and submissions in this proceeding are placed before the Tribunal. That is because, amongst other things, the Tribunal will have to decide whether the matters in issue in the Part IVC proceedings are so closely related to the matters that were in issue in the criminal proceedings, as to be relevant and of evidentiary weight in these proceedings.

18. Mr Pratten’s objection to the Commissioner relying on the Conviction is, therefore, disallowed and reserved for the substantive hearing and decision in these proceedings. The Tribunal notes that both Mr Pratten and the Commissioner have referenced, as part of their materials in these Tribunal proceedings to be relied on at the hearing, various extracts from the transcripts of the trials before the Supreme Court of New South Wales.

    CONCLUSION

19. For the reasons given, I have decided to dismiss the applications by Mr Pratten for the issuing of summonses to Messrs Barns and Murray, and for the provision of further and better particulars by the Commissioner. I have also decided to disallow Mr Pratten’s objection as to whether the Commissioner can rely on the Conviction. It is appropriate for the determination of the weight (if any) given to the Conviction, to be reserved for determination at the hearing.

Date(s) of hearing:	19 December 2024
Applicant:	Self-represented
Counsel for the Respondent:	Mr B Kasep
Solicitors for the Respondent:	Ms J Chan, Australian Government Solicitor