Rawson Finances Pty Limited v Deputy Commissioner of Taxation

[2011] FCA 1231

FEDERAL COURT OF AUSTRALIA

Rawson Finances Pty Limited v Deputy Commissioner of Taxation

[2011] FCA 1231

Citation:		Rawson Finances Pty Limited v Deputy Commissioner of Taxation [2011] FCA 1231
Parties:		RAWSON FINANCES PTY LIMITED (ACN 078 272 956) v DEPUTY COMMISSIONER OF TAXATION BCI FINANCES PTY LIMITED (ACN 055 988 531) v DEPUTY COMMISSIONER OF TAXATION RAWSON FINANCES PTY LIMITED (ACN 078 272 956) v DEPUTY COMMISSIONER OF TAXATION BCI FINANCES PTY LIMITED (ACN 055 988 531) v DEPUTY COMMISSIONER OF TAXATION
File numbers:		NSD 532 of 2010 NSD 592 of 2010 NSD 698 of 2010 NSD 781 of 2010
Judge:		FOSTER J
Date of judgment:		31 October 2011
Catchwords:		ADMINISTRATIVE LAW – whether several discretionary decisions made by the Deputy Commissioner of Taxation not to defer the time by which assessed tax would be due and payable and not to defer recovery action should be set aside – whether such decisions are amenable to review under the Administrative Decisions (Judicial Review) Act 1977 (Cth)
Legislation:		Administrative Decisions (Judicial Review) Act 1977 (Cth), s 5 Income Tax Assessment Act 1936 (Cth), ss 8, 161, 166, 170, 175, 177 and 204 Judiciary Act 1903, s 39B Taxation Administration Act 1953 (Cth), ss 8AAG, 14ZU, 14ZW, 14ZZA, 14ZZM, 14ZZR, 255-1, 255-5 and 255-10
Cases cited:		Rawson Finances Pty Ltd v Deputy Commissioner of Taxation [2010] FCAFC 139 related Rawson Finances Pty Ltd v Deputy Commissioner of Taxation (No 2) [2010] FCA 780 related Rawson Finances Pty Ltd v Deputy Commissioner of Taxation (2010) 189 FCR 189 related Asiamet (No 1) Resources Pty Ltd v Commissioner of Taxation (2003) 126 FCR 304 cited Commissioner of Taxation (Cth) v Asiamet (No 1) Resources Pty Ltd (2004) 137 FCR 146 cited Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473 cited Elias v Commissioner of Taxation (2002) 123 FCR 499 followed Federal Commissioner of Taxation v Burness (As Trustee for the Property of Bottazzi, A Bankrupt) (2009) 77 ATR 61 followed Griffith University v Tang (2005) 221 CLR 99 cited
Date of hearing:	30 July 2010 and 2 September 2010
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	103
Counsel for the Applicants:	Ms RL Seiden, Ms S Kaur-Bains
Solicitor for the Applicants:	Argyle Lawyers
Counsel for the Respondent:	Mr GT Johnson SC
Solicitor for the Respondent:	ATO Legal Services Branch

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 532 of 2010

BETWEEN:	RAWSON FINANCES PTY LIMITED (ACN 078 272 956) Applicant
AND:	DEPUTY COMMISSIONER OF TAXATION Respondent

JUDGE:	FOSTER J
DATE OF ORDER:	31 OCTOBER 2011
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The proceeding be wholly dismissed.

2.The applicant pay the respondent’s costs of and incidental to the proceeding.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 592 of 2010

BETWEEN:	BCI FINANCES PTY LIMITED (ACN 055 988 531) Applicant
AND:	DEPUTY COMMISSIONER OF TAXATION Respondent

JUDGE:	FOSTER J
DATE OF ORDER:	31 OCTOBER 2011
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The proceeding be wholly dismissed.

2.The applicant pay the respondent’s costs of and incidental to the proceeding.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 698 of 2010

BETWEEN:	RAWSON FINANCES PTY LIMITED (ACN 078 272 956) Applicant
AND:	DEPUTY COMMISSIONER OF TAXATION Respondent

JUDGE:	FOSTER J
DATE OF ORDER:	31 OCTOBER 2011
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The Notice of Motion filed by the applicant on 16 June 2010 be dismissed.

2.The applicant pay the respondent’s costs of and incidental to that Notice of Motion. 

3.The proceeding be wholly dismissed.

4.The applicant pay the respondent’s costs of and incidental to the proceeding.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 781 of 2010

BETWEEN:	BCI FINANCES PTY LIMITED (ACN 055 988 531) Applicant
AND:	DEPUTY COMMISSIONER OF TAXATION Respondent

JUDGE:	FOSTER J
DATE OF ORDER:	31 OCTOBER 2011
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1.The proceeding be wholly dismissed.

2.The applicant pay the respondent’s costs of and incidental to the proceeding.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 532 of 2010

BETWEEN:	RAWSON FINANCES PTY LIMITED (ACN 078 272 956) Applicant
AND:	DEPUTY COMMISSIONER OF TAXATION Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 592 of 2010

BETWEEN:	BCI FINANCES PTY LIMITED (ACN 055 988 531) Applicant
AND:	DEPUTY COMMISSIONER OF TAXATION Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 698 of 2010

BETWEEN:	RAWSON FINANCES PTY LIMITED (ACN 078 272 956) Applicant
AND:	DEPUTY COMMISSIONER OF TAXATION Respondent

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 781 of 2010

BETWEEN:	BCI FINANCES PTY LIMITED (ACN 055 988 531) Applicant
AND:	DEPUTY COMMISSIONER OF TAXATION Respondent

JUDGE:	FOSTER J
DATE:	31 OCTOBER 2011
PLACE:	SYDNEY

REASONS FOR JUDGMENT

1. These Reasons for Judgment determine four sets of proceedings.  They are:

   (a)Rawson Finances Pty Limited (ACN 078 272 956) (Rawson) v Deputy Commissioner of Taxation (NSD 532 of 2010) (Rawson No 2);

   (b)Rawson v Deputy Commissioner of Taxation (NSD 698 of 2010) (Rawson No 3);

   (c)BCI Finances Pty Limited (ACN 055 988 531) (BCI) v Deputy Commissioner of Taxation (NSD 592 of 2010) (BCI No 1); and

   (d)BCI v Deputy Commissioner of Taxation (NSD 781 of 2010) (BCI No 2). 

2. Rawson and BCI are associated.  Each is owned and controlled by the Binetter family.

3. From at least May 2009, Rawson and BCI have been in dispute with the Deputy Commissioner of Taxation (NSW).  I shall refer to the person occupying that office from time to time as “the Commissioner”. 

4. In the case of each of Rawson and BCI, the Commissioner issued assessments and amended assessments of income tax in respect of the income tax years ended 30 June 1997 to 30 June 2008.  The Commissioner also imposed very substantial penalties and interest charges upon Rawson and BCI in respect of those assessments.

5. In September 2009, Rawson lodged objections to those assessments with the Commissioner.  In May 2010, the Commissioner disallowed those objections.  In June 2010, Rawson appealed to the Administrative Appeals Tribunal (the AAT) seeking to have its objections upheld.  As at the date of the hearing before me, the AAT had not determined those appeals. I will assume for the purposes of this judgment that those appeals remain unresolved.  There was no evidence before me as to whether BCI had also lodged objections to the assessments issued against it.  No doubt it did so.  However, at the time when the decisions challenged in BCI No 1 and BCI No 2 were made, those objections had not been lodged or dealt with. 

6. Since June 2009, both Rawson and BCI have, on more than one occasion, made requests of the Commissioner that he or she:

   (a)Defer recovery action in respect of the outstanding tax; and

   (b)Pursuant to s 255-10 of Schedule 1 (s 255-10) to the Taxation Administration Act 1953 (Cth) (the TAA), defer the time at which the outstanding tax is, or would become, due and payable.

7. In the present proceedings, Rawson and BCI seek judicial review of several decisions made by the Commissioner whereby the Commissioner refused to defer recovery action in respect of the outstanding tax and refused to defer the time for payment of that tax. 

8. Some of the challenged decisions are sought to be reviewed under s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ADJR Act) and by engaging s 39B of the Judiciary Act 1903 (Cth) (s 39B) while, in respect of others, only s 39B is relied upon.

9. All four proceedings were heard together.  The evidence in Rawson No 2 was evidence in Rawson No 3, and vice-versa.  The evidence in BCI No 1 was evidence in BCI No 2, and vice-versa.  However, the evidence in Rawson No 2 and in Rawson No 3 was not evidence in either BCI No 1 or BCI No 2. Nor was the evidence in BCI No 1 or BCI No 2 evidence in either of the Rawson proceedings. 

10. Rawson and BCI raised many grounds of review in respect of each challenged decision and supported those grounds with extensive documentary tenders, lengthy written submissions and detailed oral submissions.  The Commissioner also made lengthy written and oral submissions.  The parties assisted the Court by agreeing most of the relevant facts.

11. Some of the challenged decisions have been overtaken by later decisions.  That circumstance has meant that some decisions should not be reviewed, simply because they are not operative and have no ongoing significance in the dealings between the parties.  Where that has occurred, I propose to refuse relief on that ground and move on to deal with the later decisions.

    THE ASSESSMENT AND COLLECTION OF TAX

12. The obligation to file an income tax return is imposed upon citizens (taxpayers) by s 161 of the Income Tax Assessment Act 1936 (Cth) (the ITAA). From a taxpayer’s tax return and from other information in his or her possession, the Commissioner must make an assessment of the amount of taxable income of that taxpayer (s 166 of the ITAA). Subject to specified time limits, the Commissioner may amend a tax assessment (s 170(1) of the ITAA).

13. A taxpayer who is dissatisfied with an assessment of tax made by the Commissioner may object to that assessment and seek internal review of that assessment in the manner prescribed by Pt IVC of the TAA (Part IVC). Part IVC provides details as to how objections must be made (s 14ZU of the TAA) and specifies time limits within which objections may be made (s 14ZW of the TAA). If a taxpayer who has objected to an assessment and pursued internal review of that assessment is not satisfied with the result of that review, he or she has the right to appeal to the AAT or to this Court (at his or her election) (s 14ZZA of the TAA).

14. Section 255-1 and s 255-5 of Schedule 1 to the TAA provide:

    255-1   Meaning of tax related liability

    (1)A tax related liability is a pecuniary liability to the Commonwealth arising directly under a *taxation law (including a liability the amount of which is not yet due and payable).

    Note 1:See section 250-10 for an index of tax related liabilities.

    Note 2:A taxation law, or a provision of it, may be excluded from being applied to this Part. See section 265-65.

    (2)A civil penalty under Division 290 of this Schedule or Part 5 of the Tax Agent Services Act 2009 is not a tax related liability.

    255-5Recovering a tax related liability that is due and payable

    (1)An amount of a *tax related liability that is due and payable:

    (a)is a debt due to the Commonwealth; and

    (b)is payable to the Commissioner.

    (2)The Commissioner, a Second Commissioner or a Deputy Commissioner may sue in his or her official name in a court of competent jurisdiction to recover an amount of a *tax related liability that remains unpaid after it has become due and payable.

    Note:The tables in section 250-10 set out each provision that specifies when an amount of a tax related liability becomes due and payable. The Commissioner may vary that time under Subdivision 255-B. 

15. Section 14ZZM and s 14ZZR of the TAA provide:

    14ZZM  Pending review not to affect implementation of taxation decisions

    The fact that a review is pending in relation to a taxation decision does not in the meantime interfere with, or affect, the decision and any tax, additional tax or other amount may be recovered as if no review were pending.

    14ZZR  Pending appeal not to affect implementation of taxation decisions

    The fact that an appeal is pending in relation to a taxation decision does not in the meantime interfere with, or affect, the decision and any tax, additional tax or other amount may be recovered as if no appeal were pending.

16. The Commissioner has a duty to collect tax that has become due and payable.

17. Sections 175, 177 and 204 of the ITAA provide:

    175      Validity of assessment

    The validity of any assessment shall not be affected by reason that any of the provisions of this Act have not been complied with.

    177      Evidence

    (1)The production of a notice of assessment, or of a document under the hand of the Commissioner, a Second Commissioner, or a Deputy Commissioner, purporting to be a copy of a notice of assessment, shall be conclusive evidence of the due making of the assessment and, except in proceedings under Part IVC of the Taxation Administration Act 1953 on a review or appeal relating to the assessment, that the amount and all the particulars of the assessment are correct.

    (2)The production of a Gazette containing a notice purporting to be issued by the Commissioner shall be conclusive evidence that the notice was so issued.

    (3)The production of a document under the hand of the Commissioner, a Second Commissioner, or a Deputy Commissioner, purporting to be a copy of a document issued by either the Commissioner, a Second Commissioner, or a Deputy Commissioner, shall be conclusive evidence that the document was so issued.

    (4)The production of a document under the hand of the Commissioner, a Second Commissioner, or a Deputy Commissioner, purporting to be a copy of or extract from any return or notice of assessment shall be evidence of the matter therein set forth to the same extent as the original would be if it were produced.

    (5)To avoid doubt, subsection (4) applies to a copy or an extract of a document that was given to the Commissioner on a data processing device or by way of electronic transmission unless the taxpayer can show that the taxpayer did not authorise the document.

    204      When tax payable

    (1) Subject to the provisions of this Part, the tax payable by a taxpayer other than a full self-assessment taxpayer for a year of income becomes due and payable:

    (a) if the taxpayer’s return of income is lodged on or before the due date for lodgement on the later of

    (i) 21 days after the due date for lodgment of that return specified in the Gazette under section 161 for the year of income; or

    (ii) 21 days after a notice of assessment is given to the taxpayer; or

    (b) in any other case—21 days after that due date for lodgment.

    Note 1: The Commissioner may defer the time at which the tax is. or would become, due and payable: see section 255-10 in Schedule 1 to the Taxation Administration Act 1953.

    Note 2The Commissioner may defer the due date for lodgment: see section 388-55 in that Schedule.

    (IAA) To avoid doubt, the reference in subparagraph (I)(a)(ii) to an assessment does not include a reference to an amended assessment,

    (1A) Subject to the provisions of this Part, the tax payable by a full self-assessment taxpayer for a year of income becomes due and payable as follows:

    (a) if the taxpayer’s year of income ends on 30 June—on 1 December of the following year of income or on such later date as the Commissioner allows by notice published in the Gazette;

    (b)if the taxpayer’s year of income ends on a day other than 30 June—on the first day of the sixth month of the following year of income, or on such later date as the Commissioner allows by notice published in the Gazette.

    (2) An amount of tax that a taxpayer is liable to pay because the Commissioner amends the taxpayer’s assessment is due and payable on the 21st day after the day on which the Commissioner gives the taxpayer notice of the amended assessment.

    (2A)An amount of shortfall interest charge that a taxpayer is liable to pay is due and payable on the 21st day after the day on which the Commissioner gives the taxpayer notice of the amount of the charge.

    (3) If any of the tax or shortfall interest charge which a person is liable to pay remains unpaid after the time by which the tax or charge is due to be paid, the person is liable to pay the general interest charge on the unpaid amount for each day in the period that:

    (a) started at the beginning of the day by which the tax or shortfall interest charge was due to be paid; and

    (b) finishes at the end of the last day on which, at the end of the day, any of the following remains unpaid:

    (i) the tax or shortfall interest charge;

    (ii) general interest charge on any of the tax or shortfall interest charge.

    Note 1:The general interest charge is worked out under Part IIA of the Taxation Administration Act 1953, and the shortfall interest charge is worked out under Division 290 in Schedule 1 to that Act.

    Note 2:For provisions about collection and recovery of income tax and related amounts, see Part 4-15 in Schedule 1 to the Taxation Administration Act 1953.

18. Section 255-10 of the TAA provides:

    255-10           To defer the payment time

    Deferrals for particular taxpayers

    (1)The Commissioner may, having regard to the circumstances of your particular case, defer the time at which an amount of a *tax related liability is, or would become, due and payable by you (whether or not the liability has already arisen). If the Commissioner does so, that time is varied accordingly.

    Note:General interest charge or any other relevant penalty, if applicable for any unpaid amount of the liability, will begin to accrue from the time as varied. See, for example, paragraph 5 15(a) of the Income Tax Assessment Act 1997.

    (2)The Commissioner must do so by written notice given to you.

    Deferrals for classes of taxpayers

    (2A)The Commissioner, having regard to the circumstances of the case, may, by notice published on the Australian Taxation Office website, defer the time at which amounts of *tax related liabilities are, or would become, due and payable by a class of taxpayers (whether or not the liabilities have already arisen).

    (2B)     If the Commissioner does so, that time is varied accordingly.

    Note:General interest charge and any other relevant penalties, if applicable for any unpaid amounts of the liabilities, will begin to accrue from the time as varied. See, for example, paragraph 5 15(a) of the Income Tax Assessment Act 1997.

    (2C)A notice published under subsection (2A) is not a legislative instrument.

    Deferral does not affect time for giving form

    (3)A deferral under this section does not defer the time for giving an *approved form to the Commissioner.

    Note:Section 388-55 allows the Commissioner to defer the time for giving an approved form.

19. In Rawson Finances Pty Ltd v Deputy Commissioner of Taxation (2010) 189 FCR 189 (Rawson No 1), at [26]–[28], Yates J said:

    26The Commissioner must pursue the recovery of the tax-related liabilities that are due as debts: Piccinin v Deputy Commissioner of Taxation [2002] FCAFC 282 at [29]; Golden City Car and Truck Centre Pty Ltd  v Deputy Commissioner of Taxation (1999) 56 ALD 177; [1999] FCA 29 at [25]; s 47 Financial Management and Accountability Act 1997 (Cth). Although, in cases of serious hardship affecting certain taxpayers (not relevantly applicable to the applicant in this case), the Commissioner may release the taxpayer, in whole or in part, from a liability: see s 340-5 of Schedule 1 to the TAA.

    27Where legal proceedings have been commenced, the provisions of ss 14ZZM and 14ZZR of the TAA do not deprive a court of the jurisdiction to grant a stay. In Deputy Commissioner of Taxation v Mackey (1982) 45 ALR 284 Hutley JA (at 289) referred to the discretion to grant a stay in such circumstances as an “open-ended”, albeit special, discretion. However, as the reasons for judgment in that case reveal, in considering whether a stay should be granted, great weight must be attached to the policy inherent in those provisions: see at 286, 289 and 290. Those provisions combined with ss 175 and 177 of the ITAA mean that, as a general rule, it will be extremely difficult to resist judgment being given against the taxpayer in recovery proceedings, even though an objection under Part IVC of the TAA is pending. As was stated in Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473 at [52], where a statute creates a debt, special provisions may make inapplicable pleas that might otherwise tender an issue for trial of an action to recover that debt: see also at [40]-[50] and the cases there cited, for the significance of taxation legislation in this regard.

    28In addition to commencing legal proceedings pursuant to s 255-5(2) of the TAA, the Commissioner may for the purpose of recovering a tax-related liability that is due and owing (a) collect amounts from third parties who owe or may later owe money to the tax debtor: s 260-5 of Schedule 1 to the TAA; (b) exercise a discretion to defer the payment time of a tax-related liability: s 255-10 of Schedule 1 to the TAA; and/or (c) permit payments by instalments: s 255-15 of Schedule 1 to the TAA.

1. I agree with his Honour’s observations.

2. In Rawson No 1, his Honour dealt with an attempt by Rawson to secure judicial review of an earlier decision to commence legal action to recover the tax, penalties and interest imposed upon Rawson which were said to be due and payable pursuant to the same assessments and amended assessments as are at the heart of the present proceedings involving Rawson (viz the decision communicated by letter dated 21 August 2009 and repeated by letter dated 6 November 2009).

3. His Honour held that neither of the challenged decisions in Rawson No 1 was reviewable under the ADJR Act. At [48]–[49], when addressing Rawson’s contention that the challenged decisions possessed the characteristics of an “intermediate decision”, his Honour said:

   48Section 255-5 of Schedule 1 to the TAA does not possess, as a matter of structure or substance, the tiered decision-making process embodied in s 88(2) of the Broadcasting Act. A decision pursuant to s 255-5(2) to sue (or to refuse to refrain from suing) to recover an amount of an unpaid tax-related liability cannot reasonably be seen to be a decision for which the TAA provides as an essential preliminary or as a condition precedent to the making of another decision. In the context of the present matter, the applicant did not seek to identify the other decision to which either of the challenged decisions was said to be antecedent. In my view the challenged decisions are devoid of the characteristics of an intermediate decision to which Mason CJ referred in Bond. 

   49Moreover, with respect to the refusal decision, s 255-5(2) does not provide for or require some separate and preliminary finding or ruling to be made dealing with the question of whether or not to refrain from making a decision to sue. Should the decision-maker come to consider whether to refrain from commencing legal proceedings as part of the recovery process, that would only be a matter bearing upon, but not an essential preliminary or condition precedent to, the exercise of the power to sue. Indeed, in this respect, a decision to refuse to refrain from suing, if made, seems to be inseparable from, if not identical to, a decision to sue. This was illustrated by the applicant’s submission that the respondent’s letter of 6 November 2009 contained the relevant decisions and involved the “re-making” of the recovery decision evidenced by the respondent’s letter of 21 August 2009.

4. At [51]–[52], his Honour explained why the challenged decisions did not have any practical legal effect.  At [54], his Honour said:

   54In any event, in my view, considerations of the kind raised by the applicant do not lead to the conclusion that the challenged decisions are reviewable decisions under the AD(JR) Act. In the present case the applicant’s liability to the Commonwealth arose upon the making of the assessments. The challenged decisions made under s 255-5 did not, and could not, alter or affect that liability. Sections 175 and 177(1) of the ITAA had effect as soon as the assessments were made, prior to any decision to sue (or to refuse to refrain from suing) or to take any other step to recover the amount of that liability. The decision to sue (or to refuse to refrain from suing) to recover the amount of the liability did not alter the pre-existing effect of those provisions in relation to that liability; nor could either decision alter the future effect of those provisions in relation to that liability. Similarly, ss 14ZZM and 14ZZR of the TAA had effect as soon as the assessments were made. The decision to sue (or to refuse to refrain from suing) did not alter and could not alter the effect of those provisions in relation to the liability. The decision to sue (or to refuse to refrain from suing) did no more than initiate the process of recovery which, at all times, the Commissioner was obliged to undertake should the debt representing that liability remain unpaid after it had become due and payable. The commencement of legal proceedings would expose the applicant to the prospect of substantive determinations being made in those proceedings by the separate exercise of judicial power. But the challenged decisions themselves did not confer, alter or otherwise affect legal rights or obligations respecting the applicant. They were not substantive determinations of any kind or in any sense.

5. After carefully analysing the relevant authorities, his Honour held that the weight of authority supported his conclusion that a decision taken by the Commissioner to commence proceedings to recover assessed income tax is not reviewable under the ADJR Act. I agree with his Honour.

6. An application for leave to appeal from his Honour’s decision was refused (Rawson Finances Pty Ltd v Deputy Commissioner of Taxation [2010] FCAFC 139). In refusing leave, the Full Court specifically approved the observations made by Yates J at [49] of his Reasons. After citing Griffith University v Tang (2005) 221 CLR 99 at [89], the Full Court said, at [8]–[9]:

   8In our view, neither of the Commissioner’s decisions which are attacked in the present case affected existing rights or obligations of Rawson Finances, whether arising under the Taxation Administration Act 1953 (Cth) or some other statutory provision or under the general law. Nor did those decisions of the Commissioner effect, in the sense of creating them, any new rights or obligations of Rawson Finances. All that a favourable decision could have done was to have created a circumstance, as distinct from a right, affecting an existing liability of Rawson Finances which arose on the making of the relevant assessment.

   9In these circumstances, we have concluded that the reasons of the learned primary Judge were not attended with any doubt and certainly not with any sufficient doubt to warrant reconsideration by this Full Court.  As the first limb of the test propounded in Décor Corporation Pty Ltd v Dart Industries Inc (supra) has not been satisfied, it follows that leave to appeal must be refused.  The order of the Court accordingly is that leave to appeal is refused with costs. 

7. In Rawson No 1, Yates J gave Rawson leave to amend its application to include s 39B relief in respect of the Commissioner’s refusal to defer recovery action. Rawson did not avail itself of that leave. Nor did it rely on s 39B in Rawson No 2.

   THE FIRST DECISION—THE COMMISSIONER’S REFUSAL OF RAWSON’S REQUEST FOR DEFERRAL OF THE TIME FOR PAYMENT OF TAX-RELATED LIABILITIES OR DEFERRAL OF RECOVERY OF THOSE LIABILITIES

   The Facts

8. This decision was communicated by the Commissioner to Rawson by letter dated 17 March 2010 sent to Argyle Lawyers (Argyle), who have represented Rawson and BCI throughout the relevant period.  That letter was in the following terms:

   RAWSON FINANCES PTY LTD

   REQUEST FOR DEFERRAL OF TIME FOR PAYMENT OR RECOVERY OF DISPUTED TAX RELATED LIABILITIES

   We refer to your facsimile letter dated 27 November 2009 (“letter”) requesting, on behalf of your client, Rawson Finances Pty Ltd (“Rawson”), deferral of the time for payment of certain tax-related liabilities, pursuant to s.255-10 of Schedule 1 of the Taxation Administration Act 1953 (“TAA”) or, in the alternative, deferral of recovery of the tax-related liabilities.

   We take this opportunity to apologise for the delay responding to your letter.  The request for deferral of the time for payment of the tax-related liabilities is refused.

   Should you wish to discuss any of the matters raised above, do not hesitate to contact me. 

9. The first challenged decision came after an exchange of correspondence between the Commissioner and Argyle which spanned the 10 month period between May 2009 and March 2010.

10. On 20 May 2009, the Commissioner issued a Position Paper to Rawson.

11. On 22 June 2009, Argyle provided a bundle of documents to the Commissioner.  Those documents related to the period from October 2000 to June 2008.  According to Argyle, the material provided to the Commissioner on 22 June 2009 was only part of the material which Rawson proposed to provide in answer to the issues raised in the Commissioner’s Position Paper.

12. On 15 July 2009, 16 July 2009 and on 24 July 2009, by Notices of Assessment issued on one or other of those days, the Commissioner issued Income Tax Assessments to Rawson in respect of the income tax years ended 30 June 1997, 30 June 1998, 30 June 1999, 30 June 2000, 30 June 2001, 30 June 2002, 30 June 2003 and 30 June 2004.  The assessments for the years ended 30 June 1997 to 30 June 2000 comprised:

    (a)An amount for income tax;

    (b)An amount by way of penalty (Additional Tax for Understatement); and

    (c)An amount for interest.

13. The assessments for the years ended 30 June 2001 to 30 June 2004 did not include any amounts by way of penalty or for interest in respect of those years.

14. The total amount assessed in respect of the years ended 30 June 1997 to 30 June 2004 was close to $8.2 million.

15. On 20 July 2009, Notices of Amended Assessment were issued by the Commissioner to Rawson in respect of the income tax years ended 30 June 2005, 30 June 2006, 30 June 2007 and 30 June 2008.  Each of those assessments comprised an amount for income tax and an amount by way of shortfall interest charge. 

16. The total additional amount required to be paid in respect of the years ended 30 June 2005 to 30 June 2008 was $238,233.13.

17. On 27 July 2009 and 31 July 2009, the Commissioner issued Notices of Assessment and Liability to Pay Penalty in respect of the income tax years ended 30 June 2001, 30 June 2002, 30 June 2003, 30 June 2004, 30 June 2005, 30 June 2006, 3 June 2007 and 30 June 2008.  The total amount levied pursuant to these assessments was $348,751.15.

18. By letter dated 21 August 2009, from the Commissioner to Rawson (care of Argyle), the Commissioner noted Rawson’s intention to lodge an objection against each of the above assessments and advised Rawson that s 204 of the ITAA provides that any assessed income tax is due for payment on the date specified in the Notice of Assessment. The Commissioner went on to state in that letter that s 255-5 of the TAA enabled the Commissioner to recover amounts so assessed in a court of competent jurisdiction as a debt due to the Commonwealth. In the letter, the Commissioner proceeded to outline, in general terms, the types of arrangement that the Commissioner would find acceptable in Rawson’s case.

19. As at 21 August 2009, almost all of the assessed tax had become due and payable.

20. On 15, 18, 21 and 28 September 2009, Rawson lodged with the Commissioner objections against all of the Notices of Assessment for the years ended 30 June 1997 to 30 June 2008. 

21. By letter dated 7 October 2009 from Argyle to the Commissioner, Argyle, on behalf of Rawson, requested remission of all General Interest Charges and shortfall interest charges.  That request was refused on 14 July 2010, after the making of the decisions challenged in the proceedings before me. 

22. By a second letter dated 7 October 2009, from Argyle to the Commissioner, Argyle, on behalf of Rawson, requested the Commissioner to agree to defer recovery action in respect of the tax outstanding under the assessments. Argyle asserted that Rawson’s liability to pay the tax was disputed.  Argyle noted the following matters:

    (a)Rawson had lodged comprehensive objections;

    (b)Rawson had co-operated with the Commissioner during the investigation phase; and

    (c)Rawson had encountered significant difficulties in providing all necessary material to the Commissioner.  There had been a fire at the premises where its records were stored which destroyed those records; the former principal of Rawson (Erwin Binetter) had died in August 2009; and, in any event, the transactions which led to the assessments took place 11 years before.

23. In the letter, Argyle said:

    On the basis of the above, [Rawson] hereby requests that the Commissioner defer recovery action until 14 days after the determination of [Rawson’s] Objections.  It is further submitted that this request not be determined without considering the matters referred to in the Objections and supporting documentation to those Objections provided by [Rawson].

    In the event that this request is denied, we request a statement of reasons in accordance with s 13 of the Administrative Decision (Judicial Review) Act, 1977 and 14 days written notice before the commencement of legal action or garnishee proceedings. 

24. By letter dated 13 October 2009, the Commissioner sought further information concerning the loan from Mercantile Discount Bank in Israel to Rawson and the on-loans of the same funds made by Rawson to related entities.  The Commissioner requested that the information which she had sought be provided by 9 November 2009.

25. By letter dated 6 November 2009, the Commissioner refused Rawson’s request that the Commissioner agree to defer recovery action until 14 days after determination of the Objections.

26. At the request of Rawson, the Commissioner twice extended the time by which Rawson was to provide the information requested in her letter dated 13 October 2009.  The second extension expired on 5 February 2010.  On that day, Argyle provided some documents in answer to the Commissioner’s request.  Argyle also requested that the Commissioner refrain from making a decision on the Objections until after 22 February 2010.  Additional information concerning Rawson’s dealings with the Mercantile Discount Bank was provided by Argyle to the Commissioner on 24 February 2010.

27. By letter dated 27 November 2009 from Argyle, on behalf of Rawson, to the Commissioner, Argyle said:

    We note that the Commissioner has considered the requests solely under section 255‑5 of the TAA (see paragraph 3 of page 2 of the letter of 6 November 2009) in relation to legal proceedings and that he did not consider our client’s request so far as it concerned non-curial proceedings pursuant to section 8 of the Income Tax Assessment Act 1936.

    The Taxpayer hereby reiterates the Requests and asks that the Commissioner fully consider the Requests (that is, that he now consider deferring any non-curial recovery action in respect of the alleged debt) and confirm in writing that until this aspect of the Requests has been considered and the decision communicated to the Taxpayer, no non-curial proceedings will be taken.

    In relation to legal proceedings, we note the Commissioner’s decision under section 255-5 not to defer such proceedings. Our client will file proceedings pursuant to the Administrative Decisions (Judicial Review) Act 1977 (“the ADJR proceedings”) on Monday 30 November 2009. A copy of the application is attached. Please note that interlocutory orders will be sought that any legal proceedings concerning the recovery of the alleged debt be stayed pending the outcome of the ADJR proceedings. We seek your confirmation that no legal proceedings will be commenced pending the outcome of the ADJR proceedings.

    Furthermore, the Taxpayer hereby requests that the Commissioner exercise her discretion pursuant to section 255-10 of the TAA to defer the time at which the amounts alleged to be owing as notified by the Assessments defined in our letter of 7 October 2009, become due and payable until 14 days after the determination of the objections for the following reasons:

    1.The Taxpayer disputes the debt.

    2.There are outstanding objections to the Assessments.

    3.You have sought further information from the taxpayer to take into account when considering the objections and have given the taxpayer until 15 January 2010 to provide the said information.

    4.The further information sought was relevant and if provided could result in your acceptance of the taxpayer’s claims that loans for deductible purposes had been provided to it from Israeli banks.  If this was accepted then the amounts in the Assessments would be incorrect and be reduced to nil.

    5.Accordingly there is a bona fide dispute concerning the correctness of the Assessments.

    6.In the circumstances outlined in the Applicant’s letter of 7 October 2009, the Applicant had co-operated and there is no risk to the revenue.

    7.The taxpayer repeats and relies upon the matters referred to in its objections and paragraphs 1-3 of the letter dated 7 October in support of this request.

    Please contact us if you have any questions in respect of the above. 

28. As mentioned at [27] above, on 17 March 2010, the Commissioner refused the requests made by Argyle, on behalf of Rawson, in Argyle’s letter dated 27 November 2009.

29. By letter dated 19 April 2010, the Commissioner provided reasons for her decision set out in her letter dated 17 March 2010.  In her letter of 19 April 2010, the Commissioner referred in detail to each of the assessments and then noted that, as at 17 March 2010, Rawson was indebted to the Commonwealth in the amount of $8,755,838.31.  In that letter, the Commissioner:

    (a)Expressly stated that, before making her decision, she had considered all of the correspondence sent to the ATO on behalf of Rawson since 27 November 2009 as well as Argyle’s earlier letter dated 7 October 2009 in which a deferral of recovery action or time for payment had been sought;

    (b)Went on to state:

    (viii)I was aware of the ATO policy for the collection of taxation debts at the time of my decision but I approached my decision upon the basis that it was for me to make the correct and preferable decision having regard to the circumstances of the taxpayer’s particular case.

    (ix)I also made the findings of fact that occur in section C of this letter.

    B.Evidence of other Material on which these findings were based:

    a.The Australian Taxation Office Policy for the Collection of Taxation Debts and in particular Chapter 9

    b.Income tax returns lodged by the taxpayer for the years ended 30 June 1997 to 30 June 2008

    c.The above mentioned Notice(s) of assessment

    d.The taxpayer’s letters sent to the ATO since 27^th November 2009 to the date of this letter, as well as the matters raised in the taxpayer’s letter dated 27^th November 2009

    e.The taxpayer has lodged notice(s) of objection in respect of the years of income ended 30 June 1997 to 30 June 2008 on 28 December 2009 and the present position in relation to these at the time of my decision was that they are still to be determined.

    C.Reasons for Decision:

    a.The Commissioner usually expects that all debts, including those subject to dispute, will be paid on time. The Legislative framework, which underpins the Commissioner’s policy in the collection and recovery of disputed debt, is designed to ensure that taxation debts are due and payable notwithstanding that the underlying liability may be disputed by taxpayers (see for example, sections 14ZZM and 14ZZR of the Taxation Administration Act 1953). Nonetheless, there is a wide discretion under section 255‑10 of schedule 1 of the TAA to defer the time when an amount of tax-related liability is, or would become, due and payable by the taxpayer (whether or not the liability has already arisen) and the section provides that that discretion is to be exercised having regard to the circumstances of the taxpayer’s particular case. Elias –v- Commissioner of Taxation (2002) 123 FCR 499 indicates the breadth of that discretion.

    b.One critical effect of granting a deferral would be that the general interest charge (“GIC”) would not be payable, even if the Commissioner were to be ultimately successful in any proceedings under Part IVC of the TAA. For example in the event that the Commissioner were to be unsuccessful in proceedings under Part IVC of the TAA then the assessment(s) would be set aside and any GIC payable on those assessment would be automatically revoked; i.e. if the taxpayer wins there is no GIC. However, if the Commissioner were ultimately to be successful there would be two possibilities. The first would be that GIC would ordinarily be payable. The second would be that, if a deferral were granted, no GIC would be payable. After careful consideration, it is my view that your client should not be placed in any higher position than the ordinary taxpayer, that is, if your client’s objections are not upheld in any process under Part IVC then GIC should accrue from the relevant due date(s). I am not satisfied that your client’s circumstances warrant the use of the Commissioner’s discretion under section 255‑10, Schedule 1 of the TAA. In so deciding, I had regard to what was said in your letters to the ATO referred to above.

    c.I consider that the impact of the assessments on the financial position of the applicant and his capacity to meet his tax liability as required is an important consideration in making a decision under section 255‑10, Schedule 1 of the TAA. You have not provided me with additional financial information in support of your deferment application. It is obvious that payment of the taxation liability on the date that is presently due and payable might be less advantageous to the company than payment of such amount at a later date, but you have not put anything that persuades me that there would be any particular detriment to your client beyond that obvious effect, or that it would be correct and preferable to grant your request. The financial information that I did have available in relation to the company was considered. That information included the income tax returns lodged by Rawson Finances Pty Limited but there is insufficient information and evidence to satisfy me the impact of the assessments on the applicant or its current and/or future financial capacity to meet its tax obligations and other liabilities would be such as to make it correct, and preferable to grant the deferment sought.

    d.Put simply, I am not satisfied that the individual circumstances of this taxpayer’s case make it correct and preferable to grant the deferment sought.  Anything that you have put, including the fact that your client has outstanding objections is outweighed in my mind by the desirability of GIC accruing from the date upon which the relevant tax-related liabilities are already due and payable.

1. The parties agreed, for the purposes of the proceedings before me, that the Commissioner did not take into account the following documents and matters when making her 17 March 2010 decision:

   (a)Rawson’s interest remission request made on 7 October 2009;

   (b)The fact that the Commissioner had not dealt with Rawson’s interest remission request by the time of the Commissioner’s 17 March 2010 s 255‑10 decision;

   (c)The folder of documents provided to the Commissioner by Argyle under cover of its letter dated 22 June 2009;

   (d)Letters from the Mercantile Discount Bank provided by Argyle to the Commissioner concerning the loan apparently made by that bank to Rawson; and

   (e)The Statutory Declarations of an officer of the Mercantile Discount Bank also provided by Argyle to the Commissioner.

2. The parties also agreed, for the purposes of these proceedings, that the Commissioner did take into account the following documents in making her 17 March 2010 decision:

   (a)ATO Receivables Policy, Part B, Chapter 28 (Volume 4, Tab 29).

   (b)STAC – Companies & Super Funds Years 1997 to 2008 (Re-write) (Volume 4, Tab 30).

   (c)STAC – Companies & Super Funds Years 1997 to 2008 (Original) (Volume 4, Tab 31).

   (d)Report of Audit dated 27 August 2009 (Volume 4, Tab 32).

   (e)Notices of Objections Against Notice of Assessment and Liability to Pay Penalty for the years ending 30 June 2001, 2002, 2003, 2004, 2005, 2006, 2007 and 2008 lodged on behalf of Rawson dated 28 September 2009 (Volume 4, Tab 33).

   (f)Notices of Objections Against Notice of Assessments for the years ending 30 June 2001, 2005, 2006, 2007 and 2008 lodged on behalf of Rawson dated 21 September 2009 (Volume 4, Tab 34).

   (g)Notices of Objections Against Notice of Assessments for the years ending 30 June 2002, 2003 and 2004 lodged on behalf of Rawson dated 18 September 2009 (Volume 4, Tab 35).

   (h)Notices of Objections Against Notice of Assessments for the years ending 30 June 1997, 1998, 1999 and 2000 lodged on behalf of Rawson dated 15 September 2009 (Volume 4, Tab 36). 

   (i)Notice of Assessments for the years ending 30 June 1997 to 2004 issued 15 and 16 July 2009; Notices of Amended Assessments for years ending 30 June 2005 to 2008 issued on 20 July 2009; Notices of Assessment and Liability to Pay Penalty for years ending 30 June 2001 to 2008 issued on 27 and 31 July 2009 (Volume 4, Tab 37).

   (j)Australian Taxation Office Statement of accounts for period 1 July 2000 to 30 June 2010 (Volume 4, Tab 38).

   (k)Facsimile dated 14 February 2007 from Rawson to the Commissioner confirming the debt owed by Rawson is not confirmed yet and therefore legal recovery action is not appropriate (Volume 4, Tab 39).

   (l)Facsimile dated 15 February 2007 from Rawson to the Commissioner in relation to the inappropriate issuing of a Notice of intended Legal Action (Volume 4, Tab 40).

   (m)Facsimile dated 16 February 2007 from Rawson to the Commissioner regarding the offset of the credit of a related entity to the liability of Rawson (Volume 4, Tab 41).

   (n)Facsimile dated 21 February 2007 from Rawson to the Commissioner in relation to the withdrawal of the Notice of intended Legal Action (Volume 4, Tab 42).

   (o)Final Notice to Lodge Income Tax Returns in respect of 2007 and 2008 income tax years issued to Rawson on 10 December 2008 (Volume 4, Tab 43).

   (p)Letter dated 21 August 2009 from the Commissioner to Rawson containing the Commissioner’s Reasons for Decision in relation to recovering disputed tax liability (Volume 4, Tab 44).

   (q)Notices of Objections Against Notice of Assessments for the year ending 30 June 1997 lodged on behalf of Rawson on 15 September 2009 (Volume 4, Tab 45).

   (r)Letter dated 7 October 2009 from Rawson to the Commissioner requesting the deferral of recovery action (Volume 4, Tab 46).

   (s)Letter dated 27 October 2009 from Rawson to the Commissioner reiterating Rawson’s request for a deferral of recovery action until the determination of the objections (Volume 4, Tab 47). 

   (t)Letter dated 6 November 2009 from the Commissioner to Rawson containing Reasons for Decision in relation to deferral of recovery action (Volume 4, Tab 48).

   (u)Letter dated 20 November 2009 from Rawson to the Commissioner confirming extension of time to respond to letter dated 6 November 2009 (Volume 4, Tab 49).

   (v)Letter dated 19 January 2010 from the Commissioner to Rawson confirming request for an extension of time to provide documentation as requested in letter dated 13 October 2009 has been approved (Volume 4, Tab 50).

   (w)ATO Receivables Policy, Part B, Chapter 9 (Volume 7, Tab 65).

   (x)Letter dated 27 November 2009 from Rawson to the Commissioner reiterating request to defer recovery action and requesting for the deferral of due date for payment (Volume 7, Tab 66).

   (y)Letter dated 30 November 2009 from Rawson to the Commissioner enclosing Application for an order to review in proceedings 1366 of 2009 (Rawson No 1) (Volume 7, Tab 67).

   (z)Letter dated 7 October 2009 from Rawson to the Commissioner requesting the deferral of recovery action (Volume 7, Tab 68).

   (aa)Letter dated 10 March 2010 from the Commissioner to Rawson reiterating refusal to defer recovery action and reasons for refusal to provide Statement of Reasons for decision (Volume 7, Tab 69).

   (bb)Letter dated 21 August 2009 from the Commissioner to Rawson containing the Commissioner’s Reasons for Decision in relation to recovering disputed tax liability (Volume 7, Tab 70).

   (cc)Letter dated 15 March 2010 from Rawson to the Commissioner reiterating request to defer due date of payment (Volume 7, Tab 71). 

   The references in bold in brackets in respect of each of the above documents are references to specific volumes comprising Exhibits A1 to A9.

   Consideration

3. Review is sought of the Commissioner’s decision notified by her letter dated 17 March 2010. That was a decision whereby the Commissioner declined to exercise the discretion reposed in her by s 255‑10 in respect of the tax, penalties and interest assessed against Rawson in July 2009.

4. Counsel for Rawson addressed Rawson’s challenge to this decision at considerable length.  Counsel for the Commissioner submitted that Rawson’s challenge to this decision was “futile”.  He argued that the extension of time which Rawson had sought in its letter dated 27 November 2009 was an extension of the time for payment “… until 14 days after the determination of Rawson’s objections”.  Those objections were disallowed on 27 May 2010.  No action to recover the tax had been taken in the meantime.  The Commissioner contended that reviewing the first decision would be a pointless exercise. 

5. In Rawson No 2, Rawson confines its challenge to the Commissioner’s s 255–10 decision made on 17 March 2010. In Rawson No 1, Yates J decided the fate of Rawson’s challenge to the Commissioner’s refusal to accede to Rawson’s request for a deferral of recovery action made in Argyle’s letter dated 7 October 2009.  That matter was thereafter closed to Rawson. 

6. Counsel for Rawson submitted that the relief claimed in Rawson No 2 had utility because it affected the quantum of Rawson’s liability for interest.

7. In its letter dated 8 June 2010 to the Commissioner, Argyle acknowledged that Rawson’s previous request for a deferral of the time for payment (made in its letter dated 27 November 2009) would “expire” on or around 15 June 2010.  Against that background, Argyle requested the Commissioner to defer the time for payment of the outstanding tax for an even longer period than had previously been requested.  Through Argyle, Rawson made a “fresh” application for an extension of the time for payment.  As a matter of obvious logic, had the Commissioner acceded to this request, the time for payment would have been extended well beyond the extension which Rawson had initially sought in Argyle’s letter dated 27 November 2009.  In the end, the additional extension was refused. But, should the Court overturn the Commissioner’s later refusal, the matter would fall to be reconsidered.  The discretion to be exercised would comprehensively encompass all considerations relevant to the earlier request for an extension and much more.

8. In my view, there is no need to give further consideration to Rawson’s detailed arguments in support of the relief which it claims in Rawson No 2.  Those arguments can be dealt with in relation to Rawson No 3.  The impact of these decisions in relation to the imposition of interest can also be considered in relation to Rawson No 3. 

9. This reasoning is supported by the reasoning of Yates J in his Honour’s judgment in Rawson Finances Pty Ltd v Deputy Commissioner of Taxation (No 2) [2010] FCA 780. In that case, his Honour was asked to renew the leave to amend to raise s 39B in Rawson No 1 which his Honour had previously given but which Rawson had failed to exploit.  His Honour did not accede to that application.  Delay was the principal reason for refusing that relief.  However, his Honour also said that the claim would be futile because the earlier refusal to defer recovery had been overtaken by the later refusal on 22 June 2010.

10. For these reasons, Rawson’s challenges to the first decision must all fail.  Rawson No 2 must be dismissed with costs.  There will be orders accordingly. 

    THE SECOND, THIRD AND FOURTH DECISIONS—THE COMMISSIONER’S REFUSAL OF RAWSON’S SUBSEQUENT REQUEST FOR DEFERRAL OF THE TIME FOR PAYMENT OF TAX-RELATED LIABILITIES AND FOR DEFERRAL OF RECOVERY ACTION AND HIS DECISION TO ISSUE A CREDITOR’S STATUTORY DEMAND (PROCEEDING NSD 698 OF 2010)

    The Facts

11. On 27 May 2010, the Commissioner completed the internal review of the objections lodged by Rawson and determined that the original decision to issue the assessments was correct.  The Commissioner disallowed all of the objections.

12. In her letter dated 27 May 2010, by which she notified this decision to Rawson, the Commissioner said:

    You need to pay any amounts owing on the notices of assessment in full within 14 days of the date that this notice is served on you, unless you are formally disputing this decision.

13. A detailed statement of reasons accompanied the Commissioner’s letter dated 27 May 2010.  Those reasons made clear that the Commissioner had decided not to remit any of the additional tax or administrative penalties imposed upon Rawson and also not to remit any part of the general interest charge or shortfall interest charge imposed upon Rawson. 

14. On 7 June 2010, Argyle, on behalf of Rawson, applied again to the Commissioner for the deferral of debt recovery action, both curial and non-curial. 

15. By letter dated 8 June 2010, from Argyle, on behalf of Rawson, to the Commissioner, Argyle made a further application for the deferral of the due date for payment of the assessed tax.  In that letter, Argyle said that Rawson intended to appeal to the AAT against the disallowance of Rawson’s objections.  Argyle requested that the Commissioner defer the due date for payment until 14 days after the appeals to the AAT have been finally determined.  Argyle requested a statement of reasons, in the event that its request was denied.

16. On 10 June 2010, the Commissioner informed Rawson that she proposed to serve a creditor’s statutory demand in respect of the outstanding tax after the expiration of 48 hours.

17. Appeals to the AAT were filed by Rawson on 11 June 2010.

18. By letter dated 22 June 2010, the Commissioner communicated to Argyle, on behalf of Rawson, his decision to refuse to defer the time at which the tax was due and payable.

19. In a second letter dated 22 June 2010, the Commissioner communicated his refusal of Rawson’s request that he defer recovery action in respect of the outstanding tax. In that letter, he also pointed out that this refusal was not reviewable under the ADJR Act. He declined to provide reasons for his decision.

20. The parties agreed, for the purposes of the proceedings before me, that the Commissioner did not take into account the following documents and matters when making her 22 June 2010 decisions: 

    (a)Rawson’s interest remission request made on 7 October 2009;

    (b)The fact that the Commissioner had not dealt with Rawson’s interest remission request by the time of the Commissioner’s 17 March 2010 s 255‑10 decision;

    (c)The folder of documents provided to the Commissioner by Argyle under cover of its letter dated 22 June 2009;

    (d)Letters from the Mercantile Discount Bank provided by Argyle to the Commissioner concerning the loan apparently made by that bank to Rawson; and

    (e)The Statutory Declarations of an officer of the Mercantile Discount Bank also provided by Argyle to the Commissioner.

21. The parties also agreed that, in making her 22 June 2010 decisions, the Commissioner took into account the same documents as she had taken into account in making her 17 March 2010 decisions, as well as relevant subsequent correspondence.  There were slight differences between the body of material taken into account in respect of the decision not to defer recovery action and the body of material taken into account in respect of the decision not to defer the time for payment.  It is not necessary to discuss those differences.

22. In his letter dated 22 June 2010, the Commissioner said: 

    (vi)Accordingly, as at 04 June 2010 the taxpayer was indebted to the Commissioner of Taxation in the amount of $8,512,959.24.

    (vii)The taxpayer wrote to the Australian Taxation Office (“ATO”) on 4th February 2010 asking that the time when the taxpayer’s tax related-liability would become due and payable be deferred. I have considered all of the correspondence sent on behalf of the taxpayer to the ATO since 4th February 2010 to the date of this letter, as well as the matters raised in taxpayer’s letter dated 23rd March 2010, asking the time that the tax liability be due and payable is deferred.

    (viii)I was aware of the ATO policy for the collection of taxation debts at the time of my decision but I approached my decision upon the basis that it was for me to make the correct and preferable decision having regard to the circumstances of the taxpayer’s particular case.

    (ix)I also made the findings of fact that occur in section C of this letter.

    B.Evidence or other Material on which these findings were based:

    a. The Australian Taxation Office Policy for the Collection of Taxation Debts and in particular Chapter 9

    b.Income tax returns lodged by the taxpayer for the years ended 30 June 1997 to 30 June 2008

    c.The above mentioned Notice(s) of assessment

    d. The taxpayer’s letters sent to the ATO since 4th February 2010 to the date of this letter, as well as the matters raised in the taxpayer’s letter dated 23rd March 2010.

    e. The taxpayer has lodged notice(s) of objection in respect of the years of income ended 30 June 1997 to 30 June 2008 on 24 March 2010 and the present position in relation to these at the time of my decision was that they are still to be determined.

    C.Reasons for Decision:

    a. The Commissioner usually expects that all debts, including those subject to dispute, will be paid on time. The Legislative framework, which underpins the Commissioner’s policy in the collection and recovery of disputed debt, is designed to ensure that taxation debts are due and payable notwithstanding that the underlying liability may be disputed by taxpayers (See for example, sections 14ZZM and 14ZZR of the Taxation Administration Act 1953). Nonetheless, there is a wide discretion under section 255-10 of schedule 1 of the TAA to defer he time when an amount of tax-related liability is, or would become, due and payable by the taxpayer (whether or not the liability has already arisen) and the section provides that that discretion is to be exercised having regard to the circumstances of the taxpayer’s particular case, Elias -v- Commissioner of Taxation (2002) 173 FCR 499 indicates the breadth of that discretion,

    b. One critical effect of granting deferral would be that the general interest charge (“GIC”) would not be payable, even if the Commissioner were to be ultimately successful in any proceedings under Part IVC of the TAA. For example in the event that the Commissioner were to be unsuccessful in proceedings under Part IVC of the TAA then the assessment(s) would be set aside and any GIC payable on those assessments would be automatically revoked; i.e. if the taxpayer wins there is no GIC. However, if the Commissioner were ultimately to be successful there would be two possibilities. The first would be that CIC would ordinarily be payable. The second would be that, if a deferral ware granted, no GIC would be payable. After careful consideration, it is my view that your client should not be placed in any higher position than the ordinary taxpayer, that is, if your client’s objections are not upheld in any process under Part IVC then GIC should accrue from the relevant due date(s). I am not satisfied that your client’s circumstances warrant the use of the Commissioner’s discretion under section 255-10, Schedule 1 of the TAA. In so deciding, I had regard to what was said in your letters to the ATO referred to above.

    c.I consider that the impact of the assessments on the financial position of the applicant and his capacity to meet his tax liability as required is an important consideration in making a decision under section 255-10, Schedule 1 of the TAA. You have not provided me with any financial information in support of your deferment application. It is obvious that payment of the taxation liability on the date that is presently due and payable might be less advantageous to the company than payment of such amount at a later date, but you have not put anything that persuades me that there would be any particular detriment to your client beyond that obvious effect, or that it would be correct and preferable to grant your request. The financial information that I did have available in relation to the company was considered. That information included the income tax returns lodged by BCI Finances Pty Limited but there is insufficient information and evidence to satisfy me the impact of the assessments on the applicant or its current and/or future financial capacity to meet its tax obligations and other liabilities would be such as to make it correct and preferable to grant the deferment sought,

    d. Put simply, I not satisfied that the individual circumstances of this taxpayer’s case make it correct and preferable to grant the dement sought, Anything that you have put, including the fact that your client has outstanding objections is outweighed in my mind by the desirability of GIC accruing from the date upon which the relevant tax-related liabilities are already due and payable.

    Consideration

23. Rawson contended that the making of the three decisions challenged in Rawson No 3 were all improper exercises of power. It sought relief pursuant to s 5 of the ADJR Act and s 39B.

24. In respect of both the decision to refuse to defer recovery action and the decision to issue a creditor’s statutory demand, Rawson claimed a declaration that it is entitled to be provided with a statement of reasons. That claim must fail since neither of those decisions is reviewable under the ADJR Act (Rawson No 1).

25. Rawson submitted that the Commissioner had failed to take into account the following relevant considerations:

    (a)The fact that, on 7 October 2009, Rawson had made an application pursuant to s 8AAG of the TAA for remission of the general interest charges imposed upon it, which application had not been determined;

    (b)The fact that, on 11 June 2010, Rawson had filed Part IVC appeal proceedings in the AAT;

    (c)The merits of the Part IVC proceedings in the AAT;

    (d)The fact that the Part IVC proceedings were bona fide;

    (e)The liquidity of Rawson;

    (f)The financial harm likely to be caused to Rawson by having to pay the outstanding tax while contesting the Part IVC proceedings even if Rawson is ultimately successful in those proceedings; and

    (g)The fact that the liquidation of Rawson would stultify the Part IVC proceedings.

1. Rawson also submitted that the Commissioner had taken into account the following irrelevant considerations:

   (a)The opinion or view that granting the requested recovery deferral would mean that general interest charges would not be payable;

   (b)The opinion or view that:

   The legislative framework is designed to ensure the collection and recovery of all debts irrespective of whether the underlying dispute the subject of Part IVC proceedings is bona fide further or in the alternative was not a frivolous dispute

   (c)There was a risk to the revenue.

2. These and other grounds were raised as bases for setting aside the refusal decision challenged in Rawson No 2.

3. The Commissioner filed a Notice of Objection to Competency in Rawson No 3 in which he contended that none of the decisions under challenge in that proceeding was a decision under an enactment that was reviewable under the ADJR Act.

4. Rawson also argued that the Commissioner had failed to take into account:

   (a)The remedial and beneficial nature of the Commissioner’s discretion under s 255‑10; and

   (b)The fact that Rawson would take all reasonable steps to expedite the Part IVC proceedings brought by it in the AAT.

5. Finally, Rawson submitted that the Commissioner had blindly and thoughtlessly applied the ATO’s Receivables Policy in the present case without paying due regard to the individual circumstances of Rawson and that the ATO Receivables Policy was an unlawful policy. 

6. Rawson referred to a number of cases in support of the proposition that, in exercising the discretion reposed in him or her by s 255‑10, the Commissioner must take into account such factors as may be implicitly determined as relevant by reference to the subject matter, scope and purpose of the TAA (and, probably, the ITAA).

7. The relevant principles were comprehensively and, with respect, correctly, articulated by Hely J in Elias v Commissioner of Taxation (2002) 123 FCR 499 at [19]–[25] (pp 503–504) and at [49]–[63] (pp 509–512). In those paragraphs, his Honour said:

   Legislative context

   19 Any assessed income tax assessed under this assessment is due and payable on the date specified in the Notice of Assessment: Income Tax Assessment Act 1936 (Cth) (ITAA), s 204(1).

   20 The fact that a review or appeal is pending in relation to an assessment does not in the meantime interfere with, or affect, the assessment, and any tax may be recovered as if no review or appeal were pending: TAA, ss 14ZZM, 14ZZR.

   21 If any tax which a person is liable to pay remains unpaid after the time by which the tax is due to be paid, the person is liable to pay the General Interest Charge (GIC) on the unpaid amount: ITAA, s 204(3).

   22 The GIC is substantially in excess of a commercial rate of interest. The amount of the GIC is fixed by s 8AAD of the TAA. The Commissioner has a discretion under s 8AAG of the TAA to remit all or part of the GIC in the circumstances referred to in s 8AAG(3), (4) or (5).

   23 The object of Pt 4.15 of Sch 1 to the TAA is to ensure that unpaid amounts of tax-related liabilities and other related amounts are collected or recovered in a timely manner: TAA, Sch 1, s 250-25. Income tax is a tax-related liability: s 255-1; s 250-10. Part 4.15 of Sch 1 includes ss 255-5 and 255-10. Section 255-5 provides that an amount of a tax-related liability that is due and payable is a debt due to the Commonwealth and is payable by the Commissioner. Section 255-10(1) provides as follows:

   “The Commissioner may, having regard to the circumstances of your particular case, defer the time at which an amount of a tax-related liability is, or would become, due and payable by you (whether or not the liability has already arisen). If the Commissioner does so, that time is varied accordingly.

   Note: General interest charge or any other relevant penalty, if applicable for any unpaid amount of the liability, will begin to accrue from the time as varied. See, for example, paragraph 204(3)(a) of the Income Tax Assessment Act 1936.”

   24 By amendments to s 207 of ITAA made in 1938, where an extension of time for payment of tax was granted under s 206 of ITAA, additional tax at the rate of 10 per cent was imposed from such date as the Commissioner determined, not being a date prior to the date on which the tax was originally payable. That position changed with the repeal of ss 207 and 207A of ITAA in 1999. The explanatory memorandum for the General Interest Charge (Imposition) Bill 1998 (Cth) includes the following:

   “Consistency in the application of GIC

   1.79 A further consequential amendment will ensure that GIC accrues from when an outstanding tax debt is due to be paid. Previously, under subsection 207(1) of ITAA36 the Commissioner was able to impose late payment penalty from the date on which tax was originally due and payable even though there may have been an extension of time allowed for the payment of the tax.

   1.80This is now no longer the case with the repeal of sections 207 and 207A of the ITAA36.”

   25 As the note to s 255-10(1) makes plain, under the present legislative scheme if the Commissioner defers the time at which tax is due and payable, then by force of the ITAA, GIC only becomes payable in the event of non-payment from the extended date, subject to the power of remission given to the Commissioner under s 8AAG of the TAA. The Commissioner no longer has power to extend the time allowed for payment of tax, on the basis that the penalty for non-payment continues to accrue in the meantime.

   …

   49 The exercise of the s 255-10 power does not simply fix the date on and after which recovery proceedings may be instituted by the Commissioner. The exercise of the power also fixes the date from which GIC will run (subject to any remittal under s 8AAG). Section 255-10 is found in Pt 4.15 of the TAA, the object of which is to ensure that unpaid amounts of tax-related liabilities are collected or recovered in a timely manner. Imposition of a GIC if tax is not paid by the date fixed is conducive to the attainment of that object.

   50 In determining whether to exercise the s 255-10 power the Commissioner is required to consider the circumstances of the taxpayer’s particular case. One of those circumstances is that unless the s 255-10 power is exercised, GIC would be payable, in this case, from 14 February 2001, unless the applicant is ultimately successful in setting aside the notice of assessment. The scope and purpose of the s 255-10 power is such that the Commissioner is entitled to consider, and where appropriate, to balance, the factors which favour the exercise of the power as well as the factors which do not.

   51 If the s 255-10 power were exercised in the manner requested by the applicant, the result would be that the applicant would have a period of deferral in which the GIC would not be payable even though it may ultimately appear that the Commissioner correctly disallowed the deduction claimed for the contributions to the superannuation scheme, and that the tax-related liability established by the notice of assessment was correct.

   52 There is nothing in the TAA or the ITAA which indicates or requires that the Commissioner should be indifferent to, or should leave out of account, the impact which a deferral of the due date for payment of a tax-related liability would have upon the date from which GIC might become payable. Relief from the GIC is so integrally involved in deferring the date that a tax-related liability is due and payable that the GIC effect of a decision under s 255-10 is one of the factors which the Commissioner was entitled to take into account. The weight to be given to that factor was a matter for the decision-maker: Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24 at 41.

   53 Accordingly, this ground on which review is sought fails.

   Failure to take into account relevant circumstances

   54 The applicant contends that the decision-maker “did not properly take into account and/or weigh” a number of factors which would have compelled him to a decision that the applicant’s tax-related liability should not become due and payable until the controlling interest superannuation controversy was resolved.

   55 The factors upon which the applicant relies are:

   (a)the applicant clearly disputed his tax liability, even though a notice of objection against the assessment had not been lodged at the time of the deferment application;

   (b)the Commissioner was unsure as to the liability to tax of those involved in controlling interest superannuation arrangements. The Commissioner contributed to the proliferation of such arrangements by his actions in issuing many rulings, opinions and advices;

   (c)the change in approach outlined by the media statement of 19 May 1999 was not accompanied by any definitive statement of where the liability to tax should be borne. Rather, the media release asserted that taxpayers could be exposed to “multiple taxing points”. The applicant asserted that the Commissioner “has not committed himself to the basis for the liability which he asserts”: Ahern v Deputy Commissioner of Taxation (Cth) (1983) 78 FLR 202 at 214; 50 ALR 177 at 190 per Sheppard J;

   (d)it would be an unfair burden that taxpayers involved in controlling superannuation arrangements should be potentially exposed, irrespective of their financial circumstances, to double recovery actions in circumstances where the Commissioner has conceded that only one assessment can stand as correct; and

   (e)while the Commissioner may create alternative tax-related liabilities by issuing alternative assessments, those tax-related liabilities should not become due and payable unless and until there is certainty as to which one, if any, is correct.

   56 The ground of failure to take into account a relevant consideration in the making of an administrative decision can only be made out if a decision-maker fails to take into account a consideration which he is bound to take into account in making that decision: Peko-Wallsend at 39. What factors a decision-maker is bound to consider in making the decision is determined by construction of the statute conferring the discretion. If those factors are not expressly stated, they must be determined by implication from the subject matter, scope and purpose of the statute. When a statute confers a discretion which in its terms is unconfined, the factors that may be taken into account in the exercise of the discretion are similarly unconfined, except insofar as there may be found in the subject matter, scope and purpose of the statute some implied limitation on the factors to which the decision-maker may legitimately have regard: Peko-Wallsend at 40. Where the ground of review is that a relevant consideration has not been taken into account, and the discretion is unconfined by the terms of the statute, the Court will not find that the decision-maker is bound to take a particular matter into account unless an implication to that effect is to be found in the subject matter, scope and purpose of the statute: Peko-Wallsend at 40.

   57 Where, as here, a discretion is conferred in very general terms, it is generally a matter for the decision-maker to decide what is relevant and what is not. It is largely for the decision-maker, in the light of the matters placed before him, to determine which matters he regards as relevant and the comparative importance to be accorded to matters which he so regards: Sean Investments Pty Ltd v MacKellar (1981) 38 ALR 363 at 375. As long as the decision-maker considers those things that the legislation requires to be taken into account and ignores any prohibited consideration, the grounds of failing to take into account a relevant consideration, or taking into account an irrelevant consideration, will not be available. Nor are those grounds available where the essence of the complaint is that the decision-maker paid either too little or too much attention to a relevant factor: Aronson and Dyer, Judicial Review of Administrative Action (2nd ed, 2000), p 225.

   58 In Harts Fidelity Pty Ltd v Deputy Commissioner of Taxation (Cth) (1999) 42 ATR 438 at 450, Kiefel J said of the predecessor provision of s 255-10, namely s 206 of the ITAA: “The ITAA 1936 does not specify the matters which are to be taken into account in exercising the discretion given by section 206, to extend the due date for payment ...” Her Honour proceeded at 451 to hold, applying Peko-Wallsend, that the existence of an arguable case on the appeals and the lack of risk to the revenue which were advanced as matters which the officer failed to take into account were not matters required to be considered by the legislation.

   59 In Ahern at 215-216; 191 Sheppard J, whilst recognising that the matter was not without difficulty, thought that the better view was that in considering the exercise of the discretion conferred by s 206 of the ITAA, the decision-maker was obliged, as a matter of law, to take into account in reaching his decision the fact that the tax-related liability was disputed. In the later case of Thurecht v Deputy Commissioner of Taxation (Cth) (1984) 3 FCR 570; 84 ATC 4,480 Sheppard J held that in deciding whether to grant an extension of time under s 206 of the ITAA, the Commissioner is not obliged to take into account the mere fact that the applicant had objected to the assessment. In Barina Corporation Ltd v Deputy Commissioner of Taxation (Cth) (1985) 6 FCR 368 at 382 Wilcox J held that in determining an application under s 206 of the ITAA, the Commissioner is not bound to address himself to the prospects of the taxpayer’s ultimate success.

   60 In ARM Constructions Pty Ltd v Commissioner of Taxation (Cth) (1986) 10 FCR 197, Burchett J, after referring to Ahern, Thurecht and Barina held that in the light of the purpose which the discretion under s 206 serves, a claim by a taxpayer who genuinely disputes the imposition of the tax that payment on the due date would wholly or partly abolish his business, is a claim which the Commissioner is bound to consider. In Nestle Australia Ltd v Commissioner of Taxation (Cth) (1987) 16 FCR 167 at 178 Wilcox J held that in considering an application under s 206 “it is always a relevant matter that the liability for tax is disputed” and the cumulative effect of financial hardship and the existence of a genuine dispute may be such as to warrant an extension of time.

   61 The factors on which the applicant relies in the present case are relevant considerations, in the sense that if the decision-maker chose to have regard to them it could not be said that his decision was based upon considerations which were extraneous to the power. But, with respect to those who have taken a different view, I agree with Kiefel J in Harts Fidelity that the factors in question are not “relevant considerations” in the Peko-Wallsend sense of matters which the decision-maker was bound to take into account. To borrow the language of Allsop J in Paul v Minister for Immigration and Multicultural Affairs (2001) 113 FCR 396 at 423; 64 ALD 289 at 312 they are not considerations “made compulsorily relevant” by the Act, although the decision-maker may regard such matters as part of the relevant circumstances of the case.

   62 If a consideration is relevant in a Peko-Wallsend sense, a decision-maker does not take it into account if he dismisses the consideration as irrelevant. It was, I think, in that sense that Wilcox J said in Nestle Australia at 184:

   “To take a matter into account means to evaluate it and to give it due weight, having regard to all other relevant factors. A matter is not taken into account by being noticed and erroneously discarded as irrelevant.”

   In Deloitte Touche Tohmatsu v Australian Securities Commission (1996) 136 ALR 453 at 468, Lindgren J, under the heading “What it means to ‘take into account’ a relevant consideration”, said that the issue is whether the decision-maker “really”, “genuinely”, “properly” and “effectively” took into account the consideration in question, but recognising that the weight to be given to the consideration, either in an absolute or relative sense, is a matter for the decision-maker. In NIB Health Funds Ltd v Private Health Insurance Administration Council (2002) 115 FCR 561, Allsop J recognised at 598 [155] that a particular matter may be identifiable as having been touched upon by a decision-maker, but that does not necessarily mean that it has been taken into account in the sense referred to in the authorities.

   63 If, on the other hand, a consideration is not relevant in a Peko-Wallsend sense, but is not a matter which the decision-maker is precluded from taking into account, then whether the consideration should be regarded as relevant at all, and if so, the weight to be given to it in an absolute or relative sense, are matters for the decision-maker.

8. Gordon J applied those principles in Federal Commissioner of Taxation v Burness (As Trustee for the Property of Bottazzi, A Bankrupt) (2009) 77 ATR 61 at [17]–[19]; [32]–[33]; [35]; [47] and [54]. At [32], her Honour said:

   32.It is not possible for the court to prescribe a list of particular considerations that should be and should not be taken into account in determining the appropriate level of penalty. As Hely J said in Elias (see at [18] and [19] above), it is generally for the decision-maker to decide what is relevant and what is not and in light of the matters placed before him to determine what matters the decision-maker regards as relevant and the comparative importance to be accorded to those matters. The limitations identified by Hely J are straightforward—has the decision-maker taken into account the things the legislation requires to be taken into account and, secondly, has the decision-maker ignored any prohibited consideration? If so, grounds of taking into account an irrelevant consideration are not available.

9. These authorities make clear that none of the matters which Rawson contended should have been taken into account (but were not) were expressly required by the TAA or the ITAA to be taken into account nor were any of them mandated implicitly by reference to the subject matter, scope and purpose of the TAA or the ITAA. At bottom, subject to paying due regard to the principles expounded in Elias, it was for the Commissioner to decide what was relevant to his s 255‑10 decision. In particular, there is ample authority for the proposition that the fact that an objection has been lodged or that an appeal from a disallowance of an objection has been lodged does not mean that recovery action should be deferred or that these matters should be taken into account in exercising the s 255‑10 discretion. Counsel for Rawson went so far as to submit that the Commissioner ought not take steps to recover outstanding tax where an objection is on foot unless he or she is satisfied that the objection was not bona fide.  This submission seeks to engraft a gloss on the clear words of the legislation and on the principles explained in such cases as Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473. The submission cannot be sustained and must be rejected. I should add that recovery action is not dependent upon s 14ZZM or s 14ZZR being engaged. The Commissioner’s obligation and entitlement to recover outstanding tax is anchored in other more fundamental provisions (discussed by Yates J in Rawson No 1). 

10. Nor, in my view, has Rawson established that the three matters extracted in (a) to (c) at [74] above were irrelevant considerations in the requisite sense.

11. The notion that the Commissioner was bound to approach his consideration of whether he should exercise his s 255‑10 discretion favourably to Rawson upon the basis that the discretion was “remedial and beneficial” is not supported by anything in the TAA or the ITAA or by any authority. The proposition advanced by Rawson lacks meaning and substance. The judgments in Asiamet (No 1) Resources Pty Ltd v Commissioner of Taxation (2003) 126 FCR 304 and Commissioner of Taxation (Cth) v Asiamet (No 1) Resources Pty Ltd (2004) 137 FCR 146 do not support it. The subject matter of the adjectives “remedial and beneficial” in Asiamet was not the exercise of the Commissioner’s discretion pursuant to s 255‑10.

1. Rawson submitted that the ATO Receivables Policy was unlawful because it travelled beyond what could conceivably be authorised by the TAA and the ITAA. It argued, in the alternative, that, on the evidence, the Commissioner had blindly applied it.

2. I am not persuaded that the policy is unlawful.  Nor am I persuaded that it was blindly applied.  The precise weight given to the policy was not established by evidence.  Parts of it may have been taken into account while other parts may have been ignored.  It is unlikely that Chapters 9 and 28 were considered in a vacuum without regard to Chapter 1 which counselled decision-makers against an overly-rigid or blind application of the policy.  In any event, in the reasons which were given by the Commissioner in his letter dated 22 June 2010, the Commissioner stated that he did have regard to Rawson’s individual circumstances in making his decision. 

3. The weight given by the Commissioner to the considerations specified in the policy was not established.  In any event, the weight to be given to those considerations was a matter for the Commissioner. 

4. The attack based upon the use made of the Receivables Policy fails. 

5. The decisions not to defer recovery action and to issue a creditor’s statutory demand cannot be reviewed pursuant to s 5 of the ADJR Act (see Rawson No 1). There is no good reason to do so pursuant to s 39B.

6. The attacks on these decisions also fail.

7. For these reasons, Rawson No 3 must be dismissed with costs. 

   THE BCI DECISIONS—THE COMMISSIONER’S REFUSAL OF BCI’S REQUEST FOR DEFERRAL OF RECOVERY ACTION AND THE TIME FOR PAYMENT OF THE OUTSTANDING TAX (PROCEEDINGS NSD 592 OF 2010 AND NSD 781 OF 2010)

   The Facts

8. On 4 February 2010, BCI requested that the Commissioner exercise her discretion pursuant to s 255‑5 of the TAA to defer recovery proceedings against BCI in respect of assessments and amended assessments issued by the Commissioner against BCI for the income tax years 30 June 1997 to 30 June 2008. The request sought an exercise of discretion pursuant to s 255‑5 of Schedule 1 to the TAA and s 8 of the ITAA.

9. By letter dated 10 February 2010, from Argyle, on behalf of BCI, to the Commissioner, BCI made an additional request seeking the deferral of the due date for payment of outstanding tax. This request sought an exercise of discretion pursuant to s 255‑10. BCI’s previous request for a deferral of recovery action was repeated. BCI relied upon similar grounds to those raised in support of the same requests made by Argyle on behalf of Rawson.

10. By letter dated 29 April 2010, the Commissioner refused BCI’s request that recovery action be deferred. She also stated that that decision was not reviewable under the ADJR Act and that, for that reason, she declined to provide reasons for her decision.

11. By letter dated 10 May 2010, the Commissioner also refused to defer the time for payment of the outstanding tax, penalties and interest.  By letter dated 7 June 2010, the Commissioner provided her reasons for that decision.  In that letter, after providing details of the outstanding assessments, the Commissioner said:

    (vi) Accordingly, as at 04 June 2010 the taxpayer was indebted to the Commissioner of Taxation in the amount of $8,512,959.24.

    (vii) The taxpayer wrote to the Australian Taxation Office (“ATO”) on 4^th February 2010 asking that the time when the taxpayer’s tax related-liability would become due and payable be deferred. I have considered all of the correspondence sent on behalf of the taxpayer to the ATO since 4^th February 2010 to the date of this letter, as well as the matters raised in taxpayer’s letter dated 23^rd March 2010, asking the time that the tax liability be due and payable is deferred.

    (viii) I was aware of the ATO policy for the collection of taxation debts at the time of my decision but I approached my decision upon the basis that it was for me to make the correct and preferable decision having regard to the circumstances of the taxpayer’s particular case.

    (ix)     I also made the findings of fact that occur in section C of this letter.

    B.       Evidence or other Material on which these findings were based:

    a. The Australian Taxation Office Policy for the Collection of Taxation Debts and in particular Chapter 9

    b. Income tax returns lodged by the taxpayer for the years ended 30 June 1997 to 30 June 2008

    c.        The above mentioned Notice(s) of assessment

    d. The taxpayer’s letters sent to the ATO since 4^th February 2010 to the date of this letter, as well as the matters raised in the taxpayer’s letter dated 23^rd March 2010.

    e. The taxpayer has lodged notice(s) of objection in respect of the years of income ended 30 June 1997 to 30 June 2008 on 24 March 2010 and the present position in relation to these at the time of my decision was that they are still to be determined.

    C.       Reasons for Decision

    a. The Commissioner usually expects that all debts, including those subject to dispute, will be paid on time. The Legislative framework, which underpins the Commissioner’s policy in the collection and recovery of disputed debt, is designed to ensure that taxation debts are due and payable notwithstanding that the underlying liability may be disputed by taxpayers (See for example, sections 14ZZM and 14ZZR of the Taxation Administration Act 1953). Nonetheless, there is a wide discretion under section 255-10 of schedule I of the TAA to defer he time when an amount of tax-related liability is, or would become, due and payable by the taxpayer (whether or not the liability has already arisen) and the section provides that that discretion is to be exercised having regard to the circumstances of the taxpayer’s particular case, Elias -v- Commissioner of Taxation (2002) 173 FCR 499 indicates the breadth of that discretion.

    b. One critical effect of granting deferral would be that the general interest charge (“GIC”) would not be payable, even if the Commissioner were to be ultimately successful in any proceedings under Part IVC of the TAA. For example in the event that the Commissioner were to be unsuccessful in proceedings under Part IVC of the TAA then the assessment(s) would be set aside and any GIC payable on those assessments would be automatically revoked; i.e. if the taxpayer wins there is no GIC. However, if the Commissioner were ultimately to be successful there would be two possibilities. The first would be that CIC would ordinarily be payable. The second would be that, if a deferral ware granted, no GIC would be payable. After careful consideration, it is my view that your client should not be placed in any higher position than the ordinary taxpayer, that is, if your client’s objections are not upheld in any process under Part IVC then GIC should accrue from the relevant due date(s). I am not satisfied that your client’s circumstances warrant the use of the Commissioner’s discretion under section 255-10, Schedule 1 of the TAA. In so deciding, I had regard to what was said in your letters to the ATO referred to above.

    c.I consider that the impact of the assessments on the financial position of the applicant and his capacity to meet his tax liability as required is an important consideration in making a decision under section 255-10, Schedule 1 of the TAA. You have not provided me with any financial information in support of your deferment application. It is obvious that payment of the taxation liability on the date that is presently due and payable might be less advantageous to the company than payment of such amount at a later date, but you have not put anything that persuades me that there would be any particular detriment to your client beyond that obvious effect, or that it would be correct and preferable to grant your request. The financial information that I did have available in relation to the company was considered. That information included the income tax returns lodged by BCI Finances Pty Limited but there is insufficient information and evidence to satisfy me the impact of the assessments on the applicant or its current and/or future financial capacity to meet its tax obligations and other liabilities would be such as to make it correct and preferable to grant the deferment sought.

    d. Put simply, I not satisfied that the individual circumstances of this taxpayer’s case make it correct and preferable to grant the dement sought, Anything that you have put, including the fact that your client has outstanding objections is outweighed in my mind by the desirability of GIC accruing from the date upon which the relevant tax-related liabilities are already due and payable.

12. The parties agreed, for the purposes of these proceedings, that the Commissioner took into account the following documents in refusing to defer the time by which the outstanding tax assessed against BCI would become payable:

    (a)ATO Receivables Policy, Part B The Collection of Taxation Debts, Chapter 9 (Volume 8, Tab 72).

    (b)ATO Receivables Policy, Part B The Collection of Taxation Debts, Chapter 28 (Volume 8, Tab 73).

    (c)Notice of Assessment for the financial years ended 30 June 1997 to 2004 (Volume 8, Tab 74).

    (d)Notice of Amended Assessment for the financial years ended 30 June 2005, 2006, 2007 and 2008 (Volume 8, Tab 75).

    (e)Notice of Assessment and Liability to pay penalty for the Income years 2007 and 2008 (Volume 8, Tab 76).

    (f)Notice of Assessment and Liability to pay penalty for the Income years 2004, 2005 and 2006 (Volume 8, Tab 77).

    (g)Notice of Assessment and Liability to pay penalty for the Income years 2001, 2002 and 2003 (Volume 8, Tab 78).

    (h)STAC - Companies & Super Funds – 97 (Volume 8, Tab 79).

    (i)STAC - Companies & Super Funds – 98 (Volume 8, Tab 80).

    (j) STAC - Companies & Super Funds – 99 (Volume 8, Tab 81).

    (k) STAC - Companies & Super Funds – 00 (Volume 8, Tab 82).

    (1) STAC - Companies & Super Funds – 01 (Volume 8, Tab 83).

    (m) STAC - Companies & Super Funds – 02 (Volume 8, Tab 84).

    (n) STAC - Companies & Super Funds – 03 (Volume 8, Tab 85).

    (o) Calculation Statement 04, 05, 06, 07, 08 (Volume 8, Tab 86).

    (p)ATO Statement of Account (Volume 8, Tab 87).

    (q)Calculation Statement 97, 98, 99, 00, 01, 02, 03, 04, 05, 06, 07, 08 (Volume 8, Tab 88).

    (r) Letter from Argyle Lawyers dated 25 March 2010 enclosing Notices of Assessment and Liability to Pay Penalty for years ended 30 June 2001 to 30 June 2008 (inclusive) (Volume 8, Tab 89).

    (s) Letter from Argyle Lawyers dated 24 March 2010 enclosing Objections against the Notices of Assessment for years ended 30 June 2005, 2006, 2007 and 2008 (Volume 8, Tab 90).

    (t) Statutory Declaration of Baruch Etzion dated 16 December 2009, who had been the general manager at Bank Hapoalim in relation to the negotiations and provision of loans to the Applicant and the terms of the loans (Volume 8, Tab 91).

    (u) Email correspondence from Benjamin Rogers, ATO to Vesna Tot dated 4 January 2010 requesting immigration searches of incoming and outgoing passenger cards for Margaret Binetter, Erwin Binetter and Andrew John Binetter (Volume 8, Tab 92).

    (v) Annexure B, containing Deed of Continuing Guarantee in Unlimited Amount dated 10 November 1992 provided to Bank Hapoalim in relation to the loans from the bank to the Applicant (Volume 8, Tab 93).

    (w)Letter to Bank Hapoalim as to list of assets available to secure the loans (Volume 8, Tab 93).

    (x) Applications dated 13 May 1993 from the Applicant requesting loans from Bank Hapoalim and letter requesting loans and setting out the terms of the loans (Volume 8, Tab 93).

    (y)Minute of directors meeting of the Applicant as to the loans from Bank Hapoalim (Volume 8, Tab 93).

    (z)Letter from the Respondent to the Applicant dated 10 November 2009 containing Reasons for Decision (Volume 8, Tab 94).

    (aa)Letter from Applicant to the Respondent dated 4 February 2010 requesting deferral of recovery action (Volume 8, Tab 95).

    (bb)Letter from Applicant to the Respondent dated 10 February 2010 providing additional grounds to application made on 4 February 2010 (Volume 8, Tab 96).

    (cc)Statutory Declaration of Baruch Etzion dated 16 December 2009 (Volume 8, Tab 97).

    (dd) Letter from Applicant to the Respondent dated 23 March 2010 requesting a response to correspondence dated 5 and 10 February 2010 (Volume 8, Tab 98).

    (ee)Letter from Argyle Lawyers dated 10 May 2010 requesting a deferral of time for payment (Volume 9, Tab 99).

    (ff)Letter from ATO dated 29 April 2010 responding to request for deferral of recovery action (Volume 9, Tab 100).

    (gg) Notice of Objection to competency (Volume 9, Tab 101).

13. The great majority of those documents were also taken into account by the Commissioner in making her 29 April 2010 decision to refuse to defer recovery action.

    Consideration

14. BCI propounded a case by way of challenge to these decisions which was essentially the same as the case which Rawson mounted in Rawson No 2 and Rawson No 3.  No new points of substance were raised.  BCI’s case must fail for the same reasons as Rawson’s cases have failed. 

15. BCI No 1 and BCI No 2 will be dismissed with costs. 

    CONCLUSIONS

16. All of the challenges made under the ADJR Act by Rawson and BCI to the Commissioner’s decision to issue a creditor’s statutory demand and otherwise to pursue recovery of the outstanding tax, penalties and interest must be dismissed because they are incompetent.

17. Those challenges made in reliance upon s 39B all fail. Had they been competent to be brought under the ADJR Act, they would also have failed.

18. The challenges brought by Rawson and BCI to the relevant s 255‑10 decisions made by the Commissioner also fail.

19. All of the proceedings must be dismissed with costs.  There will be orders accordingly.

I certify that the preceding one hundred and three (103) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Foster.

Associate:

Dated:       31 October 2011