Re the Trustee for Oenoviva (Australia & New Zealand) Plant and Equipment Trust And Commissioner Of Taxation
[2013] AATA 253
•26 April 2013
CATCHWORDS – TAXATION – GST – whether Tribunal has jurisdiction to consider applications for review – whether Commissioner has made reviewable objection decisions relating to objections made to assessments of indirect taxes or imposition of penalties - no decisions yet made and none deemed to have been made – no jurisdiction.
Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd [1979] FCA 21; (1979) 24 ALR 307
Comcare v Labathas [1995] FCA 1702; (1995) 61 FCR 149; 22 AAR 295; 133 ALR 744
Federal Commissioner of Taxation v Dalco [1990] HCA 3; (1990) 168 CLR 614; 90 ALR 341; 20 ATR 1370; 64 ALJR 166
Federal Commissioner of Taxation v Futuris Corporation Ltd [2008] HCA 32; (2008) 237 CLR 146; 247 ALR 605; 69 ATR 41; 82 ALJR 1177; [2008] ATC 20-039
Herald and Weekly Times Ltd v Victorian Civil and Administrative Appeals Tribunal [2005] VSC 44; (2005) 22 VAR 482
Hong Ye v Minister for Immigration and Multicultural Affairs [1998] FCA 341; (1998) 82 FCR 468; 153 ALR 327; 55 ALD 358
Re Confidential and Commissioner of Taxation [2013] AATA 112
Re Walters and Commissioner of Taxation [2013] AATA 151
WR Carpenter Holdings Pty Ltd v Commissioner of Taxation [2008] HCA 33; (2008) 237 CLR 198; 248 ALR 256; 69 ATR 29; 82 ALJR 1211; [2008] ATC 20-040
A New Tax System (Goods and Services Tax) Act 1999, ss 2-30, 4-10, 7-1, 7-5, 7-15, 9-5, 11-5, 17-5, 25-5, 31-5, 31-8, 31-10, 35-5, 35-10, 35-99, 195-1
Acts Interpretation Act 1901, ss 28A, 29, 36
Administrative Appeals Tribunal Amendment Act 1993, s 22
Administrative Appeals Tribunal Act 1975, ss 20, 25, 29, 30, 33, 35, 35A, 37, 41, 43, 68, 68AA
Administrative Decisions (Judicial Review) Act 1977
Electronic Transactions Act 1999, ss 7B, 14A
Evidence Act 1995, ss 4, 160, 161
Federal Court of Australia Act 1976, ss 59, 59A
Income Tax Assessment Act 1936
Income Tax Assessment Act 1997, s 995-1
Legislative Instruments Act 2003
Safety, Rehabilitation and Compensation Act 1988, s 67
Taxation Administration Act 1953, ss 2, 3AA, 14ZL, 14ZQ, 14ZU, 14ZV, 14ZW, 14ZX, 14ZY, 14ZYA, 14ZZ, 14ZZK, 105-A, 105-5, 105-15, 105-20, 105-25,105-B, 105-40, 110-50, 380-50, 382-5, 388-50
Victorian Civil and Administrative Tribunal Act 1998, ss 146, 157
Administrative Appeals Tribunal Regulations 1976, rr 9, 17
Administrative Appeals Tribunal Regulations (Amendment), rr 4.1, 6.1
Federal Court Rules 2011, rr 2.25
Taxation Ruling TR 2011/5 – Income tax: objections against income tax assessments
DECISIONS AND REASONS FOR DECISIONS [2013] AATA 253
ADMINISTRATIVE APPEALS TRIBUNAL )
) 2013/0848
TAXATION APPEALS DIVISION )
ReTHE TRUSTEE FOR OENOVIVA (AUSTRALIA & NEW ZEALAND) PLANT AND EQUIPMENT TRUST
Applicant
AndCOMMISSIONER OF TAXATION
Respondent
ADMINISTRATIVE APPEALS TRIBUNAL )
) 2013/0910
TAXATION APPEALS DIVISION )
ReTHE TRUSTEE FOR THE ANDREW GARRETT FAMILY TRUST NO 3
Applicant
AndCOMMISSIONER OF TAXATION
Respondent
DECISIONS
Tribunal: Deputy President S A Forgie
Date: 26 April 2013
Place: Melbourne
Decision:The Tribunal:
1.decides that:
(a) as at the dates on which the applicant lodged each of the applications in his capacity as a trustee:
(i)the respondent had not made reviewable objection decisions in relation to the taxation objections he had lodged with him; and
(ii)the respondent had not been deemed to have made reviewable objection decisions in relation to those taxation objections; and
(b)therefore, the Tribunal does not have jurisdiction to review either of the applications lodged on behalf of the applicant in his capacity as a trustee; and
2.dismisses the applicant’s application lodged in the Tribunal in each of the proceedings Nos. 2013/0848 and 2013/0910.
_(sgd) S A Forgie
Deputy President
REASONS FOR DECISIONS
Mr Andrew Garrett is the trustee of the Andrew Garrett Family Trust (No 3) (Family Trust) and of the Oenoviva (Australia & New Zealand) Plant & Equipment Trust (Oenoviva). In that capacity, he has lodged in the Tribunal an application on behalf of each Trust for review of decisions he identified as having been made by a delegate of the Commissioner of Taxation (Commissioner) and as being objection decisions.[1] The Commissioner challenges the Tribunal’s power to review the decisions on the basis that he has not yet made objection decisions that are reviewable by the Tribunal.
[1] Re Trustee of Andrew Garratt Family Trust (No 3) and Commissioner of Taxation No. 2013/0910 and Re Trustee of Oenoviva (Australia & New Zealand) Plant & Equipment Trust and Commissioner of Taxation No. 2013/0848
The decisions that Mr Garrett claims the Commissioner has made concern the two Trusts and the assessment of the appropriate amounts of goods and services tax (GST) payable or refundable to them. The relevant legislation includes the Administrative Appeals Tribunal Act 1975 (AAT Act), A New Tax System (Goods and Services Tax) Act 1999 (GST Act) and the Taxation Administration Act 1953 (TAA). For the purposes of this case, I have summarised features of the scheme for the collection of the goods and services tax (GST) provided for in the GST Act. I have done that in Attachment A to these reasons. In that Attachment, I have set out the provisions of the GST Act and those of the TAA relevant to determining whether or not the Tribunal has power to review the decisions in relation to which Mr Garrett has made an application on behalf of each of the Family Trust and of Oenoviva.
In the circumstances of this case, the Tribunal’s jurisdiction or authority to review decisions relating to assessments of GST and associated penalties is to be found in s 14ZZ(1)(a)(i) of the TAA. That means that the Tribunal only has jurisdiction if the Commissioner has made a reviewable objection decision and he can only make such a decision if a taxpayer has made a taxation objection. I have decided that the Commissioner is yet to make a reviewable objection decision, has not purported to do so and has not been deemed to have done so. Therefore, I have decided that the Tribunal does not have jurisdiction to consider the applications lodged on behalf of the Family Trust and of Oenoviva.
CONSIDERATION
The principles
In Attachment A to these reasons, I have explained why, in a case such as this, the Tribunal has power to review a decision made by the Commissioner only if it is a “reviewable objection decision”. In order for a decision of the Commissioner to
come within that description, it is generally the case that three factors exist. They are:
(1)the decision must have been made, or deemed to have been made,[2] in response to a taxation objection;
[2] TAA; s 14ZYA(3)
(2)the taxation objection has been made:[3]
[3] TAA; ss 14ZU, 14ZW; Schedule 1, s 388-50 and 14ZZK
(a)in an approved form;
(b)lodged within the specified time; and
(c)sets out the grounds on which the taxpayer relied in objecting to the Commissioner’s decision; and
(3)there must be a provision in the taxation law permitting a person dissatisfied with a decision, however described, to object against it.[4]
I say “generally” because there are circumstances in which the Commissioner has made an objection decision even though the taxation objection has not met all of the criteria. Circumstances such as those raise issues of the sort considered in Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd.[5] I touched on them in
Re Walters and Commissioner of Taxation[6] but there is no suggestion that they arise in this case. The Commissioner has not purported to make an objection decision and has not described any decision he has made as an objection decision. In fact, he has denied doing so.
[4] TAA; s 14ZL(1) The “taxation law” means, among other things, “an Act of which the Commissioner has the general administration …”: Income Tax Assessment Act 1997 (ITAA97); s 995-1(1). These provisions apply to the interpretation of the TAA: TAA; s 3AA(2).
[5] [1979] FCA 21; (1979) 24 ALR 307; Bowen CJ, Smithers and Deane JJ
[6] [2013] AATA 151
The Family Trust: course of events leading to lodgement of application in Tribunal
Mr Garrett has submitted four volumes of material containing a selection of correspondence relating to this matter and to Oenoviva and to his business plan relating to the development of urban wineries and what he describes as “Oenotechas” both in Australia and overseas. I will refer to them as the “AG documents”. The Commissioner has lodged material also. I have referred to both. On the basis of that material, I find that the order of some of the main events relevant to
this issue has been:
| Date | Event |
| 8 January 2013 | The ATO completed an audit of the revised Business Activity Statements submitted on behalf of the Family Trust and relating to quarterly tax periods between 1 January 2010 and 31 March 2010 and 1 April 2011 and 30 September 2012. The audit concerned input tax credits of $108,947 claimed by the Family Trust in respect of those periods.[7] |
| 8 January 2013 | The Commissioner issued notices of assessments for the tax period 1 January 2010 to 30 June 2012 and 1 July 2012 to 30 September 2012 showing a difference of $89,794 as the difference between the net amount from the activity statements lodged in the first period and the net amount assessed for the earlier period and a difference of $19,153 for the later period.[8] |
| 12 January 2013 | Mr Garrett emails the ATO and marks it “Without Prejudice All Rights Reserved”. In summary, he states that all relevant information had been provided to the ATO and he has demonstrated his openness and willingness to ease its concerns. He asserts that the ATO’s withholding the input tax credit amounts to “conscious maladministration”.[9] |
| 18 January 2013 | Acknowledgment of receipt of email by ATO advising that an officer would “respond to your concerns in writing next week.” |
| 19 January 2013 | On behalf of the Family Trust, Mr Garrett emailed a notice of objection to the Commissioner. He referred to six sets of material and his grounds were: “1. [left blank] 2. There has been no notice issued under the provisions of section 8AAZLGA of the Taxation Administration Act 1953 to the Trustee. 3. No further attempt was made by the ATO to again request the information from the original request dated 18 December 2012. 4. There was no attempt by the ATO to communicate with the trustee of AGFT 3 between 18 December 2012 and 8 January 2013 in a [sic] espatblished [sic] pattern of conscious maladministration. 5. No time limit was expressed by the ATO on 18 December 2012 or at any other time for the provision of information. 6. Between 20 December 2012 and 7 January 2013 the custodiamn [sic] of the information requested being the booke [sic] keepr [sic] was on leave. 7. The information requested has subsequently been provided within a reasonable time frame dated 9 and 12 January 2013.. 8. The Notice of Finalisation of Audit and Notices of Assessment is a further example of the ongoing evidence of conscious maladministration allegedly flowing from the mind set of Operation Winebar. 9. The Notice of Finalisation was issued in a void of information. 10. On 20th October 2012 a related trust applied to the Commissioner for compensation in respect to the conscious maladministration issues apparently associated to Operation Winebar and the failure to set aside the default judgment in DCCIV – 1666-2003 11. I allege further examples pf [sic] conscious maladministration is evidenced within the activities of the ATO related to the OenoViva (Australia & New Zealand) Plant & Equipment Trust and the OenoViva (Australia & New Zealand) Plant & Equipment Trust No 2.”[10] |
| 24 January 2013 | The Commissioner advised that the objection was invalid in that it is not in the approved form and did not fully state the grounds on which the objection was made.[11] |
| 16 February 2013 | The Family Trust lodged a notice of objection with the Commissioner.[12] |
| 4 March 2013 | The Family Trust applies to Tribunal for review of objection decision.[13] |
| 13 March 2013 | The Commissioner decided to accept the objection as a valid objection after taking into account the course of correspondence written by Mr Garrett between 9 January 2013 and 2 March 2013.[14] |
[7] AG documents, volume 2 at 29
[8] AG documents, volume 2 at 32
[9] AG documents, volume 2 at 44
[10] AG documents, volume 2 at 46
[11] AG documents, volume 2 at 51
[12] Commissioner’s documents in proceedings No. 2013/0910; Attachment 5
[13] Tribunal proceedings No. 2013/0910
[14] Commissioner’s documents in proceedings No. 2013/0848; Attachment 6
Oenoviva: course of events leading to lodgement of application in Tribunal
6.
| Date | Event |
| 2 May 2012 | Lodgement of Business Activity Statement (BAS) for the quarter ending March 2012 claiming input tax credit of $3,150,000 and attaching a Tax Invoice for the production of Oenotecas totalling $31,500,000 together with other supporting information.[15] |
| 3 May 2012 | Triage reporting alerted officers of the Australian Taxation Office (ATO) who decided to recall the refund of the amount of the input tax credit and to refer the matter to an audit.[16] |
| 4 May 2012 | ATO advises Oenoviva of audit orally and in writing.[17] |
| 8 May 2012 | Audit completed and ATO not satisfied on the evidence produced that the producer of the Oenotecas had been given any payment in relation to their supply. The Commissioner decides to reduce Oenoviva’s input tax credit by $3,150,000 and issues a notice of amended assessment disallowing Oenoviva’s claim for input tax credits. He gives notice that he will impose a tax shortfall penalty and the General Interest Charge (GIC) will be payable.[18] |
| 20 May 2012 | Oenoviva objected to Commissioner’s decision.[19] |
| 13 November 2012 | The Commissioner makes an objection decision disallowing Oenoviva’s objection. |
| 31 December 2012 | Oenoviva applies to Tribunal for review of objection decision.[20] |
| 9 January 2013 | The Commissioner issues a notice of assessment and liability to pay penalty in the sum of $1,575,000. That represents 50% of the shortfall amount because the Commissioner assessed Oenoviva’s behaviour in claiming the input tax credit as reckless.[21] |
| 19 January 2013 | Mr Garrett emails the ATO with the subject line “Application of Penalties NOTICE OF OBJECTION” stating: “The grounds for the objection are that: 1. The decision of Brett Swanston dated 13 November 2012 is subject of an application for review filed with the Administrative Appeals Tribunal on 30 December 2012 and given action number 2012/5901 2. On 31 May 2012 the Trustee made complaint to ACCC with respect to the actions of the ATO in this matter which matter is under investigation. 3. On 20 October 2012 the Trustee of the Andrew Garrett Family Trust made an application to the ATO compensation area with respect to this matter which is subject to review by Special Counsel appointed by the ATO 4. The Trust has lost the benefit of a sale of 270 sets of Oenotecas to OenoViva Limited as a consequence of this matter and has been placed on Notice of a potential claim by OeoViva Limited in respect to the failure to supply. 5. The Trust has a right of set off as to damages in any event as a consequence of the actions of the ATO flowing from the delays in sales of Franchises globally. 6. The decision of Mr Swanston dated 13 November 2012 on which the penalties are based is flawed and subject to allegations of conscious maladministration subject to review by Special Counsel. 7. That any decision of the ATO related “Operation Winebar” is tainted with issues of conscious maladministration 8. The Trustee is currently considering an application under section 39B of the Judiciary Act (1903) 9. The reasons for the application of Penalty are incorrect and are subject of AAT action No 2012/5901 and that application will also be made that it is convenient that the AAT also hear the application for review of this decision in respect to penalty concurrent with the application to review the Decision of Brett Swanston dated 13 November 2012 …”[22] |
| 24 January 2013 | The Commissioner responded to the Notice of Objection advising, in part: “We can only proceed with an objection request if it is valid. Your objection is invalid as your notice is not in the approved form (for further information on what constitutes an approved form, refer to the ATO website – and your objection does not fully state in detail the grounds you are relying on. …”[23] |
| 3 February 2013 | Mr Garrett sent a further email to the ATO questioning why the Notice of Objection was not in the correct form and reminding it that its website stated that a taxpayer could either use a form or write to it to state its objection.[24] |
| 22 February 2013 | The ATO responded to Mr Garrett setting out the nine grounds of objection he had set out in his email and explaining why it considered none of them to be relevant to the penalty assessment: “In response to your grounds listed above and relied upon by you, we advise that none of the grounds stated above are considered to be relevant to the penalty assessment and do not address why the assessment of penalty is incorrect and should either be reduced or remitted. … Reason 9 has no relevance to the penalty assessment and does not address why the assessment of penalty is incorrect and should be reduced or remitted.”[25] |
| 26 February 2013 | Application for review of objection decisions stated to have been made on 24 January and 22 February 2013 lodged in Tribunal. |
| 2 March 2013 | Oenoviva lodged a notice of objection with the Commissioner.[26] |
| 12 March 2013 | Commissioner accepted correspondence sent to the ATO between 19 January 2013 and 2 March 2013 as a notice of objection to the assessments and liability to pay penalty dated 9 January 2013. He identified Mr Garrett’s first ground of objection as rejecting the proposition that there was a shortfall amount at all. He asked Mr Garrett to confirm that was indeed one of his objections. The Commissioner went on to ask Mr Garrett whether he was also objecting on the basis that he disagreed with the finding that he had been reckless and that there was no basis for remitting the penalty.[27] |
[15] AG documents, volume 2 at 2
[16] AG documents, volume 2 at 3
[17] AG documents, volume 2 at 4 and 6
[18] AG documents, volume 2 at 7
[19] AG documents, volume 2 at 8
[20] Tribunal proceedings No. 2012/5901
[21] Commissioner’s documents at Attachment 1
[22] AG documents, volume 2 at 48
[23] AG documents, volume 2 at 50
[24] AG documents, volume 3 at 1
[25] AG documents, volume 3 at 24
[26] Commissioner’s documents; Attachment 6 Tribunal proceedings No. 2013/0848
[27] AG documents, volume 3 at 45
Has the Commissioner made a reviewable objection decision?
Mr Garrett has referred me to a number of cases regarding the identification of an administrative decision made under an enactment of which review may be sought under the Administrative Decisions (Judicial Review) Act 1977 (ADJR Act). They do not assist me in this case. In order for the Tribunal to have power to consider the applications made on behalf of the Family Trust and Oenoviva, each must have been made in respect of an objection decision. Mr Garrett has identified various letters as objection decisions. They fall into three main categories and I will deal with each.
Before I do that, I need to mention Mr Garrett’s general concerns about what he sees as shortcomings in the Commissioner’s behaviour. This is not the occasion to address them although I note that Ms Woolley, solicitor for the Commissioner, rejected any suggestion that the Commissioner has behaved inappropriately. What it is the occasion to say is that, if there have been shortcomings in the proceedings leading to the Commissioner’s making an assessment, they will be irrelevant to the review of any reviewable objection decision he makes and of any assessment to which it relates. They will be irrelevant because shortcomings in process, even if they were established to have occurred, will not help the Family Trust or Oenoviva in establishing that the assessments were excessive. I have considered this issue in a recent case of Re Confidential and Commissioner of Taxation[28] and, rather than setting out the whole of the passage, adopt it and set out only its final three paragraphs:
[28] [2013] AATA 112 at [227]-[280]
“278. In cases such as these, the taxpayers’ have the burden of proving that the assessments were “excessive”. That is the case in the Tribunal under s 14ZZK(b)(i) of the TAA and in the Federal Court under s 14ZZO(b)(i). That latter provision and the meaning of the word “excessive” was considered by the High Court in Carpenter. It is a word that had previously been used in a similar context in s 190(b) when the TAA was originally enacted. When used in that earlier provision it:
“… was said by Dixon CJ, McTiernan and Webb JJ in McAndrew
v Federal Commissioner of Taxation … [(1956) 98 CLR 263 at 271] to be ‘perhaps not a good choice,’ but their Honours emphasised that ‘excessive’ relates to the amount of the substantive liability’. The adjective ‘substantive’ is used in this field of discourse to contrast those provisions of the Act which relate to what is to be characterised as the procedure or mechanism of assessment. An error or slip by the Commissioner in following that procedure or in the operation of that mechanism does not necessarily produce any error in the amount of the substantive liability of the taxpayer, a point made by Brennan J in Federal Commissioner of Taxation v Dalco … [(1960 168 CLR 614 at 623].”[29]
[29] [2008] HCA 33; (2008) 237 CLR 198; 248 ALR 256; 69 ATR 29; 82 ALJR 1211; 2008 ATC 20-040 at [6]; 203-204; 258; 32; 1213; 8532
279. This was underlined by the High Court in the majority judgment
in Futuris:[30]
“ Section 175 must be read with ss 175A and 177(1). If that be done, the result is that the validity of an assessment is not affected by failure to comply with any provision of the Act, but a dissatisfied taxpayer may object to the assessment in the manner set out in Pt IVC of the Administration Act; in review or appeal proceedings under
Pt IVC the amount and all the particulars of the assessment may be challenged by the taxpayer but with the burden of proof provided in
ss 14ZZK and 14ZZO of the Administration Act. Where s 175 applies, errors in the process of assessment do not go to jurisdiction and so do not attract the remedy of a constitutional writ under s 75(v) of the Constitution or under s 39B of the Judiciary Act.”[31]
280. If procedural errors or errors in following the mechanical steps in making an assessment are of no relevance to the Court’s deciding whether an assessment is excessive, they can play no part in the Tribunal’s consideration of the same issue.”
[30] [2008] HCA 32; (2008) 237 CLR 146; 247 ALR 605; 69 ATR 41; 82 ALJR 1177; 2008 ATC 20-039
[31] [2008] HCA 32; (2008) 237 CLR 146; 247 ALR 605; 69 ATR 41; 82 ALJR 1177; 2008 ATC 20-039 at [24]; 157; 611; 51; 1185; 8,501 per Gummow, Hayne, Heydon and Crennan JJ
In practical terms, this means that Mr Garrett, as the trustee of the Family Trust and of Oenoviva must look at the assessments and the basis on which they are made. If, as would seem to be the case, the assessment given to Oenoviva has been made because the Commissioner is not satisfied that it is entitled to the input tax credit, Mr Garrett has to go back to the GST Act, look at what is required in order to be entitled to that credit, search for information and material that is necessary to establish that entitlement and, if he finds it, provide it. The task should be made easier if he has complied with s 382-5(1)(a) of the TAA by keeping, and retaining, records:
“… that record and explain all transactions and other acts you engage in that are relevant to a *supply, importation, acquisition, dealing, manufacture or entitlement to which this subsection applies; …”.
Included among the transactions and acts to which the subsection applies are:
“(a) a *taxable supply, *taxable importation, *creditable acquisition or *creditable importation made by you;…”[32]
[32] TAA; Schedule 1, s 382-5(2)(a)
Those records may also be relevant when Mr Garrett considers his position in relation to assessments imposing penalties. He should look at the provisions relating to the imposition of penalties. They are found in the TAA and centre on a taxpayer’s having a shortfall amount and on his, her or its behaviour leading to that being the case. He can challenge the Commissioner’s view of the behaviour by, for example, leading evidence that shows what the behaviour actually was or information that underpinned a claim for an input tax credit and explained why the Family Trust or Oenoviva came, rightly or wrongly, to a particular view of its entitlement to claim. I have not in any way attempted to give Mr Garrett comprehensive – or, indeed, any – advice about the material he should gather. All that I have attempted to do is to direct his attention to the substance of the matters that he must deal with and not the procedural and peripheral however irritating he may find them.
I turn now to the documents that Mr Garrett relies on as reviewable objection decisions. In the first category are letters of acknowledgement sent by officers of the ATO in response to correspondence sent by Mr Garrett. As I said in [4] above, a letter cannot amount to such a decision. It is not a decision that has been made in response to substantive matters raised in a taxation objection. A letter of acknowledgment is simply an administrative action.
A more substantive response such as the email dated 13 March 2013 in the Family Trust matter and said by Mr Garrett to amount to a “terse and rude email” is in the same category.[33] It set out a chronology of events that had occurred between Mr Garrett and the Family Trust.[34] The email dated 5 March 2013 to Mr Garrett in relation to Oenoviva is no different. It set out a chronology of events. Again, it does not address any objection made on behalf of Oenoviva and cannot be regarded as a decision on any objection. It is not a reviewable objection decision.
[33] AG documents, Chronology of Events/Documents
[34] AG documents, volume 2 at 40
The second category of responses identified by Mr Garrett as objection decisions are represented by the letter from the Commissioner to him dated
22 February 2013. It repeated the nine grounds of objection he had set out in his email and explained why it considered none of them to be relevant to the penalty assessment to which Oenoviva was allegedly objecting. Repetition of the grounds set out in a taxpayer’s objection does not amount to making a decision on them. In that letter, the Commissioner very properly went on to explain why each of the grounds was not a proper ground. It was clear that Mr Garrett did not understand that issues relating to the way in which the Commissioner had made his assessment are not relevant in reviewing an assessment. The only issues are those of the sort to which the Commissioner later drew his attention. They included whether he had a shortfall amount at all and, if he did and for the purposes of objecting to the assessment of penalty, the correct categorisation of behaviour that led to that shortfall. Assisting a taxpayer in this way does not amount to an objection decision.
The third category of responses is represented by an email from an ATO officer to Mr Garrett on 21 February 2013 in relation to the Family Trust.[35] It is written at a time before the Commissioner decided that the Family Trust had lodged an objection in relation to the assessments issued on 8 January 2013. The email asserts that the Commissioner was correct in his assessment of the net amount and affirms that the Family Trust was not entitled to a refund as claimed. It goes on to advise
Mr Garrett to lodge an objection to the assessment if he does not agree rather than attempt to lodge a revised activity statement. Again, there is no decision on any taxation objection made on behalf of the Family Trust.[35] AG documents, volume 3 at 23
At the time of the hearing, Mr Garrett mentioned giving the Commissioner notices under s 14ZYA(2) requiring him to make an objection decision. That is an avenue open to him if the Commissioner has not made an objection decision on each of the objections, which he now accepts, within the periods set out in
s 14ZYA(1). [36] It is doubtful whether those time periods have yet expired but that is not a matter for me to decide at this stage for I have no evidence to suggest that, at the time the applications were lodged, Mr Garrett had given the Commissioner written notice requiring him to make a decision let alone that the Commissioner was deemed to have made an objection decision by the passing of time. Therefore, the deeming provisions of s 14ZYA have no part to play.[36] See [45] below
For the reasons I have given, I am not satisfied that the applications for review lodged on behalf of each of the Family Trust and of Oenoviva seek review of a reviewable objection decision for the Commissioner is yet to make those decisions. Therefore, the Tribunal does not have jurisdiction to review the applications.
OUTLINE OF LEGISLATIVE PROVISIONS OF THE TAA AND GST ACT
Despite its name, the Tribunal does not have unbridled authority to review decisions made by administrative decision-makers. It has only the authority that Parliament has given it and it must act within the boundaries of that authority. The way in which Parliament has chosen to give the Tribunal power is by first establishing a broad framework within which the Tribunal operates. That broad framework is found in the Administrative Appeals Tribunal Act 1975 (AAT Act). It establishes the Tribunal itself, prescribes the way in which it will be given authority to review decisions and the way in which persons may come to it for that review and gives it certain powers to facilitate its task. Within that broad framework, Parliament then establishes a narrower framework specific to the administrative decisions that it wants the Tribunal to review. In this case, that narrower framework is found in the Income Tax Assessment Act 1936 (ITAA36) and the Taxation Administration Act 1953 (TAA). It defines the decisions which the Tribunal may review and, to the extent permitted by the AAT Act, may modify or add to the powers it confers on the Tribunal.
The broad framework provided by the AAT Act
In so far as it is relevant in these cases, s 25(1) of the AAT Act provides:
“An enactment may provide that applications may be made to the Tribunal:
(a)for review of decisions made in the exercise of powers conferred by that enactment; or
(b)…”
The enactment must specify the person or persons in respect of whose decisions an application may be made and may apply to all of their decisions or to a class of decisions.[37] It may specify conditions with which any applications for review must comply.[38] Where an enactment has made such a provision, s 27(1) of the AAT Act provides that a person whose interests are affected by the decision may make an application for review.
[37] AAT Act; s 25(3)(a) and (b)
[38] AAT Act; s 25(3)(c)
Empowering a person to make an application for review of a decision does not give the Tribunal power to review that decision. That power comes to it from s 25(4) of the AAT Act when it provides:
“The Tribunal has power to review any decision in respect of which application is made to it under any enactment.”
Other provisions of the AAT Act provide for matters such as the manner in which an application may be made and the time within which it must be made,[39] the parties to an application or a proceeding,[40] the procedure that will be followed by the Tribunal,[41] the role of the decision-maker[42] and the material the decision-maker must lodge,[43] the way in which parties may participate in a hearing of a proceeding,[44] opportunities that are available to resolve an application otherwise than having it heard and determined by the Tribunal,[45] the principles that guide whether an application will be heard in public and material lodged made publicly available or not,[46] the principles guiding the Tribunal’s decision to determine whether the operation or implementation of a decision should be stayed pending resolution of the application for review,[47] the Tribunal’s obligation to make a decision and to give reasons[48] and so on. When an enactment provides that applications may be made to the Tribunal:
“(a) that enactment may also include provisions adding to, excluding or modifying the operation of any of the provisions of sections 27, 29, 32, 33 and 35 or of subsection 41 or 43(1) or (2) in relation to such applications; and
(b)those sections and subsections have effect subject to any provisions so included.”[49]
The narrower framework formed by the TAA and ITAA36: right to make application for review of a decision
[39] AAT Act; s 29
[40] AAT Act; s 30
[41] AAT Act; s 33(1)
[42] AAT Act; s 33(2)
[43] AAT Act; s 37
[44] AAT Act; s 35A
[45] AAT Act; Part IV; Division 3
[46] AAT Act; s 35
[47] AAT Act; s 41
[48] AAT Act; s 43(2)
[49] AAT Act; s 25(6)
The structure of the AAT Act is such that I must look to the particular provisions of the TAA and of the GST Act in order to identify the decision or decisions, if any, in respect of which the right to make an application has been given.
A.GST Act
A.1General outline of substantive provisions applicable to these cases
I will begin with the GST Act for it is an enactment of the sort referred to in s 25(1) of the AAT Act. It imposes a goods and services tax (GST) and sets out the rules determining how the GST arises (if it arises at all) and who is liable to pay it, when and how input tax credits arise and who is entitled to them, how to work out payments and refunds of GST and when and how the payments and refunds are to be made. GST is payable on taxable supplies and taxable importations.[50] Taking “taxable supplies” as an example:
“You make a taxable supply if:
(a) you make the supply for *consideration; and
(b)the supply is made in the course or furtherance of an *enterprise that you *carry on; and
(c)the supply is *connected with Australia; and
(d)you are *registered, or *required to be registered.
However, the supply is not a *taxable supply to the extent that it is *GST-free or *input taxed.”[51]
[50] GST Act; s 7-1(1)
[51] GST Act; s 9-5
Entitlements to input tax credits arise on creditable acquisitions and creditable importations. Taking “creditable acquisitions” as an example, an entity makes a creditable acquisition if:
“(a) you acquire anything solely or partly for a *creditable purpose; and
(b)the supply of the thing to you is a *taxable supply; and
(c)you provide, or are liable to provide, *consideration for the supply; and
(d)you are *registered, or *required to be registered.”[52]
Section 7-5 of the GST Act provides:
“Amounts of GST and amounts of input tax credits are set off against each other to produce a *net amount for a tax period (which may be altered to take account of *adjustments).”
[52] GST Act; s 11-5
The way in which the net amount for a tax period is worked out is the subject of further attention in s 17-5. It provides:
“(1) The net amount for a tax period applying to you is worked out using the following formula:
GST - Input tax credits
where:
GST is the sum of all of the GST for which you are liable on the *taxable supplies that are attributable to the tax period.
input tax credits is the sum of all of the input tax credits to which you are entitled for the *creditable acquisitions and *creditable importations that are attributable to the tax period.
For the basic rules on what is attributable to a particular period, see Division 29.
(2) However, the *net amount for the tax period:
(a)may be increased or decreased if you have any *adjustments for the tax period; and
(b)may be increased or decreased under Subdivision 21-A of the *Wine Tax Act; and
(c)may be increased or decreased under Subdivision 13-A of the
A New Tax System (Luxury Car Tax) Act 1999.Note 1: Under Subdivision 21-A of the Wine Tax Act, amounts of wine tax increase the net amount, and amounts of wine tax credits reduce the net amount.
Note 2: Under Subdivision 13-A of the A New Tax System (Luxury Car Tax)
Act 1999, amounts of luxury car tax increase the net amount, and luxury car tax adjustments alter the net amount.”
An “adjustment” is an “increasing adjustment” or a “decreasing adjustment”.[53] Those two terms are also defined in s 195-1 of the GST Act. Each is defined by reference to the particular provision under which it arises.
[53] GST Act; s 195-1
Once the calculations have been completed, s 7-15 takes effect:
“The amount *assessed as being the *net amount for a tax period is the amount that the entity must pay to the Commonwealth, or the Commonwealth must refund to the entity, in respect of the period.”
Division 35 of Part 2-7 of Chapter 2 of the GST Act makes provision for refunds. Section 35-5(1) sets out the basic proposition:
“If the *assessed net amount for a tax period is less than zero, the Commissioner must, on behalf of the Commonwealth, pay that amount (expressed as a positive amount) to you.
…”
An entitlement to be paid an amount under s 35-5 arises when the Commissioner gives the entity notice of the assessment of the net amount for the tax period.[54] Section 35-99 sets out the provisions of the GST Act containing special rules relating to refunds.
[54] GST Act; s 35-10
If an entity is registered or required to be registered, it must give the Commissioner a GST return for each tax period.[55] The tax period may be quarterly as provided by s 31-8 or some other period as contemplated by s 31-10. The GST return for a particular tax period must be in the approved form i.e. in the form provided for in s 388-50 of Schedule 1 to TAA.[56]
[55] GST Act; s 31-5
[56] GST Act; s 195-1
A.2 Review rights given under the GST Act
From time to time in the GST Act, a note appears under a provision referring to a decision’s being a reviewable GST decision. Taking s 25-5(1) as an example, it provides that the Commissioner must register an entity if that entity complies with the conditions it specifies. The note that follows reads:
“Note: Refusing to register you under this subsection is a reviewable GST decision (see Subdivision 110-F in Schedule 1 to the Taxation Administration Act 1953).”[57]
[57] Section 4-10 provides that notes of this sort form part of the GST Act.
A “reviewable GST decision” is defined in complementary terms by
s 195-1 of the GST Act as having the meaning given by Subdivision 110-F of TAA. Section 110-50(1) of that Subdivision provides:“You may object, in the manner set out in Part IVC, against a decision you are
dissatisfied with that is:
(a)a *reviewable GST decision relating to you; or
(b)a *reviewable GST transitional decision relating to you.”
The distinction between the two types of decision is irrelevant in the context of this matter.
Section 110-50(2) of TAA goes on to specify those decisions made under the GST Act that are reviewable GST decisions. There are 65 separate decisions identified in that provision. None of them is a decision of the sort of which Mr Garrett seeks review on behalf of the two trusts i.e. decisions relating to the Commissioner’s having disallowed input tax credits claimed by Mr Garrett on behalf of each of the trusts.
B. The TAA
B.1 General outline of substantive provisions applicable to these cases
The TAA is also an enactment for the purposes of s 25(1). It becomes relevant in this matter because s 2-30 of the GST Act provides:
“Schedule 1 to the Taxation Administration Act 1953 contains provisions relating to the administration of the GST, and to collection and recovery of amounts of GST.”
Schedule 1 to the TAA is concerned with the collection and recovery of income tax and other liabilities. Two liabilities are of particular relevance.
The first is concerned with indirect taxes and they are the subject of Subdivision 105-A. An “indirect tax” includes GST.[58] Section 105-5(1)(a) of Schedule 1 provides that the Commissioner may, at any time, make an assessment of a taxpayer’s net amount, or part of that net amount, for a tax period. If he does so, he must give notice of it under s 105-20. The Commissioner may amend an assessment under s 105-25. A taxpayer’s liability to pay indirect tax does not, however, depend on the Commissioner’s having made an assessment and nor does the Commissioner’s liability to pay a net amount under s 35-5 of the GST Act.[59]
[58] Income Tax Assessment Act 1997 (ITAA97); s 995-1(1) These provisions apply to the interpretation of the TAA: TAA; s 3AA(2).
[59] TA Act; s 105-15
The second liability of relevance in this case is concerned with penalties. Section 298-30 of Schedule 1 to the TAA requires the Commissioner to make an assessment of the amount of an administrative penalty under Division 284.[60]
[60] TAA; s 298-30(1)
B.2 The right to apply to the Tribunal
In so far as it is relevant to applications to the Tribunal in the context of this matter, s 14ZZ of the TAA provides:
“If the person is dissatisfied with the Commissioner’s objection decision …, the person may:
(a)if the decision is a reviewable objection decision – either:
(i)apply to the Tribunal for review of the decision; or
(ii)…
(b)…”[61]
A “reviewable objection decision” is “… an objection decision that is not an ineligible income tax remission decision.”[62] In general terms, an objection decision is an “ineligible income tax remission decision” if it relates to the remission of additional tax payable under certain provisions of ITAA36.[63] None of the decisions made by the Commissioner in these cases relates to such matters.
[61] TAA; s 14ZZA
[62] TAA; s 14ZQ
[63] TAA; ss 2(1) and 14ZS
B.3 What is an “objection decision”?
The expression “objection decision” is given its meaning by s 14ZY(2) of the TAA.[64] In order to understand s 14ZY(2), it is necessary to look to the preceding subsections. Subsection 14ZY(1) provides:
“(1) Subject to subsection (1A), if the taxation objection has been lodged with the Commissioner within the required period, the Commissioner must decide whether to:
(a)allow it, wholly or in part; or
(b)disallow it.”
Section 14ZY(1A) is concerned with the situation in which the objection is made under s 359-50(3) in respect of the Commissioner’s failure to make a private ruling. It is not relevant as this matter does not concern a private ruling. In the context of this case, the decision made by the Commissioner whether to allow an objection, wholly or in part, or to disallow it, is an objection decision within the meaning of s 14ZY(2).
[64] TAA; ss 2(1) and 14ZQ(2)
B.4 What is a “taxation objection”?
The term “taxation objection” is given its meaning by s 14ZL.[65] It is an objection to which s 14ZL(1) refers.[66] That subsection provides:
“This Part [Part IVC] applies if a provision of an Act or of regulations (including the provision as applied by another Act) provides that a person who is dissatisfied with an assessment, determination, notice or decision, or with a failure to make a private ruling, may object against it in the manner set out in this Part.”
B.5Is there a provision providing that a taxation objection may be made against the Commissioner’s assessments in this case?
[65] TAA; s 14ZQ
[66] TAA; s 14ZL(2)
In this case, there are two provisions that may be relevant. The first is found in Subdivision 105-B of Division 105 of Part 3-10 of Schedule 1 to the TAA, which provides for the review of indirect tax decisions. It does so in s 105-40(1) by providing:
“You may object, in the manner set out in Part IVC, against a decision you are dissatisfied with that is a *reviewable indirect tax decision relating to you.”
A “reviewable indirect tax decision” is a decision under ss 105-5 or 105-25 involving an assessment of, among other indirect taxes, a net amount.[67] That is a decision of the sort made by the Commissioner in each of these cases. Therefore, acting as Trustee, Mr Garrett could make a taxation objection against each of them.
[67] TAA; s 105-40(2)
The second relevant provision is found in s 298-30 of Schedule 1 to the TAA. An entity dissatisfied with an assessment made about it under Division 284 in relation to the imposition of an administrative penalty may object in the manner set out in Part IVC of the TAA.[68] That is a decision of the sort made by the Commissioner in each of these cases. Again, Mr Garrett could make a taxation objection against them when he acted in his capacity as trustee of each of the Trusts.
[68] TAA; s 298-30(2)
B.6 How is a taxation objection made?
Section 14ZU of the TAA sets out how to make an objection:
“A person making a taxation objection must:
(a)make it in the approved form; and
(b)lodge it with the Commissioner within the period set out in section 14ZW; and
(c)state in it, fully and in detail, the grounds that the person relies on.
Note: …”
Section 14ZV limits the right to make a taxation objection when it is made against an assessment or determination that has been amended in any particular. The person’s right to object is then a right to object against the alterations or additions in respect of, or matters relating to, that particular.
The time limits within which a taxation objection must be made are set out in s 14ZW of the TAA. In the circumstances of this case, the time limit is the later of two periods. The first period finishes 60 days after notice of the reviewable indirect taxation decision has been served on the person.[69] The second period is four years after the end of the tax period, or after the importation of goods, to which the decision relates.[70] If the period for making an objection has passed, s 14ZW(2) provides that the person may nevertheless lodge the taxation objection together with a written request asking the Commissioner to deal with it as if it had been lodged within time. The Commissioner must decide whether to grant or refuse the request.[71]
[69] TAA; s 14ZW(1AAA)(a)
[70] TAA; s 14ZW(1AAA)(b) Other provisions relate to time periods where the Commissioner has amended an assessment or determination: TAA; s 14ZW(1B)
[71] TAA; s 14ZX
The “approved form” referred to in s 14ZU(a) has the meaning given
in s 388-50 of Schedule 1 to TAA. Section 388-50(1) provides:
“A return, notice, statement, application or other document under a *taxation law is in the approved form if, and only if:
(a)it is in the form approved in writing by the Commissioner for that kind of return, notice, statement, application or other document; and
(b)it contains a declaration signed by a person or persons as the form requires (see section 388-75); and
(c)it contains the information that the form requires, and any further information, statement or document as the Commissioner requires, whether in the form or otherwise; and
(d)for a return, notice, statement, application or document that is required to be given to the Commissioner – it is given in the manner that the Commissioner requires (which may include electronically).”
Taxation Ruling TR 2011/5 is entitled “Income tax: objections against income tax assessments”. At [117], it states:
“It is not necessary to use a printed form or electronic template published by the Commissioner. An objection by letter or other paper document will be in the approved form for the purposes of paragraph 14ZU(a) provided it:
∙is in writing;
∙contains the necessary signed declaration;
∙contains the requisite information; and
∙is lodged in the required manner.[72]”
[72] “This Ruling constitutes approval in writing by the Commissioner under subsection 388-50(1) of Schedule 1 for such objections to be in the approved form.”
The grounds specified in a taxation objection are of some importance. Although s 14ZZK(a) permits the Tribunal to make an order to the contrary, the general position is that the applicant is limited to the grounds stated in the taxation objection to which the reviewable objection decision relates. Within the confines of those grounds, an applicant for review in a case such as this then has the burden of proving that the assessment made by the Commissioner is excessive.[73]
[73] TAA; s 14ZZK(b)(i)
B.7 Requesting the Commissioner to make an objection decision
Putting aside situations concerning private rulings and requests for extensions of time within which to lodge an objection, s 14ZYA(2) provides that a person may give the Commissioner a written notice requiring him to make an objection decision if he has not done so at the end of the later of two periods. The first period ends 60 days after the person has lodged an objection decision with the Commissioner.[74] The second period ends 60 days after the Commissioner receives information that he has, in writing, asked the person for and he has made that request within the original 60 day period from the date of the lodgement of the objection.[75] If the Commissioner has not made an objection decision within the later of those two periods, he is taken to have made a decision under s 14ZYA(1) to disallow the taxation objection.[76]
[74] TAA; s 14ZYA(1)(a)(i)
[75] TAA; s 14ZYA(1)(b)
[76] TAA; s 14ZYA(3)
I certify that the preceding forty five paragraphs are a true copy of the reasons for the decisions herein of
Deputy President S A Forgie,
Signed: ….(sgd)...........................................................
Leah Berardi Associate
Date of Hearing 21 March 2013
Date of Decisions 26 April 2013
Representative for Applicants Mr Andrew
Solicitor for the Respondent Ms Renae Woolley
ATO Legal Services Branch
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