SANCTUARY AUSTRALASIA PTY LTD and COMMISSIONER OF TAXATION
[2013] AATA 371
•4 June 2013
ADMINISTRATIVE APPEALS TRIBUNAL )
) 2013/2071
TAXATION APPEALS DIVISION )Re:SANCTUARY AUSTRALASIA PTY LTD
Applicant
And:COMMISSIONER OF TAXATION
Respondent
CORRIGENDUM TO DECISION [2013] AATA 371
The Tribunal amends its decision and reasons for decision of 4 June 2013 as follows:
1.by inserting “2013” at the end of the copyright in footer which appears at the bottom of the page which contains the catchwords;
2.by inserting “APPEALS” between the words “TAXATION” and “DIVISION” in the third heading on the page which contains the decision;
3.in (1) of its decision by deleting “the” which appears before “A New Tax System (Goods and Services) Act 1999”;
4.in the second sentence of [2] by deleting the third word of the sentence, “had”;
5.in the last sentence of [4] by inserting “(1)” in the section reference of “s 14ZZ(a)(i)” so that it reads “s 14ZZ(1)(a)(i)”;
6.in the first sentence of [12] by inserting “AA” in the section reference so that the reference reads “Section 8AAZLGA(6)”;
7.in the third sentence of [12] by inserting “AA” in the section reference so that the reference reads “Section 8AAZLGA”;
8.in the fourth sentence of [12] by adding “s” to the word “set” so that it reads “sets”;
9.in the third sentence of [33] by inserting after the first comma “the following considerations need to be taken into account:” and replacing the second comma with a semicolon and inserting a semicolon after each of the following words “considered” and “assessed” and inserting the word “and” after the word “assessed”;
10.in the first sentence of [40] by inserting a full stop after the word “Tribunal” and after the full stop insert “It” so the sentence becomes two;
11.in the third line of the first sentence of [42] by inserting “is” in between the words “decisions” and “in”; and
12.by inserting the heading “Attachment A” in the header and aligned to the right of the page above the heading preceding [44].
_[sgd] S.A. Forgie
Deputy President
CATCHWORDS – TAXATION – GOODS AND SERVICES TAX – whether applicant for review of reviewable objection decision relating to retention of an amount pending verification of information is a “person … dissatisfied” with the decision when application lodged after amended assessment issued to effect not entitled to input tax credits claimed – applicant not such a person.
WORDS AND PHRASES – “person … dissatisfied” with a reviewable objection decision.
Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321; 94 ALR 11
Bushell v Repatriation Commission [1992] HCA 47; (1992) 175 CLR 408; 109 ALR 30; 16 AAR 1; 29 ALD 1
Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd [2013] HCA 11; (2013) 87 ALJR 528; 296 ALR 394
CTC Resources NL v Federal Commissioner of Taxation [1994] FCA 947; (1994) 48 FCR 397; 120 ALR 197; 27 ATR 403; 94 ATC 4072
Chief Commissioner of State Revenue v Print National Pty Ltd [2013] NSWCA 96
CTC Resources NL v Federal Commissioner of Taxation 94 ATC 4234
Cummings v Claremont Petroleum NL (1996) 185 CLR 124; 137 ALR 1
Eldridge v Federal Commissioner of Taxation (1990) 21 ATR 897
Kowalski v Chief Executive Officer of Medicare Australia [2010] FCA 413; (2010) 185 FCR 42
McCallum v Commissioner of Taxation (1997) 75 FCR 458; 145 ALR 446
A New Tax System (Goods and Services) Act 1999 ss 2-30, 7-1, 7-5, 17-5, 11-5, 31-8, 31-5, 31-10, 35-99 and195-1,
Administrative Appeals Tribunal Act 1975, ss 3(3), 25(1) and (4), 42B and 43
Bankruptcy Act 1966 ss 82(1), 134(1)(j), 153
Income Tax Assessment Act 1997, s 995-1(1)
Migration Act 1958 ss 501 and 501A
Taxation Administration Act 1953, ss 3AA(2), 8AAZA, 8AAZLF, 8AAZLG, 8AAZLGA, 14W(1)(aad), 14ZY(1),14ZS, 14ZZC, 14ZZK, 14ZZO and 14ZZP and Schedule 1, cll 105-5(1)(a), 105-15, 105-20, 105-25, 105-40 and 388-50
Tax Superannuation Laws Amendment (2012 Measures No. 1) Act 2012
Federal Court Rules 2011, Order 33
Administrative Decisions Tribunal Act 1997 (NSW), s 6(1)
Real Property Act 1900 (NSW), s 122(1)
Taxation Administration Act 1996 (NSW). ss 72, 73, 74, 75, 76, 77, 86 and 91
DECISION AND REASONS FOR DECISION [2013] AATA 371
ADMINISTRATIVE APPEALS TRIBUNAL )
) 2013/2071
TAXATION DIVISION )
ReSANCTUARY AUSTRALASIA PTY LTD
Applicant
AndCOMMISSIONER OF TAXATION
Respondent
DECISION
Tribunal: Deputy President S A Forgie
Date: 4 June 2013
Place: Melbourne
Decision:The Tribunal decides that:
(1)the applicant is not, within the meaning of s 14ZZ(1)(a)(i) of the Taxation Administration Act 1953, a “person … dissatisfied” with the respondent’s reviewable objection decision dated 19 April 2013 and relating to the retention of an amount under s 8AAZLGA of the A New Tax System (Goods and Services) Act 1999; and
(2)as a consequence, is not entitled to apply to the Tribunal for review of that decision.
[sgd] S.A. Forgie
Deputy President
REASONS FOR DECISION
Sanctuary Australasia Pty Ltd (SAPL) conducts a business supplying and installing solar panels. When it lodged its quarterly Business Activity Statement (BAS) on 27 July 2011, it disclosed a GST debt of $16,045.00 relating to the tax period beginning 1 April 2011 and ending 30 June 2011 and, when it lodged a revised BAS on 29 August 2012, it claimed a negative net amount (and so a GST refund) of $35,312.00 for the same period. The claims related to input tax credits relating to the sales and returns of solar panels. In a letter dated 10 September 2012, the Commissioner advised SAPL that he was undertaking an audit of its BAS for the period 1 April to 30 June 2011. He told SAPL that information it had previously provided was being analysed and, while it could choose to do so, it need not provide further information unless requested. On 4 September 2012, he decided to retain a refund amount of $35,312.00 while he undertook the audit. SAPL lodged an objection to the Commissioner’s decision on 3 February 2013 and, on 19 April 2013, the Commissioner disallowed that objection.
On 6 May 2013, SAPL lodged an application for review of that objection decision. Had events had ended there, I would have been satisfied that SAPL was entitled to make that application for review and that the Tribunal had power to review the Commissioner’s decision. It would have been regarded as a person whose interests are affected by the Commissioner’s objection decision dated 19 April 2013 and its application would have been lodged within the time limits prescribed by
s 29(1) of the Administrative Appeals Tribunal Act 1975 (AAT Act) as modified by
s 14ZZC of the Taxation Administration Act 1953 (TAA).[1][1] In view of the Commissioner’s later making an amended assessment, to which I will turn, the Tribunal might well have given consideration to whether, although properly made at the time it was made, the application for review of the Commissioner’s decision to withhold the refund was later frivolous and vexatious within the meaning of s 42B of the Administrative Appeals Tribunal Act 1975. At the heart of any such consideration in this context would be whether SAPL’s interests could be in any way affected by reviewing a decision to withhold a net amount to which the Commissioner now says it is not entitled at all.
Events did not end with the Commissioner’s objection decision for, before SAPL lodged its application for review on 6 May 2013, the Commissioner had, on 26 April 2013, issued an amended assessment of the net amount for the tax period beginning 1 April 2011 and ending 30 June 2011. In that assessment, he amended the net amount from -$35,312.00 to NIL. In an email dated 19 May 2013, SAPL has set out grounds of objection to the Commissioner’s amended assessment and asked him to consider it a notice of objection to his decision to issue it.
For the reasons I give below, I have decided that, as soon as the Commissioner issued the amended assessment, SAPL was no longer a “person … dissatisfied” with the Commissioner’s objection decision relating to the retention of the refund amount. Consequently, it is not entitled to apply for review of what is a reviewable objection decision under s 14ZZ(a)(i) of the TAA.
THE SUBMISSIONS
By agreement, the matter has been heard on the papers. The Commissioner has submitted that, under s 35-5 of A New Tax System (Goods and Services) Act 1999 (GST Act), the Commissioner must pay a taxpayer the net amount for a tax period if that net amount is less than zero. In some circumstances, however, the Commissioner has power to retain a negative net amount and so not refund it to the taxpayer. His power arises under s 8AAZLGA of the TAA. That provision was inserted by the Tax Superannuation Laws Amendment (2012 Measures No. 1) Act 2012 (TSLAM Act) and took effect on 27 June 2012. As SAPL had lodged its activity statement in July 2012, s 8AAZLGA applies. Section 8AAZLGA(5) provides that the Commissioner must retain the amount only until certain events occur. In this case, the relevant event is that there has been a change in the amount that the Commissioner is required to refund as a result of his making or amending an assessment. The Commissioner has issued an assessment assessing the net amount as NIL. As there is no negative amount, there is no amount that the Commissioner is required to refund and so no net amount that the Commissioner is retaining under s 8AAZLGA.
It follows, the Commissioners’ submission continues, that SAPL cannot be an entity dissatisfied with the decision within the meaning of s 14ZZ of the TAA because his decision to retain the negative net amount could no longer have any legal effect once he had issued the amended assessment. While noting that it arose in a different context, the Commissioner relied on the authority of CTC Resources NL
v Federal Commissioner of Taxation[2] (CTC Resources).[2] [1994] FCA 947; (1994) 48 FCR 397; 120 ALR 197; 27 ATR 403; 94 ATC 4072; Jenkinson, Gummow and Hill JJ Special leave to appeal to the High Court was refused: CTC Resources NL v Federal Commissioner of Taxation 94 ATC 4234; Mason CJ, Deane and Gaudron JJ
On behalf of SAPL, Mr Garrett referred to the notice issued to the Commissioner on 24 December 2012 requesting him to pay the negative net amount to it under s 8AAZLF of the TAA. Mr Garrett describes himself as SAPL’s agent in this matter. He has been appointed to act in that capacity by SAPL’s sole director,
Mr Robert Nowak.
Mr Garrett has challenged the Commissioner’s submissions on three bases:
(1)The Commissioner has not undertaken the steps set out in
s 8AAZLGA(3) or complied with the time limits it imposes;
(2)SAPL has no record of its having been given a notice of retention of refund dated 4 September 2012;
(3)As the Commissioner has not given SAPL a notice within the time limits set out in s 8AAZLGA, the assertion that he has exercised his discretion to retain the negative net amount must be incorrect.[3]
[3] Email sent by Mr Garrett and dated 19 May 2013
CONSIDERATION
An entity’s entitlement to seek review and the Tribunal’s power to review the Commissioner’s objection decision regarding the retention of the refund amount
At the heart of the Tribunal’s power to review a decision lies s 25 of the AAT Act. Section 25(1) provides that an enactment may provide that applications may be made to the Tribunal for review of decisions made in the exercise of powers conferred by that enactment or for the review of decisions made in the exercise of powers conferred by another enactment having effect under that enactment. Section 25(4) is a complementary provision to s 25(1). It provides that the Tribunal has power to review any decision in respect of which an application is made to it under any enactment. Unless a contrary intention appears, a reference to a “decision”:
“… includes a reference to:
(a)making, suspending, revoking or refusing to make an order or determination;
(b)giving, suspending, revoking or refusing to give a certificate, direction, approval, consent or permission;
(c)issuing, suspending, revoking or refusing to issue a licence, authority or other instrument;
(d)imposing a condition or restriction;
(e)making a declaration, demand or requirement;
(f)retaining, or refusing to deliver up, an article; or
(g)doing or refusing to do any other act or thing.”[4]
[4] AAT Act; s 3(3)
Section 14ZZ(1)(a)(i) of the TAA provides that a person may apply to the Tribunal for review of a “reviewable objection decision” if “… dissatisfied with the Commissioner’s objection decision …”. The time within which such an application may be made to the Tribunal ends 60 days after the person making the application has been served with a notice of a reviewable objection decision.[5]
[5] AAT Act; s 29(1) as modified by s 14ZZC of the TAA
A “reviewable objection decision” is “… an objection decision that is not an ineligible income tax remission decision.”[6] An “objection decision” is a decision of the Commissioner of the sort referred to in ss 14ZY(1), (1A) or (1B).[7] Of relevance in this case is s 14ZY(1) which requires the Commissioner to decide whether to allow, either wholly or in part, or to disallow a taxation objection lodged within the required period. A “taxation objection” is an objection that may be made:
“… if a provision of an Act or of regulations (including the provisions 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.”[8]
[6] TAA; s 14ZQ An “ineligible income tax remission decision” is an objection decision relating to certain decisions relating to the remission of additional tax payable under ITAA36: TAA; s 14ZS. There is no objection decision of that sort in this matter.
[7] TAA; s 14ZY(2)
[8] TAA; s 14ZL(1) and s 14ZL(2)
Section 8ZLGA(6) of the TAA is such a provision. It provides that:
“The entity may object to a decision of the Commissioner to retain the amount under this section in the manner set out in Part IVC, if the entity is dissatisfied with the decision.”
Section 8ZLGA provides that the Commissioner may retain amounts that he would otherwise have to refund to an entity under s 8AAZLF of the TAA. Section 8AAZLGA(1) sets out the circumstances in which the Commissioner may decide to do so and s 8AAZLGA set out matters to which he must have regard in making that decision. I have set them out in Attachment A to these reasons where I have also elaborated on the provisions relating to the way in which the Commissioner must inform the entity of the retention and the length of time for which it may continue.
The decision, objection, reviewable objection decision and application in this matter
In this matter, the Commissioner decided on 4 September 2012 to retain an amount that it was otherwise required to refund to SAPL under s 8AAZLF(1) of the TAA. SAPL objected to that decision as it was entitled to do under s 8AAZLGA(6) and within the time limits specified in s 14ZW(1)(aad) when read with s 14ZW(4) of the TAA.[9] It did so on 3 February 2013. The Commissioner disallowed SAPL’s objection on 15 April 2013. SAPL lodged an application for review of that decision on 6 May 2013. That was within the 60 day time period permitted for such an application to be made. It follows that, providing it is a “person … dissatisfied with the Commissioner’s objection decision …”, SAPL was entitled to make that application to the Tribunal for review of that objection decision because there is no question that it was a reviewable objection decision.
[9] See Attachment A at [54] for further detail
Is SAPL a person who is “dissatisfied with the Commissioner’s objection decision”?
A person’s entitlement to apply to the Tribunal for review of a decision is circumscribed by the terms of the particular enactment providing for such an application to be made. The terms of s 14ZZ(1)(a)(i) make it clear that there must be two elements before the entitlement arises. The first is that the Commissioner has made an objection decision. The second is that the person wishing to apply for review of that objection decision is dissatisfied with it.
A. CTC Resources
The Commissioner has relied on the case of CTC Resources in submitting that SAPL is not a person who is “dissatisfied” with the Commissioner’s objection decision in relation to the retention of an amount under s 8AAZLGA of the TAA. CTC Resources concerned two Private Rulings requested by CTC Resources NL (CTC) in relation to a proposal that it issue to a financial institution a number of shares having a par value of $10,000 but at a premium of $9.45m. The request for the first ruling related to the year of income ending 30 June 1993 and the second to the following year. CTC proposed to redeem the shares immediately after their issue and to do so at a premium of $9.45m. It then proposed to treat that premium as a dividend under the Income Tax Assessment Act 1936 (ITAA36) and a dividend that could be franked. The first request for a Private Ruling named a specific bank as the financial institution but the second did not identify any financial institution. The Commissioner ruled on each that the distribution on redemption would not be a dividend. After objections to each ruling were disallowed, CTC appealed to the Federal Court.
The Full Court of the Federal Court considered whether CTC was a “person dissatisfied” with the objection decisions within the meaning of s 14ZZ(1) of the TAA. It did so on two different bases. In the case of the objection decision relating to the second request for a ruling and so to the 1994 income year, the Full Court decided that CTC could not be a “person … dissatisfied” with the Commissioner’s objection decision because, in not naming the financial institution, its request had been hypothetical. In the case of the first request for a ruling, the Full Court decided that it was no longer possible for the ruling to have any legal consequences for it related solely to the implementation of a proposal which had related to the 1993 income year and that year had passed without the proposal’s being implemented.
In his judgment, Gummow J made the following points relevant to a person’s entitlement to apply to the Tribunal:
(1)“ The use of the term ‘dissatisfied’ as an identification of the class of persons who are given a right of further recourse to a court or an administrative body in respect of an adverse decision by the Commissioner or an objection has a long legislative history. … However, in the past, the cause for the dissatisfaction of the taxpayer has been a particular assessment to tax which because it leads to the creation of a debt in favour of the Commonwealth undoubtedly has an immediate and direct effect in a legal sense upon the taxpayer. As a result there has been little discussion in the authorities as to the meaning of the term: cf Henderson v Commissioner of Taxation (Cth) (1970) 119 CLR 612 at 618; 646.”[10]
(2)Regard must be had to the context in which an assessment must be made of whether a person is “dissatisfied” for the presumption that a word is used with uniform meaning in a statute yields to its context.[11]
(3)That context requires consideration of both the review procedures and of the substantive provisions under which the decision was made.
(4)Section “… 14ZZ … is to be read as designed to specify a ‘matter’ within the meaning of Ch III of the Constitution. …”.[12]
(5)“ In my view, if regard is had to the context in which s. 14ZZ appears, in its operation upon the jurisdiction of this Court, then the ‘dissatisfaction’ of the person initiating the proceeding is of the following nature. It is a dissatisfaction with the absence of a favourable decision upon the objection which would, if now rectified by the Court, place the party in the position for the administration of the taxation laws which should have applied if the ruling had been made by the Commissioner in the terms sought. A mere curiosity or interest in having a formal ruling by the Commissioner for some collateral commercial purpose of the applicant is not sufficient to amount to ‘dissatisfaction’ in the relevant sense. …”[13]
[10] [1994] FCA 947; (1994) 48 FCR 397; 120 ALR 197; 94 ATC 4072 at 404-405; 206; 4,079
[11] [1994] FCA 947; (1994) 48 FCR 397; 120 ALR 197; 27 ATR 403; 94 ATC 4072 at 405; 206; 4,079
[12] [1994] FCA 947; (1994) 48 FCR 397; 120 ALR 197; 27 ATR 403; 94 ATC 4072 at 405; 207; 4,079-4,080
[13] [1994] FCA 947; (1994) 48 FCR 397; 120 ALR 197; 27 ATR 403; 94 ATC 4072 at 408; 210; 4,082
Justice Hill also looked to the constitutional issues citing various High Court authorities relating to the meaning of “matter” as it is used in Chapter III of the Constitution.[14] After reviewing the case law, his Honour concluded:
[14] Section 77(i) in Part III of the Constitution provides that with respect to “matters” mentioned in s 75 (and s 76), Parliament may make laws defining the jurisdiction of any federal court other than the High Court.
(1)“ A perusal of the case law suggests that a case will be ‘hypothetical’, and in consequence involve no ‘matter’ where there is no controversy between parties, where the decision has not legal or practical consequences upon the plaintiff or where either party might ignore the result. …
The conferral upon a federal court of judicial power presupposes that there must be a controversy between the parties … The power to decide controversies is, as Brennan J observed in Harris v Caladine (1990-1991) 172 CLR 84 at 107, ‘at the heart of judicial power’. …
A case having no practical or legal consequences between the parties will obviously be of mere academic interest only and on any view of the matter hypothetical … Thus, if the result of the case can not determine rights or liabilities which are litigated or affected, but is merely advisory, it will be hypothetical and not involve a ‘matter’ …
A case where there are practical, although not legal consequences, may, however, not be hypothetical … Closely related will be the class of case where the result of the case is one which may be ignored. Thus in Minister for Immigration and Ethnic Affairs (Cth) v Pochi (1981) 55 ALJR 706, a majority of the High Court, in rescinding a grant of special leave to appeal, said (at 708-709):
‘This Court should not be placed in a position where the substance of a decision which it has affirmed can be overriden by ministerial fiat and the reasons for its judgment may be treated by the Minister as no more than advice which he is at liberty to disregard.’
A question will be hypothetical in the relevant sense if the outcome depends upon facts which remain in doubt or have not yet been decided …
It follows from what I have said that determination of the legal outcome of a proposed course of action where all the facts relevant to that proposed course of action are known, will not be hypothetical in the relevant sense. This is particularly so having regard to the fact that failure to appeal or the outcome of an appeal will govern the rights and obligations of the taxpayer in respect of the proposed transaction thereafter, whatever the income law might otherwise provide …”[15]
(2)The legislative scheme for the provision of private rulings conferred upon a “rulee” who was “dissatisfied” a right to seek review of a ruling. A “rulee” as then defined had to be a person to whom the tax law was capable of applying.
“ There is no definition of ‘dissatisfied’ in this context but the word must bear more than its ordinary dictionary meaning of ‘displeased with’ or ‘not contented with’. More is required than mere lack of satisfaction with the objection decision. It can hardly be said that a university lecturer, leaning of the disallowance of an objection by a public company of which he or she is neither a director nor shareholder, could, because he or she was not happy with the objection decision, refer the matter to the Court. The existence of the constitutional requirement that a federal court’s jurisdiction be limited to a ‘matter’ requires that the word ‘dissatisfied’ be interpreted in a way which would lead to the legislation being valid, rather than in a way which would lead to its being struck down …
In my opinion a person will only be ‘dissatisfied’ in the relevant sense if that person is a person to whom the ‘ruling’ is still capable of having legal effect. In the case of a ruling relating to a proposed arrangement, that means that the arrangement must be one which, if entered into, will fall within the ruling. If the ruling relates to a year of income which has passed before the appeal is instituted (or perhaps before the appeal has been heard) so that the ruling cannot affect the taxation liability, that person, no matter how discontented, will not be a ‘person dissatisfied’.”[16]
[15] [1994] FCA 947; (1994) 48 FCR 397; 120 ALR 197; 27 ATR 403; 94 ATC 4072 at 430-431; 230-231; 4,098-4.099
[16] [1994] FCA 947; (1994) 48 FCR 397; 120 ALR 197; 27 ATR 403; 94 ATC 4072 at 432; 233; 4,100
B.Other authorities
B.1Appeal to a court by a person who is dissatisfied with an administrative decision
CTC Resources was decided in 1994 and in a context of an appeal to a court from an administrative decision rather than in the context of an administrative tribunal or body engaged in administrative decision-making. A more recent case falling into the same category is Castle Constructions Pty Ltd v Sahab Holdings Pty Ltd,[17] which considered it in the context of an application to the Supreme Court of New South Wales for review of an administrative decision. The administrative decision of which review was sought involved the Registrar-General’s powers to restore an easement over real property. The application for restoration had been made by Sahab Holdings Pty Ltd which had purchased the property that had been the dominant tenement in relation to the easement but which had done so after the easement had been removed. Section 122(1) of the Real Property Act 1900 (NSW) permitted a “person who is dissatisfied” with certain decisions of the Registrar-General to apply to the Supreme Court for their review. The majority said in relation to this point:
“ In relation to the Registrar-General’s decision in 2001 to remove the easement, Sahab alleged that the Registrar-General should not have removed the easement because the Registrar-General could not reasonably have been satisfied that it did not affect the land. But this argument assumed, and did not demonstrate, that Sahab was a ‘person who is dissatisfied’ with the Registrar-General’s decision to exercise power under s 32(6) to remove the easement from the Register. The decision to remove which Sahab sought to challenge did not relate to land in which Sahab had any interest at the time the decision was made. Sahab, having acquired the title to the Strathallen land which the Howards had at the time of sale, did not then become a person dissatisfied with the Registrar-General’s decision to remove. Section 122 is not reached.”[18]
[17] [2013] HCA 11; (2013) 87 ALJR 528; 296 ALR 394; Hayne, Crennan, Kiefel, Bell and Gageler JJ
[18] [2013] HCA 11; (2013) 87 ALJR 528; 296 ALR 394 at [38]; 536-537; 403-404; Hayne, Crennan, Kiefel and Bell JJ
Given the different constitutional framework of a State Supreme Court exercising jurisdiction from that of the Federal Court, it is understandable that the majority did not address the issue in terms of the court’s jurisdiction.
B.2Application to a merits review tribunal by a person who is dissatisfied with an administrative decision
The case of McCallum v Commissioner of Taxation[19] raised the issue of when a person may be “dissatisfied” with an administrative decision and may make an application to the Tribunal. Mr McCallum had objected to amended assessments made by the Commissioner in relation to income tax. Before the Commissioner made his decision on those objections, Mr McCallum became bankrupt. Having being notified of the objection decisions, he lodged an application for review of the Commissioner’s objection decisions. In the meantime, the amounts assessed by the Commissioner were tax debts for the purposes of the Bankruptcy Act 1966 (Bankruptcy Act) then in force and had been converted by s 82(1) of that legislation into a right of proof. Furthermore, it would be released by s 153 upon Mr McCallum’s discharge from bankruptcy.
[19] (1997) 75 FCR 458; 145 ALR 446; Whitlam and Lehane JJ; Hill J dissenting
Lehane J, with whom Whitlam J agreed, said that it was necessary to decide whether Mr McCallum was a person dissatisfied with an objection decision having regard to the provisions of ITAA36, the TAA and the Bankruptcy Act. His Honour considered first whether the trustee was a “person” and, if so, a person who might be described as “dissatisfied” with the objection decision. He found those two questions relatively easy to answer saying:
“… If an objection decision leaves on foot an assessment which the trustee regards as excessive, and thus prejudicial to other creditors, I see no reason to think that the trustee is not properly to be described as a person who is dissatisfied with the decision. …”[20]
[20] (1997) 75 FCR 458; 145 ALR 446 at 472; 459
A third question was harder to answer. It was the question whether an application for review to the Tribunal under s 14ZZ(1)(a)(i) could be regarded as a “legal proceeding” within the meaning of s 134(1)(j) of the Bankruptcy Act. That section provides that “Subject to this Act, the trustee may … bring, institute or defend any action or other legal proceeding relating to the administration of the estate”. Lehane J decided that the expression should be given a broad interpretation and that an application to the Tribunal was encompassed within it.[21] It was a legal proceeding that related to the administration of the bankrupt estate. Having reached that conclusion, he concluded:
“… Once that is seen, it is evident in my view, that the way in which the Assessment Act and the Administration Act limit the rights of objection, review and appeal are not to be regarded as precluding the exercise of those rights by the trustee in bankruptcy or a bankrupt taxpayer. That being so, in my opinion it should be held, consistently with Cummings [Cummings v Claremont Petroleum NL[22]], that in this case the Official Trustee has standing to apply for a review of the objection decision.”[23]
[21] (1997) 75 FCR 458; 145 ALR 446 at 472-473; 459-460
[22] (1996) 185 CLR 124; 137 ALR 1; Brennan, Dawson, Toohey, Gaudron and McHugh JJ
[23] (1997) 75 FCR 458; 145 ALR 446 at 474; 461
His conclusion on that point did not necessarily mean that the bankrupt taxpayer did not have an entitlement to apply for a review of the objection decision. In the case of Cummings, the High Court had decided that two bankrupts had no standing to institute an appeal against a judgment entered against them. The grounds on which the majority did so differed from the minority. Noting that there had been no suggestion in the arguments put to them that the bankrupts would not be released from liability for the judgment debt (because of fraud) when they were discharged from bankruptcy,[24] the majority, Brennan CJ, Gaudron and McHugh JJ decided:
“… So far as a judgment entered in an action against a bankrupt creates or evidences a provable debt, we respectfully agree that the bankrupt has no financial interest which would confer locus standi to appeal in his own name against the judgment. That is because it is fundamental to the law of bankruptcy that the bankrupt is divested of both his interest in his property and liability for his provable debts …”.[25]
[24] (1996) 185 CLR 124; 137 ALR 1 at 138; 9 (Footnote (63))
[25] (1996) 185 CLR 124; 137 ALR 1 at 137-138; 9
I have also looked at the case of Chief Commissioner of State Revenue v Print National Pty Ltd.[26] Under s 72 of the Taxation Administration Act 1996 (NSW) (TAANSW), the Chief Commissioner of State Revenue in New South Wales (Chief Commissioner) issued notices to certain persons requiring them to produce information, records and the like. He did so for the purposes of his investigation into those persons and their relationship with various companies including Print National Pty Ltd (Print National). The Chief Commissioner did not issue a notice to Print National.
[26] [2013] NSWCA 96; Bathurst CJ; Beazley P and Gzell J
Under s 86 of the TAANSW, a “taxpayer who is dissatisfied” with an assessment shown in a notice of assessment or “any other decision (in the meaning of section 6 of the Administrative Decisions Tribunal Act 1997) of the Chief Commissioner under a taxation law” may lodge a written objection with the Chief Commissioner. Section 6(1) of the Administrative Decisions Tribunal Act 1997 (NSW) (ADT Act) sets out the “General meaning” of the word “decision”:
“A decision includes any of the following:
(a)making, suspending, revoking or refusing to make an order or determination,
(b)giving, suspending, revoking or refusing to give a certificate, direction, approval, consent or permission,
(c)issuing, suspending, revoking or refusing to issue a licence, authority or other instrument,
(d)imposing a condition or restriction,
(e)making a declaration, demand or requirement,
(f)retaining, or refusing to deliver up, an article,
(g)doing or refusing to do any other act or thing.”
Print National lodged written objections to the Chief Commissioner’s decision to issue s 72 notices to the recipients of those notices even though it was not itself a recipient. The Chief Commissioner had disallowed them under s 91 of the TAANSW. On appeal to the Administrative Decisions Tribunal (ADT) in New South Wales, a case stated was referred to the Court of Appeal.
Gzell J, with whom Bathurst CJ and Beazley P agreed, said that it was unlikely that the broad definition of a “decision” found in s 6(1) of the ADT Act:
“… should be cut down by an implied intent to give ‘dissatisfied’ a special and limited meaning that would undermine the breadth of decisions of the Chief Commissioner open to review.
The TA Act deals with administrative matters. It is unlikely that the parliament intended that the ADT could only review decisions under its provisions that had a substantive rather than an administrative effect. That would mean that decisions of the Chief Commissioner under many Parts of the TA Act were not open to review.”[27]
[27] [2013] NSWCA 96 at [37]-[38]
If that were the case, Gzell J continued, the Chief Commissioner’s decisions to inspect public records under s 73 of the TAANSW, to use documents provided to him under s 74, a decision to enter premises under s 75, to require the occupants of premises entered to provide information and assistance under s 76 and a decision to apply for a search warrant under s 77 would all be unassailable before the ADT. It is no answer to that outcome that a taxpayer remains able to seek judicial review before the Supreme Court. That path has cost implications for a taxpayer and, furthermore, is not merits review. It followed that that Court of Appeal did not exclude decisions of that sort and decided:
“… ‘Dissatisfied’ in s 86(1)(b) of the Taxation Administration Act 1996 not limited to decisions having an immediate direct effect on a person’s actual or potential liability to tax.”
The Court of Appeal’s attention was not drawn to the case of Australian Broadcasting Tribunal v Bond[28] (Bond) decided by the High Court but in the context of the Administrative Decisions (Judicial Review) Act 1977 (ADJR Act) and particularly in the context of the definition of the word “decision” in s 3(2) of the ADJR Act. That provision defines the word, in part and in so far as they are relevant in this case, in terms of “… a decision of an administrative character made … under an enactment …”.
[28] (1990) 170 CLR 321; 94 ALR 11
Mason CJ, with whom Brennan J and Deane J agreed, considered the competing policy considerations to be taken into account in determining the compass of the word “decision” in the context of the ADJR Act. These were:
“On the one hand, the purposes of the ADJR Act are to allow persons aggrieved by the administrative decision-making processes of government a convenient and effective means of redress and to enhance those processes. On the other hand, in so far as the ambit of the concept of ‘decision’ is extended, there is a greater risk that the efficient administration of government will be impaired. Although Bowen CJ and Lockhart J appeared to emphasise the first of these considerations in Australian National University v Burns (1982) 64 FLR 166 at 172; 43 ALR 25 at 30, there comes a point when the second must prevail, as their Honours implicitly acknowledged. To interpret ‘decision’ in a way that would involve a departure from the quality of finality would lead to a fragmentation of the processes of administrative decision-making and set at risk the efficiency of the administrative process.”[29]
[29] (1990) 170 CLR 321; 94 ALR 11 at 23; 336-337
Mason CJ distinguished between a “decision” that is, for the purposes of s 3(2) of the ADJR Act “... one that generally is substantive, final and operative ...”,[30] conduct that “…looks to the way in which the proceedings have been conducted …” and “… decisions made along the way with a view to the making of a final determination. …”,[31] which are “… unreviewable decisions which are in themselves no more than steps in the deliberative or reasoning process.”[32]
[30] (1990) 170 CLR 321; 94 ALR 11 at 27; 341-342
[31] (1990) 170 CLR 321; 94 ALR 11 at 27; 341-342
[32] (1990) 170 CLR 321; 94 ALR 11 at 27; 341-342
Bond is a case that has been applied in ascertaining the limits of the Tribunal’s power to review decisions on many occasions.[33] The definition of “decision” in s 3(3) of the AAT Act[34] is in identical terms to the general definition of that term in s 6(1) of the ADT Act. I respectfully suggest that in considering whether a person is “dissatisfied” with a decision made under an enactment, the context in which the “decision” is identified in the relevant enactment, the meaning of “dissatisfied” is considered and a person’s dissatisfaction with that decision is assessed must include the law as set out in Bond.
[33] A recent example is Kowalski v Chief Executive Officer of Medicare Australia [2010] FCA 413; (2010) 185 FCR 42 at [23]-[26]; 48-49; Mansfield J
[34] See [9] above
C. Some of the principles that can be gleaned from the cases
It seems to me that the following are some of the principles that can be taken from these cases to guide me in deciding whether SAPL is a person dissatisfied with the Commissioner’s objection decision so that it may lodge an application for its review in an administrative body being the Tribunal:
(1)When used in an enactment prescribing those who may make an application to a review body such as the Tribunal, the word “dissatisfied” is not to be given its ordinary meanings of “displeased with”, “not contented with” or the like.
(2)Its meaning is to be gained from the context in which it is used. That context includes not only the particular provision conferring a right to make an application but to the scheme of the legislation in which an administrative decision has been made and authorities such as Bond.
(3)A person is not dissatisfied with an administrative decision that cannot have any legal effect upon his or her interests:
(a)Those interests must be examined in the context of the legislative framework in which the administrative decision has been made.
(b)Generally, for example, a bankrupt’s interests cannot be affected by a judgment debt or by an administrative decision imposing a liability provable in the bankruptcy but Cummings leaves open the possibility that they may be affected if it is a debt or liability from which the bankrupt will not be released on his or her discharge from bankruptcy.
(4)A person may be dissatisfied with an administrative decision and be entitled to make an application for its review in the Tribunal even though the Tribunal’s decision may, under the legislative scheme, be set aside, ignored, treated as a recommendation or the like by the Minister or other person.
(a)This places an administrative body such as the Tribunal in a very different position from a federal court established under Chapter III of the Constitution.
(i)The Tribunal is part of the Executive Government coming under Chapter II of the Constitution.
(ii)Therefore, unlike a federal court, its jurisdiction is not constrained by:
∙matters referred to in ss 75 and 76 of the Constitution;
∙any obligation to determine rights and liabilities of the parties for its role is to create rights and liabilities; or
∙any obligation to reach a decision that cannot be set aside, ignored, treated as a recommendation or the like by a Minister or other person acting in accordance with the terms of the relevant legislation. An example is found in s 501 of the Migration Act 1958 for it can be set aside by the Minister acting under s 501A.
Applying the principles to this case
In Attachment A, I have set out a brief summary of the GST Act and of the assessment of assessable amounts and of the retention provisions under the TAA. Together, the GST Act and the TAA make a scheme for the imposition, collection and refund of GST. It is clear from that scheme that an entity’s power to object to the Commissioner’s decision to retain an amount under s 8AAZLGA while he verifies information as described in s 8AAZLGA(1), comes to an end as soon as one of the events listed in s 8AAZLGA(5) occurs. Those are events that include matters relating to the information itself that would no longer be reasonable to verify and the Commissioner’s failure to notify of the retention as required by s 8AAZLGA(3). They are events that also include a change in the amount that the Commissioner is required to refund as a result of his making an assessment relating to that amount or amending such an assessment. The issuing of the assessment or of the amended assessment fixes an entity’s liability to pay or entitlement to a refund. Section 105-40 gives an entity dissatisfied with the assessment or amended assessment a right to object to it and, in turn, Part IVC gives such an entity a right to apply to the Tribunal for review of the decision made on that objection.
In this scheme, the decision to retain an amount while information is verified is merely a holding decision, as it were. It is not a decision relating to an entity’s substantive liabilities or entitlements. The decision enables the Commissioner to hold the money but only for so long as s 8AAZLGA(5) permits. An entity may object to the Commissioner’s retention decision but only for so long as there is no change of the sort mentioned in s 8AAZLGA(5)(c) i.e. there has been no assessment or amended assessment relating to how much the Commissioner must refund in relation to the amount. That is the effect of s 14W(1)(aad) of the TAA. It is clear that the right to object to the decision to retain an amount must come to an end at that time because the amount, if any, that the Commissioner must refund to the entity is not then determined under s 8AAZLGA(5)(a) or (b) but by the assessment or amended assessment. That is the decision to which the entity must object and which determines its liability to pay or entitlement to receive a refund.
In this case, SAPL had already objected to the retention decision and the Commissioner had made an objection decision disallowing the objection when he went on to issue an amended assessment. The change in the order of events, though, does not put SAPL in a different position from that of the entity which finds its right to object to a retention decision is ended by the Commissioner’s issuing an assessment or amended assessment. Even if it were to be decided on review in the Tribunal that the Commissioner should not have made the decision to retain the amount under
s 8AAZLGA or that it did not follow all of the procedures that it should have, there would be no outcome in fact or in law that would change SAPL’s position. SAPL would not be paid the amount originally retained for the effect of the amended assessment is that there is no longer a credit on the Running Balance Account[35] in SAPL’s favour. The Commissioner no longer has any obligation to pay an amount to it under s 8AAZLF. The review of the objection decision relating to the retention decision would not touch on substantive issues relating to SAPL’s entitlements and obligations for they are not issues of the sort to which reference is made in s 8AAZLGA(2) or that would be relevant on review. Substantive issues relating to liabilities and entitlements are the province of the review of the amended assessment and I understand that it is pursuing its review rights in relation to that.[35] See further [53]-[55] below
As there can be no change effected in fact or in law, I have reached the conclusion that SAPL is not a person within the meaning of s 14ZZ(1)(a)(i) of the TAA who may apply to the Tribunal for review of a “reviewable objection decision” because it is not a person who is “… dissatisfied with the Commissioner’s objection decision …” in this case.
There is a slightly different path that I could also take and that would reach the same conclusion. It is apparent from CTC Resources that SAPL would not be a person who is “… dissatisfied with the Commissioner’s objection decision …” within the meaning of s 14ZZ(1)(a)(ii) and so would not be able to lodge an appeal to the Federal Court. That would follow from the fact that, just like CTC Resources, the appeal from the Commissioner’s objection decision relating to the retention of the amount would not lead to any change to SAPL’s position whether in fact or in law. That conclusion follows from a consideration of the limits on the Federal Court’s judicial power as prescribed by the Constitution.
The fact that SAPL could not pursue an appeal to the Federal Court from the Commissioner’s objection decision relating to his retention of an amount under s 8AAZLGA is relevant in considering whether it could lodge an application for its review in this Tribunal becomes relevant when it is realised that s 14ZZ(1)(a) 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)appeal to the Federal Court against the decision; …”
Although Parliament has provided for two different avenues of appeal, it would be strange if it were to permit the Tribunal to take a broader view of when a “person is dissatisfied” than a court is permitted to do so by virtue of its constitutional limitations. The drafting of s 14ZZ(1)(a) does not permit different views to be taken. Its opening words set the single criterion that must be satisfied by a person whether or not he or she chooses to apply to the Tribunal or appeal to the Federal Court. Therefore, in the case of s 14ZZ(1)(a), any consideration of whether a “person is dissatisfied” with a reviewable objection decision in the context of that person’s application to the Tribunal must take account of the factors that would lead a court to find that the person met, or did not meet, that description had he or she chosen to lodge an appeal in the Federal Court. As I have noted above,[36] constitutional considerations of that sort would not apply had Parliament limited the right to seek review to the administrative body being the Tribunal.
[36] See [34(4)(a)(ii)] above
The fact that Parliament has chosen to confer jurisdiction on both the Federal Court and the Tribunal in relation to reviewable objection decisions must lead to the conclusion that the manner in which each will review those decisions in a way that is consistent. Clearly, the legislative framework is a consistent factor and so too are the particular provisions of the TAA relating to review in the Tribunal and an appeal in the Federal Court. In each forum, the taxpayer carries the burden of proof whether it be to prove that the assessment is excessive or, in the case of a franking assessment, incorrect or, in any other case, the taxation decision concerned should not have been made.[37] Whether an applicant in the Tribunal or an appellant in the Federal Court, the taxpayer is, unless a contrary order is made by the Tribunal or the Court, limited to the grounds stated in the taxation objection to which the decision relates.[38] The Tribunal’s powers on review are found in s 43 of the AAT Act. They are to affirm a decision, vary it or set it aside and either substitute another or remit it to the decision-maker to reconsider in accordance with any directions it may give. That provision is not modified by the TAA. In relation to review by the Federal Court, s 14ZZP gives the Federal Court a similar discretion when it provides:
“Where a court hears an appeal against an objection decision under section 14ZZ, the court may make such order in relation to the decision as it thinks fit, including an order confirming or varying the decision.”
[37] TAA; ss 14ZZK(b) and 14ZZO(b)
[38] TAA; s 14ZZK(a) and 14ZZO(a) As always, the Tribunal’s jurisdiction and powers are constrained by the terms of the particular enactment providing that an application may be made to it for review of a particular decision. Gemerally and as a broad proposition, it might be said that the onus of proof relevant in judicial fact-finding has no part to play in administrative proceedings but Parliament may choose to alter that. It has chosen to do so in the particular context of the review of reviewable objection decisions by the Tribunal. That it might do so was specifically recognised by Brennan J when, in making a general statement of principle that is often relied on to support the broad proposition, he expressly confined it to “these administrative proceedings” (emphasis added) before him i.e. proceedings relating to the review of a decision made under the Veterans’ Entitlements Act 1986: Bushell v Repatriation Commission [1992] HCA 47; (1992) 175 CLR 408; 109 ALR 30; 16 AAR 1; 29 ALD 1 at 425; 43; 14 and 16
As is apparent from a reading of any appeal to the Federal Court from a reviewable objection decision, that Court undertakes an analysis of the evidence, makes findings of fact on that evidentiary material and decides whether the appellant has discharged the burden of proof just as the Tribunal decides whether an applicant to it has done so. Both act on the evidence before them even though the Tribunal is not bound by the rules of evidence. Neither is constrained by pleadings.[39] That is not to say that there are not some differences but they are differences that do not impinge on the manner or substance of the outcome of the review or appeal. Those differences may include some differences in the bases on which an extension of time for lodgement of the application or appeal may be made and, unlike the Federal Court, the Tribunal cannot make an order for security of costs or award costs against an unsuccessful party. As Foster J said in Eldridge v Federal Commissioner of Taxation:[40]
“ It is abundantly clear, of course, that even though the Tribunal does over again the work of the Commissioner, it does it in a significantly different way. Although it could be said to be part of an administrative hierarchy, its functions partake far more of the court than of the office desk.”[41]
[39] See further Federal Court Rules 2011; Part 33; Division 33.1
[40] (1990) 21 ATR 897
[41] (1990) 21 ATR 897 at 912
A GENERAL OUTLINE OF THE SCHEME FOR THE IMPOSITION AND COLLECTION OF GST
The GST Act imposes a goods and services tax (GST). If an entity is registered or required to be registered, it must give the Commissioner a GST return for each tax period.[42] 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.[43]
[42] GST Act; s 31-5
[43] GST Act; s 195-1
The GST Act 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.[44]
[44] GST Act; s 7-1(1)
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.”[45]
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).”
[45] 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”.[46] 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.
[46] 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.[47] Section 35-99 sets out the provisions of the GST Act containing special rules relating to refunds.
[47] GST Act; s 35-10
The administration of the GST scheme and the collection and recovery of amounts of GST
The obligations and liabilities that arise under the GST Act are ultimately expressed in terms of an entity’s liability to pay a net amount for a tax period or the Commissioner’s liability to pay a negative net amount, and so a GST credit, to that entity. The GST Act itself does not provide the practical machinery for determining those amounts and notifying an entity of an obligation to pay or an entitlement to receive a refund. Instead, 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 a range of other liabilities. In this case, only one of those other liabilities is relevant. It is concerned with indirect taxes and they are the subject of Subdivision 105-A. An “indirect tax” includes GST.[48]
[48] Income Tax Assessment Act 1997 (ITAA97); s 995-1(1) These provisions apply to the interpretation of the TAA: TAA; s 3AA(2).
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 at any time 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.[49] An entity may object against an assessment of a net amount if dissatisfied with it and may do so under Part IVC of the TAA.[50]
[49] TAA; s 105-15
[50] TAA; s 105-40
Keeping a record of tax debts
It is apparent from the scheme of the GST Act that there may well be an ebb and flow of an entity’s obligation to pay a net amount and the Commissioner’s to pay a negative net amount to the entity. There has to be a way in which these amounts are recorded so that an entity’s obligations or entitlements can be ascertained at any particular time. Part IIB of the TAA provides the way by permitting the Commissioner to establish one or more systems of accounts for primary tax debts.[51] With one exception, a “primary tax debt” means any amount due to the Commonwealth directly under a taxation law and includes an amount of that sort even though it is not yet payable.[52] An amount due to the Commissioner under the GST Act is such an amount and is not excluded from the definition of a “primary tax debt”.
[51] TAA; s 8AAZC(1)
[52] TAA; s 8AAZA
Each account established is known as a “Running Balance Account” or an “RBA” and may be established for any entity.[53] Separate RBAs may be established for different types of primary tax debts.[54]
[53] TAA; ss 8AAZC(2) and (3)
[54] TAA; s 8AAZC(4A)
Division 3 of Part 11B of the TAA sets out the way in which the Commissioner is required to treat amounts he receives in respect of an entity’s current or anticipated tax debt or debts, a credit to which an entity is entitled under a taxation law and an entity’s RBA surplus. An “RBA surplus” is the balance shown in the RBA in favour of an entity. That balance is based on the primary tax debts allocated to the RBA and the payments that have been made in respect of current or anticipated primary tax debts of the entity and on the credits to which the entity is entitled under taxation law and which have been allocated to the RBA.[55]
[55] TAA; s 8AAZA
Refunds of RBA surpluses and credits
Division 3A of Part IIB of the TAA deals with the refund of any RBA surplus and of credits to an entity. A “credit” is an amount that the Commissioner must pay to a taxpayer under a taxation law other than those specified in the definition of that term in s 8AAZA of the TAA. None of the exceptions relates to the GST Act. A credit also includes an amount received by the Commissioner in respect of a taxpayer as a result of the Commissioner’s having made a claim that is similar in nature to a foreign revenue claim as defined in s 263-10 in Schedule 1 to the TAA.
Section 8AAZLF(1) of the TAA provides that the Commissioner must refund to an entity so much of its RBA surplus or any credit in its favour as he does not allocate or apply under Division 3 of Part IIB.[56] The section goes on to qualify the circumstances in which certain amounts are refunded and to provide for adjustment of the RBA when payments are made.
[56] See [52] above
Commissioner’s right to retain certain amounts otherwise required to refund them
Sections 8AAZLG and 8AAZLGA set out the circumstances in which the Commissioner may retain an amount that he or she would otherwise have to pay to an entity under s 8AAZLF.
Section 8AAZLG was inserted in the TAA in 1999 but was amended in 2012. Section 8AAZLG(1) was not affected by the amendment. It provides:
“The Commissioner may retain an amount that he or she otherwise would have to refund to an entity under section 8AAZLF, if the entity has not given the Commissioner a notification:
(a)that affects or may affect the amount that the Commissioner refunds to the entity: and
(b)that the entity is required to give the Commissioner under any of the BAS provisions …”.
The “BAS provisions” include “the indirect tax law” and the GST law is an “indirect tax law”.[57]
[57] Income Tax Assessment Act 1997; s 995-1(1)
Section 8AAZLG(2) was amended in 2012 to add the words I have shown in bold in the provision as it now reads:
“The Commissioner may retain the amount until the entity has given the Commissioner that notification or the Commissioner makes or amends an assessment of the amount, whichever happens first.
Note:…”
The amendment was made by the Indirect Tax Laws Amendment (Assessment) Act 2012 (ITLAA Act).[58] As an amendment made by Division 3 of Part 1 of Schedule 1 to the ITLAA Act, it applied “… in relation to payments and refunds that relate to tax periods … starting on or after 1 July 2012.”[59]
[58] ITLAA Act; s 3 and Schedule 1, Part 1, Division 3; Item 190
[59] ITLAA Act; s 3 and Schedule 1, Part 1, Division 5; Item 239(1)
Whereas s 8AAZLG provides for situations in which an entity has not given the Commissioner a notification that it is required to give under a BAS provision and that may affect the amount refunded, s 8AAZLGA provides for the situation in which an entity has given him such a notification and it affects, or may affect, the amount refunded by the Commissioner. It was inserted by the TSLAM Act[60] and came into effect on the day that legislation received Royal Asset 27 June 2012.[61]
[60] TSLAM Act; s 3 and Schedule 7; Item 1
[61] TSLAM Act; s 2(1); Item 5; Act No. 75 of 2012
The effect of s 8AAZLGA is that the Commissioner may retain an amount in the two circumstances it sets out. Both are predicated on the entity’s having given the Commissioner a notification that affects, or may affect, the amount that the Commissioner refunds to that entity. One circumstance arises if the entity asks the Commissioner to retain the amount for verification of the information it has provided, the Commissioner may retain it.[62] The other arises if it would be reasonable to require verification of the information contained in the notification and relates to the amount that the Commissioner would have to refund.[63]
[62] TAA; s 8AAZLGA(1)(b)
[63] TAA; s 8AAZLGA(1)(a)
Section 8AAZLGA(2) sets out matters to which the Commissioner must have regard in deciding whether to retain an amount in either of the two circumstances. It provides:
“In deciding whether to retain the amount under this section, the Commissioner must, as far as the information available to the Commissioner at the time of making the decision reasonably allows, have regard to the following:
(a)the likely accuracy of the notified information;
(b)the likelihood that the notified information was affected by:
(i)fraud or evasion; or
(ii)intentional disregard of a taxation law; or
(iii)recklessness as to the operation of a taxation law;
(c)the impact of retaining the amount on the entity’s financial position;
(d)whether retaining the amount is necessary for the protection of the revenue, including the likelihood that the Commissioner could recover any of the amount if the notified information were found to be incorrect after the amount had been refunded;
(e)any complexity that would be involved in verifying the notified information;
(f)the time for which the Commissioner has already retained the amount;
(g)what the Commissioner has already done to verify the notified information;
(h)whether the Commissioner has enough information to make an assessment relating to the amount (including information obtained from making further requests for information);
(i)the extent to which the notified information is consistent with information that the entity previously provided;
(j)any other relevant matter.”
Section 8AAZLGA(3) requires the Commissioner to inform the entity concerned of any retention of an amount. At the time he informs the entity, he may also require the entity to provide information that he is aware will be required for the purposes of verifying the notified information.[64] Section 8AAZLGA(5) provides for the length of time for which the Commissioner may retain an amount under
[64] TAA; s 8AAZLGA(4)
s 8AAZLGA. It provides:
“The Commissioner may retain the amount under this section only until:
(a)if paragraph (1)(a) applies – it would no longer be reasonable to require verification of the information; or
(b)if the Commissioner fails to inform the entity, in accordance with subsection (3), that he or she has retained the amount under this section – the end of the day after the time by which, under that subsection, the Commissioner is required to inform the entity; or
(c)in any case – there is a change to how much the Commissioner is required to refund, as a result of:
(i)the Commissioner amending an assessment relating to the amount; or
(ii)the Commissioner making or amending an assessment, under Division 105 in Schedule 1, relating to the amount;
whichever happens first.”
Right to object to Commissioner’s decision to retain an amount
An entity dissatisfied with the Commissioner’s decision to retain an amount under s 8AAZLGA may object to that decision. It may do so in the manner set out in Part IVC of the TAA.[65] The period within which the entity may object does not start at the time the Commissioner makes his decision to retain an amount or even at the time he notifies the entity of his decision. Instead, it starts 60 days after the end of the day on which the Commissioner must inform the entity under s 8AAZLGA(3) that he has retained an amount under s 8AAZLGA.[66] The starting day is extended if the Commissioner has requested information for the purposes of verifying notified information to which reference is made in s 8AAZLGA of the TAA and he has not yet received it.[67] The period ends:
“… on the day (if any) on which there is a change, of a kind mentioned in paragraph 8AAZLGA(5)(c), to how much the Commissioner is required to refund in relation to the amount; …”.[68]
[65] TAA; s 8AAZLG(6)
[66] TAA; s 14ZW(1)(aad)
[67] TAA; s 14ZW(4)
[68] TAA; s 14ZW(1)(aad)
I note that the relevant amendments made to s 14ZW to accommodate the right to object given to an entity under s 8AAZLGA were inserted in the TAA by the TSLAM Act. They also came into effect on the day on which TSLAM received Royal Assent i.e. 27 June 2012.
I certify that the preceding sixty six paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie,
Signed: [sgd]..............................................................
Associate
Date of Hearing 28 May 2013
Date of Decision 4 June 2013
Representative for the Applicant Mr Andrew Garrett
Solicitor for the Respondent Ms Renae Woolley
ATO Legal Services Branch
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