Stern and Commissioner of Taxation (Taxation) - [2023] AATA 2010

Stern and Commissioner of Taxation (Taxation) [2023] AATA 2010 (4 July 2023)
Division:TAXATION AND COMMERCIAL DIVISION
File Number(s): 2021/9670
Re:Steven Stern
APPLICANT

AndCommissioner of Taxation
RESPONDENT

DECISION
Tribunal:Deputy President Bernard J McCabe
Date:4 July 2023
Place:Melbourne

The decision under review is affirmed.
....................[SGD]......................
Deputy President Bernard J McCabe
CATCHWORDS
Review of objection decision - superannuation - commutation of excess transfer balance - where taxpayer recipient of capped defined benefit income streams - whether commutation results in acquisition of property - whether s 51(xxxi) of the Australian Constitution engaged - whether Commissioner required to consult taxpayer over commutation - decision under review affirmed
LEGISLATION
Acts Interpretations Act 1901 (Cth)
Australian Constitution
Income Tax Assessment Act 1997 (Cth)
Taxation Administration Act 1953 (Cth)
CASES
Georgiadis v Australian and Overseas Telecommunications Corporation [1994] HCA 6; (1994) 179 CLR 297
Greville v Williams (1906) 4 CLR 694
Johnston Pear & Kingham & The Offset Printing Company Pty Ltd v Commonwealth (1943) 67 CLR 314
JT International SA v The Commonwealth [2012] HCA 43
Mutual Pools and Staff Pty Limited v The Commonwealth [1994] HCA 9; (1994) 179 CLR 155
PJ Magennis Pty Ltd v The Commonwealth (1949) 80 CLR 382
Smith v ANL Limited (2000) 204 CLR 493
SECONDARY MATERIALS
Explanatory memorandum to the Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016
Superannuation (Excess Transfer Balance Tax) Imposition Bill 2016
Treasury Laws Amendment (Fair and Sustainable Superannuation) Bill 2016
REASONS FOR DECISION
Deputy President Bernard J McCabe
4 July 2023

Australia’s system of compulsory superannuation is designed to ensure workers make provision for their retirement. Self-funded retirees enjoy greater financial freedom and impose less of a burden on the public purse over the longer term. With that desirable end in mind, the Commonwealth provides taxation concessions for superannuation. The concessions apply at the contribution, investment, and earnings stages of the superannuation life cycle. But there are limits to that concessional treatment. This case concerns the limits of one of those limits.
The applicant taxpayer’s arguments focus on the limit contained in Division 294 of the Income Tax Assessment Act 1997 (Cth) (ITAA97) and related provisions in Schedule One of the Taxation Administration Act 1953 (Cth) (TAA). Division 294 purports to limit the concessions available at the earnings stage of the superannuation cycle. The purpose of Division 294 of the ITAA97 is succinctly explained in s 294-1, which provides:
There is a cap on the total amount you can transfer into the retirement phase of superannuation (where earnings are exempt from taxation).
Credits are added to a transfer balance account when you transfer amounts.
If the balance in your account exceeds the cap, you will be required to remove the excess from the retirement phase, and you will be liable to pay excess transfer balance tax.
The taxpayer is an experienced lawyer and scholar who spent most of his career in the public sector. He retired from full-time work prior to 1 July 2017. He was (and…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Stern and Commissioner of Taxation (Taxation)

Details

AGLC: Stern and Commissioner of Taxation (Taxation) [2023] AATA 2010
Case: [2023] AATA 2010
Decision Date: 4 July 2023

CaseChat Overview and Summary

This matter concerned an application for review of a decision made by the Commissioner of Taxation regarding the commutation of an excess transfer balance. The taxpayer, Mr Stern, sought to challenge the Commissioner's decision in relation to capped defined benefit income streams.

The primary legal issue before the Court was whether the commutation of the taxpayer's capped defined benefit income streams resulted in the acquisition of property for the purposes of section 51(xxxi) of the Australian Constitution. A further issue was whether the Commissioner was required to consult the taxpayer before undertaking the commutation.

Deputy President McCabe P found that the plain text of section 294-140 of the relevant legislation was unambiguous and did not support the taxpayer's interpretation. The Court held that the literal meaning of the provision, when considered within the broader legislative scheme, did not lead to an absurd or anomalous result. Consequently, the taxpayer's proposed interpretation was deemed irreconcilable with the statutory language.

The objection decision under review was affirmed.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

I am not satisfied the plain text of s 294-140 admits of any ambiguity, and there is no reason to doubt the literal meaning of the words lends itself to the interpretation proposed by the taxpayer. While s 294-120 offers guidance to the object, the plain meaning of s 294-140(3) is not ambiguous and does not lead to a result that is absurd or anomalous, particularly when understood in the larger context of the legislative scheme. The interpretation proposed by the taxpayer is impossible to square with the plain text of the provision. CONCLUSION The objection decision under review is affirmed.

Ratio Decidendi

Legal Principle Established

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