STEVEN MATTHEWS and COMMISSIONER OF TAXATION
[2013] AATA 435
•26 June 2013
[2013] AATA 435
Division TAXATION APPEALS DIVISION File Number(s)
2012/5147, 2012/5148, 2012/5149, 2012/5150, 2012/5151, 2012/5152
Re
STEVEN MATTHEWS
APPLICANT
And
COMMISSIONER OF TAXATION
RESPONDENT
DECISION
Tribunal F J Alpins, Deputy President
Date 26 June 2013 Place Melbourne As the Tribunal does not have jurisdiction to consider the application for review, the application is dismissed.
………[sgd]………………………….
F J Alpins, Deputy President
TAXATION – Practice and procedure – jurisdiction of Tribunal – Pt IVC of Taxation Administration Act 1953 – no reviewable decision identified by applicant
Legislation
Administrative Appeals Tribunal Act 1975 (Cth) sections 25(1), 25(4)
Financial Management and Accountability Act 1997 (Cth) section 47(1)(c)
Taxation Administration Act 1953 (Cth) sections 8AAZA, 8AAZC, 14ZL-14ZZS, Division 45 and Division 340 in Schedule 1Income Tax Assessment Act 1936 (Cth) section 175A(1)
Cases
Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 2 ALD 1
Mahoney & Ors v Dillon (1987) 71 ALR 395
Comcare v Burton (1998) 50 ALD 846
Secretary to the Department of Social Security v Riley (1987) 17 FCR 99Civil Aviation Safety Authority v Coburn [1996] FCA 1827
REASONS FOR DECISION
F J Alpins, Deputy President
26 June 2013
Introduction
The issue before the Tribunal is whether it has jurisdiction in relation to this application for review, made by Mr Steven Matthews. The application concerns Mr Matthews’ taxation affairs. In particular, the question is whether there has been a decision capable of review by the Tribunal (see ss 25(1) and 25(4) of the Administrative Appeals Tribunal Act 1975 (Cth) (the “AAT Act”)).
Facts
It is convenient first to set out the background to Mr Matthews’ application. The following findings of fact are based upon various documents provided by both parties at the hearing and also upon documents attached to Mr Matthews’ application.
By letter dated 20 December 2011, the Deputy Commissioner of Taxation informed Mr Matthews that, as a result of the lodgement of Mr Matthews’ income tax return for the year ended 30 June 2011, a debt of $45,993.31 owing by Mr Matthews had been “re-raised”. That is to say, while the Commissioner had previously decided (in May 2010) not to pursue recovery of the debt, on the basis that it was considered that it was not economical to do so (see s 47(1)(c) of the Financial Management And Accountability Act 1997 (Cth)), the Commissioner now considered recovery to be viable and sought to recover that amount.
The debt was said to comprise primary tax debts (see s 8AAZA of the Taxation Administration Act 1953 (“TAA”)) and general interest charges (“GIC”) recorded in the integrated client account of “Te Matiu Services”, being a trading name attached to Mr Matthews’ Australian Business Number under which he carried on business as a sole trader. The integrated client account was a Running Balance Account (“RBA”) established under s 8AAZC of the TAA.
The debt was said to comprise the following amounts:
(a)Pay as you go (“PAYG”) income tax instalments (see Div 45 in Sch 1 to the TAA) for the years ending 30 June 2005, 2006 and 2007, totalling $24,048.29;
(b)GIC totalling $21,536.02;
(c)(a) GST instalment(s) in the amount of $297.00;
(d)GST in the amount of $112.00.
Mr Matthews was informed in the letter that, as a result of the re-raising of the debt, there was therefore currently a debit balance in the integrated client account of $45,065.73. Mr Matthews was told that he must either pay that amount in full or apply for a payment arrangement.
Mr Matthews replied to that correspondence by letter dated 1 March 2012. He described his letter in its heading and its contents as a “[l]etter of objection”. He said that Te Matiu Services had ceased trading on 1 February 2006 and complained that GIC should not have been debited to the integrated client account since 30 June 2006. Furthermore, he complained that credits in respect of his income tax returns for the years ending 30 June 2007 to 30 June 2011 (inclusive), totalling $12,880.00 (also said to total $12,870.00), therefore should not have been offset against the alleged debt. He also expressed general dissatisfaction with the manner in which the Australian Taxation Office (“ATO”) had dealt with the matter. In conclusion, he said:
“Consequently, I request:
1) Cancellation of the Pay As You Go income tax installments [sic] for 30 June 2005, 2006 and 2007
2) Cancellation of all interest debit charges against my ABN .... and a written guarantee that there will be no further and future interest charges, and
3) A full reimbursement of $12,880.00 against my T[ax] F[ile] N[umber] ...
Unless I receive a satisfactory conclusion .... within 30 days from the above date, resolving these issues, I will have no alternative but to place this matter in the hands of the Ombudsman as well as my Federal Member of Parliament.”
In August 2012 Mr Matthews complained to the Commonwealth Ombudsman about the matter. By letter dated 3 September 2012, a Senior Investigation Officer in the Ombudsman’s office informed Mr Matthews that the ATO had advised the officer that in May 2012 it had decided to remit accrued GIC and shortfall interest charges so as to reduce the relevant debt to $9,526.63. As Mr Matthews had indicated in his complaint to the Ombudsman that he was unable to repay the debt, the officer recommended that he apply to the ATO for release from the debt on the grounds of hardship and provided him with a fact sheet and application form for that purpose.
In October 2012 Mr Matthews sought a written response to his letter to the Deputy Commissioner of Taxation. The Deputy Commissioner responded under cover of a letter dated 22 October 2012. In that letter, the Deputy Commissioner reiterated the circumstances in which it had been decided that the debt of $45,993.31 would be “re-raised for pursuit”. I note that the components of that amount set out in the letter appear to differ somewhat from those set out in the letter of December 2011; however, for present purposes that is immaterial.
With respect to the outstanding PAYG instalments, the relevant instalments were said to be those for the quarterly periods April-June 2004 to April-June 2006, as set out in the Business Activity Statements of Te Matiu Services for those periods. Those periods appear to differ from those referred to in the letter of December 2011, but again that is in this instance immaterial.
It was said that those PAYG instalments, while shown as credits (for instalments payable) on Mr Matthews’ income tax returns and notices of assessment for the 2004, 2005 and 2006 years of income, in fact remained unpaid (see s 45-30, Sch 1 to the TAA).
I note that Mr Matthews’ income tax assessments for the 2004, 2005 and 2006 income years were in the amounts of $8,401.70, $29,130.34 and $18,157.80 respectively. An amended assessment was issued to Mr Matthews for the 2005 year, in the amount of $11,654.46, although the circumstances in which that amended assessment was issued are not apparent.
The Deputy Commissioner confirmed that the amount of the debt had been reduced to $9,526.63, as follows:
“Upon receipt of your complaint of 1 March 2012, giving consideration to your circumstances, the ATO agreed to remit accrued GIC on the account totalling $32,562.57 however there remained outstanding amounts of PAYG Income Tax Instalments totalling $24,567.78.
At this time the ATO also granted remission of GIC ($12,374.67) and Shortfall Interest Charges ($2,609.01) previously applied to your income tax account. The credit generated by this remission was offset to your account to reduce the liability further bringing the balance to $9,526.63 as at 16 October 2012.
This balance represents credits made available to you on your income tax returns for PAYG Income Tax Instalments for which you have not yet made payment.”
The Deputy Commissioner noted that Mr Matthews had been advised “at the time of your complaint” that he should submit an application for release from the debt (see Div 340, Sch 1 to the TAA), but that no such application had yet been made. Based on the documents before the Tribunal, it appears that Mr Matthews has not made such an application to date.
In his application to the Tribunal, Mr Matthews identified the Deputy Commissioner’s letter of 22 October 2012 as conveying the decision subject to review. Mr Matthews gave the following reasons for seeking review:
“I believe the Australian Taxation Office has incorrectly assessed my income tax, charged me with a debt I do not owe and taken my tax returns for the years 2006-2011 to offset this alleged debt. I have repeatedly asked for clarification and dispute the debt. ...”
Consideration
The Tribunal only has the jurisdiction conferred upon it by enabling enactments (see ss 25(1) and 25(4) of the AAT Act). It is necessary, amongst other things, for there to have been a decision in fact made under such an enactment capable of review by the Tribunal (Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 2 ALD 1 at 4, 5, 7; Mahoney & Ors v Dillon (1987) 71 ALR 395 at 401-2).
The question in this instance is whether there was an “objection decision” made by the Commissioner for the purposes of Pt IVC (ss 14ZL-14ZZS) of the TAA.
Section 14ZL provides:
“(1) This Part 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 .... may object against it in the manner set out in this Part.
(2) Such an objection is in this Part called a ‘taxation objection’.”
For simplicity, I shall refer to such an “assessment, determination, notice or decision” against which a taxation objection may be made as a “taxation decision”, adopting the term used for that purpose in s 14ZQ.
Division 3 of Pt IVC contains provisions concerning taxation objections, including how and when they are to be made (see ss 14ZU and 14ZW respectively). Section 14ZY relevantly provides that, if the taxation objection has been lodged within the required period, the Commissioner must decide whether to allow it, wholly or in part, or to disallow it. Such a decision is called an “objection decision” (s 14ZY(2)). Section 14ZZ(1)(a)(i) relevantly entitles a person dissatisfied with the Commissioner’s objection decision to apply to the Tribunal for review of the decision. (I note that the objection decision must be a “reviewable objection decision”, but that term is not significant in this instance (see definition in s 14ZQ)).
The difficulty faced by Mr Matthews is that, in order for there to be a decision reviewable by the Tribunal, it is necessary be able to point to a taxation decision, a taxation objection and then an objection decision within the terms of Pt IVC of the TAA. In order for Pt IVC to apply, there must be a taxation decision against which an objection might be brought under an enactment (s 14ZL(1)).
Liability for PAYG instalments arises by operation of Div 45 in Sch 1 to the TAA (s 45-15 in Sch 1 to the TAA), not upon the making of a taxation decision. As the Commissioner submitted, it would not have been possible for Mr Matthews to object to his liability to PAYG instalments when that liability arose; rather, he ought to have objected against the assessments to which such instalments related, if he considered them to be excessive (see s 175A(1) of the Income Tax Assessment Act 1936). (I note in that regard that the entitlement to credits for PAYG instalments upon the making of an income tax assessment does not affect the liability to pay an instalment (s 45-30 in Sch 1 to the TAA). The fact that Mr Matthews described his letter as a “[l]etter of objection” did not make it an objection within the terms of Pt IVC - it was not directed to matters which could properly be the subject of an objection.
Nor could the re-raising of the debt by the Commissioner be the subject of an objection. That also did not constitute a taxation decision within the terms of Pt IVC. It may be accepted that if Mr Stevens had applied (under Div 340 in Sch 1 to the TAA) for release from his liability on the grounds that he would suffer serious hardship if he were required to satisfy it, and the Commissioner had then made an unfavourable decision about that application, Mr Stevens would then be entitled to object against that decision in the manner set out in Pt IVC (pursuant to s 340-5(7)), thus possibly resulting ultimately in an objection decision reviewable by the Tribunal. However, as I have said, on the material before me that has not occurred in this case.
I accept the Commissioner’s submission that the letter of 22 October 2012 did not constitute an objection decision capable of review by the Tribunal. Rather, as the Commissioner contended, it was essentially a response to a complaint, which also served to inform Mr Matthews about the Commissioner’s subsequent favourable change of position about the outstanding debt.
I have noted that in the reasons given in Mr Matthews’ application and also in his letter of 1 March 2012 there was some suggestion that he considered that he was not liable for the debt because it somehow belonged to Te Matiu Services as a separate entity. However, if that was the case, it would have been a matter to plead as a defence to recovery proceedings, if such proceedings were ultimately brought.
In any event, it became apparent at the hearing on the preliminary issue that the true source of Mr Matthews’ dissatisfaction lay elsewhere and that the parties had unfortunately been at cross-purposes for a considerable period of time. In the course of submissions it became evident, as foreshadowed in the reasons given for Mr Matthews’ application, that the real dispute from Mr Matthews’ perspective lay in the income tax assessments issued to him for the 2004, 2005 and 2006 years, which he considers to be excessive. Mr and Mrs Matthews explained (without giving evidence) that Mr Matthews was not working during at least some of that time.
It may also be accepted that objection decisions concerning valid objections to those assessments would have constituted decisions reviewable by the Tribunal. However, Mr Matthews acknowledged that he has unfortunately never objected to those assessments. Mr Matthews, and Mrs Matthews on his behalf, explained that he had not been aware that he could do so.
For the reasons I have given, in my view it is not possible to identify a decision capable of review by the Tribunal upon which Mr Matthews’ application might properly be founded. Even if there had been a reviewable decision, it would not have been permissible for the Tribunal to visit the question of the excessiveness of those assessments under the guise of reviewing that decision (Comcare v Burton (1998) 50 ALD 846 at 850; see Secretary to the Department of Social Security v Riley (1987) 17 FCR 99 at 103 and Civil Aviation Safety Authority v Coburn [1996] FCA 1827 at [38]).
Conclusion
As the Tribunal lacks jurisdiction to consider Mr Matthews’ application for review, it must be dismissed.
I certify that the preceding 29 (twenty-nine) paragraphs are a true copy of the reasons for the decision herein of F J Alpins, Deputy President. .............[sgd]...........................................................
Associate
Dated 26 June 2013
Date of hearing 13 March 2013 Advocate for Applicant Mrs Marice Matthews (Applicant’s wife)
Advocate for Respondent
Solicitors for the Respondent
Ms Vikki King
Australian Taxation Office Legal Services Branch
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