Stevens Nominees (Sydney) Pty Ltd ATF SNS Trust and Commissioner of Taxation
[2014] AATA 303
[2014] AATA 303
Division TAXATION APPEALS DIVISION File Number
2014/0216
Re
Stevens Nominees (Sydney) Pty Ltd ATF SNS Trust
APPLICANT
And
Commissioner of Taxation
RESPONDENT
DECISION
Tribunal Ms G Lazanas, Senior Member
Date 16 May 2014 Place Sydney The proceedings are dismissed for want of jurisdiction.
..........................[sgd]..............................................
Ms G Lazanas, Senior Member
CATCHWORDS
TAXATION – Practice and procedure – Jurisdiction of Tribunal – Pt IVC of Taxation Administration Act 1953 – Res judicata
LEGISLATION
Taxation Administration Act 1953 (Cth), ss 14ZL, 14ZU, 14ZV, 14ZW, 14ZY, 14ZZ, 14ZZK, 14ZZO, 14ZZQ
Income Tax Assessment Act 1936 (Cth), ss 97, 99A, 175A
Administrative Appeals Tribunal Act 1975 (Cth), ss 25(1), 25(4)
CASES
Collector of Customs (New South Wales) v Brian Lawlor Automotive Pty Ltd (1979) 41 FLR 338
Walters v Commissioner of Taxation [2013] AATA 151
Linprint Pty Ltd v Hexham Textiles (1991) 23 NSWLR 508
SECONDARY MATERIALS
K.R. Handley and George Spencer Bower, Res Judicata (4th ed, LexisNexis, 2009)
REASONS FOR DECISION
Ms G Lazanas, Senior Member
16 May 2014
INTRODUCTION
The applicant has applied for review of a decision made by the Commissioner on
20 September 2013 (the 2013 Decision). The applicant says that the 2013 Decision is a reviewable objection decision for the purposes of s 14ZZ of Part IVC of the Taxation Administration Act 1953 (Cth) (TAA) and that the Tribunal has jurisdiction to review the 2013 Decision.
The Commissioner says that the Tribunal lacks jurisdiction to review his 2013 Decision.
The Commissioner submits that the 2013 Decision is not a reviewable objection decision because the objection lodged by the applicant to which the 2013 Decision relates was an invalid objection. The Commissioner says that this follows from the fact that the applicant had already exhausted its appeal and review rights.
The applicant submits that the Commissioner failed to take account of the application of s 14ZV of Part IVC of the TAA regarding limited objection rights in the case of certain amended taxation decisions. However, for the reasons set out below, in my view, reliance on that provision is misplaced and it does not assist the applicant in this matter.
I have decided that the applicant is prevented from re-litigating its claims regarding the 1999 Assessment based on the principle of res judicata. Accordingly, the applicant cannot proceed with its application for review as the Tribunal has no jurisdiction to review the 2013 Decision.
THE FACTS
The relevant facts are not disputed and relatively straightforward. The summary below is primarily based on the applicant’s application for review dated 16 January 2014 and the tender bundle of documents produced at the hearing.
The applicant is a trustee of a trust known as the SNS Trust (Trust). During the year ended 30 June 1999 (1999 Income Year), the applicant held all of the units in a trust referred to as a unit trust known as the Shellharbour Unit Trust (Unit Trust). The Unit Trust invested in a retirement village. In its income tax return for the 1999 Income Year, the Unit Trust claimed a loss in relation to that investment.
On 24 November 2004, the SNS Trust lodged its income tax return for the 1999 Income Year.
On 1 December 2004, the Commissioner issued to the applicant as trustee of the SNS Trust a notice of assessment and, as a result of the inclusion of an amount of $601,838 under the heading “Trust/Estate Income”, the net income of the SNS Trust became a positive amount (1999 Assessment).
On 3 December 2004, the applicant lodged a notice of objection to the 1999 Assessment. Its grounds of objection included that the amount of the taxpayer’s taxable income in respect of the 1999 Income Year did not exceed nil.
On 14 June 2007, the Commissioner disallowed the applicant’s objection (Objection Decision).
On 16 July 2007, the applicant appealed against the Objection Decision in the Federal Court.
On 15 December 2009, the Federal Court made the following relevant order by consent in Proceedings NSD 1354/2007 between the applicant and the Commissioner:
1. …
2. The application otherwise be dismissed.
3. …
On 25 June 2013, the applicant lodged with the Commissioner a document headed ‘Notice of Objection Against Amended Assessment”, against the 1999 Assessment (the Further Notice of Objection), although the Commissioner had not actually issued an amended assessment.
On 20 September 2013, the Commissioner notified the applicant that he did not consider that the Further Notice of Objection complied with the requirements of s 175A of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936) and Part IVC of the TAA and, therefore, it was not a valid objection. This is the “2013 Decision” referred to in these reasons.
On 16 January 2014, the applicant applied to this Tribunal for review of the 2013 Decision. A hearing took place on 2 April 2013 with respect to the issue of whether the applicant is entitled to proceed with its claim, namely, whether the Tribunal has jurisdiction to review the applicant’s application for review.
RELEVANT LEGISLATIVE PROVISIONS
It is necessary to first set out the relevant statutory provisions regarding taxation objections and objection decisions and how taxpayers apply to the Tribunal for review of decisions.
The Tribunal only has the jurisdiction conferred upon it by enabling enactments (see ss 25(1) and 25(4) of the Administrative Appeals Tribunal Act 1975 (Cth)).
Section 175A(1) of the ITAA 1936 relevantly states:
175A (1) A taxpayer who is dissatisfied with an assessment made in relation to the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953.
Part IVC of the TAA refers to taxation objections, reviews and appeals. The following sections in Part IVC are relevant in this matter.
Section 14ZL sets out when Part IVC applies and the meaning of taxation objection, as follows:
14ZL Part applies to taxation objections
(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, or with a failure to make a private ruling, may object against it in the manner set out in this Part.
(2) Such an objection is in this Part called a taxation objection.
Section 14ZU states out how taxation objections are to be made by taxpayers:
14ZU How taxation objections are to be made
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: A person who objects against the Commissioner's failure to make a private ruling must lodge a draft private ruling with the objection: see subsection 359-50(4).
If an objection relates to an original assessment, a taxpayer has unlimited objection rights, subject to time limitations, and may object against any part of that assessment with which they are dissatisfied. The time limits are set out in s 14ZW.
The position is different with an assessment that has been amended. Section 14ZV sets out limited objection rights in the case of certain amended taxation decisions, as follows:
14ZV Limited objection rights in the case of certain amended taxation decisions
If the taxation objection is made against a taxation decision, being an assessment or determination that has been amended in any particular, then a person's right to object against the amended assessment or amended determination is limited to a right to object against alterations or additions in respect of, or matters relating to, that particular.
Section 14ZY states that the Commissioner is to decide taxation objections. He must decide whether to allow the taxation objection, wholly or in part, or disallow it: s 14ZY(1). A decision of the Commissioner on a taxation objection is an objection decision: s 14ZY(2).
If the person is dissatisfied with the Commissioner’s objection decision, the person may, if the decision is a reviewable objection decision, apply to the Tribunal for the review of the decision or appeal to the Federal Court against the decision: s 14ZZ(1)(a). A reviewable objection decision is defined in s 14ZQ to mean an objection decision that is not an ineligible income tax remission decision (the latter term is not relevant for present purposes).
In addition, s 14ZZQ is also important in the present case as it refers to the implementation of court orders in respect of an objection decision, as follows:
14ZZQ Implementation of court order in respect of objection decision
(1) When the order of the court in relation to the decision becomes final, the Commissioner must, within 60 days, take such action, including amending any assessment or determination concerned, as is necessary to give effect to the decision.
(2) For the purposes of subsection (1):
(a) if the order is made by the court constituted by a single Judge and no appeal is lodged against the order within the period for lodging an appeal--the order becomes final at the end of the period; and
(b) if the order is made by the court constituted other than as mentioned in paragraph (a) and no application for special leave to appeal to the High Court against the order is made within the period of 30 days after the order is made--the order becomes final at the end of the period.
DOES THE TRIBUNAL HAVE JURISDICTION?
The applicant’s submission was that if its Further Notice of Objection lodged with the Commissioner on 25 June 2013 was a taxation objection, then the Commissioner was required, pursuant to s 14ZY, to either allow it, wholly or in part, or disallow it. Furthermore, the applicant suggested that as the Commissioner had refused to allow it, wholly or in part, he must be taken to have disallowed it.
In the written submissions, Counsel for the applicant put the applicant’s position as to why its taxation objection was valid and within the terms of s 14ZV as follows :
The gravamen of the Applicant’s objection, and its application to the Tribunal, is the fact that a particular in relation to the amended assessment was not considered by the Respondent in the original taxation objection and remains the valid subject of a taxation objection.
The applicant submitted that the “particular” concerned the inclusion of the amount of $601,838 under the heading ‘Trust/Estate Income’. Therefore, the “matters” which relate to the “particular” which the applicant says can be the subject of another objection, include the loss claimed with respect to the investment in the retirement village and, on the basis that that loss was denied, the inclusion of the net income in the applicant’s assessable income.
The applicant submitted that the application of s 99A of the ITAA 1936 is a matter which relates to the “particular” for the purposes of s 14ZV, one which was not considered in any previous objection or the Federal Court proceedings, as those proceedings only addressed the initial issue of the loss claimed in the retirement village scheme. The applicant also says it was it was not the correct taxpayer, according to the terms of the deed of the Unit Trust, and seeks to show that the 1999 Assessment is excessive.
In summary, the applicant submits that s 14ZV of the ITAA 1936 does not limit the applicant’s ability to make another objection with respect to the application of ss 97 and 99A of the ITAA 1936.
The difficulty with the applicant’s submission is the sequence and timing of events. That is to say, the Objection Decision in relation to the 1999 Assessment was already the subject of litigation and finally determined by the Federal Court. The Further Notice of Objection was, therefore, too late, even if there was an amended assessment (which there was not). To recap, the applicant had lodged an Objection after the 1999 Assessment issued. The Commissioner disallowed that Objection and the applicant then filed an application to appeal the Objection Decision for the 1999 Income Year assessment in the Federal Court. As noted above, by consent, on 15 December 2009, the Federal Court ordered that the proceedings be dismissed, thus finally determining the applicant’s Objection in relation to the 1999 Assessment. The Further Notice of Objection in relation to the 1999 Assessment was lodged in June 2013, after the legal proceedings were finalised.
It follows that s 14ZV is of no avail in those circumstances, even if the “matters” raised by the applicant relate to a “particular”. This is because when the order of the Court in relation to the decision is final, namely, when the period for lodging an appeal from the decision has passed, the Commissioner is required to take such action as is necessary to give effect to the decision: s 14ZZQ. The applicant does not have an opportunity to subsequently lodge another objection in relation to the same taxation decision, as the applicant has exhausted its rights of appeal in relation to the 1999 Assessment where a decision, as in this case, was made by the Court, albeit with the consent of the parties. This is the case even if new and or better grounds of objection emerged after the earlier proceedings were resolved. It is not a case where s 14ZV has any application because the Federal Court proceedings had already determined the applicant’s claims in relation to the 1999 Assessment. The Commissioner rightly also pointed out that s 14ZV only applied if there was an amended assessment in issue.
The applicant cannot re-litigate claims made in another objection to the 1999 Assessment because the applicant is barred according to the doctrine of res judicata. A res judicata is a decision by “a judicial or other tribunal with jurisdiction over the cause of action and the parties, which disposes once and for all the fundamental matters decided, so that, except on appeal, they cannot be re-litigated between persons bound by the judgment”: Handley KR, Spencer Bower and Handley: Res Judicata (4th ed, LexisNexis, 2009) at [1.01]. See also Linprint Pty Ltd v Hexham Textiles (1991) 23 NSWLR 508.
I also accept the Commissioner’s submission that the 2013 Decision was not a decision which the Tribunal could review because it was not an objection decision under s 14ZY of the TAA. On the contrary, in the 2013 Decision, the Commissioner rejected making an objection decision because he said the applicant’s objection was invalid. In this regard, the Commissioner rightly points out that the decisions of Collector of Customs (New South Wales) v Brian Lawlor Automotive Pty Ltd (1979) 41 FLR 338 and Walters v Commissioner of Taxation [2013] AATA 151 do not advance the applicant’s position with respect to the nature of the 2013 Decision, where the Tribunal has no jurisdiction.
Finally, I note for completeness, that if proceedings were alive and not finalised, once a person files an appeal in the Court against an objection decision, the person cannot decide to lodge an application for review of the same taxation decision in the Tribunal. The obverse position also applies. That is to say, the person may apply to the Tribunal for review of the decision or appeal to the Federal Court against the decision: s 14ZZ(1). In addition, on an application for review of a reviewable objection decision in this Tribunal or in proceedings on an appeal to the Federal Court against an objection decision, the applicant is, unless the Tribunal or Court (as appropriate) orders otherwise, limited to the grounds stated in the taxation objection to which the decision relates: ss14ZZK(a) and 14ZZO. If proceedings were alive, the appropriate course would have been for the applicant to have requested orders to allow it to add its additional grounds of objection.
CONCLUSION
The Tribunal has no jurisdiction to hear the applicant’s application as there is no reviewable objection decision.
I certify that the preceding 38 (thirty -eight) paragraphs are a true copy of the reasons for the decision herein of Ms G Lazanas, Senior Member
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Associate
Dated 16 May 2014
Date of hearing 2 April 2014 Counsel for the Applicant Mr D Barlin Solicitors for the Applicant Robinson Legal Pty Ltd Counsel for the Respondent Mr P Afshar Solicitors for the Respondent ATO Review and Dispute Resolution
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