The Taxpayers v Commissioner of Taxation

[2007] AATA 45

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 45

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No QT2006/417-419, 422-424

TAXATION APPEALS DIVISION		)
Re		THE TAXPAYERS

Applicant

And COMMISSIONER OF TAXATION

Respondent

DECISION

Tribunal Senior Member Bernard J McCabe

Date2 February 2007

PlaceBrisbane

Decision The proceedings are dismissed for want of jurisdiction.

................Sgd]..............................

SENIOR MEMBER

CATCHWORDS

TAXATION – JURISDICTION – amended assessment – Tribunal does not have jurisdiction to consider matters going beyond alteration or additions to the decision

Income Tax Assessment Act 1936

Taxation Administration Act 1953, s 14ZV

REASONS FOR DECISION

2 February 2007	Senior Member Bernard J McCabe
introduction

1. The respondent says the Tribunal does not have jurisdiction to consider the applicants’ request that the Tribunal review several objection decisions. The Commissioner says s 14ZV of the Taxation Administration Act 1953 (the TAA) restricts the applicants’ ability to appeal against an objection decision that relates to an amended assessment. The Commissioner says only changes that were made by the amended assessment may be challenged. The applicants want to press ahead with their appeal and discuss each aspect of their dispute. They are upset and frustrated with what they take to be an unreasonable delay.

2.      The applicants represented themselves at the hearing of jurisdiction, which was held by telephone. Ms Gilligan appeared on behalf of the Commissioner. Both parties referred to material on the files in support of their submissions.

3.      I am satisfied the Tribunal does not have jurisdiction to entertain the applicants’ claim. I explain my reasons below.

the history of the proceedings

4.      The applicants have been engaged in a long-running dispute with the Commissioner in relation to the 1996, 1997 and 1998 years of income. The applicants are a married couple. Mr Taxpayer is an engineer. The applicants’ original returns were filed on the basis that they conducted an engineering partnership together. The Commissioner took a different view. He claimed the applicants had contravened Part IVA of the Income Tax Assessment Act 1936 (ITAA36). The stage was set for a battle before the Tribunal and perhaps the courts. But events took an unexpected turn.

5.      On the morning of the hearing of Mr Taxpayer’s original application, the parties informed the Tribunal they had become aware of a problem: the legislation governing professional engineers prohibited engineers from forming partnerships with non-engineers. The legislation had been overlooked in the preparation of the returns. The Tribunal was asked to proceed on the following basis:

·the applicant agreed to withdraw the original assessments and the claim that he was in partnership. (Mr Taxpayer pointed out in separate written submissions in these proceedings that it was not a matter for him to withdraw the assessments. That was a matter for the Commissioner.) The taxpayer agreed he would submit amended returns for the years ended 30 June 1996, 1997 and 1998;

·those returns would be completed on the assumptions that (a) Mr Taxpayer’s income included all of the fees paid to the partnership and (b) he employed his wife and paid her a reasonable wage that would give rise to a deduction. It was further agreed between the parties that a reasonable wage was $15 per hour.

6.      I agreed to proceed on the basis agreed between the parties. In due course, the Tribunal set aside the objection decisions and remitted the matter for reconsideration in accordance with its reasons: [citation removed in order to ensure applicants are not identified because they have asked that this matter be heard in private].

7.      The parties apparently engaged in a course of unproductive correspondence concerning the next steps in the process. Mr Taxpayer said he wanted to claim additional business expenses that were consistent with the Tribunal’s reasons. Mrs Taxpayer also wanted to raise some new matters. The applicants did not file amended returns: they say they were put off by the Commissioner’s apparent unwillingness to discus the matter.

8.      Amended assessments in relation to Mr Taxpayer’s income were issued on 23 October 2003. The Commissioner says he had already made adjustments in relation to salary and wages, partnership distributions and interest income in accordance with the reasoning of the Tribunal. He says the Tribunal’s reasons did not authorise him to deal with any other claims, and he was obliged to give effect to the Tribunal’s decision promptly. Objections were lodged and Notices of Amended Assessment were issued on 10 February 2005. The applicants insist those assessments have not taken all of their claims into account. They say they have never been given a proper opportunity to present their claims, and argue there has been a denial of natural justice as a result. They also say the Commissioner is not acting consistently with the terms of the Tribunal’s remittal.

9.      The applicants objected to the amended assessments and the Commissioner’s objection decisions have now come before the Tribunal.

the legislation

10. The Commissioner says that since an amended assessment has been issued, the jurisdiction question turns on the interpretation of s 14ZV of the TAA The section provides:

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.

11.     In this case, the amendments made to the assessments occurred following the Tribunal’s earlier decision. The Commissioner took a view of the scope of the remit and went ahead and issued amended assessments on that basis without waiting for the applicants’ amended assessments. It may be that the terms of the remittal should have been clearer, but that was what the parties agreed should occur. In retrospect, a more detailed indication of the matters to be considered would have avoided the present situation.

12. There appears to have been a breakdown in communication between the applicants and the Australian Tax Office following the Tribunal’s earlier decision but this does not change the fact I am now faced with a situation where an amended assessment has been issued. Regardless of the process which led that to occur, s 14ZV restricts the right of objection, and therefore appeal, to matters that were the subject of the amendments. The matters raised by the applicants are not dealt with in those amendments, although I express no view on whether they should have been.

13.     With some hesitation, I accept the Tribunal does not have jurisdiction to entertain the applicants’ claims. The proper course in the circumstances is for the applicants to seek an extension of time to lodge an objection to the original assessment.

conclusion

14.     The proceedings are dismissed for want of jurisdiction.

I certify that the 14 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Bernard J McCabe.

Signed:         .....................................................................................
  Associate      Adam Ryan

Date of Hearing  6 November 2006
Date of Decision  2 February 2007
The applicants represented themselves at the hearing.
The respondent was represented by Ms Gilligan, a departmental advocate.