THE TRUSTEE FOR THE DALBY FAMILY TRUST and COMMISSIONER OF TAXATION (Taxation)

The Administrative Appeals Tribunal considered an application by the Trustee for the Dalby Family Trust (the Applicant) for leave to amend its grounds of objection against an income tax assessment issued by the Commissioner of Taxation (the Commissioner) for the 2013 income year. The dispute centred on whether the Applicant had correctly distributed the trust's income, with the Commissioner taking the view that no beneficiary was presently entitled to the income as at 30 June 2013, leading to an assessment against the trustee under section 99A of the *Income Tax Assessment Act 1936* (Cth).

The primary legal issue before the Tribunal was whether to grant the Applicant leave to rely on grounds not originally raised in its objection, specifically concerning a resolution (the Resolution) purportedly setting aside the trust's income for the benefit of named beneficiaries. This issue arose after the Commissioner had issued an assessment and disallowed the Applicant's objection, and the Applicant had subsequently filed its application for review and Statement of Facts, Issues and Contentions, which first mentioned the Resolution. The Tribunal was required to consider the nature and importance of the amendment sought, the extent of the delay in raising the new grounds, the potential prejudice to the Commissioner, and the lack of explanation for the delay.

Senior Member Olding refused the Applicant's application for leave to amend its grounds of objection. The Tribunal reasoned that the Resolution was in the Applicant's possession or readily available at the time of lodging its initial objection and subsequent responses to the Commissioner's information requests. The Applicant had failed to provide any explanation for the significant delay in raising the Resolution as a ground of objection, which occurred after the Commissioner had issued the assessment and disallowed the objection, and after the Applicant had filed its application for review. Crucially, the delay meant that the time for the Commissioner to issue reassessments against several of the nominated beneficiaries had expired or was about to expire, creating a potential prejudice to the Commissioner's ability to conduct a full review of the matter. The Tribunal concluded that the prejudice to the Commissioner, coupled with the lack of any reasonable explanation for the delay, outweighed the potential importance of the amendment sought.