TKYY and Commissioner of Taxation (Taxation)

The Administrative Appeals Tribunal considered the deductibility of interest expenses claimed by the taxpayer, TKYY, in relation to loans taken out for a fraudulent investment opportunity. The Commissioner of Taxation had issued amended assessments for the 2008 and 2009 income years, which included additional unreturned income and implicitly rejected TKYY's claims for deductions. The core of the dispute revolved around the scope of TKYY's objection rights under section 14ZV of the *Taxation Administration Act 1953* (Cth) and whether the Tribunal had jurisdiction to review the Commissioner's decision to disallow the deductions.

The Tribunal was required to determine whether TKYY's objection rights were limited by section 14ZV of the *Taxation Administration Act 1953* (Cth) to only those alterations or additions made in the amended assessment, or if the rejection of the claimed deductions constituted a separate "particular" against which a full objection could be made. A further issue was whether the original assessments for the years in question, which were "nil assessments," precluded TKYY from objecting at that time, and how this impacted their objection rights upon the subsequent amended assessments. The Tribunal also considered whether a finding of fraud or evasion should be made and if penalties should be remitted, although the provided text focuses primarily on the objection rights.

Deputy President Bernard J McCabe applied the principles established in cases such as *Bosanac v Commissioner of Taxation* and *Batagol v Commissioner of Taxation*. The Tribunal reasoned that the right to object flows from the taxation decision inherent in an assessment, not merely the assessment itself. TKYY argued that the Commissioner's implicit rejection of their deduction claims constituted a distinct taxation decision, making it a reviewable "particular" under section 14ZV. The Commissioner contended that section 14ZV applied only to amended assessments that altered existing taxable income or tax payable, and that nil assessments, by their nature, did not permit objections under section 175A(2) of the *Income Tax Assessment Act 1936* (Cth). However, the Tribunal noted that where a taxpayer cannot object to an original nil assessment, full objection rights are retained in relation to the first subsequent amended assessment that includes a positive taxable income and liability. The Tribunal's reasoning in *WLQC and Commissioner of Taxation* was referenced, which concluded that the Tribunal lacked jurisdiction to review objections against nil assessments, but that a right to object arises once an amended assessment details assessable income and a specific positive liability.