ZIOLKOWSKI and Commissioner of Taxation (Taxation)

ZIOLKOWSKI and Commissioner of Taxation (Taxation) [2023] AATA 292 (2 March 2023)
Division:TAXATION AND COMMERCIAL DIVISION
File Number(s): 2019/0240 & 2019/0241
Re:Thomas ZIOLKOWSKI
APPLICANT

AndCommissioner of Taxation
RESPONDENT

Decision
Tribunal:Mr P W Taylor SC, Senior Member
Date:2 March 2023
Place:Sydney

The January 2019 review application dismissed on 14 August 2020 is reinstated.
Within three weeks after the publication of these reasons for decision
(a)the parties are to endeavour to agree upon, and to submit to the Tribunal, a draft of the directions to be made for the progress of the review application
(b)failing agreement between the parties, the Applicant is to lodge with the Tribunal, and provide to the Respondent, a draft of the directions for which he contends.
Against the contingency of the absence of agreement between the parties about the content of the directions contemplated in the preceding paragraph, the Tribunal will appoint a telephone directions hearing, in the fourth week after the publication of these reasons, at a date and time to be notified to the parties by the Tribunal Registry.
.................................[SGD[.......................................
Mr P W Taylor SC, Senior Member
Catchwords
TAXATION – application for reinstatement – income tax assessment and penalty decision – extensive non-compliance with directions – citizen of Australia and United States of America
Legislation
Income Tax Assessment Act 1936 (Cth)
International Tax Agreements Act 1953 (Cth)
Cases
Brehoi v Minister for Immigration and Multicultural Affairs [1999] FCA 772; (1999) 58 ALD 385
Goldie v Minister for Immigration and Multicultural Affairs [2002] FCAFC 367; (2002) 121 FCR 383
Re The Taxpayer and the Commissioner of Taxation [2002] AATA 523; (2002) 68 ADL 143
Secondary Materials
Convention between the Government of Australia and the Government of the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, Australia–United States of America, signed 6 August 1982, [1983] ATS 16 (entered into force 31 October 1983) (‘the Convention’) as amended by the Protocol Amending the Convention, Australia–United States of America, signed 27 September 2001, [2003] ATS 14 (entered into force 12 May 2003)
REASONS FOR DECISION
Mr P W Taylor SC, Senior Member
2 March 2023
Preliminary information
In early 1997, Dr Thomas Ziolkowski, a US citizen who then conducted a dermatology practice in Colorado USA, purchased a residential property in Potts Point, New South Wales. The following year he purchased another residential property in Boulder, Colorado. Thereafter he was a frequent visitor to Australia, and sometimes stayed for several months at a time. That pattern of activity continued for about the next fifteen years. During that time Dr Ziolkowski retained the Potts Point property, and used it during his various stays in Australia.
In the early part of that fifteen year period, that is to say, prior to August 2000, Dr Ziolkowski held only a tourist visa authorising his presence in Australia. However, the available material suggests that he retired from medical practice in about 2000. Perhaps consistent with that suggestion, from August 2000 until January 2006 he sequentially held two different “permanent” Australian visas. On 26 January 2006 Dr Ziolkowski became an Australian citizen. In July 2006, after returning to America he purchased an apartment in New York. In May 2007 he sold his Colorado property.
For each of the tax years from 30 June 1997 to 30 June 2009 Dr Ziolkowski lodged Australian tax returns with the Commissioner.[1] In those returns Dr Ziolkowski typically declared modest amounts of Australian income. The accuracy of his returned Australian income for the 2006 tax year ($4) and the 2007 tax year ($930) is the principal point in dispute.
[1]There is some doubt about the lodgement of Australian returns for the 1999, 2000 & 2001 tax years:- see T51-0849. For each of the tax years ended 31 December 1996 to 31 December 2011, he also filed Individual Income Tax returns with the Internal Revenue Service:- see T28-0537.
The contentious assessments
In late February 2014, after various communications with Dr Ziolkowski and / or both his legal and accountancy advisers, the Commissioner notified Dr Ziolkowski of an intention to examine his taxation affairs, specifically in relation to omitted income, for the whole of the tax years from July 1996 to June 2013.
Following numerous subsequent communications, in December 2015 the Commissioner wrote to Dr Ziolkowski informing him of the conclusion of an audit of his taxation affairs for the 2006 and 2007 tax years. In January 2016, consistent with the findings in the audit report, the Commissioner issued Notices of Assessment relating to Dr Ziolkowski’s taxable income for each of the years ended June 2006 ($1.017m) and 2007 ($0.127.9m). The assessments related to three amounts that had been transferred by two British Virgin Islands (“BVI”) corporate entities assertedly controlled by Dr Ziolkowski. The transfers had been made from bank accounts in New York to an Australian bank account in the name of one of Dr Ziolkowski’s Australian friends. The deposited funds had then been promptly transferred by the friend to bank accounts in New York. There, in the Commissioner’s opinion, they had been used to fund Dr Ziolkowski’s “personal/lifestyle expenses”, likely including his New York apartment purchase in 2006.
The Commissioner’s December 2015 audit report, and the January 2016 amended assessments effectively relied on the propositions that Dr Ziolkowski
(a)relevantly controlled the BVI entities (partly because their sole director was an accountant / tax agent he had retained, and partly because the accountant was the “protector” of the trust (the Voyager Trust) that held all of the issued shares in the BVI entities)
(b)used the funds (or, in the absence of contrary explanation, it was reasonable to infer he had used the funds) for his own personal benefit
(c)was an Australian resident for tax purposes, at least partly because he had been in Australia for almost half of each of the contentious years
(d)had not provided evidence that either (i) detailed his status as a US tax resident or (accepting the likelihood that he was such a resident), (ii) substantiated his entitlement to the benefit of the “tie breaker test” provisions in the 1982 double taxation convention between Australia and the USA[2]
(e)was not entitled to the benefit of any assessment amendment time limits, because the Commissioner was of the opinion that there had been fraud or evasion, and was consequently entitled to amend an assessment at any time:- Income Tax Assessment Act 1936 (Cth) s 170(1) Item 5.
[2]Information supplied by the US Internal Revenue Service indicated that, as a US citizen, Dr Ziolkowski was subject to US income tax, in relation to worldwide income, regardless of residence. However residence is one of the criteria relevant to the operation of the “tie breaker” provisions in the USA / Australia double taxation convention. See the International Tax Agreements Act 1953 (Cth) s 3AAA(1) & Schedule 1 to these Reasons.
The Commissioner’s January 2016 assessments imposed a total liability approximating $1.379m. That total included amounts for primary tax ($529,494), administrative penalties ($403,453) and general interest ($446,368).
The 2018 Objection decision
The assessments were the subject of an objection Dr Ziolkowski lodged in March 2016.
Early in the process of dealing with Dr Ziolkowski’s objection the Commissioner accepted that Australian immigration movement records established that, in 2006 and 2007, Dr Ziolkowski had only been in Australia for a total of about three months (in 2006) and two months (in 2007). Both of those totals were significantly shorter periods than those that had previously been thought to have been the case.
Nevertheless, on 14 November 2018 the Commissioner disallowed Dr Ziolkowski’s objection to the January 2016 assessments. The reasons for the disallowance decision were essentially the same as those underlying the January 2016 assessments. Those reasons were complemented by the observation that, despite having been informed of specific details of the bank deposit amounts (i.e., source, date and individual amounts) Dr Ziolkowski had not provided any explanation supporting his objection to the amended assessments.
On 11 January 2019 solicitors acting for Dr Ziolkowski lodged with the Tribunal an application to review the 14 November 2018 objection decision. The application relied on four substantive, and alternate, grounds. They were that
(a)Dr Ziolkowski was not an Australian resident for tax purposes, in either of the 2006 and 2007 tax years
(b)Dr Ziolkowski was entitled to the benefit of the Australia / USA Double Taxation Agreement in each of those tax years
(c)the deposit amounts the Commissioner had assessed in each year were not in fact taxable income
(d)the Commissioner of Taxation had no power to issue the amended January 2016 assessments, because any failure to include the contentious deposits in either of the 2006 and 2007 income tax returns was not attributable to either fraud or evasion of tax.
Dismissal of the January 2019 review application
On 14 August 2020 I dismissed Dr Ziolkowski’s review application. That dismissal took into account the lamentable procedural history of the application, in particular, Dr Ziolkowski’s repeated failure to comply with procedural directions, and his failure to appear on the telephone directions hearing that had been listed for that day. That history of the application, and the nature and extent of Dr Ziolkowski’s compliance failures are detailed in a later section of these reasons:- see paragraph 36 below.
In the reasons I gave for dismissing Dr Ziolkowski’s review application I indicated that I was invoking the discretionary dismissal power conferred by AAT Act s 42A(5). That provision authorises dismissal of an application where a review applicant has failed “within a reasonable time” either to proceed with the review application or to comply with a Tribunal direction. The determinative consideration in my dismissal decision was my view that Dr Ziolkowski lacked “either the inclination or the ability in any reasonable time to progress the application in a way that would permit the proper determination of its merits”.
The reinstatement applications and supporting material
The Tribunal has a discretionary power to reinstate an application where it considers that the application “has been dismissed in error”:- AAT Act s 42A(10). Dr Ziolkowski contends that there was such an error, and that the Tribunal should reinstate the review application he lodged in January 2019.
In order to deal with Dr Ziolkowski’s contention it is necessary to have regard to both the events that followed shortly after the August 2020 dismissal, and the substantive matters relied on to support reinstatement of the review application.
Events subsequent to the 14 August 2020 dismissal
Sometime prior to 6 October 2020 Dr Ziolkowski lodged his first reinstatement application. That application may have been based on the assumption that the 14 August 2020 dismissal had been made (under AAT Act s 42A(2)) because of Dr Ziolkowski’s non-appearance at the telephone directions hearing on that day.
The October 2020 reinstatement application was listed for a directions hearing on 12 November 2020. However, Dr Ziolkowski acknowledges that he did not appear at that hearing. Perhaps as a consequence of that non-appearance, and perhaps also because a reinstatement application, where the substantive review application had been dismissed for non-appearance, was ordinarily required to be lodged within 28 days of the dismissal, DP McCabe dismissed Dr Ziolkowski’s reinstatement application. In so doing DP McCabe described his decision as an exercise of the reinstatement discretion conferred by AAT Act s 42A(9) – rather than the “error” reinstatement discretion conferred by AAT Act s 42A(10).
On 17 October 2022 Dr Ziolkowski lodged a further reinstatement application. That application was subsequently supported by three affidavits and by a preliminary submission document.
In his 9 November 2022 affidavit Dr Ziolkowski made the following assertions:-
(a)His delay, since November 2020, in pursuing reinstatement of his review application is attributable to
(i)an acute medical condition, that resulted in hospitalisation over various weeks after October 2020
(ii)the difficulties of obtaining supportive evidence, during the period of COVID 19 related restrictions in New York
(iii)an ongoing dispute with his previously retained legal representatives
(b)He has good prospects of being able to demonstrate that he was not an Australian resident in either of the 2006 and 2007 tax years.
In a further affidavit of 24 November 2022, Dr Ziolkowski
(a)asserted a belief that his 2019 non-compliance with the Tribunal’s directions was a lack of communication from his then Australian legal representatives, because of a fee dispute with them
(b)asserted a lack of familiarity with proceedings in the Tribunal, and confusion, as at December 2019, April, June and July 2020, as to whether the ATO legal officer with whom he communicated, was a Tribunal officer
(c)acknowledged awareness of the Tribunal’s 26 June 2020 Directions, and asserted a belief that he had communicated to the Tribunal both the facts of his ill health and his hospitalisation
(d)impliedly asserted that he did not receive notice of the 14 August 2020 directions hearing until Friday 21 August at 2:00am.
In a draft (and thus unsworn) 185 paragraph affidavit, nominally dated November 2022, Dr Ziolkowski addressed a range of factual matters relevant to the contentious amended assessments.
The AAT s 42A(10) concept of “error”
The concept of “error” in AAT Act s 42A(10) and, in particular, whether it can extend to include the circumstances in which an applicant has failed to appear at a hearing, has been the subject of some discussion, and differences of view. The earlier history of that discussion was comprehensively reviewed by DP Block in Re The Taxpayer and the Commissioner of Taxation [2002] AATA 523; (2002) 68 ADL 143. That was a case where the Applicant, who had repeatedly failed to comply with Tribunal directions, and had been granted previous extensions of time, appeared in person at a directions hearing, and requested yet a further extension. He did so without providing any exculpatory information about either his past default, or the substantial reasons for requiring a further extension. The Tribunal dismissed the review application, under AAT Act s 42A(5), because of the applicant’s failure to comply with the Tribunal’s procedural directions. Some months later, the Applicant sought to have the review application reinstated. The principal question to be resolved was whether the dismissal had been made “in error”.
In addressing that question DP Block reviewed at length the legislative history of AAT Act s 42A, the decision of the Full Court of the Federal Court of Australia in Brehoi v Minister for Immigration and Multicultural Affairs [1999] FCA 772; (1999) 58 ALD 385, and a number of Tribunal decisions. Obiter remarks in the decision in Brehoi had favoured the view that the concept of “error” in AAT Act s 42A was limited to “administrative error” or error by the Tribunal itself. The Tribunal decisions discussed by DP Block expressed differing views, some adopting the construction favoured in Brehoi, and others adopting a more generous view of the potential meaning of “error”. DP Block ultimately favoured the latter, more generous view. So much is apparent from the following passages of his reasons for decision:-
[at 68 ALD 156] (6)(a) Subsection (10) of s 42A of the Act speaks merely of an “error”. There is in my view, because there is no ambiguity, no need to refer to the explanatory memorandum which would suggest that it was intended that error be confined to one of the slip-rule type. It is not necessary to resort to s 15AB of the Acts Interpretation Act 1901 (Cth).
(b) D Greenberg, Stroud’s Judicial Dictionary of Words and Phrases, 6th ed, Sweet & Maxwell, London, 2000 at p 829 in a lengthy entry for the word “error” commences with these words:
ERROR. “‘Error’ is a fault in a judgment, or in the process or proceeding to judgment…”
[at 68 ALD 161] 7(b) … it is arguable that it would have been preferable for me to offer the applicant the opportunity of proceeding to a hearing on the papers before me, and being of course the T documents. There is a possibility that he would have accepted; as to whether he could have run his case on the basis of the T documents alone, and having regard to the nature of the issues as described to me by Mr. Robinson, is another matter. The applicant was self-represented and deserving of special consideration, the fact that this offer was not made may have resulted in prejudice (and a denial of natural justice) to the applicant, and constituted, in my view, and on reflection, an error.”
[at 68 ALD 162] 7(c)) It is my view, as I have said, that “error” in subs (10) of s 42A of the Act is not confined to error of the “slip-rule” type. I consider then that, for these reasons, I should reinstate the applications under subs (10), and I do so on the basis that the matter can and should now be listed for a hearing. At the risk of labouring the point I am of the opinion that the word “error’’ in subs (10) of s 42A is not ambiguous and that it should be given its ordinary meaning … I note also that the legislation is remedial and should be construed accordingly.
It is to be noted that although DP Block’s reasoning rejected the notion that “error” concept was confined to “administrative” mistake, it appeared to accept, at least implicitly, that the “error” had to be one made by the Tribunal.
Four months after DP Block’s decision, the Full Court of the Federal Court unambiguously endorsed the permissible width of the “error” criterion, and specifically rejected the proposition that it could only extend to “error” made by the Tribunal itself: see Goldie v Minister for Immigration and Multicultural Affairs [2002] FCAFC 367; (2002) 121 FCR 383.
The circumstances in Goldie were that the Applicant instructed counsel to appear to apply on an adjournment application. The Tribunal refused the adjournment application, and then dismissed the review application for non-appearance (under AAT Act s 42A(2)), when neither the Applicant nor his counsel was present at the immediately ensuing hearing. The Applicant subsequently applied to have the substantive application dismissed, but made that application after the (then inflexible) 28 day time limit provided for in AAT Act s 42A(8). The Tribunal refused that application. The matter was then the subject of an application for an extension of time to appeal to the Federal Court. The argument about extension of time necessarily required consideration of the apparent merits of the proposed appeal:- see [2002] FCAFC 367 at [14].
One of the issues in the extension of time application was therefore whether the “error” discretion conferred by AAT Act s 42A(10) was capable of applying to a dismissal (under AAT Act s 42A(2)) on the ground of non-appearance. A second issue, related to the first, was whether the concept of “error” was limited to “administrative error” and, in particular, error on the part of the Tribunal. A third issue was whether either the adjournment refusal, or the subsequent dismissal order, were affected by relevant error.
All three members of the Full Court of the Federal Court disapproved of the obiter remarks in the earlier decision in Brehoi and held that (i) the concept of “error” was not confined to “administrative error” by the Tribunal and, (ii) the “error” criterion in AAT Act s 42A(10) could be applied even where the proceedings had been dismissed, under AAT Act s 42A(2), for non-appearance. In Goldie Wilcox and Downes JJ constituted the majority that dismissed the extension of time application. On the question of the proper interpretation of the “error” criterion in AAT Act s 42A(10) their Honours said that the expression “dismissed in error”‘ in AAT Act s 42A(10) should be interpreted widely, and as extending beyond mere administrative error. Their Honours said (at [27]-[29])
[27] The s 42A(10) issue is more problematic. The difficulty with … the decision of Deputy President Hotop, is that {it} requires the Court to read into the subsection a word ("administrative") which is not there. The stated condition for the exercise of the subs (10) power is that "it appears to the Tribunal that an application has been dismissed in error". The subsection does not impose any qualification or limitation on the word "error".
[28] The only limitations that we can see in s42A(10) are:
(i) that the Tribunal has dismissed the application; and
(ii) that the act of dismissal was attended with error.
[29]
We do not think it is necessary, in order to enliven the Tribunal’s power under

s 42A(10), that the Tribunal, or a member or employee of the Tribunal, should have been at fault in relation to the dismissal. The fault may have lain elsewhere, provided it induced the error. For example, because of a mistake as to his or her instructions, a solicitor or other representative of a party might have wrongly consented to a dismissal order or filed a notice of discontinuance. No fault would attach to the Tribunal; but, if the solicitor's mistake induced the dismissal of the action, it could properly be said the application had been "dismissed in error".

However, their Honours went on to hold that there was no relevant “error”. This was because (i) there was no application to appeal from the refusal of the adjournment decision and, (ii) because there had been no appearance by the applicant after the refusal of the adjournment application, there was no factual basis on which, given the limited material before it, the Tribunal dealing with the reinstatement application could have concluded that the proceedings had been dismissed in error. Indeed the majority judges tended to the view that the Applicant’s non-appearance meant that dismissal was the preferable course for the Tribunal to have taken:- see [2002] FCAFC 367 at [23] & [38]-[42].
The third member of the Full Court in Goldie was Carr J. His Honour agreed with the majority on the potential application of the AAT Act s 42A(10) reinstatement discretion to review applications that had been dismissed for non-appearance. His Honour also agreed with the majority about the potential width of the AAT Act s 42A(10) concept of “error”. His Honour’s agreement was expressed in the following passages of his reasons:-
[73] I would accept that a purpose of s 42A(10) is to provide a power to reinstate an application which has been dismissed through administrative error on the part of the Tribunal. But I would not accept that s 42A(10) must be construed as applying only where there has been administrative error. I would construe the word "error" as including administrative error but extending beyond mere administrative error.
[77]
In my view, there is a significant degree of desirability of persons being able to rely on the ordinary meaning conveyed by the word "error". More importantly,

s 42A(10) provides a mechanism of avoiding prolonging legal or other proceedings without compensating advantage. The mechanism is a relatively informal method of bringing a matter back to the Tribunal for reconsideration with a view to it being considered on the merits. It can be seen as a convenient, prompt and inexpensive means whereby errors which may have occurred in the exercise of the Tribunal's default jurisdiction can be rectified. That is, any sort of error in dismissing an application summarily, whether the error be administrative error or any other error.
Carr J’s dissent in Goldie was in relation to the arguable merits of the proposed appeal. Carr J thought it was arguable that the Applicant had relevantly “appeared” and that the Tribunal had been wrong to dismiss the review application in the exercise of the non-appearance discretion conferred by AAT Act s 42A(2). Carr J also thought it was arguable that refusal of the adjournment application had been a denial of procedural fairness.
The reasoning of all three members of the Full Court in Goldie endorsed, or can accurately be regarded as having endorsed two propositions. The first is that a mistake made by a party, or by their representative, is capable of constituting an “error” to which the AAT Act

s 42A(10) reinstatement discretion can apply. The second is that a failure by the Tribunal to have regard to the arguable merits of review application is also capable of constituting a relevant error for the purposes of AAT Act s 42A(10). Whether or not, in any particular case, such an “error” has occurred must depend on the particular circumstances, including the material before the Tribunal at the time of the events in which the dismissal discretion was exercised.
The parties’ error contentions in the present matter
The principal error contention advanced in support of the reinstatement application was that the subsequently provided material (i.e., Dr Ziolkowski’s November 2022 affidavits, and the preliminary contention document), raised significant substantive points, and provided at least an arguable basis for review of the November 2018 amended, and penalty, assessments. The essential proposition was that this development bespoke Dr Ziolkowski’s capacity to progress the review proceedings, indicated that his 2020 non-compliance was attributable merely to lack of understanding of the Tribunal’s requirements, and justified the conclusion that I was relevantly “in error” in proceeding on the basis that, in 14 August 2020, he lacked a similar capacity.
There was, perhaps, a subsidiary or alternative argument. It was to the effect that an operative reason for the 14 August 2020 dismissal decision was the mere fact of Dr Ziolkowski’s failure to appear at the telephone directions hearing on that date. The implicit submission was that his non-appearance should be characterised as a “mistake” – given his persistently demonstrated opposition to the contentious assessments, and an available inference from the objective circumstances of his non-appearance. (I have addressed those circumstances in a later part of these reasons: see paragraphs 68 to 79 below.)
The Commissioner accepted that Dr Ziolkowski’s currently proffered (draft) evidence and preliminary submissions, did suffice to establish an arguable case to support the review application. However, the Commissioner disputed that Dr Ziolkowski’s currently demonstrated apparent capacity to pursue the review proceedings justified the conclusion that I was relevantly in error in finding that he lacked that capacity in the circumstances that prevailed on 14 August 2020. On the contrary, the Commissioner contended that the procedural history (which I address at length in the immediately following sections of these reasons) adequately demonstrated Dr Ziolkowski’s then lack of capacity, and precluded satisfaction that I had dismissed the review application “in error”.
The procedural history of the review application
As I previously indicated, a significant factor in my 14 August 2020 dismissal decision was what I then regarded, and still regard, as the lamentable procedural history of the review application. Dr Ziolkowski’s 23 November 2022 affidavit at least implies that (i) he lacked relevant understanding of the review procedure, and consequently did not understand what was required of him and, (ii) he was not aware of the scheduled directions hearing on 14 August 2020. Since those implications would, if accurate, be potentially material to a determination that the dismissal had been made in error, I address them in the following paragraphs of this section of these reasons. It will be necessary to do so at some length.
Shortly after 11 January 2019, Dr Ziolkowski’s review application was listed for a telephone directions hearing, first on 20 February 2019 and then 4 April 2019.
At the 4 April 2019 directions hearing Dr Ziolkowski was directed to provide, by 19 June 2019, all witness statements and documents, and any contention document, that were to be relied on to support his review application. At the same time, the Tribunal listed the review application for a further telephone directions hearing on 9 August 2019.
Dr Ziolkowski did not comply with the direction. As a result of his non-compliance the review application was listed for a further directions hearing, and on 11 July 2019 the Tribunal made directions to the following effect:-
(a)Requiring Dr Ziolkowski be notified of a further directions hearing on 9 August 2019
(b)Requiring Dr Ziolkowski to inform both the Tribunal and the Respondent whether he intended to proceed with the review application, and provide a draft timetable of the future stages of the review proceedings
(c)Requiring Dr Ziolkowski, if he was unable to provide a draft timetable by 7 August 2019, to provide a written statement of the reasons for his non-compliance
(d)Including in the Listing Notice for the 9 August 2019 telephone directions hearing warnings to the effect that:-
(i)Dr Ziolkowski had not complied with the 4 April 2019 directions
(ii)Dr Ziolkowski had failed to proceed with the review application within a reasonable time
(iii)In the event of further failure to comply with the 11 July 2019 directions, the Tribunal might exercise the AAT Act s 42A(5) power to dismiss the application.
On 8 August 2019, at a further telephone directions hearing, Dr Ziolkowski was directed to provide, by 25 September 2019, all witness statements and documents, and any contention document, that were to be relied on to support his review application.
The Dr Ziolkowski also did not comply with the 8 August 2019 direction. However, he had caused the Tribunal to issue, on 7 August 2019, a summons for production of some additional documents.
On 9 August 2019 the Tribunal issued further directions to the following effect:-
(a)Releasing the Respondent from compliance with the 7 August 2019 summons for production
(b)Directing the parties to discuss, and endeavour to agree upon, resolution of any further documentary production to be provided by the Respondent
(c)Appointing a further telephone directions hearing on 4 September 2019, for the purpose of resolving any dispute about any required additional document lodgement by the Commissioner
(d)Requiring Dr Ziolkowski to provide, by 6 November 2019, all witness statements and documents, and any contention document, that were to be relied on to support his review application
(e)Listing the review application for a further telephone directions hearing on 15 November 2019.
Dr Ziolkowski did not comply with the 9 August 2019 directions.
As a result of Dr Ziolkowski’s failure to comply with the 9 August 2019 directions the review application was listed for a further telephone directions hearing on 7 November 2019.
On 7 November 2019 the Tribunal directed Dr Ziolkowski to provide by 18 December 2019 a contention document, outlining the substance of the facts, grounds and contentions he intended to rely on in support of the review application. At the same time, the Tribunal directed Dr Ziolkowski to provide, by 29 January 2020, all witness statements, and any other documentary evidence, that he intended to rely on in support of the review application.
The Tribunal’s written directions of 7 November 2019 also
(a)noted the contents of the previous directions on 11 July and 9 August 2019, and Dr Ziolkowski’s failure to comply with those directions
(b)directed that Dr Ziolkowski, if he apprehended the likelihood of non-compliance with the 7 November 2019 directions, was to inform the Tribunal forthwith, provide a full explanation of the reasons for any non-compliance, and the steps proposed to be taken to ameliorate the effect of, or reduce the extent of, any delay involved in the apprehended non-compliance.
Dr Ziolkowski did not comply with either aspect of the November 2019 directions.
On 16 December 2019, the Tribunal Registry emailed Dr Ziolkowski, noting that his solicitors had ceased to act for him in the review proceedings, and asking for contact details for his participation in a directions hearing that had been listed for February 2020.
On 17 December 2019 Dr Ziolkowski telephoned the Respondent, and left a message indicating that he would require an extension of time to comply with the Tribunal’s directions. Later that day, the Respondent sent an email to Dr Ziolkowski asking him to indicate how long an extension he required “to file your Statement of Facts, Issues and Contentions”.
On 19 December 2019 at 9:18am (USA:EST) Dr Ziolkowski sent an email (headed “to all concerned) to the Respondent. In that email, Dr Ziolkowski (i) complained about the conduct of the solicitors he had previously retained, (ii) stated his intention “to pursue this” (iii) asserted that he had “performed most of the work and am almost ready”, (iv) acknowledged that he did need “an extension of the next date 18 December 2019, mostly because I’m not going any further without representation there, I’m sure you understand” and, attributed the delays in progressing the review application to “poor legal advice”.
A few minutes later, on 19 December 2019 at 9:31am (USA:EST), Dr Ziolkowski responded to the Respondent’s 17 December 2019 email. In his email Dr Ziolkowski, perhaps somewhat inconsistently, (i) complained that he did not understand the Respondent’s question but, (ii) asked how long an extension the Respondent suggested he should request.
At 9:38am (USA:EST) on 19 December 2019, Dr Ziolkowski responded to the Tribunal’s 15 July 2019 email request (for contact details). In his response, Dr Ziolkowski and provided his New York landline telephone number.
On 24 March 2020, the Respondent emailed both Dr Ziolkowski and the Tribunal requesting an extension of the 7 November 2019 directions timing for the provision of its evidence and submissions. In its email the Respondent
(a)referred to email correspondence between Dr Ziolkowski, the Respondent and the Tribunal on 3, 6 & 30 January 2020
(b)noted that Dr Ziolkowski had not lodged any evidence and contentions, as had been required by the 7 November 2019 directions
(c)foreshadowed a request for an extension of time for 8 weeks after Dr Ziolkowski provided his evidence and statement of contentions.
On Friday 3 April 2020 the Respondent replied to an email Dr Ziolkowski had sent (perhaps on the previous day). The Respondent noted that the review proceedings were listed for a directions hearing on 9 April 2020 at 9:30am (A:EST).
Later in the morning of 3 April 2020 (at 12:41pm USA:EDT) Dr Ziolkowski replied to the Respondent’s 24 March 2020 email. In his reply Dr Ziolkowski
(a)said he had been in Australia from 30 December 2019 to 30 January 2020
(b)said that he had contacted the Tribunal, and had been granted an extension of time
(c)claimed that he did “want to cooperate with you”
(d)said he was still seeking legal representation in Australia
(e)complained that the assessment was based on the ATO’s fabricated / fraudulent assertion of the number of days he had been in Australia in the 2006 and 2007 tax years.
Dr Ziolkowski communicated with the Respondent in the late morning of 8 April 2020 (USA:EDT / 1:24am A:EST). He subsequently participated in a telephone directions hearing on 9 April 2020 (A:EST). On that occasion, the review application was stood over to 8 May 2020.
On 7 May 2020 (3:49pm USA:EDT; 5:49pm A:EST) the Respondent made the “T documents” (i.e., the documents required by AAT Act s 37) available to Dr Ziolkowski via a download file link.
On 8 May 2020, the Tribunal directed Dr Ziolkowski to continue his attempts to obtain legal representation. The Tribunal further directed that, by 22 May 2020, 5:00pm A:EST, Dr Ziolkowski was to provide the Tribunal and Respondent with written notification of the status of his legal representation attempts. At the same time, the Tribunal appointed a further directions hearing on 26 June 2020.
The Tribunal Registry provided a copy of the 8 May 2020 directions shortly after that date. At the same time it also sent a further email which (i) noted that the “pro bono” services offered by both the Law Society and Bar Association of NSW were limited to providing assistance to impecunious parties and, (ii) encouraging Dr Ziolkowski to pursue his own direct enquires to obtain contact details for appropriately qualified legal representatives.
Dr Ziolkowski did not secure legal representation and did not provide the Tribunal with any details of his attempts to obtain legal representation. Indeed he, perhaps, misunderstood the notification requirement in the Tribunal’s 8 May 2020 direction. That possibility arises from the content of an email he sent to the Respondent (on 25 June 2020 USA:EDT). In that email he noted that “no one called me on your Thursday May 21” and asked “what happened”. In any event, Dr Ziolkowski did not, prior to 26 June 2020, communicate to the Tribunal his inability to obtain legal representation.
On 26 June 2020, the Tribunal noted the substance of the 8 May 2020 communications relating to Dr Ziolkowski’s difficulties in obtaining legal representation. The Tribunal directed Dr Ziolkowski to continue his attempts to obtain that representation. It also directed him to provide, by Thursday 9 July 2020, his proposal for the time by which he would provide (i) the evidence (documents and witness statements) on which he intended to rely to support his review application and, (ii) any contention or submission document that he intended to rely on to support his review application. At the same time, the Tribunal listed the review application for a further telephone directions hearing at 9:30am (A:EST) on 10 July 2020. The Tribunal also directed that, if Dr Ziolkowski’s proposal involved the provision of his evidence and contention documents more than 8 weeks after 10 July 2020, he was to include with his proposal a “short explanation setting out the reasons for his proposed timing”.
Dr Ziolkowski did not provide any documentary evidence, submissions, proposal or explanation in response to the 26 June 2020 direction.
On 10 July 2020 (at about 6:00am A:EST) Dr Ziolkowski sent an email informing the Tribunal that he was going to seek medical treatment in New York and might be unable to participate in the telephone directions hearing that had been listed for later that day – at 9:30am (A:EST).
The Applicant did not answer telephone calls made by Tribunal staff to his USA phone numbers on 10 July 2020 and did not participate in the telephone directions hearing on 10 July 2020. Later that day, the Tribunal sent Dr Ziolkowski an email, notifying him that a further telephone directions hearing had been listed on 17 July 2020. The Tribunal email attached (i) a copy of the Tribunal’s 10 July 2020 direction and, (ii) a copy of a listing notice for the further directions hearing on 17 July 2020. Dr Ziolkowski received that email on 9 July 2020 at 8:43pm (USA:EST). The copy of the Tribunal’s 10 July 2020 direction (i) included a specific notation, that Dr Ziolkowski appeared not to have complied with the 26 June 2020 directions and, (ii) drew attention to the fact that non-compliance with Tribunal directions could potentially lead to dismissal of the review application.
On 15 July 2020 the Tribunal Registry sent emails to both the Respondent and Dr Ziolkowski, requesting confirmation of appearances and contact information, in relation to participation in the further directions hearing that had been scheduled for Friday 17 July 2020 at 9:30am (A:EST).
Dr Ziolkowski responded to the Tribunal emails (of 10, 15 and 17 July 2020) as follows:-
(a)16 July 2020 at 1:21pm (USA:EST / A:EST 17 July 2020 at 3:21am) he emailed the Respondent reporting that he had been ill, but was at home and back at work
(b)16 July 2020 at 7:15pm (USA:EST / A:EST 17 July 2020 at 9:15am) he emailed the Tribunal Registry variously indicating or asserting that
(i)he had been at a hospital clinic in New York and unable to participate in the 10 July 2020 directions hearing
(ii)he had received the Tribunal’s 15 July 2020 email, as well as the Tribunal’s 10 July 2020 direction
(iii)although he had read the Directions and Listing Notice attached to the Tribunal’s 10 July 2020 email, he did “not understand what you are looking for”
(iv)he was a victim of fraud by the ATO
(v)he rejected what he regarded as “trickery” in the Tribunal’s 10 July 2020 email in trying to “to persuade me to act as my own lawyer”
(vi)asserting that the Tribunal would face international criticism if it did not “allow me to seek counsel however long it takes”.
Dr Ziolkowski’s only response to the Tribunal’s emails of the Tribunal emails of 10, 15 and 17 July 2020 was contained in the email he sent 15 minutes before the directions hearing listed for the 17 July directions hearing at 9:30am A:EST. However, an email sent by the Tribunal Registry two hours later (i.e., 16 July 2020 at 9:12pm USA:EDT, 17 July 2020 at 11:12am) requested further identifying details from Dr Ziolkowski, and the content of that request indicates that Dr Ziolkowski’s email had not then been passed on from the Tribunal Registry. It follows that at the time of the directions hearing on 17 July 2020, Dr Ziolkowski had
(a)not complied with any of the Tribunal directions relating to the provision of witness statements, documents or contention documents
(b)not provided the Tribunal with any details of his attempts to obtain legal representation
(c)not provided the Tribunal with any proposal indicating the time by which he proposes to provide any witness statements, documents or contention documents
(d)claimed not to understand the purport of the Tribunal’s directions
(e)claimed, perhaps inconsistent with his asserted lack of understanding, that the Tribunal was incorrect in observing that he had apparently failed to comply with those directions
(f)characterised, though without any rational justification, the Tribunal’s 10 July 2020 communications as involving “trickery” intended to persuade him to pursue the review application without legal representation.

At the reinstatement hearing in December 2022 Dr Ziolkowski’s legal representative tendered a seven page printout of copies of various email communications in July 2020. One part of that printout consists of three undated paragraphs. Those paragraphs suggest that Dr Ziolkowski (i) requested the Tribunal to clarify the request in the Registry’s 16 July 2020 (USA:EDT) email, (ii) also asked the Respondent’s legal officer to respond to the Tribunal request, (iii) asked whether the Respondent’s legal officer was “an AAT staff member”, (iv) misinterpreted the Tribunal’s observation of his apparent non-compliance with the 26 June 2020 Directions as involving assertion that he had not contacted the Tribunal.
The directions hearing listed for 17 July 2020 was stood over, in the absence of any response from Dr Ziolkowski, to 14 August 2020 at 9:30am A:EST. The copy of the Tribunal’s 22 July 2020 Direction contained specific notes drawing attention to the potential dismissal of the review application. The notes recited the substance of the matters noted in the preceding paragraphs, and observed that Dr Ziolkowski had not communicated with the Tribunal since 10 July 2020. The notes stated that the review application would be dismissed if Dr Ziolkowski either (i) did not appear at the 14 August 2020 directions hearing, (ii) had not by then complied with the substance of the Tribunal’s previous directions requiring the lodgement of evidence and contentions or, (iii) had not provided both a satisfactory explanation for his non-compliance and a reasonable proposal for the timing of future compliance.
Two copies of Listing Notices for the 14 August 2020 directions hearing were sent to Dr Ziolkowski. The second of them was sent as an attachment to an email Dr Ziolkowski received on 26 July 2020 (USA:EDT). On Wednesday, 12 August 2020 (at 11:52pm USA:EDT), Dr Ziolkowski received a Tribunal email reminding him of the date and time of the 14 August 2020 directions hearing, and asking for confirmation of the telephone contact details set out in the email.
On 13 August 2020 at 7:36pm (USA:EDT, A:EST 14 August 2020 at 9:00am) a Tribunal associate emailed Dr Ziolkowski in an attempt to have him participate in the directions hearing. The email stated that unsuccessful attempts had been made to contact him on his nominated telephone number, and contact attempts would continue until 9:45am A:EST.
Dr Ziolkowski did respond to the email from the Tribunal Associate, but not until 2:00am (USA:EDT, 4:00PM A:EST) on 14 August 2020. Half an hour later, that is at 4:30pm on 14 August 2020 A:EST, he sent a further email to the Tribunal Associate, informing her that he would telephone her. However, by that time the 14 August 2020 directions hearing had been completed, and the Tribunal had dismissed Dr Ziolkowski’s review application.
Findings in response to Dr Ziolkowski’s assertions and explanations
Dr Ziolkowski’s attempt to explain or excuse his 2019 non-compliance with the Tribunal’s directions, on the basis of lack of communication from his then legal representatives, is both unpersuasive and immaterial. The matters summarised earlier in these reasons fulsomely indicate that (i) by no later than 17 December 2019, he was well aware of the fact of his non-compliance, (ii) he attributed his compliance delay to “poor legal advice” – as distinct from lack of communication from his legal advisers, and (iii) he asserted that he was “almost ready” to comply with the Tribunal’s directions:- see paragraphs ‎49 to ‎51 above.
Dr Ziolkowski’s asserted lack of familiarity with Tribunal proceedings may be accepted, at a level of generality. But it is an immaterial assertion, in the light of (i) the compliance readiness he asserted in December 2019, (ii) the clarity and vehemence with which he asserted an unwillingness to proceed in the absence of legal representation, despite his awareness of the content of the Tribunal’s Directions (see paragraphs ‎66 above) and, (iii) the clear, and self-explanatory, content of the Tribunal’s directions and warnings – particularly those in the Directions of 8 May 2020, 26 June 2020 and 22 July 2020:- see paragraphs 58 to 61 & 69 above.
Dr Ziolkowski’s asserted confusion about the relationship between the ATO legal officer acting for the Commissioner in the review proceedings, and the Tribunal, is both disingenuous and immaterial. Throughout the many email communications referred to above the distinctions between the role and function of the ATO legal officer, and the Tribunal are, to any competent and objective reader, readily apparent. First of all, the email addresses used by the ATO legal officer and by the Tribunal have clearly distinct domain names. Secondly, there are several instances in which the ATO legal officer identified herself as representing the Commissioner in the review proceedings and, specifically, at the directions hearings. Thirdly, the one occasion on which Dr Ziolkowski enquired whether the ATO legal officer was “with the Tribunal” more betokens a request for confirmation, rather than an operative current misapprehension about the person’s actual role and function. In that context, the assertion that Dr Ziolkowski makes, in paragraph 9 of his 24 November 2022 affidavit – that he “did not understand (the legal officer) was from the ATO” – is impossible to accept. It is patently inconsistent with the inference properly to be drawn from the contents of the various email exchanges to which I have referred.
More significantly however, Dr Ziolkowski’s asserted mistake, confusion or misunderstanding about the ATO legal officer is essentially immaterial. The Tribunal’s directions (specifically those in May, June and July 2020) were clear, and communicated to Dr Ziolkowski. Given their contents and clarity, it is beside the point to assert any mistake or confusion about the precise status, function or role of the ATO legal officer.
Dr Ziolkowski should be regarded as partly correct in his asserted belief that the Tribunal was aware of his ill health at the time of, and subsequent to, the Tribunal’s 26 June 2020 Directions. However the facts of the matter are that (i) he was not in fact admitted to hospital in July 2020, (ii) on 16 July 2020 he announced he was at home and fit for work (see paragraph 66‎(a) above) and, (iii) his more detailed 16 July 2020 email to the Tribunal focussed no on any infirmity impeding his preparation or comprehension, but on a reluctance to participate in the review proceedings without legal representation:- see paragraph ‎66(b) above.
Dr Ziolkowski’s implied assertion about lack of notice of the directions Hearing on 14 August 2014 is impossible to accept. The apparent assertion, in the narrative part of his 24 November 2020 affidavit, that he did not receive notice of the listing until “Friday 21 August 2020”, is plainly contradicted by the content of various attachments to the affidavit:- see paragraphs 69 to 72 above.
In my view, Dr Ziolkowski has provided no meaningful explanation for either (i) his failure, indeed refusal, to comply with the Tribunal’s 8 May, 26 June and 22 July 2020 Directions or, (ii) his failure to participate in the 14 August 2020 directions hearing. In those circumstances I am not satisfied that his conduct involved any “error” that enlivens the reinstatement discretion. Rather, the better view is that Dr Ziolkowski knowingly and deliberately refused to comply with the Tribunal’s directions.
Consideration of the “inclination” & “capacity” error contentions
Earlier in these reasons I indicated the separate elements of the reasoning underlying the contentious amended assessments, and the grounds of Dr Ziolkowski’s objection to them:- see paragraphs 9 & 14 above.
Leaving aside (for the time being:- see paragraph ‎112 below) the question of fraud and evasion (relevant to the Commissioner’s authority to issue any amended assessment) the principally relevant elements of the Commissioner’s reasoning were (i) Dr Ziolkowski’s controlled receipt and use of the three fund transfers made to his Australian friend (Mr Hanneman) (the “income issue”), (ii) his status an Australian resident (the “residence issue”) and, (iii) his inability to take advantage of the “tie breaker” provisions in the Australia / USA double taxation arrangements (the “double taxation issue”).
Against that background, proper evaluation of Dr Ziolkowski’s principal “error” contention requires regard not only to the true nature and extent of my dismissal findings. It also requires regard to (i) the separate elements of the reasoning underlying the contentious assessments, (ii) the state of the material available at the time of the 14 August 2020 decision and, (iii) to the Tribunal’s own role and responsibilities when, standing in the shoes of the primary decision maker (i.e., the Commissioner), it is dealing with an unrepresented applicant.
The income issue
I briefly described the contentious bank transfers earlier in these reasons:- see paragraph ‎5 above. Their essential details are set out in Schedule 1 to these reasons. Those details, and the material available to the Tribunal as at 14 August 2020 (specifically section 37 documents T1 to T68, comprising 1,107 pages) provided an arguable basis for a conclusion that the three contentious transfers were directed by, and implemented for the benefit of, Dr Ziolkowski. That material included information to the effect that (i) Dr Ziolkowski’s transferee friend disavowed any role in the origin of the transfers, (ii) disavowed any personal interest in the transferred funds and, (iii) said that Dr Ziolkowski had asked him to participate in the transfers, and had directed all his activities in relation to them. Furthermore, there is information capable of supporting a finding that Dr Ziolkowski’s American accountant had concocted a fanciful explanation that the transfers to the Australian accounts were, in reality, a gift to Dr Ziolkowski’s friend. The unlikelihood of the accuracy of this explanation is indicated by the immediacy with which the funds had been remitted to bank accounts in the USA.
The complicated relationships and structures involved in the BVI entities, the “Voyager Trust” which held their issued shares, and Dr Ziolkowski’s status as a substantial creditor of the two BVI entities, were all discussed in the December 2015 audit report. The complexity, and the discussion, point to the unlikelihood that the true character of the contentious fund transfers could be accurately and properly determined without further detailed explanations from Dr Ziolkowski. However, at the time of the August 2020 dismissal he had displayed neither the intention nor the ability to provide any explanation for the fund transfers. Accordingly, in relation to this issue, there was no relevant “error” that occasioned the dismissal of the review application.
The residence issue
The material in the section 37 documents, did tend to indicate that there were some problematic aspects of the Commissioner’s finding that Dr Ziolkowski was an Australian tax resident in the 2006 and 2007 Australian tax years. Both the original assessment reasons, and those in the Objection decision, had (apparently) simply aggregated the periods when Dr Ziolkowski had been in Australia, between 1999 and 2013. However, the actual movement records had been obtained by the Commissioner from the Department of Immigration and Border Protection. They are summarised in Schedule 2 to these reasons. Regard to the movement details summarised in Schedule 2, at least arguably, points against a conclusion of Dr Ziolkowski’s Australian residence. They tend to indicate, or at least they arguably indicate, that the character of Dr Ziolkowski’s visits to Australia was more in the nature of an occasional (though perhaps regular) visitor. Rarely did his presence extend beyond two or three month stays.
However, the criteria for determining “residence” for taxation purposes were addressed in detail in the December 2015 audit decision reasons. In those reasons, the Commissioner had pointed out that (i) physical presence at a place was not required for that place to be characterised a “residence”, (ii) a person could have multiple places of residence and, (iii) even relatively short periods of physical presence could suffice to contribute to a finding of “residence”, particularly where those periods related to, and contemporaneous with, home ownership and occupation.
Regard to the propositions in the preceding paragraph, when viewed against the background of Dr Ziolkowski’s ownership of the Potts Point property, his January 2006 Australian citizenship, his apparent practice of lodging income tax returns with the Commissioner, and the regularity and duration of his various periods of Australian presence, leads to a conclusion contrary to a finding of “error” in the August 2020 dismissal. Those various considerations contribute to scepticism that, at that time, Dr Ziolkowski had either the intention, or a meaningful capacity, to challenge successfully his characterisation as an Australian resident.
The double taxation issue – the 1982 convention wording
I have set out in Schedule 3 extracts from the wording of the 1982 Australian and American convention relating to “double taxation”. I approach the application of that wording on the basis of the assumption that Dr Ziolkowski was an Australian resident in each of the 2006 and 2007 tax years, and the further (uncontroversial) assumption that he was also a United States citizen. With those assumptions in mind, it is readily apparent from the Schedule 3 convention extracts, and in particular from Article 4 of the convention, that the answer to the question of Dr Ziolkowski’s country of residence, for income tax purposes, likely depends on which of a cascade of alternative criteria applies to his particular circumstances. The alternative criteria are
(a)the place where he “maintains his permanent home”
(b)the place “in which he has an habitual abode”
(c)the place “with which his personal and economic relations are closer”.
The “double taxation” audit / objection findings & Dr Ziolkowski’s capacity
The December 2015 audit reasons, at least arguably, did not correctly address these cascading criteria. For example, the reasons contained a finding that Dr Ziolkowski had a “permanent home available” in Australia. That finding did not reflect the actual wording of the first of the Article 4 convention criteria. Neither did the audit reasons address the question whether Dr Ziolkowski maintained a permanent home in the United States. (Indeed, the audit reasons merely referred to his periods of absence from Australia as “trips”.) Finally, the audit decision reasoning, implicitly resorting to the third of the convention criteria, referred only to four matters to establish the fact and extent of Dr Ziolkowski’s Australian relations. They were
(a)his two periods of presence in 2006 and 2007
(b)the “resident returning” notation he had placed on his incoming passenger cards, and the nomination of his Australian resident friend as a contact, when he entered Australia on those two occasions
(c)the characterisation of the Voyager Trust beneficiaries as Australian residents
(d)his status as a director and sole shareholder of Park Avenue Properties Pty Ltd (“PAP Pty Ltd”) – and Australian corporation.
Whilst it may be acknowledged that each of those matters is capable of demonstrating the nature and extent of Dr Ziolkowski’s personal and economic relations in Australia, the audit December 2015 audit reasoning is, at least arguably, bereft of the comparison required by the third convention criterion. That comparison was between Dr Ziolkowski’s relevant relations in Australian and those in the United States.
There was a similar, though slightly different, brevity of reasoning expressed in the November 2018 objection decision reasoning. In that reasoning the Commissioner concluded that Dr Ziolkowski was an Australian resident, but made no explicit finding that Dr Ziolkowski “maintains his permanent home” in Australia. Neither did it make any finding about the place of Dr Ziolkowski’s “habitual abode”. In relation to the third convention criterion the Objection Decision reasoning observed (albeit without placing any explicit reliance on either the Voyager trust beneficiaries or PAP Pty Ltd) that Dr Ziolkowski had “personal and economic ties in Australia”. However, the reasoning again eschewed any comparison, apparently required by the third criterion, between those relations and those Dr Ziolkowski had with the United States. The implicit justification for the absence of such a comparison and evaluation was the assertion that Dr Ziolkowski had provided no information about his living arrangements, nor about his personal and economic ties, in the United States.
Various aspects of the “no information” assertion in the Objection decision reasoning invite careful examination. The material in the section 37 documents fulsomely demonstrated the fact of Dr Ziolkowski’s American citizenship, his practice of filing tax returns in the United States, and the attitude of the American Internal Revenue Service that, as a US citizen Dr Ziolkowski was liable to US income tax on his global income. The section 37 documents in fact contained copies of income tax returns that Dr Ziolkowski had submitted to the United States Internal Revenue Service.
In Schedule 4 to these reasons, I have set out a summary of details of those tax returns. The details, especially when understood against the background of the more extensive information contained in the tax returns themselves, are at least consistent with, and arguably probative of, a conclusion that Dr Ziolkowski had significant economic and personal ties in the United States.
That consistency then points to the potential importance of the comparison required by the third convention criterion. In that context, it is arguably instructive to have regard to the contents of Dr Ziolkowski’s Australian income tax returns. Copies of the Australian tax returns that Dr Ziolkowski had lodged for the tax years from June 2002 to June 2007 were included in the section 37 documents. In Schedule 5 to these reasons, I have set out a summary of the details of those Australian tax returns. Those summarised details are at least consistent with, and are potentially probative of, minimal economic activity (other than ownership of the Potts Point property) by Dr Ziolkowski in Australia.
When regard is had to the contents of the two sets of income tax returns, it is at least arguable that they provide a basis for findings that (i) at all (presently material) times, Dr Ziolkowski maintained a home in Colorado, and later New York and, (ii) his principal economic connection (at least in terms of income and expenses) related to his activities / entitlements in, and ties to the United States.
It is also apparent from the section 37 documents that the Commissioner was very aware, in the course of the, extensive and prolonged, examination that preceded the November 2018 Amended Assessments, of the potential materiality of full information about Dr Ziolkowski’s American interests and activities. That appearance comes from information requests that the Commissioner made. The first of these was in a 25 August 2016 letter written under the name of Ms Hastings, the Deputy Commissioner of Taxation. That letter set out a list of 27 detailed questions, avowedly intended to elicit details of his Australian and United States connections during the period from 1 January 2005 to 31 December 2007. In particular, and with obvious appreciation of the “tie breaker” criteria in the “double taxation” convention, the letter implicitly acknowledged the likelihood that Dr Ziolkowski had “homes” in both the US and Australia, and then asked which he considered to be his “habitual abode”. When Dr Ziolkowski did not respond to this request, it was repeated in a follow up letter of 10 September 2016, and perhaps also in a further follow up letter of 11 November 2016.

The section 37 documents do not contain any direct response by Dr Ziolkowski to these specific requests. The available documents do however tend to suggest the reason for his lack of a direct response. I have alluded earlier to the Commissioner’s 18 May 2016 letter acknowledging the inaccuracy of the movement record information that had informed the January 2016 assessments:- see paragraph ‎9 above. The correction of this inaccuracy revealed that Dr Ziolkowski had spent far less time (a total of 202 fewer days) in Australia than had been taken into account in the December 2015 audit report and in making the Amended Assessments. Unfortunately, however, this correction seems to have deflected Dr Ziolkowski’s attention to, essentially irrelevant, accusations that the ATO had engaged in “fraud” when making the January 2016 assessments. Rather than respond directly and substantively to the questions that had been posed in the Commissioner’s August, October and November 2016 letters, Dr Ziolkowski embarked upon (what can reasonably be described as) irrelevant tirades about the unfairness of the assessment / objection process, and intemperate assertion that the Amended Assessments were without justification.
The relevant “mistake”
Having reviewed, at some length, the various communications in the section 37 documents, it seems to me that two views are open, in identifying a relevant error that led to the August 2020 dismissal of the review application.
One view is that Dr Ziolkowski was mistaken about the significance of the precise periods of his presence in Australia in 2006 and 2007. That mistake led him to fail to appreciate the significance of the Commissioners’ August, October and November 2016 enquiry letters. Alternatively, for whatever reason, he mistakenly failed to respond to those enquiries and, in turn failed to appreciate the nature of the issues, and more particularly, the nature of a potentially determinative issue, in the review proceedings. That failure of appreciation contributed to the procedural defaults that led to dismissal of the review application in August 2020.
A second view is that I was mistaken, in my 14 August 2020 reasoning, in two respects. The first respect was in characterising Dr Ziolkowski as lacking both the intention, and the capacity, to progress the review proceedings. The second respect was in regarding Dr Ziolkowski’s non-compliance as warranting dismissal of the proceedings, having regard to the then available material, and the likely potential for Dr Ziolkowski to be able to provide at least some meaningful additional evidentiary material in response to the Commissioner’s August, October and November 2016 enquiry letters.
It is unnecessary, in my opinion to attempt to reach any conclusion about the first of the two alternative views. Dr Ziolkowski’s failure to appreciate the materiality of the Commissioner’s August, October and November 2016 enquiry letters had two consequences. The first was that, notwithstanding the challenge to the Amended Assessments (evident in the grounds of the review application:- see paragraph 8 above) Dr Ziolkowski failed to highlight the third convention criterion as a significant point of contest. The second consequence was that, in the exercise of the dismissal discretion, it was at least desirable, and more likely necessary, for the Tribunal to inform itself about the significance of that criterion, and to reach some view as to whether there was at least an arguable basis for that criterion to be applied favourably to Dr Ziolkowski. That desirability arises, in my opinion from the combined effect of the Tribunal’s function and freedom of procedure (see the AAT Act ss 2A & 33), its ability to exercise all of the powers of the primary decision maker (AAT Act s 43(1)) and the orthodox jurisprudence requiring the Tribunal to apply the review mechanism to as to achieve the “correct or preferable” decision and, the discretionary nature of the dismissal power:- see AAT Act s 42A(5).
Turning to the actual finding I made in my 14 August 2020 dismissal decision reasoning, I am inclined to characterise as an error, my finding that Dr Ziolkowski lacked the inclination to pursue the review application. Detailed examination of the correspondence contained in the s 37 documents, together with at least some of the material to which I referred in the “procedural review” section of these reasons, points to the more accurate conclusion that Dr Ziolkowski was in fact quite determined to pursue the review application, and to so as soon as he was satisfied he had the legal representation he thought necessary to pursue the application in an effective manner.
However, an error of that kind would not suffice to warrant exercise of the reinstatement discretion unless I were also of the opinion that, as at 14 August 2020, Dr Ziolkowski had the capacity to have the matter determined on its merits, and was likely to manifest that capacity within a reasonable time.
As to that, I am of the view that there were, at least arguably, significant deficiencies in both the December 2015 audit decision reasons, and the November 2018 Objection decision reasons, in their consideration of the third “tie breaker” criterion in the convention. In my opinion, when regard is had to the material already available in the section 37 documents, there was at least an arguable basis on which Dr Ziolkowski could have successfully challenged the Amended Assessments – and thus the penalty assessments. Having regard to the existence of that arguable basis it was, in my opinion, an error to dismiss the application without proceeding to determine, potentially on the basis of the then available material alone, the merits of the review application.
I am further of the view that it was a relevant error, at least in relation to consideration of the third “tie breaker” criterion in the convention, to characterise Dr Ziolkowski as lacking the capacity to progress the review application. On one view, all that Dr Ziolkowski had to do was to respond meaningfully to the substance of the questions the Commissioner had posed in the letters of August, October and November 2016. The essence of those questions was to obtain details of Dr Ziolkowski’s living arrangements, and personal and economic ties, in the United States. In my opinion, at least in the absence of drawing his specific attention to those requests, and the apparent absence of a response to them, it was an error to conclude that Dr Ziolkowski lacked capacity (in August 2020) to provide timely information of the kind requested.
In the light of the conclusions I have just expressed, it appears to me that on 14 August 2020, the January 2019 review application was dismissed in error.
Exercise of the reinstatement discretion
The Commissioner contended that, even if Dr Ziolkowski succeeded in demonstrating dismissal error the Tribunal should refuse to reinstate the January 2019 review application. The substantive grounds for the Commissioner’s contention were (i) the past history of procedural delay, (ii) the correspondingly doubtful likelihood that Dr Ziolkowski would progress the reinstated application with requisite diligence and timeliness, (iii) the extensive and inadequately explained delay in bringing the current (October 2022) reinstatement application and, (iv) the presumptive prejudice that the Commissioner may suffer as a result of the delay that has occurred.
None of the Commissioner’s contentions points to the appropriateness of refusing to reinstate the review application. Nor does the combined impact of the individual contentions. The past history of delay in pursuing the review application is partly attributable to (i) lack of legal representation, (ii) misapprehension of the nature of the matters really required to be determined and, (iii) communication difficulties arising in connection with the COVID 19 pandemic crisis and Dr Ziolkowski’s periods of ill health. The first of those matters appears to have been addressed. The second matter can be addressed by appropriate directions, and with the assistance of Dr Ziolkowski’s legal representatives. The third matter is less significant, given not only the cessation of most of the previously employed public health restrictions, but also Dr Ziolkowski’s legal representation.
The prior and inadequately explained delay in bringing the current reinstatement application is of no determinative significance. This is because (i) there is at least an arguable basis for the review application, even if the material to be considered is limited to the material contained in the section 37 documents alone, (ii) it is inherently desirable that the review application be determined on its merits and, (iii) there is a reasonable basis for concluding that the past procedural delays and non-compliance will not be repeated.
The presumptive prejudice assertedly arising from the delay in bringing the reinstatement application is a necessarily general, and correspondingly unpersuasive, contention. That is especially the case when regard is had to (i) the information already contained in the s 37 documents, (ii) the delay that had already occurred, particularly in the course of the audit and objection process between 2013 and 2018, (iii) the potentially determinative role of the third “tie breaker” criterion in the convention and, (iv) the essentially objective, but impressionistic, nature of the comparison evaluation ultimately required by that criterion.
The agnostic significance of the reinstatement decision
Nothing I have said about the apparently arguable content of Dr Ziolkowski’s review grounds should be taken as expressing any view about the ultimate merits of his substantive review application. The same applies in relation to the critical comments I have made about the imprecision of both the December 2015 audit reasons, and the 2018 Objection decision reasons, in their application of the “tie breaker” criteria in the convention. The ultimate merits of the substantive review application will depend upon the precise content of the ultimately provided evidence, and upon evaluation of that evidence and the considered submissions of both parties.
A reservation about the “fraud” and “evasion” issue
In particular, I have in these reasons expressed no view about the threshold “fraud and evasion” issue. I have preferred instead to proceed on the assumption (about which I emphasise I express no view) that the threshold time limit on assessment amendment does not apply. Proceeding in that way was a convenient course, because it facilitates a focus on the apparent arguability of Dr Ziolkowski’s contention about the application of the third “tie breaker” criterion in the convention. However, it will be readily apparent to likely readers that if the “tie breaker” criterion is the decisive factor in determining Dr Ziolkowski’s country of residence for income tax purposes, the appropriateness of a “fraud” or “evasion” may be a matter of genuine and substantial contest, and will likely require very specific factual findings.
Directions for the conduct of the substantive review
In the event of success on the reinstatement application, the Applicant sought the following directions:-
(a)That the Respondent provide a copy of the section 37 documents, within a specified time
(b)That the Respondent provide the Applicant and the Tribunal with all witness statements, any further documentary evidence, and a contention document outlining the substance of the assessment facts and the grounds, on which the commissioner intends to rely in the review proceedings
(c)That both parties lodge submissions, and a list of authorities within a specified time
(d)That the matter be listed for a further directions hearing, with a view to having the substantive review listed for hearing.
The section 37 documents were lodged with the Tribunal on 5 June 2019. A supplementary set of section 37 documents was lodged with the Tribunal in early September 2019. It is likely that both sets of section 37 documents were provided to the legal representatives who, prior to 15 December 2019, acted for Dr Ziolkowski in the review proceedings. However that may be, both sets of section 37 documents are available, in searchable portable document format. I expect that the parties will co-operate, without the need for any formal direction, so that Dr Ziolkowski’s current legal representatives are provided with those documents.
In the course of my review of the section 37 documents, I formed the impression that they may require further supplementation. The following four illustrative matters contributed to my impression:-
(a)The description of Document T28 in the Index does not, at least not self-evidently, correspond with the actual apparent contents of the T28 document
(b)The T28 document includes cover pages for Exhibits A, B, C & D, but the actual inclusion / location of those documents is not readily apparent
(c)The interview transcript at Document T40 includes exchanges about documents that were put to the interviewee, but whose actual inclusion in the section 37 documents is not readily apparent
(d)The December 2015 audit finalisation letter includes various types of information about Park Avenue Properties Pty Ltd. However, the inclusion / location of the underlying source documents in the section 37 documents is not readily apparent.
I invite the parties to consider whether the appropriate directions for the further conduct of the matter should address the following matters:-
(a)The Respondent to lodge any further supplementary section 37 documents within xx weeks
(b)Within yy weeks thereafter the Applicant is to lodge with the Tribunal, and provide to the Respondent, all witness statements, documents, statement of contention and written submissions, intended to be relied on, in chief, in support of the substantive review application
(c)A self-executing provision for the dismissal of the reinstated review application in the event of the Applicant’s failure to comply with the preceding direction
(d)Within zz weeks after the Applicant’s compliance with the lodgement direction, if EITHER the witness statements provided by the Applicant are to substantially the same effect as the contents of paragraphs 32 to 34, 65 to 70, 91 to 105 of the Applicant’s draft November 2022 affidavit, OR the Applicant has otherwise provided a substantive response to the Respondent’s August, October and November 2016 enquiry letters, the parties are to discuss the desirability of the substantive review application being remitted (in accordance with AAT Act s 42D(1)) to the Commissioner for further consideration
(e)If the parties agree on remittal of the Objection decision under AAT Act s 42D(1) the Applicant is to lodge with the Tribunal a draft form of remittal order
(f)If, within zz + 2 weeks after the Applicant has lodged his witness statements, documents and submissions, the parties have not agreed on remittal of the Objection decision to the Commissioner, within a further period of two weeks the Respondent is to lodge with the Tribunal, and provide to the Applicant
(i)all witness statements, documents, statement of contention and written submissions, intended to be relied on in support of the Objection decision
(ii)an estimate of the length of the substantive hearing, and a range of available dates for the substantive review hearing
(g)Within three weeks after the Respondent has lodged the documents required by the preceding direction, the Applicant is to lodge with the Tribunal, and provide to the Respondent
(i)all witness statements, documents, statement of contention and written submissions, intended to be relied on in reply
(ii)an estimate of the length of the substantive hearing, and a range of available dates for the substantive review hearing
(h)The matter is to listed for a telephone directions hearing, at a time and date suitable to the parties, but no later than 7 days after the required time for the Applicant’s compliance with the preceding direction.
Within three weeks after the publication of these reasons for decision
(a)the parties are to endeavour to agree upon, and to submit to the Tribunal, a draft of the directions to be made for the progress of the review application
(b)failing agreement between the parties, the Applicant is to lodge with the Tribunal, and provide to the Respondent, a draft of the directions for which he contends.
In the absence of agreement between the parties about the content of the directions contemplated in the preceding paragraph, the Tribunal will appoint a telephone directions hearing, in the fourth week after the publication of these reasons, at a date and time to be notified to the parties by the Tribunal Registry.
Conclusion
For the reasons expressed above, it appears to me that the January 2019 review application was dismissed in error. Given the nature of the error, and the apparent arguability of the merits of the grounds of review included in the review application, it is appropriate to reinstate the review application. I hereby reinstate that application. I also make directions to the effect indicated in paragraphs 117 and 118 above.

I certify that the preceding 119 (one-hundred and nineteen) paragraphs are a true copy of the reasons for the decision herein of Mr P W Taylor SC, Senior Member

......................................[SGD].................................
Associate
Dated: 2 March 2023

Date(s) of hearing:

12 December 2022

Solicitors for the Applicant:

Mr M Webeck, HWL Ebsworth Lawyers

Counsel for the Respondent:

Mr K Josifoski

Solicitors for the Respondent:

Ms C Lee, Australian Tax Office

Schedule 1 - Fund transfers - 2006 & 2007 tax years

Reasons paragraph 83

Date

Amount

Sender

Recipient

AUD

Name

Bank

City

Country

Name

Bank

City

22-Jun-06

339,392

Falcor Australia Ltd

JPM

New York

USA

Hanneman

WBC

Parramatta

22-Jun-06

678,242

Vulcan International Enterprises

JPM

New York

USA

Hanneman

WBC

Parramatta

Total

1,017,634

23-Jun-06

1,017,499

Hanneman

WBC

Parramatta

Aus

Wolsk (client fund)

BofNY

New York

Balance

135

20-Feb-07

126,984

Falcor Australia Ltd

JPM

New York

USA

Hanneman

WBC

Parramatta

22-Feb-07

101,587

Hanneman

WBC

Parramatta

Aus

NFS for Ziolkowski

BofNY

New York

Balance

25,397

Schedule 2 - Australian Movement details - extract - T Ziolkowski

Reasons paragraph 85

Arrival

Departure

Duration

No of entries

T52 records

DUR - ¶31

17-Aug-99

15-Sep-99

29

15-Nov-99

11-Dec-99

26

15-Dec-99

23-Dec-99

8

28-Dec-99

28-Mar-00

91

5-Apr-00

19-Apr-00

14

25-Apr-00

1-May-00

6

31-May-00

19-Jun-00

19

tax year total - 2000

193

205

7

15-Sep-00

7-Oct-00

22

9-Nov-00

4-Apr-01

146

7-Apr-01

30-Apr-01

23

tax year total - 2001

191

194

3

23-Jul-01

12-Aug-01

20

25-Sep-01

9-Oct-01

14

8-Nov-01

3-Apr-02

146

18-Apr-02

5-May-02

17

tax year total - 2002

197

201

4

22-Oct-02

20-Mar-03

149

tax year total - 2003

149

150

1

1-Oct-03

28-Oct-03

27

6-Dec-03

13-Mar-04

98

21-Mar-04

7-Apr-04

17

tax year total - 2004

142

145

3

8-Jul-04

26-Jul-04

18

9-Nov-04

7-Jun-05

210

tax year total - 2005

228

230

2

30-Dec-05

21-Mar-06

81

tax year total - 2006

81

82

1

18-Jan-07

19-Mar-07

60

tax year total - 2007

60

61

1

28-Dec-07

31-Jan-08

34

13-Feb-08

26-Mar-08

42

tax year total - 2008

76

77

2

15-Dec-08

13-Mar-09

88

21-Mar-09

8-Apr-09

18

tax year total - 2009

106

108

2

5-Nov-09

26-Mar-10

141

5-Apr-10

22-Jun-10

78

tax year total - 2010

219

221

2

27-Aug-10

18-Oct-10

52

28-Oct-10

13-Dec-10

46

4-Jan-11

8-Mar-11

63

14-Mar-11

14-Jun-11

92

tax year total - 2011

253

257

4

19-Aug-11

28-Sep-11

40

17-Oct-11

26-Dec-11

70

31-Dec-11

7-Mar-12

67

12-Apr-12

27-Apr-12

15

1-Jun-12

11-Jun-12

10

tax year total - 2012

202

207

5

4-Jul-12

17-Jul-12

13

5-Aug-12

18-Sep-12

44

10-Oct-12

30-Nov-12

51

19-Dec-12

14-Apr-13

116

19-Apr-13

1-May-13

12

tax year total - 2013

236

241

5

Schedule 3 – Australian Treaty Series [1983] No 16 (as amended by [2003] ATS 14 - (extract)
Reasons paragraph 88
Convention between the Government of Australia and the Government of the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income –
Article 1 - Personal scope
(1) Except as otherwise provided in this Convention, this Convention shall apply to persons who are residents of one or both of the Contracting States.
(2) This Convention shall not restrict in any manner any exclusion, exemption, deduction, rebate, credit or other allowance accorded from time to time:
(a) by the laws of either Contracting State; or
(b) by any other agreement between the Contracting States.

(3) Notwithstanding any provision of this Convention, except paragraph (4) of this Article, a Contracting State may tax its residents (as determined under Article 4 (Residence)) and individuals electing under its domestic law to be taxed as residents of that State, and by reason of citizenship may tax its citizens, as if this Convention had not entered into force. For this purpose, the term "citizen" shall, with respect to United States source income according to United States law relating to United States tax, include a former citizen or long-term resident whose loss of such status had as one of its principal purposes the avoidance of tax, but only for a period of 10 years following such loss.
(4) The provisions of paragraph (3) shall not affect:
(a) the benefits conferred by a Contracting State under paragraph (2) of Article 9 (Associated enterprises), paragraph (2) or (6) of Article 18 (Pensions, annuities, alimony and child support), Article 22 (Relief from double taxation), 23 (Non-discrimination), 24 (Mutual agreement procedure) or paragraph (1) of Article 27 (Miscellaneous); or
(b) the benefits conferred by a Contracting State under Article 19 (Governmental remuneration), 20 (Students) or 26 (Diplomatic and consular privileges) upon individuals who are neither citizens of, nor have immigrant status in, that State (in the case of benefits conferred by the United States), or who are not ordinarily resident in that State (in the case of benefits conferred by Australia).

Article 2 - Taxes covered
(1) The existing taxes to which this Convention shall apply are:
(a) in the United States: the Federal income taxes imposed by the Internal Revenue Code; and
(b) in Australia:
(i) the Australian income tax, including tax on capital gains; and
(ii) the resource rent tax in respect of offshore projects relating to exploration for or exploitation of petroleum resources,

imposed under the federal law of Australia.

(2) This Convention shall also apply to any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of this Convention in addition to, or in place of, the existing taxes. At the end of each calendar year, the competent authority of each Contracting State shall notify the competent authority of the other Contracting State of any substantial changes which have been made during that year in the laws of his State relating to the taxes to which this Convention applies or in the official interpretation of those laws or of this Convention.
Article 3 – General definitions
…
Article 4 - Residence
(1) For the purposes of this Convention:
(a) a person is a resident of Australia if the person is:
(i) an Australian corporation; or
(ii) any other person (except a company as defined under the law of Australia relating to Australian tax) who, under that law, is a resident of Australia,

provided that, in relation to any income, a person who:
(iii) is subject to Australian tax on income which is from sources in Australia; or
(iv) is a partnership, an estate of a deceased individual or a trust (other than a trust that is a provident, benefit, superannuation or retirement fund, or that is established for public charitable purposes or for the purpose of enabling scientific research to be conducted by or in conjunction with a public university or public hospital, the income of which is exempt from tax under the law of Australia relating to Australian tax),

shall not be treated as a resident of Australia except to the extent that the income is subject to Australian tax as the income of a resident, either in the hands of that person or in the hands of a partner or beneficiary, or, if that income is exempt from Australian tax, is so exempt solely because it is subject to United States tax; and

(b) a person is a resident of the United States if the person is:
(i) a United States corporation;
(ii) a United States citizen, other than a United States citizen who is a resident of a State other than Australia for the purposes of a double tax agreement between that State and Australia; or
(iii) any other person (except a corporation or unincorporated entity treated as a corporation for United States tax purposes) resident in the United States for purposes of its tax, provided that, in relation to any income derived by a partnership, an estate of a deceased individual or a trust, such person shall not be treated as a resident of the United States except to the extent that the income is subject to United States tax as the income of a resident, either in its hands or in the hands of a partner or beneficiary, or, if that income is exempt from United States tax, is exempt other than because such person, partner or beneficiary is not a United States person according to United States law relating to United States tax.

(2) Where by application of paragraph (1) an individual is a resident of both Contracting States, he shall be deemed to be a resident of the State:
(a) in which he maintains his permanent home;
(b) if the provisions of sub-paragraph (a) do not apply, in which he has an habitual abode if he has his permanent home in both Contracting States or in neither of the Contracting States; or
(c) if the provisions of sub-paragraphs (a) and (b) do not apply, with which his personal and economic relations are closer if he has an habitual abode in both Contracting States or in neither of the Contracting States.

For the purposes of this paragraph, in determining an individual's permanent home, regard shall be given to the place where the individual dwells with his family, and in determining the Contracting State with which an individual's personal and economic relations are closer, regard shall be given to his citizenship (if he is a citizen of one of the Contracting States).

(3) An individual who is deemed to be a resident of one of the Contracting States for any year of income, or taxable year, as the case may be by reason of the provisions of paragraph (2) shall, for all purposes of this Convention, be deemed to be a resident only of that State for such year.
Schedule 4 - Tax returns submitted to the United States of America Internal Revenue Service

Reasons paragraph 93

Description

Dec-00

Dec-01

Dec-02

Dec-03

Dec-04

Dec-05

Dec-06

Dec-07

Dec-08

Dec-09

T27-0398

T27-0406

T27-0416

T27-0426

T27-0438

T27-0451

T27-0461

T27-0472

T29-0550

T29-0567

Home address

{1}

{1}

{1}

{1}

{1}

{1}

{2}

{2]

{3}

{3}

Agent

{4}

{5}

{5}

{5}

{5}

{5}

{5}

{5}

{5}

{5}

Interest income

7,755

5,530

127

37

0

0

2

2

141

149

Dividend income

1,408

995

868

3,886

2,641

10,680

17,209

10,851

757

Capital gains

7,258

20,819

-3,000

-3,000

-3,000

-3,000

-3,000

-3,000

-3,000

-3,000

IRA (retirement plan) distributions

54,500

54,500

54,500

54,500

54,500

54,585

54,500

54,507

2,312

0

Rent / royalty / other income

-679

-99

-288

Total income

68,834

82,257

52,622

52,405

55,386

54,226

62,182

68,619

10,304

-2,382

Adjusted gross income

68,834

82,257

52,622

52,405

55,386

54,226

62,182

68,619

10,304

-2,382

Deductions

Home mortgage

55,426

67,338

50,909

34,641

28,218

34,892

48,206

19,435

0

0

Real estate & other taxes

6,471

6,002

5,415

5,818

6,326

6,303

11,436

18,505

4,194

7,173

Other deductions

7,323

5,847

10,395

10,677

19,939

14,238

16,625

29,757

38,238

47,131

Total deductions

69,220

79,187

66,719

51,136

54,483

55,433

76,267

67,697

42,432

54,304

Foreign tax credit

0

0

0

0

0

0

0

0

0

0

Tax payable

0

170

0

0

0

0

0

0

0

0

Notes

Address {1}: xxxx Pineridge Lane, Boulder, Colorado

Address {2}: xxx 7th Avenue, New York (return is undated)

Address {3}: xxxxx West Broadway, New York

Agent ("Paid Preparer") {4}:- Rocky Mountain Professional Consultants Inc

Agent ("Paid Preparer") {5}:- Mark Janicki CPA, Denver USA

Schedule 5 - Australian tax returns lodged with the Commissioner

Reasons paragraph 94

Description

Jun-02

Jun-03

Jun-04

Jun-05

Jun-06

Jun-07

T51-0865

T51-0875

T51-0885

T51-0893

T51-0901

T51-0909

Home address

{1}

{1}

{1}

{1}

{1}

{1}

Agent

{2}

{2}

{2}

{2}

{2}

{2}

Interest

648

1,757

3,416

3,296

4

930

Total income

648

1,757

3,416

3,296

4

930

Deductions

0

0

0

0

0

0

Taxable income

648

1,757

3,416

3,296

4

930

Notes

Address {1}:- Potts Point, NSW

Agent {2}:- Steven Rosen

[2023] AATA 292

2 March 2023

Key Legal Topics

Areas of Law

Tax Law

Administrative Law

Legal Concepts

Appeal

Procedural Fairness

Jurisdiction

Statutory Construction

Remedies

Standing

Date(s) of hearing:	12 December 2022
Solicitors for the Applicant:	Mr M Webeck, HWL Ebsworth Lawyers
Counsel for the Respondent:	Mr K Josifoski
Solicitors for the Respondent:	Ms C Lee, Australian Tax Office

Reasons paragraph 83
Date	Amount	Sender				Recipient
AUD	Name	Bank	City	Country	Name	Bank	City
22-Jun-06	339,392	Falcor Australia Ltd	JPM	New York	USA	Hanneman	WBC	Parramatta
22-Jun-06	678,242	Vulcan International Enterprises	JPM	New York	USA	Hanneman	WBC	Parramatta
Total	1,017,634
23-Jun-06	1,017,499	Hanneman	WBC	Parramatta	Aus	Wolsk (client fund)	BofNY	New York
Balance	135
20-Feb-07	126,984	Falcor Australia Ltd	JPM	New York	USA	Hanneman	WBC	Parramatta
22-Feb-07	101,587	Hanneman	WBC	Parramatta	Aus	NFS for Ziolkowski	BofNY	New York
Balance	25,397

Reasons paragraph 85
Arrival		Departure		Duration	No of entries
T52 records	DUR - ¶31
17-Aug-99		15-Sep-99		29
15-Nov-99		11-Dec-99		26
15-Dec-99		23-Dec-99		8
28-Dec-99		28-Mar-00		91
5-Apr-00		19-Apr-00		14
25-Apr-00		1-May-00		6
31-May-00		19-Jun-00		19
tax year total - 2000		193	205	7
15-Sep-00		7-Oct-00		22
9-Nov-00		4-Apr-01		146
7-Apr-01		30-Apr-01		23
tax year total - 2001		191	194	3
23-Jul-01		12-Aug-01		20
25-Sep-01		9-Oct-01		14
8-Nov-01		3-Apr-02		146
18-Apr-02		5-May-02		17
tax year total - 2002		197	201	4
22-Oct-02		20-Mar-03		149
tax year total - 2003		149	150	1
1-Oct-03		28-Oct-03		27
6-Dec-03		13-Mar-04		98
21-Mar-04		7-Apr-04		17
tax year total - 2004		142	145	3
8-Jul-04		26-Jul-04		18
9-Nov-04		7-Jun-05		210
tax year total - 2005		228	230	2
30-Dec-05		21-Mar-06		81
tax year total - 2006		81	82	1
18-Jan-07		19-Mar-07		60
tax year total - 2007		60	61	1
28-Dec-07		31-Jan-08		34
13-Feb-08		26-Mar-08		42
tax year total - 2008		76	77	2
15-Dec-08		13-Mar-09		88
21-Mar-09		8-Apr-09		18
tax year total - 2009		106	108	2
5-Nov-09		26-Mar-10		141
5-Apr-10		22-Jun-10		78
tax year total - 2010		219	221	2
27-Aug-10		18-Oct-10		52
28-Oct-10		13-Dec-10		46
4-Jan-11		8-Mar-11		63
14-Mar-11		14-Jun-11		92
tax year total - 2011		253	257	4
19-Aug-11		28-Sep-11		40
17-Oct-11		26-Dec-11		70
31-Dec-11		7-Mar-12		67
12-Apr-12		27-Apr-12		15
1-Jun-12		11-Jun-12		10
tax year total - 2012		202	207	5
4-Jul-12		17-Jul-12		13
5-Aug-12		18-Sep-12		44
10-Oct-12		30-Nov-12		51
19-Dec-12		14-Apr-13		116
19-Apr-13		1-May-13		12
tax year total - 2013		236	241	5

Reasons paragraph 93
Description	Dec-00	Dec-01	Dec-02	Dec-03	Dec-04	Dec-05	Dec-06	Dec-07	Dec-08	Dec-09
T27-0398	T27-0406	T27-0416	T27-0426	T27-0438	T27-0451	T27-0461	T27-0472	T29-0550	T29-0567
Home address	{1}	{1}	{1}	{1}	{1}	{1}	{2}	{2]	{3}	{3}
Agent	{4}	{5}	{5}	{5}	{5}	{5}	{5}	{5}	{5}	{5}
Interest income	7,755	5,530	127	37	0	0	2	2	141	149
Dividend income	1,408	995	868	3,886	2,641	10,680	17,209	10,851	757
Capital gains	7,258	20,819	-3,000	-3,000	-3,000	-3,000	-3,000	-3,000	-3,000	-3,000
IRA (retirement plan) distributions	54,500	54,500	54,500	54,500	54,500	54,585	54,500	54,507	2,312	0
Rent / royalty / other income	-679	-99	-288
Total income	68,834	82,257	52,622	52,405	55,386	54,226	62,182	68,619	10,304	-2,382
Adjusted gross income	68,834	82,257	52,622	52,405	55,386	54,226	62,182	68,619	10,304	-2,382
Deductions
Home mortgage	55,426	67,338	50,909	34,641	28,218	34,892	48,206	19,435	0	0
Real estate & other taxes	6,471	6,002	5,415	5,818	6,326	6,303	11,436	18,505	4,194	7,173
Other deductions	7,323	5,847	10,395	10,677	19,939	14,238	16,625	29,757	38,238	47,131
Total deductions	69,220	79,187	66,719	51,136	54,483	55,433	76,267	67,697	42,432	54,304
Foreign tax credit	0	0	0	0	0	0	0	0	0	0
Tax payable	0	170	0	0	0	0	0	0	0	0
Notes
Address {1}: xxxx Pineridge Lane, Boulder, Colorado
Address {2}: xxx 7th Avenue, New York (return is undated)
Address {3}: xxxxx West Broadway, New York
Agent ("Paid Preparer") {4}:- Rocky Mountain Professional Consultants Inc
Agent ("Paid Preparer") {5}:- Mark Janicki CPA, Denver USA

Reasons paragraph 94
Description	Jun-02	Jun-03	Jun-04	Jun-05	Jun-06	Jun-07
T51-0865	T51-0875	T51-0885	T51-0893	T51-0901	T51-0909
Home address	{1}	{1}	{1}	{1}	{1}	{1}
Agent	{2}	{2}	{2}	{2}	{2}	{2}
Interest	648	1,757	3,416	3,296	4	930
Total income	648	1,757	3,416	3,296	4	930
Deductions	0	0	0	0	0	0
Taxable income	648	1,757	3,416	3,296	4	930
Notes
Address {1}:- Potts Point, NSW
Agent {2}:- Steven Rosen