ZIOLKOWSKI and Commissioner of Taxation (Taxation)

This matter concerned an application for reinstatement of a tax review application filed by Dr Ziolkowski, a citizen of Australia and the United States, against the Commissioner of Taxation. The dispute centred on income tax assessments and penalty decisions issued by the Commissioner, which Dr Ziolkowski had challenged. The Senior Member of the Administrative Appeals Tribunal (AAT) was required to determine whether to grant reinstatement of the dismissed application.

The legal issues before the Tribunal included whether Dr Ziolkowski had provided a meaningful explanation for his extensive non-compliance with the Tribunal's directions and his failure to participate in a directions hearing. The Tribunal also considered the grounds upon which Dr Ziolkowski had sought to object to the Commissioner's amended assessments, which related to his residency status, entitlement to benefits under the Australia/USA Double Taxation Agreement, the nature of certain fund transfers as taxable income, and the Commissioner's power to issue amended assessments due to alleged fraud or evasion.

The Senior Member found that Dr Ziolkowski had not provided any satisfactory explanation for his refusal to comply with the Tribunal's directions or his failure to attend the directions hearing. Consequently, the Senior Member was not satisfied that his conduct warranted the exercise of the reinstatement discretion, concluding instead that Dr Ziolkowski had knowingly and deliberately refused to comply with the Tribunal's orders. The Tribunal noted that the Commissioner's amended assessments were based on an arguable conclusion that certain fund transfers were directed by and for the benefit of Dr Ziolkowski, supported by available material, including the disavowal of personal interest by the recipient and the immediate remittance of funds to US bank accounts.

The Tribunal dismissed Dr Ziolkowski's review application on 14 August 2020, invoking the discretionary power under s 42A(5) of the AAT Act due to his failure to proceed with the review or comply with Tribunal directions. The determinative consideration was the view that Dr Ziolkowski lacked the inclination or ability to progress the application for a proper determination of its merits. The subsequent applications for reinstatement were also dismissed.