The role and implications of litigation in tax administration

Speech by Bruce Quigley, 2nd Commissioner of Taxation, Law,

Australian Petroleum Production & Exploration Association,

Annual Conference, Hobart, 22 November 2007

As Second Commissioner, Law, I have oversight of the Tax Office’s litigation program and this morning I plan to talk about some key features and developments in our approach to litigation that are designed to improve certainty for taxpayers. Along the way, I will share some examples that highlight the inherent difficulties in achieving such an outcome.

The outcome of tax litigation is very important for the Tax Office and the community. In individual cases it provides taxpayers with a fair and independent resolution of disputes with the Tax Office.

In many cases, it also provides law clarification for the community and the Tax Office. Our goal is to have high levels of voluntary compliance. Law clarification through Tax Office rulings and litigation helps us achieve that goal.

As the Commissioner stated in his speech on 1 September 2007 to the Law Council Rule of Law Conference:

“We have a strong interest in having contentious areas of the law clarified in a sensible and coherent way consistent with the underlying policy of the law.”¹

The Tax Office argues its cases consistently with its published view of the tax law.

In commenting on the Tax Office’s approach to litigation, the Hon Justice Beaumont noted in this regard that “[t]he responsible professional attitude usually adopted for the Commissioner has expedited the flow of tax litigation considerably.”²

Despite public recognition of the Tax Office’s professional approach in conducting litigation and the legal framework that regulates our conduct, some still hold the view that the Tax Office takes a pro-revenue and win-at-all costs approach to litigation.³

Fortunately the evidence does not support this perception. In addition to operating under a legal framework that precludes this form of conduct, the Tax Office takes a corporate approach that upholds the values of law clarification and applying the rule of law.⁴ There are also firmly established processes that guide our approach to law clarification.⁵

How we approach law clarification

A robust process is undertaken to settle the ATO view. It is our goal to develop a view of the law which, to the extent allowed by the words used in the legislation, produces a coherent fabric of tax law for the community.⁶

The process starts with the initial identification of a high priority technical issue. This input can come from various sources, such as tax professional or industry representative bodies, or ATO intelligence as to emerging issues.⁷ Where no precedential ATO view exists on the issue, tax officers are required to escalate the matter to the relevant Centre of Expertise. These centres are the central escalation point for all complex technical issues. They are also responsible for authoring precedential tax office views on technical issues and work closely with tax counsel, our internal legal specialists to ensure that the most senior technical staff are involved in, and sign off on, technical decision making. This is a robust process, employing the 3C’s of consultation, collaboration and co-design; the values that we believe are an integral part of tax office operations.

When settling the ATO view on a technical issue, generally, a purposive approach is taken to the construction of a statue. ⁸ The words of the Act are considered in their statutory context, along with the underlying policy of the law as gleaned from extrinsic materials to ensure that the interpretation is, where possible, in harmony with the intention of Parliament.⁹ This is consistent with the approach that has been taken by the courts and tribunals in cases like CIC Insurance Ltd v. Bankstown Football Club Ltd¹⁰ and Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation.¹¹ This informs the way we approach litigation.

Justice Hill described the judicial approach to the interpretation of tax legislation as one where,

“The Courts will construe...legislation having regard to its context in the widest sense of that word with a view to adopting a construction which gives effect to the legislative policy to be found in the language which Parliament has used but having regard to relevant extrinsic materials.”¹²

“...A construction will not be adopted which is absurd or irrational but even the literal meaning of the words used may be departed from if to do so is necessary to give effect to the purpose or objects of the legislation, but not merely because the interpretation to be adopted conforms to some personal theory of justice”¹³

So, in interpreting legislation we also turn to the underlying policy as gleaned from extrinsic materials, such as the Explanatory Memorandum. Sometimes, however, establishing the underlying policy can be a “difficult and imprecise art”¹⁴ and extrinsic materials may lead to inconsistent interpretations as to the underlying policy.¹⁵

Even where the policy is clear, ambiguities in wording may prevent the Commissioner from reaching a view that reflects the underlying policy. Where the underlying policy is not able to be reflected in our interpretation, or even where it is, but produces anomalies or unintended consequences the ATO would advise Government (generally via Treasury).¹⁶

Where the words of the provision are ambiguous and the policy intent is clear, our approach is to adopt the interpretation that best promotes the policy intent. If more than one of the available interpretations promotes the policy intent, we will generally favour the interpretation that reduces taxpayer compliance costs.¹⁷

When there are legitimate differences of opinion on interpretative issues in tax law between the tax office and taxpayers, we look to the court system to resolve our disputes.

Once a decision has been made to litigate, the technical issue is reviewed again and our Legal Services Branch manages the conduct of cases and is the first point of contact into the Tax Office. In the more complex, significant and strategically important cases, a Tax Counsel officer is also involved. Our tax counsel are our senior technical people who are responsible for establishing the ATO view of the law. Throughout the course of the litigation, the ATO litigation team is required to meet at predetermined key points to review the progress of the case. Our senior officers in the litigation area try to call over all cases monthly and our Senior Tax Counsel responsible for strategic litigation, closely review the most important cases twice a year.

By the time we reach court, we expect to have a thoroughly worked out view of the law. This means that, in the vast majority of cases, we are very well prepared.

Sometimes further information comes to hand as part of the filing of evidence and this may require us to reconsider our position. Indeed, even the filing of submissions can be a cause of us finally appreciating the force of the taxpayer's case and we may decide to alter our position, even at that late stage. These late changes of view are rare, and we try to minimise the risk of this occurring to the extent possible.

Our processes of reviewing cases as they progress assist, but we do encourage taxpayers who are in dispute with us to provide full information as early as possible and engage in discussion to ensure both sides fully appreciate the other's arguments. Cooperation during the objection and litigation stages is more likely to reduce the likelihood of both parties incurring unnecessary legal costs.

Model Litigant

The Tax Office approaches litigation in accordance with its obligations under the law, including the Attorney-General’s Legal Services Directions 2005 (in particular the Model Litigant Guidelines)¹⁸, relevant Court and Tribunal rules and directions¹⁹, and other relevant policies and guidelines.²⁰ This approach is clearly set out in a practice statement for our officers to follow.²¹

These obligations are legally binding and help to ensure that Commonwealth agencies such as the Tax Office receive consistent and well coordinated legal services that are of a high standard, uphold the public interest and are sensitive to their context of Commonwealth interests which are broader than any one agency.

The Tax Office seeks to act as a model litigant. This requires us, as a party to litigation, to act with propriety, fairness and in accordance with the highest professional standards. The obligation applies to all litigation before the Courts, Tribunals, Inquiries, and in Alternative Dispute Resolution processes.

The model litigant guidelines require Commonwealth litigants such as the Tax Office to handle our cases efficiently and effectively in accordance with our responsibility to the community to deal responsibly with public revenue and also to fulfil our responsibilities to other litigants and the justice system.²²

The litigation function of the Tax Office has as its strategic focus, the desire to obtain law clarification in a timely way providing greater certainty for the community. That doesn’t mean that the model litigant obligation does not prevent the Commissioner from acting firmly and properly to protect its interests.²³ Obviously, we operate in an adversarial system and the tax office enters into litigation with the aim of clarifying that our view of the law is correct.

However, as the well known Rolling Stones song goes, “You can’t always get what you want”.

Bruce’s umbrella

The Tax Office is currently seeking leave to appeal the recent Full Federal Court decision in Reliance Carpet.²⁴ This case deals with the scope of the definition of 'supply' in section 9-10 of the GST Act. It also deals with section 99-5 of the GST Act,²⁵ which affects the time of attribution of GST to security deposits.

99-5 Giving a deposit as security does not constitute consideration

	(1) A deposit held as security for the performance of an obligation is not treated as *consideration for a supply, unless the deposit:
	(a)	is forfeited because of a failure to perform the obligation; or
	(b)	is applied as all or part of the consideration for a supply.

The genesis of this provision is somewhat meteorological. Just prior to my involvement in developing the GST law, I had reason to be attending a Tax Institute conference at the Gold Coast. As I got ready to leave for my constitutional morning walk, and despite the fact that there was only a 10% chance of rain the skies opened up. Fortunately the concierge was able to provide me with an umbrella, on the proviso that a deposit of $20 was payable and refundable on its return in good condition. If I didn’t return the umbrella in good condition, I would forfeit the $20.

It was this situation that I had in mind when drafting the legislation to ensure that all security deposits received in a commercial setting were not attributed until the deposit was either forfeited or applied as consideration. According to the general rules of GST, that $20 would be consideration for the supply of the umbrella. When the umbrella is returned in good working order and the money is refunded, the regime, without Division 99, would have required an accounting adjustment to be made to write back the tax. This was clearly impractical. Instead, a more common sense approach would be to delay determining if the deposit had to be accounted for or not, contingent on its proper return.

The rule in Division 99 was not intended to be limited to hire cases, however. As the Explanatory Memorandum to the GST Act makes clear, it was also intended to apply to cases where a deposit is paid in relation to a sale contract.²⁶

The applicant in Reliance Carpet was in receipt of a forfeited deposit after a contract for the sale of real property was rescinded. The Commissioner assessed the applicant to GST on the forfeited deposit.

We argued that either the contract for sale constituted a supply in itself, whereby the vendor enters into various obligations (such as an obligation to transfer the land or not sell it to others), or alternatively that the rescission of the contract constituted a supply.

Unfortunately, the Full Federal Court found that GST was not payable on the forfeited deposit as they concluded there was no supply upon either entry into the contract or the rescission of the contract for sale for which the forfeited deposit may be treated as consideration.²⁷ The Court was of the view that there was no supply unless there was a transfer of land at settlement.

The Commissioner has sought special leave to appeal to the High Court because we are concerned that the finding that there was no supply under section 9-10 is inconsistent with both the language and intent of the GST Act, and therefore may have significant ramifications for the operation of the GST.

The Commissioner also argued, as a second alternative, that Division 99 deemed there to be a supply for consideration. The Full Federal Court rejected that argument and the Commissioner will not be pursuing it in his special leave application.

Let’s hope the result doesn’t go to that other famous Stones’ line, “I can’t get no satisfaction”.

Citylink

The result in FC of T v Citylink Melbourne Ltd²⁸ also paid tribute to the Stones’ adage that you can’t always get what you want.

This is a case concerning a large infrastructure project in Melbourne. As consideration for the right to construct the CityLink road system and collect tolls, Citylink (previously Transurban) was obliged to pay semi-annual concession fees to the State.

Citylink sought to deduct these fees under section 8-1 of the 1997 Income Tax Assessment Act.²⁹

Section 8-1 of the 1997 Act (applicable to the income year ended 30 June 1998) provides that:

"(1)	You can deduct from your assessable income any loss or outgoing to the extent that:
	(a)	it is incurred in gaining or producing your assessable income; or
	(b)	it is necessarily incurred in carrying on a business for the purpose of gaining or producing your assessable income.
(2)	However, you cannot deduct a loss or outgoing under this section to the extent that:
	(a)	it is a loss or outgoing of capital, or of a capital nature; or
	(b)	it is a loss or outgoing of a private or domestic nature ..."

Case law provides that an outgoing has been incurred where the taxpayer is definitively committed to an inescapable presently existing liability, properly referable to the year in question.³⁰

None of the concession fees, for which Citylink had sought deductions, had been discharged.

The concession fees could be satisfied, at Citylink’s option, by the issue of concession notes to the State at or prior to the time that payment is due. Concession notes are a promise to pay the amount in the future subject to the presentation conditions being satisfied. One of these conditions being that Citylink is prohibited from paying the concession fees until the debt due to the project lenders has been discharged.³¹

The Full Federal Court decided in favour of the taxpayer and special leave was granted to the Commissioner to appeal the Full Federal Court’s decision. His Honour Justice McHugh, while hearing the special leave application, remarked that “arguably, this is a case of form triumphing over substance”³² Ultimately, however, the High Court affirmed the Federal Court’s decision.

The Court held that the terms concerning the time at which those liabilities were to be discharged did not affect Citylink’s liability for concession fees in the years of income. The Court appears to be saying that the fact that the discharge of the payment obligation is subject to preconditions doesn’t affect the deductibility at the time first liability arises. It doesn’t render the liability contingent because it is merely about the “terms concerning the time at which those liabilities are to be discharged”.³³

The decision entrenches a jurisprudential approach for the determination of when an outgoing is incurred for the purposes of the general deduction provisions. In this regard it places importance on a legal analysis of the arrangements to distinguish between conditions that concern the creation of liability and conditions that merely affect discharge.³⁴

The result for the taxpayer meant that they received a deduction of $95 million a year for liabilities that may not be paid for decades. Justice Merkel earlier referred to the outcome in this case, as ‘taxpayers’ heaven’.³⁵ The taxpayer ultimately found taxpayer’s heaven when it succeeded in a 5/1 majority of the High Court, and was able to tell the Commissioner to 'Get off my cloud’.

Declaratory Orders

The Commissioner recently sought legal advice regarding the appropriateness of seeking declaratory orders from the Federal Court to clarify contentious points of law. The Solicitor-General and counsel have advised that it would not usually be appropriate for the Commissioner to take this course of action.³⁶

The advice indicates that the Commissioner should follow the process set down in Part IVC of the Taxation Administration Act 1953. This enables a matter to be referred to the Court where a taxpayer objects to an assessment or private ruling made by the Commissioner.

This advice has been endorsed by the Honourable Daryl Davies QC who has publicly expressed the view that justice and certainty are more appropriately served by the existing processes provided for under legislation.³⁷ Mr Davies QC points to the responsibility of the Commissioner to bring questions of legal interpretation to the courts for determination.³⁸ He also refers to the availability of funding to taxpayers under the Tax Office’s Test Case Litigation Program where it is in the public interest to have the matter litigated and the law clarified.

The Solicitor-General and counsel also confirmed advice that the ATO is not required to follow a single judge decision if, on the basis of robust legal advice, there are good arguments that, as a matter of law, the decision is incorrect and prompt action is being taken to clarify the position and communicate the ATO’s intention to taxpayers.³⁹

DIS

The Inspector-General recently made a number of recommendations in respect of the Review of Tax Office Management of Part IVC Litigation. ⁴⁰ We accept constructive criticism and use it as an opportunity to promote improvements. One of the Inspector-General’s recommendations was in response to criticisms that the Tax Office does not always communicate how it plans to interpret significant Court and Tribunal decisions. The Tax Office has since introduced Decision Impact Statements.

These statements communicate to taxpayers the implications of adverse court and AAT decisions and significant court decisions. A Decision Impact Statement advises the Tax Office view on the implications of those decisions and how the law will be administered as a result of the decision.⁴¹ These should be available within eight weeks of a decision being handed down and can be viewed on the Tax Office’s internet site.⁴²

A Decision Impact Statement will contain the following information:

• details of the case including venue, date of decision, and whether or not an appeal has been lodged
• a brief summary of the relevant facts
• a summary of the issues decided by the Court or Tribunal
• the Tax Office's perception of the implications of the decision, and
• whether there are any implications in regard to current Public Rulings

If there is any uncertainty surrounding a Court or Tribunal decision the Decision Impact Statement will explain how the Commissioner will administer the law pending any review of a published Ruling.⁴³

Conduct of Tax Office Litigation in Courts and Tribunals Practice Statement

The Inspector-General’s review into tax office management of Part IVC litigation also led to the introduction of the Conduct of Tax Office Litigation in Courts and Tribunals Practice Statement⁴⁴.

This practice statement explains the Tax Office’s approach to litigation including its obligations under the Law, the Attorney-General’s Legal Services Directions relating to the conduct of litigation by the Commonwealth, relevant Court and Tribunal rules and directions and other relevant internal and external policies and guidelines. It also provides staff guidance on the application of the model litigant guidelines.

New management arrangements for litigation in the Tax Office are also reflected in the practice statement consistent with the Inspector-General’s recommendation that a single area of the Tax Office should have responsibility for the management of litigation.

There was extensive consultation with professional bodies and relevant government departments in the development of the practice statement. Included in the practice statement are the principles that guide our conduct in litigation and these are extracted at the end of this paper.

Test Case Funding

Under the Test Case Litigation Program we provide financial assistance to taxpayers involved in litigation that we regard as being important to the administration of the tax system.

The purpose of the Test Case Litigation Program is to clarify the operation of the laws administered by the Commissioner of Taxation where:

• there is uncertainty or contention about the operation of areas of law
• the issue is of significance to a substantial segment of the public or has significant commercial implications for an industry segment, and
• it is in the public interest for the issue to be litigated.⁴⁵

Applications are considered by the Test Case Litigation Panel, which at various times has included solicitors, accountants, retired judges and academics to ensure the integrity of the decision to fund selected cases.

We have also simplified the criteria to be addressed and broadened the categories of cases we will be funding under the program, demonstrating our continued and increasing commitment to the Test Case Litigation Program.

The Conduct of Tax Litigation practice statement sets out our commitment to test case funding,

(vi) the Tax Office has a continuing commitment to a public interest Test Case Litigation Program through which taxpayers can be provided with financial support in appropriate circumstances to achieve law clarification⁴⁶

The Tax Office’s approach to providing test case funding is unique. Senior people in overseas jurisdictions have expressed surprise to me that we take this approach. We believe it is important that we make test case funding available where the circumstances are appropriate as this assists us to achieve law clarification.

ADR

Alternative dispute resolution is a means of providing cost effective, informal, consensual and speedy ways of resolving disputes in appropriate cases. It is also useful to clarify the scope of a dispute. The Tax Office has committed to the use of alternative dispute resolution processes where appropriate, to avoid unnecessary litigation, and this commitment can be found in the principles that guide our conduct in tax litigation.⁴⁷

A number of initiatives have been undertaken to expand the use of alternative dispute resolution in resolving taxation disputes. These include;

• Developing a checklist to assist in considering whether alternative dispute resolution is available. It looks at issues such as the age of a dispute, the nature of the relationship between the parties to a dispute as well as cost issues.
• Producing a draft Practice Statement on Alternative Dispute Resolution in Tax Office disputes and litigation. This will soon be issued as a final Practice Statement.
• Creating an alternative dispute resolution intranet home page to provide staff with guidance on the matter. We also anticipate that this information will be made available on the ATO’s external web page.
• Putting an external panel of dispute resolution providers in place. This was established by our Large Business area last year for high level negotiations, primarily for work with large corporate clients.

Conclusion

The Tax Office uses litigation as a last resort in achieving law clarification. We aim to conduct ourselves in a way that is consistent with the obligation to be a model litigant and to act as fairly and transparently as possible.

Appendix A: Conduct of Tax Office Litigation in Courts and Tribunals PS LA 2007/12

Principles that guide our conduct

1. In conducting litigation the Tax Office is guided by the following principles:

(xv)	the Commissioner in his statutory functions under the executive arm of government has a role to administer various laws enacted by Parliament and interpreted by the Courts, such as those related to taxation and superannuation., Consistent with this, the Tax Office will conduct and manage its litigation as a model litigant in accordance with its obligations under the law, the Attorney-General’s Legal Services Directions 2005 (in particular the Model Litigant Guidelines), relevant court and tribunal rules and directions, and other relevant internal and external policies and guidelines
(xvi)	the model litigant obligation does not prevent the Commissioner from acting firmly and properly to protect its interests
(xvii)	the litigation function of the Tax Office will have as its strategic focus the desire to obtain law clarification in a timely way providing greater certainty for the community
(xviii)	the Tax Office has as an underlying value in its administration, respect for the rule of law. It follows that this value applies in the conduct of litigation, the resolution of disputes and in managing the outcome of judicial decisions
(xix)	the Tax Office seeks to promote an environment where people have a reasonable understanding of their rights and obligations or can readily obtain adequate guidance; where in practice the law can be complied with voluntarily; where the law is applied and enforced fairly; and where disputes about the law’s operation can be resolved expeditiously.48 where the tax laws, as enacted by Parliament and interpreted by the courts are administered in an impartial and transparent manner.

In keeping with this, the Tax Office respects and supports the rights of taxpayers to access appropriate review processes to achieve final, fair and independent resolution of disputes

(xx)	the Tax Office has a continuing commitment to a public interest Test Case Litigation Program through which taxpayers can be provided with financial support in appropriate circumstances to achieve law clarification
(xxi)	an objective of the Tax Office litigation function is to assist decision makers in making well reasoned and supportable decisions so as to avoid unnecessary litigation
(xxii)	the Tax Office will argue its cases consistently with Tax Office published views of the law
(xxiii)	in determining the Tax Office view of the law the Tax Office adopts a ‘purposive’ approach to statutory construction, consistent with the statutory requirement49 and guidance of the High Court50. For practical purposes this means that where the words of the Act and their statutory context allow, a view of the law that reflects the underlying policy is preferred.
(xxiv)	the Tax Office will risk assess litigation cases to ensure that cases are appropriately managed. All cases will have appropriately capable teams marshalled to conduct litigation. In particular, cases that will examine ‘priority technical issues’ will be identified and escalated in accordance with corporate practice guidelines
(xxv)	the Tax Office will be consistent, yet vigorous, firm and efficient in the conduct of litigation. Where possible and appropriate, emphasis will be placed on resolving disputes through consultation, negotiation, mediation and formal alternative dispute resolution process available through tribunals and courts to avoid unnecessary litigation
(xxvi)	the Tax Office aims to resolve disputes in a fair and timely manner, consistent with the law
(xxvii)	consistent with the model litigant guidelines the Tax Office aims to handle its cases efficiently and effectively in accordance with its responsibility to the community to deal responsibly with public revenue and also to fulfil their responsibilities to other litigants and the justice system
(xxviii)	the Tax Office will not adopt an unnecessarily adversarial approach particularly in tribunal matters where the taxpayer is unrepresented
(xxix)	the Tax Office will show appropriate deference to the decisions of Courts and quasi-judicial decisions by following the results of finalised court decisions in other similar cases, but reserves the right to exercise appeal rights and review and clarify the law through litigation consistently with the model litigant obligation. There will be rare instances where the Tax Office will maintain its position contrary to an existing Court or Tribunal decision. That would only be where the Tax Office has credible and robust legal advice (including internal legal advice) that a decision is wrong at law. In such circumstances, the Tax Office will put the community on notice that we will be looking for a test case to get the decision reconsidered.51
(xxx)	the Tax Office will foster effective relationships with the courts, tribunals and other parts of the legal system
(xxxi)	the Tax Office will foster a close working relationship with the Attorney-General’s department
(xxxii)	the Tax Office will seek to gain value for money from the provision of external legal services, and
(xxiii)	Tax Office staff will have the range of skills and competencies appropriate to support its litigation strategy.

¹ M D’Ascenzo, ‘The rule of law: a corporate value’, speech delivered by M D’Ascenzo at the Law Council of Australia Rule of Law conference, Brisbane, 1 September 2007, p3.

² The Hon Justice B. Beaumont, "Anatomy of a Federal Court Tax Case", (2000) 23 (2) UNSW Law Journal 237 at 238; M D'Ascenzo, `A unique taxation partnership for the benefit of the Australian community' (speech delivered by M D'Ascenzo and Steve Martin at the ATO/AGS/Counsel Workshop, 3 April 2004).

³ Inspector-General of Taxation, ‘Review of Tax Office Management of Part IVC Litigation’, 7 August 2006.

⁴ The Tax Office’s 2007-08 Corporate Plan contains a list of the values which include applying the rule of law.

⁵ The Commissioner identifies these in his speech addressing the rule of law (M D`Ascenzo 2007, op cit) as including skilling strategies and appropriate checks and balances such as a precedent set (ATO Interpretative Decisions) the use of external experts on our Panels, team environments, peer review and quality assurance, and the use of external counsel on all major litigation. These measures minimise the risk of tax officers taking an overly subjective approach.

⁶ M D'Ascenzo 2007, op cit.

⁷ M D'Ascenzo 2004, op cit.

⁸ Section 15AA of the Acts Interpretation Act 1901 (Cth).

⁹ B Quigley , ‘Interpreting GST Law in Australia’ in R Krever and D White (eds), GST in Retrospect and Prospect (2007) 113.

¹⁰ (1997) 187 CLR 384.

¹¹ (1980) 147 CLR 297.

¹² J Tretola, "Some thoughts on the principles applicable to the interpretation of GST" ATAX UNSW-15^th Annual GST & Indirect Tax Conference, April 2003`, at p 30, quoting Justice Hill and Hill J in "A Judicial Perspective of Tax Law Reform" (1998) 72 Australian Law Journal 685.

¹³ J Tretola, "Some thoughts on the principles applicable to the interpretation of GST" ATAX UNSW-15^th Annual GST & Indirect Tax Conference, April 2003`, at p 30, quoting Justice Hill and Hill J in "A Judicial Perspective of Tax Law Reform" (1998) 72 Australian Law Journal 685.

¹⁴ B Quigley, op cit 117.

¹⁵ Ibid.

¹⁶ M D’Ascenzo 2004, op cit.

¹⁷ Large Business and tax compliance 2006, http://www.ato.gov.au/content/downloads/77898_N8675-08-2006_w.pdf.

¹⁸ The Legal Services Directions provide guidance to agencies which are subject to the Financial Management and Accountability Act 1997 (FMA Act) on a number of issues including: Tied Areas of Commonwealth Legal Work, The Commonwealth’s Obligation to Act as a Model Litigant, Handling Monetary Claims, The Engagement of Counsel, and Assistance to Employees for Legal Proceedings. The Commonwealth's obligation to act as a model litigant can be found in Appendix B of the Legal Services Directions 2005, issued by the Attorney-General pursuant to section 55ZF of the Judiciary Act 1903.

¹⁹ These include Practice Directions of the Administrative Appeals Tribunal, Rules of the various State Courts, Rules of the Australian Industrial Relations Commission, Rules and Practice Directions of the Federal Court, and Rules of the High Court.

²⁰ See PS LA 2007/12: Conduct of Tax Office Litigation in Courts and Tribunals.

²¹ Ibid.

²² Ibid.

²³ Ibid.

²⁴ Reliance Carpet Co Pty Ltd v Federal Commissioner of Taxation 2007 ATC 4650.

²⁵ A New Tax System (Goods and Services Tax) Act 1999 (Cth).

²⁶ Explanatory Memorandum, A New Tax System (Goods and Services Tax) Bill 1999 (Cth.)

²⁷ Reliance Carpet Co Pty Ltd v. Commissioner of Taxation, 2007 ATC 4650, 4661-4662.

²⁸ FC of T v Citylink Melbourne Limited 2006 ATC 4404.

²⁹ Deduction initially sought under subsection 51(1) of the Income Tax Assessment Act 1936, which was subsequently replaced by section 8-1 of the Income Tax Assessment Act 1997.

³⁰ Coles Myer Finance Limited v FC of T 93 ATC 4341; A loss must be more than impending, threatened or expected to occur FC of T v James Flood Pty Ltd (1953) 88 CLR 492.

³¹ Decision Impact Statement, FC of T v Citylink Melbourne Limited 2006 ATC 4404.

³² FC of T v Citylink Melbourne Limited [2005] HCATrans 304 (29 April 2005).

³³ FC of T v Citylink Melbourne Limited 2006 ATC 4404, 4423 (Crennan J).

³⁴ Decision Impact Statement, FC of T v Citylink Melbourne Limited 2006 ATC 4404.

³⁵ Transurban Citylink Limited v FC of T 2004] ATC 4084, 4103.

³⁶ This legal advice is available at http://law.ato.gov.au/pdf/DIS_Indooroopilly_opinion1.pdf ; http://law.ato.gov.au/pdf/DIS_Indooroopilly_opinion2.pdf; http://law.ato.gov.au/pdf/DIS_Indooroopilly_opinion3.pdf.

³⁷ Daryl Davies QC, `The relationship between the Commissioner of Taxation and the Judiciary,' Taxation in Australia, Volume 41, No. 10 May 2007, pp 630 - 633.

³⁸ Ibid, 631.

³⁹ M D’Ascenzo 2007, op cit.

⁴⁰ http://www.igt.gov.au/content/reports/Litigation_report/default.asp.

⁴¹ PS LA 2007/2: Management of Decisions of Courts and Tribunals.

⁴² http://www.ato.gov.au/taxprofessionals/pathway.asp?pc=001/005/060.

⁴³ PS LA: 2007/2 Management of Decisions of Courts and Tribunals.

⁴⁴ PS LA: 2007/12 Conduct of Tax Office Litigation in Courts and Tribunals.

⁴⁵ http://atogovau/corporate/content.asp?doc=/content/57395.htm

⁴⁶ PS LA 2007/12: Conduct of Tax Office Litigation in Courts and Tribunals.

⁴⁷ Ibid.

⁴⁸ C Saunders and K Le Roy, “Perspectives on the Rule of Law”, in C. Saunders and K. Le Roy (eds), The Rule of Law (Federation Press, Melbourne, 2003), 5.

⁴⁹ Acts Interpretation Act 1901 (Cth), s 15AA.

⁵⁰ CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384; Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (1980) 147 CLR 297 Kirby J in Austin v The Commonwealth (2003) 51 ATR 654, 723-724 said, “That in the case of federal legislation, the purposive principle is supported by the Acts Interpretation Act 1901 (Cth).

⁵¹ See PSLA 2007/2: Management of Decisions of Courts and Tribunals.

Last Modified: Tuesday, 11 December 2007