Brownsville Nominees Pty. Limited v. Federal Commissioner of TaxationJudges:
By application issued on 8 March 1988, the applicant, pursuant to subsec. 7(1) of the Administrative Decisions (Judicial Review) Act 1977 (``the Judicial Review Act'') is seeking an order of review in respect of the failure of the Federal Commissioner of Taxation (``the Commissioner''), to decide whether to issue under sec. 170 of the Income
ATC 4514Tax Assessment Act 1936 (``the Tax Act'') amended assessments to the applicant in respect of the income years ending 30 June 1981, 1982 and 1983 respectively. The applicant is seeking an order directing the Commissioner to make a decision whether amended assessments should be made in respect of each of the three income years. The Commissioner gave notice of objection to competency of the application under O. 54 r. 4 of the Federal Court Rules and that objection was heard at the first directions hearing on 29 March 1988.
The grounds of the objection to competency, as stated in the notice, are as follows:
``1. The order sought requires the respondent to make a decision amending an assessment of tax under the Income Tax Assessment Act 1936.
2. The order sought is precluded by virtue of Section 3 of the Administrative Decisions (Judicial Review) Act 1977 and Part (e) of the schedule thereto.''
Before referring to the facts of the application and objection to competency, the relevant provisions of the Judicial Review Act should be mentioned. Subsection 7(1) of the Act provides:
``7(1) Where -
- (a) a person has a duty to make a decision to which this Act applies;
- (b) there is no law that prescribes a period within which the person is required to make that decision; and
- (c) the person has failed to make that decision,
a person who is aggrieved by the failure of the first-mentioned person to make the decision may apply to the Court for an order of review in respect of the failure to make the decision on the ground that there has been unreasonable delay in making the decision.''
In that subsection the phrase, ``decision to which this Act applies'', is defined in subsec. 3(1) to mean, unless a contrary intention appears and there is no contrary intention in subsec. 7(1):
``... a decision of an administrative character... required to be made... under an enactment, other than... a decision included in any of the classes of decision set out in Schedule 1;''
The relevant provisions of Sch. 1 are as follows:
Classes of decisions that are not decisions to which this Act applies
(e) decisions making, or forming part of the process of making, or leading up to the making of, assessments or calculations of tax or duty, or decisions disallowing objections to assessments or calculations of tax or duty, or decisions amending, or refusing to amend, assessments or calculations of tax or duty, under any of the following Acts:
... Income Tax Assessment Act 1936.''
The facts on which the application is based are summarised. Assessments under the Tax Act for each of the three income tax years were issued on 25 October 1984. On 14 December 1984 the applicant, pursuant to sec. 185, lodged with the Commissioner objections against each of the assessments. The applicant has paid the amount of tax as assessed. On 28 February 1985 the Commissioner, pursuant to sec. 186, disallowed each of the objections. On 6 March 1985, the applicant lodged with the Commissioner requests to refer each of the decisions made under sec. 186 to the Supreme Court of Tasmania. The Commissioner has not yet referred any of the decisions to that Court. Under subsec. 4(2) of the Jurisdiction of Courts (Miscellaneous Amendments) Act 1987 the Commissioner is now required to refer the requests of the Federal Court of Australia. The applicant has not given notice under sec. 189A requiring the Commissioner to comply with the requests made under sec. 187.
Apparently, the questions raised by the objections are similar to questions the subject of other objections that were being considered in proceedings before the Court. Those proceedings resulted in a judgment adverse to the Commissioner; see
F.C. of T. v. Janmor Nominees Pty. Ltd. 87 ATC 4813. Apparently the Commissioner was delaying referring to the Court the requests made by the applicant pending the outcome of those proceedings.
By a letter dated 5 April 1986 the accountant for the applicant wrote to the Commissioner.
ATC 4515The terms of the letter are obscure and confusing but by letter dated 21 April 1986 the Commissioner made it clear that he treated the letter of 5 April as containing a request that he issue amended assessments for each of the three income years. In his letter, the Commissioner stated that appeals were pending in the Janmor Nominees matters and that ``In the circumstances your request to have the subject assessments amended should remain in abeyance pending resolution of the appeal.'' Neither of these two letters make reference to sec. 170 of the Tax Act.
By letter dated 3 December 1987 the accountant for the applicant wrote to the Commissioner stating that the High Court, on 13 November 1987, had refused the Commissioner leave to appeal from the judgment of the Federal Court in the Janmor Nominees case, and that ``the law should now have been clarified for the matters in dispute to be settled''. The letter then contained the following paragraph:
``As these matters have now been (the) subject of most unreasonable delay, you are now requested, pursuant to Section 7 of the Administrative Decisions (Judicial Review) Act 1977 to make a decision on the matters in dispute, such decision to be made within the prescribed time and as indicated in your earlier correspondence to be in accordance with the judgment made in the Janmor Nominees Appeal.''
On a reading of this letter ``the matters in dispute'' must relate to the matters to be taken into account in making the assessments with respect to the three income tax years.
The Commissioner having taken no apparent action pursuant to the letter of 3 December 1987, the accountant for the applicant wrote a further letter dated 14 January 1988. This letter referred to the letter of 3 December, the fact that no reply had been received, and continued:
``Your attention is now drawn to s. 200B under which you are required to give immediate attention to amending the assessments concerned.
Please advise the circumstances as to why this requirement has not been complied with within the prescribed 60 days.''
This letter is based upon a misconception. Section 200B applies only when a decision of the Tribunal or of a Court under Pt V of the Tax Act becomes final. In the present case, no court has made a final decision with respect to the assessments issued to the applicant for any of the three income years. Thus sec. 200B does not apply in respect of the applicant.
By letter dated 20 January 1988, the solicitors for the applicant wrote to the Commissioner threatening legal proceedings under the Judicial Review Act ``in respect of your failure to deal within a reasonable time with the objections lodged in respect of the assessments made, consideration of which objections was deferred pending final determination of'' the Janmor Nominees case.
By letter dated 3 February 1988 to the accountant for the applicant, the Commissioner responded to these letters and made reference to a telephone conversation between an officer of the tax office, a Mr Brown, and Mr Crawford, on behalf of the applicant. The letter continued:
``Your concern has been the delay in the outcome of the objections, requests for reference and court appeals on hand which, prima facie, have facts similar to that pertaining in the case of F.C. of T. v. Janmor Nominees Pty. Ltd. as trustee for J. Redman Family Trust 87 ATC 4813. This letter confirms oral advice from Mr Brown to Mr Crawford that a decision has not yet been made by National Office with respect to these matters. The office of the Deputy Commissioner of Taxation, Melbourne (which has the majority of the cases) is completing a review of those that it holds. The decision will be made by National Office when that review is completed and will involve consideration of whether Part IVA of the Income Tax Assessment Act should be applied.''
As the first step in deciding the objection to competency, it is necessary to identify what decision of an administrative character required to be made under an enactment is the subject of the application. After that decision has been identified, it is necessary to determine whether that decision comes within para. (e) of Sch. 1 to the Judicial Review Act. In brief form, the factual position is that the applicant has objected to assessments, the Commissioner, by decision, has disallowed the objections and the applicant has requested the Commissioner to refer the decisions to a court. The decisions
ATC 4516have not been referred by the Commissioner. The reference has been deferred pending the final decision in the Janmor Nominees case. In the light of that final decision the Commissioner is considering whether an amended assessment should be issued with respect to the applicant. The application does not specify the section of the Tax Act which requires the Commissioner to make a decision. The correspondence between the applicant and the Commissioner does not, in express terms, identify the section of the Tax Act which requires the Commissioner to make a decision. The correspondence is confusing in this respect. This confusion became apparent during the course of submissions by counsel for the Commissioner in support of the objection to competency.
Counsel for the applicant clarified the position. Although no reference was made to it in the correspondence, the application, or the order sought, counsel submitted that the decision involved was a decision under subsec. 170(6) of the Tax Act. The form of the application and the form of the order sought are consistent with that submission. It is necessary to consider therefore whether that decision, apart from whether it arises or comes within Sch. 1 of the Judicial Review Act, is a decision of an administrative character required to be made under an enactment.
Subsection 170(1) of the Tax Act empowers the Commissioner, subject to sec. 170, at any time to amend an assessment notwithstanding that tax may have been paid in respect of the assessment. Subsection 170(6) is set out in full:
``(6) Where an application for an amendment in his assessment is made by a taxpayer within 3 years from the date upon which the tax became due and payable under that assessment, and the taxpayer has supplied to the Commissioner within that period all information needed by the Commissioner for the purpose of deciding the application, the Commissioner may amend the assessment when he decides that application notwithstanding that that period has elapsed.''
In the present case, tax became due and payable under each of the three assessments on 26 November 1984. Counsel for the applicant contended that the applicant made an application for an amended assessment by the letter of 5 April 1986 and that the Commissioner accepted that letter as being such an application; see his letter of 21 April 1986. Thus, counsel contended that the application was made within the time limited by that subsection, that the Commissioner was required by subsec. 170(6) to make a decision whether to issue an amended assessment or not and that the applicant was entitled, under subsec. 7(1) of the Judicial Review Act, to apply to the Court for an order of review in respect of the failure to make that decision on the ground that there has been unreasonable delay by the Commissioner in making that decision.
It must be noted that subsec. 170(1) does not impose a duty on the Commissioner to make an amended assessment. The subsection is enabling in form, namely, ``The Commissioner may, subject to this section, at any time amend any assessment...''. The section then prescribes limits on the exercise of that power. Thus, under subsec. 170(2), where there is an avoidance of tax arising where there has not been a full and true disclosure of all facts, and where that avoidance of tax is, in the opinion of the Commissioner, due to fraud, the amended assessment may be made at any time and in any other case an amended assessment can be made only within six years from the date upon which the tax had become due and payable under the assessment. This subsection has no application to the facts of these proceedings. Under subsec. 170(3), where a taxpayer has made a full and true disclosure of all material facts necessary for an assessment and an assessment is then made, no amendment of the assessment increasing the liability of the taxpayer shall be made after the expiration of three years from the date on which the tax became due and payable. This subsection has no application to the facts of these proceedings. Under subsec. 170(4), no amendment effecting a reduction in the liability of a taxpayer under an assessment shall be made after the expiration of three years from the date upon which the tax became due and payable under that assessment. On its face, this subsection prevents the Commissioner from making an amended assessment reducing the liability of the applicant for tax for each of the three assessments. The construction and effect of subsec. 170(6) is to be understood in this context. That subsection preserves the power of the Commissioner to make an amended assessment reducing the liability of a
ATC 4517taxpayer where the provisions of subsec. 170(6) apply. It does not create any duty on the Commissioner. The whole purpose of sec. 170 is to confer a power on the Commissioner. Subsections 170(2), (3) and (4) impose restrictions on the exercise of that power. Apart from subsec. 170(6) reference need not be made to the other subsections of sec. 170. What is important is that sec. 170 does not impose any duty or obligation on the Commissioner to make an amended assessment. The Commissioner does not come within the requirements of para. 7(1)(a) of the Judicial Review Act. Section 170 may be contrasted in this respect with sec. 200B which imposes a duty on the Commissioner to make an amended assessment in the circumstances therein specified.
On this analysis of sec. 170, and in particular subsec. 170(6), it cannot be said that a decision under subsec. 170(6) is a decision required to be made under an enactment. The use of the word ``required'' illustrates that the decision-maker must be under a duty or obligation to make a decision. The duty or obligation imposed upon the Commissioner by sec. 200B is an illustration of a case where the Commissioner is required to make a decision under an enactment.
Accordingly, in my opinion, the application is incompetent. This does not mean that the Commissioner is prevented from making an amended assessment. In the circumstances it is not necessary to consider whether the decision comes within para. (e) of Sch. 1 to the Judicial Review Act. Likewise, it is not necessary to consider whether it is shown by the correspondence, and in particular the letter from the Commissioner dated 3 February 1988, that the Commissioner had made a decision not to make an amended assessment at that time but that he is still considering the matter. The important point is that the application cannot come within sec. 7 of the Judicial Review Act. The applicant is unable to claim the order of review he is seeking. The applicant's rights with respect to his request under sec. 187 of the Tax Act remain and can be enforced against the Commissioner.
In the result, the objection to competency is upheld. The application should be dismissed. Normally costs should follow the event. The issue on which the Commissioner succeeded was not raised by the Commissioner. His ground of objection arises only if otherwise there is a decision to which the Judicial Review Act applies. That condition precedent has not been established. In these circumstances there should be no order for costs.
In form, the orders to be made are interlocutory but they have the effect of bringing the application to an end. An appeal from an interlocutory order can be taken only with leave; see subsec. 24(1A) of the Federal Court of Australia Act 1976. The issues decided involve questions of law. In these circumstances the applicant should have leave to appeal, if so advised, from the orders to be made; O. 52 r. 10 of the Federal Court Rules.
Accordingly, the following orders are made:
1. The objection to competency be allowed.
2. The application be dismissed.
3. The applicant have leave to appeal from orders 1 and 2.