CASE 25/96

MD Allen SM

Administrative Appeals Tribunal

Judgment date: 14 March 1996

MD Allen (Senior Member)

On 6 March 1996 I heard argument on behalf of the parties as to whether, in regard to certain applications presently before the Tribunal, the Tribunal was in fact seized of jurisdiction.

2. There are presently before the Administrative Appeals Tribunal applications to review objection decisions by the Respondent for the tax years 1988, 1989, 1990, 1991 and 1992 by the parties who I shall identify as H Pty Ltd, and individuals R, L, B, E and D.

3. There is no dispute regarding jurisdiction so far as B and E are concerned.

4. In relation to H Pty Ltd it is contended by the Respondent that, as at no time any ``assessment'' issued, the Tribunal has no jurisdiction. As regards R, it is contended there is no jurisdiction for the tax years 1988, 1989; for L there is no jurisdiction respecting the tax years 1988, 1989; and as for D, no jurisdiction respecting the tax year 1988.

5. In the years nominated the Respondent says that although a calculation of tax was made, as that calculation of tax resulted in no tax being payable by the taxpayer, no notice of tax due and owing issued and thus there was no ``assessment'' to be objected to and regarding which review might be sought.

6. The Applicants state that although they may have had a nil calculation of tax payable in the years in question, as certain items were disallowed as deductable items then the

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calculation is itself an assessment and so can be challenged.

7. The starting point for consideration of the arguments raised is Section 14ZL of the Taxation Administration Act 1953 (as amended) which states:

``(1) This Part applies if a provision of an Act (including the provision as applied by another Act) provides that a person who is dissatisfied with an assessment, determination, notice or decision may object against it in the manner set out in this Part.

(2) Such an objection is in this Part called a `taxation objection' .''

8. Section 14ZY of the Administration Act then states:

``(1) If the taxation objection has been lodged with the Commissioner within the 4 years or 60 days, the Commissioner must decide whether to:

  • (a) allow it, wholly or in part; or
  • (b) disallow it.

(2) Such a decision is in this Part called an `objection decision' .

(3) The Commissioner must cause to be served on the person written notice of the Commissioner's objection decision.''

And Section 14ZZ then states:

``If the person is dissatisfied with the Commissioner's objection decision, the person may:

  • (a) if the decision is both a reviewable objection decision and an appealable objection decision - either:
    • (i) apply to the AAT for review of the decision; or
    • ...''

9. Thus in order for this Tribunal to have jurisdiction there must first be an objection decision which is a decision upon an objection to an assessment. (It was common ground that the other words of Section 14ZL, namely, ``determination, notice or decision'', did not apply.)

10. ``Assessment'' is defined in Section 6 of the Income Tax Assessment Act 1936 as follows:

```assessment' means:

  • (a) the ascertainment of:
    • (i) the amount of taxable income; or
    • (ii) in the case of a taxpayer being the trustee of a unit trust that is a corporate unit trust within the meaning of section 102J - the net income of the trust as defined by section 102D; or
    • (iii) in the case of a taxpayer being the trustee of a unit trust that is a public trading trust within the meaning of section 102R - the net income of the trust as defined by section 102M; or
    • (iv) in the case of any other taxpayer that is the trustee of a trust estate but excluding a taxpayer that is the trustee of a fund or unit trust referred to in paragraph (a), (b) or (c) of the definition of `eligible entity' in subsection 267(1) - so much of the net income of the trust estate as is net income in respect of which the trustee is liable to pay tax;

and of the tax payable on that taxable income or net income;...''

11. At first blush therefore it would seem that the above definition would encompass a calculation which after allowing and disallowing items claimed determined that no tax was payable, irrespective of whether or not a notice of assessment then issued.

12. This view finds support in the decision of Isaacs J in
The King v DFC of T (S.A.) Ex parte Hooper 37 CLR 368 at 373. There his Honour stated in a well known passage:

``An `assessment' is not a piece of paper: it is an official act or operation; it is the Commissioner's ascertainment, on consideration of all relevant circumstances, including sometimes his own opinion, of the amount of tax chargeable to a given taxpayer. When he has completed his ascertainment of the amount, he sends by post a notification thereof called `a notice of assessment'. And then, says the Act (sec. 54), `income tax shall be due and payable sixty days after the service by post of a notice of assessment'. The section adds that, where by amendment of an assessment additional income tax is thereby payable by a taxpayer, it is due and payable thirty days

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after notice of amended assessment. But neither the paper sent nor the notification it gives is the `assessment'. That is and remains the act or operation of the Commissioner.''

13. That passage was, however, reconsidered by the High Court in
Batagol v FC of T (1963) 13 ATD 202; 109 CLR 243. In that case the Court (Kitto, Menzies and Owen JJ) unanimously held that an assessment is not made until the Commissioner, having gone through the process of calculation, serves upon the taxpayer a notice that he has assessed the taxable income and the tax at specified amounts.

14. Owen J dealt with the decision of Isaacs in The King v DFC of T (S.A.) supra. At pp 256, 257, after quoting the passage referred to above, Owen J continued:

``The distinction which his Honour drew is, of course, a valid one but the present case is concerned with the use of the word `assessment' not in its defined sense but as conveying the meaning that every necessary step has been taken to create a debt due and payable by the taxpayer to the Crown. This was the view taken by Thurlow, J. in the Exchequer Court of Canada in
Scott v. The Minister of National Revenue [1961] Exch. C.R. 120, at pp 131-2. After referring to the passage from the judgment of Isaacs, J. set out above, he went on: `But it does not, in my opinion, follow from the foregoing that the giving of a notice of assessment is not itself part of the fixation operation or procedure which is compendiously referred to in the statute as an ``assessment'', or if the giving of notice is not strictly part of the assessment itself that the assessment itself is complete until the notice has been effectively given'. With that statement I agree...''

15. A further argument was that as the Respondent had in fact proceeded to make decisions upon objections to purported assessments then there were in fact and form objection decisions in the terms of Section 14ZY of the Taxation Administration Act. I disagree. If the Commissioner has no jurisdiction to entertain an objection on the basis that no ``assessment'' has in fact issued then this Tribunal has no jurisdiction to review any purported objection decision - cf
Crompton v Repatriation Commission 45 FCR 330.

16. Given the clear authority of Batagol's case supra I find that in relation to the matters numbered NT95/291, 292, 293 and 294 and matters NT96/2; 96/6; and 96/18, this Tribunal has no jurisdiction.

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