CASE 37/96

TE Barnett DP

Administrative Appeals Tribunal

Decision date: 21 May 1996

TE Barnett (Deputy President)

The applicant seeks a review of decisions of the respondent refusing applications made under the former s. 82(1) of the Fringe Benefits Tax Assessment Act 1986 (``the FBTAA'') for an extension of time to lodge objections against assessments for fringe benefits tax deemed to have issued on 15 June 1988 and 18 September 1989.

2. At the hearing of this matter, the applicant was represented by Mr R O'Connor QC on instructions of Kott Gunning and the respondent was represented by Mr S Owen-Conway QC on instructions of the Australian Government Solicitor. The Tribunal had before it the materials lodged pursuant to s. 37 of the Administrative Appeals Tribunal Act 1975 and the following exhibits:

. Exhibit A1   Statement of Peter Moltoni as amended by Tribunal

. Exhibit A2   Booklet -- Fringe Benefits Tax: A Guide for Employers

Oral evidence was given by Mr Peter Moltoni, a chartered accountant.

3. The following relevant facts forming the background to these applications are not in dispute and are, accordingly, found by the Tribunal:

  • (a) The applicant is a public company operating in the gold mining industry.
  • (b) The relevant assessments for fringe benefits tax are deemed to have issued on 15 June 1988 and 18 September 1989 (``the assessments''). The assessments determined that the applicant had a liability for fringe benefits tax on board meals, that is meals provided by the applicant to its employees.
  • (c) The applicant lodged objections to the assessments on 13 January 1995.
  • (d) The applicant included in its tax returns as taxable fringe benefits for the years ended March 31, 1988 and 1989 Board Fringe Benefits within the meaning of s. 35 of the FBTAA.
  • (e) The respondent has agreed that if the objections are to be treated as if they were lodged within time, then the objections will be allowable.

4. The prescribed period for lodging objections to the assessments expired 60 days after the assessments were issued pursuant to s. 80(1) of the Fringe Benefits Tax Assessment Act 1986 (``the FBTAA''), as it then was. That section provided that:

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``80(1) [Lodgement by employer within 60 days] An employer who is dissatisfied with an assessment may, within 60 days after service of the notice of that assessment, lodge with the Commission an objection in writing against the assessment stating fully and in detail the grounds on which the employer relies.''

5. The Tribunal therefore finds that the prescribed period for the applicant to lodge objections against its 1988 and 1989 deemed assessments expired on 15 August 1988 and 17 November 1989 respectively and the applicant is therefore approximately 6 years, 5 months and 5 years, 2 months respectively, out of time.

6. The issue before this Tribunal is whether the applicant's applications to lodge objections for the years ended 31 March 1988 and 31 March 1989, which were lodged on 13 January 1995, should be treated as having been duly lodged pursuant to section 82(1) of the FBTAA as then applicable. That section provided that:

``82(1) [Objection] Where the period for the lodgement by an employer of an objection against an assessment has ended, the employer may, notwithstanding that the period has ended, send the objection to the Commissioner together with an application in writing requesting the Commissioner to treat the objection as having been duly lodged.''

7. Section 83(1) then provided:

``83(1) [Decision by Commissioner] The Commissioner shall consider each application made under sub-section 82(1) and may grant or refuse the application.''

8. Where the respondent declined to exercise the discretion contained in s. 82(1) of the FBTAA in favour of the taxpayer, the taxpayer could apply to the Tribunal for a review of that decision pursuant to s. 83(3) of the FBTAA. This section provided that:

``83(3) [Application for review of decision] An employer who is dissatisfied with a decision under sub-section (1) in respect of an application made by the employer may apply to the Tribunal for review of the decision.''

9. Although the substantive taxation issue is not before the Tribunal, it is important to note that the applicant included in its tax returns for the relevant years board meals and assessed them as liable for fringe benefits tax. Mr O'Connor submitted that the applicant and its advisers at that time, did this under the mistaken belief that they were assessable, although it seems that these meals were not assessable because they were provided by the applicant to its employees in a dining facility which was open to the public.

10. Mr O'Connor adduced evidence from Mr Moltoni, who is a chartered accountant with Duesburys Chartered Accountants, in support of his submission. Mr Moltoni (and his firm) was first engaged by the applicant on 7 April 1994. He said that in 1988/89, when fringe benefits tax was first introduced, practitioners were issued with the Fringe Benefits Tax: A Guide For Employers booklet (``the booklet'') by the respondent. Further he said, at that time, practitioners treated the contents of the booklet as authoritatively setting out the law. In particular, with respect to the meaning of ``dining facility open to the public'', he said the interpretation current in the industry at that time was that it related to a ``dining facility such as a restaurant or a coffee shop or something... that would be commonly accepted as being in the ordinary course of business as being open to the public''. Therefore he said that his opinion, ``... certainly in '88 and '89, would have been and was at that stage, that the meals [in this application] were in fact board fringe benefits'' since this was not a restaurant open to the public, but a mess. Mr Moltoni said that he formed this opinion not only from the contents of the booklet but on the basis of MT2030, Taxation Ruling 96/7 (issued as a draft TD94 D89), as well as from information gleaned from various seminars conducted by the respondent.

Submissions by applicant

11. Mr O'Connor, for the applicant, submitted that the applicant's objections should be treated as having been duly lodged because the board meals were included in the assessable amount in the fringe benefits tax returns in the relevant years because of a mistake of law. He said that this mistake of law was that the applicant believed, either of its own volition or because of representations by the respondent, that the amount of board meals was assessable under the FBTAA.

12. Mr O'Connor submitted that the representations by the respondent at page 69 of the booklet published by the respondent, as well as the Commissioner's ruling MT2030, were causative of the applicant's mistake of law. He

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asked the Tribunal to conclude, on the basis of Mr Moltoni's evidence, that the booklet was issued by the respondent to all employer taxpayers as a guide to be followed and that any adviser or taxpayer reading pages 69 and 70 would conclude that the tax was properly payable. In any event, he submitted, on the basis of
Commr of State Revenue (Vic) v Royal Insurance Australia Ltd 94 ATC 4960; (1993-1994) 182 CLR 51 (``Royal Insurance''), it was sufficient for the applicant to succeed even if it was the only party to the mistake of law.

13. Mr O'Connor contended that this mistake of law, whether or not caused by the respondent, was causative of the overpayment of fringe benefits tax and the applicant was consequently, prima facie entitled at common law to a repayment of the overpaid tax under the general law of restitution pursuant to
David Securities Pty Ltd & Ors v Commonwealth Bank of Australia 92 ATC 4658; (1991-1992) 175 CLR 353 (``David Securities'') and Royal Insurance. Further, he said, there was no residual discretion left in the Tribunal when considering whether an objection should be treated as if it had been lodged within time. All that is required for the applicant to recover the overpaid tax was that it was paid in the mistaken belief that the respondent was legally entitled to payment of the moneys; such a mistake thereby being causative of the payment; and that there has been unjust enrichment of the respondent at the expense of the applicant. He submitted that before this prima facie obligation to a refund could be displaced, the respondent must point to circumstances which the law recognises would make an order for restitution unjust.

14. However, in the event that there was any residual discretion in the Tribunal after concluding a mistake of law had occurred, he submitted that the fact that the law entitled the applicant to a repayment of the overpaid tax should be regarded by the Tribunal as the overwhelming factor so that in the end, the discretion should be exercised in favour of the applicant.

15. Mr O'Connor submitted that it was proper for the Tribunal to look to the general principles of restitution at common law, despite the statutory limitation, because s. 14ZX(1) and (4) of the Taxation Administration Act 1953 (``TAA'') did not provide an exhaustive code, as it did not mention overpayment. This was his primary reason for distinguishing the recent Full Federal Court decision in
Chippendale Printing Co Pty Ltd v FC of T & Anor 96 ATC 4175 (``Chippendale''). He said that although a time limit was imposed in s. 80(1) of the FBTAA, s. 82(1), which gives a discretion to extend time, imposed no ultimate time limit for the granting of an extension of time.

16. He also submitted that, on the reasoning of the Federal Court decision in
Windshuttle v DFC of T 93 ATC 4992, the Tribunal should consider, as a relevant factor, whether prejudice would be suffered by others if this application was not allowed.

17. Mr O'Connor also contended that on the basis of the guidelines set down by Justice Wilcox in
Hunter Valley Developments Pty Ltd v Cohen (1984) 7 ALD 315 (``Hunter Valley'') the Tribunal should grant an extension of time. In relation to the guideline requiring the applicant to demonstrate an adequate explanation for the delay, he said that on the basis of David Securities and Royal Insurance, ``we must win on this point'' because there has been a mistake of law which has been causative of the overpayment. He also emphasised the fact that the respondent has conceded that it would allow the objections if the extension of time was granted.

Submissions by respondent

18. Mr Owen-Conway, for the respondent, submitted that the statutory scheme relevant to this application provided two avenues of relief to a taxpayer in circumstances where there had been an overpayment of fringe benefits tax. A taxpayer could either lodge an objection within time or apply for an amended assessment. The statutory scheme also limits the time in which such applications can be made. Thus, Mr Owen-Conway said that:

``Clearly the element of finality is implicit throughout the Act and is a fundamental part of the scheme. If it were otherwise there would never be any end to litigation arising out of the issue of notices of assessment.''

19. Thus he submitted that s. 14ZX of the TAA provided an exhaustive code for repayment of overpaid taxes and therefore common law restitutionary principles were not to be applied. Further, if a common law restitutionary claim was open to the applicant, it should have been brought in a common law

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court within the statutory time limitation period applicable to such actions. On the issue of the statute providing an exhaustive code, Mr Owen- Conway distinguished Royal Insurance because in that case, s. 111(1) of the Stamp Act 1921 (WA) was under consideration and that section was not subject to time limits.

20. In any event, if restitutionary principles applied, the respondent contended that on the basis of David Securities, it was a defence to a claim for restitution of money paid under a mistake of law that the defendant/respondent honestly believed when it learned of the payment or transfer that he was entitled to receive and retain the money or property. Thus, in this case, under the system of self- assessment, the Commissioner had no way of knowing whether the tax return is accurate or not.

21. In relation to the Commissioner's booklet, Mr Owen-Conway submitted that there was no evidence before the Tribunal that the applicant even received a copy of this booklet but, in any event, even if it did and read it, it would not have been misled by the contents. One has to read both pages 69 and 70 and having done so, it is clear that the booklet correctly stated the law. With respect to the Taxation Ruling MT2030, he said that this was irrelevant and in any event he emphasised that there was no evidence before the Tribunal that the applicant had a copy of this ruling and had relied on it.

22. He submitted that the only possible conclusion to be drawn about the board meals being included as taxable fringe benefits on the basis of all the evidence was that at the time Ernst and Young completed the tax returns, it either gave wrong advice, as the applicant has always provided its employees with meals in a dining facility open to the public, and was therefore negligent, or the applicant failed to give that essential information to Ernst and Young. On this matter there was a total lack of evidence.

23. Mr Owen-Conway referred the Tribunal to the recent Full Federal Court case in Chippendale, where it was held that the statutory provisions were intended to be exhaustive of the taxpayers rights and precluded any common law remedy. He submitted that on the basis of Chippendale any rights under the general law to recover overpaid sales tax would have to be in the form of an action by the taxpayer against the Commonwealth and not against the Commissioner. (On this latter submission, the Tribunal agrees with Mr O'Connor that although the applicant in Chippendale made the submission that an action of this type was to be against the Commonwealth and not the Commissioner, the Federal Court in Chippendale rejected this submission.)

24. Mr Owen-Conway applied Mr Paul Gerrard's analysis of the Hunter Valley principles, at T9 of the T Documents, and urged the Tribunal to do the same.


25. The question to be determined in this application is whether the discretion conferred on the Tribunal by s. 82(1) of the FBTAA should be exercised favourably to enable the applicant's objections to its assessments to be treated as having been duly lodged. The Tribunal finds at the outset that the power in s. 82(1) does give the Tribunal a discretion and it therefore rejects the applicant's argument that there is no residual discretion left in the Tribunal.

26. On the issue of the application of common law restitutionary principles, the Tribunal finds that it is necessary to consider whether the statutory scheme under consideration provides an exhaustive code or whether there is a clear legislative intention that Parliament intended that recourse could be had to common law principles. Of course, if the statutory scheme is intended to be exhaustive, then no recourse can be had to the common law principles. There is abundant authority for this principle, the most recent being the Full Federal Court decision in Chippendale where Justice Tamberlin commented at p 4182:

``... a detailed statutory regime may appropriately create, exclude, limit and control the exercise of rights to repayment and to preclude any general law rights to repayment freed of such restraints....''

27. As there is no express exclusion of common law principles in the FBTAA, any such result must be found to arise by ``necessary implication''. Prima facie, the only methods a dissatisfied taxpayer can recover overpaid fringe benefits tax via the FBTAA is to object to the assessment pursuant to s. 80 of the FBTAA or request an amended assessment pursuant to s. 74 of the FBTAA. The taxpayer

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in this instance has utilised the objection provisions. Section 136(1) of the FBTAA, as then in force, defines ``assessment'' as follows:

```assessment' means-

  • (a) the ascertainment of the fringe benefits taxable amount of an employer of a year of tax and of the tax payable on that amount; or
  • (b) the ascertainment of the additional tax payable under a provision of Part VIII.''

28. The Tribunal finds that where ss. 80 and 74 refer to ``an assessment'', it is intended to refer to all assessments made under the FBTAA and not just some assessments of fringe benefits tax. Further, these sections impose specific conditions and limitations on the recovery of overpaid fringe benefits tax. These detailed express and specific provisions would be unnecessary if a taxpayer was entitled to claim a refund of overpaid fringe benefits tax under the general law, freed of the specific statutory constraints. The Tribunal finds that the comments by Justice Tamberlin in Chippendale at p 4184 are also of relevance here:

``It must be borne in mind that the obligation to pay sales tax and the procedures by reference to which such tax is to be assessed, paid, collected and adjusted, arises from statute and not from agreement or from the general law. The subject matter of the tax is a statutory debt. The whole regulatory framework is legislative and not consensual in character. Against this background it is not inappropriate that the statutory regime should be interpreted to cover the field and not allow actions under the general law where the result would be to bypass carefully formulated legislative controls.''

29. Therefore, the Tribunal finds that the scheme in the FBTAA, in relation to recovery of overpaid fringe benefits tax, is intended to be exhaustive and common law restitutionary principles are therefore inapplicable.

30. In these circumstances, the Tribunal must now consider whether it is appropriate to exercise the discretion conferred on it by s. 82(1) to extend time for the lodging of the objections. The principles governing the exercise of the discretion have been considered in many cases. A useful starting point is the considerations outlined by Justice Wilcox in Hunter Valley. Although these considerations are not exhaustive, they offer a relevant framework. These factors include:

  • (a) whether the applicant has provided an ``acceptable explanation of the delay'' and shown that it would be ``fair and equitable in the circumstances'' to extend the time;
  • (b) any action taken by the applicant to make the decision-maker aware that the finality of its decision is being contested;
  • (c) any prejudice to the respondent which may have resulted from the delay;
  • (d) any unsettling of people, other than the respondent, or of established practices;
  • (e) the merits of the substantial application; and
  • (f) considerations of fairness as between applicants and other persons in like positions: it is not only prejudice vis-a-vis the parties but against the wider public interest which must also be taken into consideration.

Factor (A) - Explanation for delay

31. Justice Sweeny in the Federal Court decision of
Fardon v FC of T 92 ATC 4339 commented at page 4347 that:

``(a) Although the section does not, in terms, place any onus of proof upon an applicant for extension an application has to be made. Special circumstances need to be shown but the court will not grant the application unless positively satisfied that it is proper to do so.... Indeed it is the prima facie rule that proceedings commenced outside that period will not be entertained....''

As Senior Member Ettinger commented in Case 36/94,
94 ATC 327 (at 332):

``This appears to require the applicant to convince the decision-maker that there are unusual circumstances and that the failure was not due only to inadvertence.''

32. The Tribunal notes that there was no representative from the applicant present at the hearing and that no explanation was offered by the applicant, itself, for the reason for failing to lodge the objections within time. At the relevant time in 1988/89, the tax returns were completed by the applicant's accountants, Ernst & Young. The applicant did not adduce any evidence to show that their accountants were negligent or incompetent in completing the tax returns.

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33. The only explanation offered on behalf of the applicant was by the applicant's counsel, Mr O'Connor, who submitted the reason the objections were not filed within time was because, at that time, the applicant believed that the board meals were assessable for fringe benefits tax. Mr O'Connor said that this belief, held by the applicant, may have been contributed to by representations made by the respondent, either orally or in writing. Mr Moltoni drew similar inferences based upon his professional knowledge about the belief of tax agents at the time.

34. The Tribunal finds that there is insufficient evidence before it to justify the conclusion that the applicant's delay in failing to lodge the objections within time was due to its belief that the board meals were assessable or that this belief was formed as a result of reliance on representations made by the respondent. In any event, the Tribunal considers that ignorance of the law is not acceptable as a valid excuse (Case 36/94). Furthermore it considers that pages 69 and 70 of the booklet correctly stated the law at the time and were not misleading.

35. The Tribunal therefore finds, on all the evidence before it, that the applicant has not provided an acceptable explanation for failing to lodge the objections within time. However, the Tribunal notes that on the basis of the Full Court of the Federal Court in
Comcare v A'Hearn (1993) 119 ALR 85, that it is not an essential precondition for an extension of time to be granted that an acceptable explanation for delay be given.

Factor (B) - Whether respondent aware finality of decisioin had been contested

36. The Tribunal finds that the respondent first became aware that the applicant was contesting the assessments, when it lodged the notices of objections on 13 January 1995. Justice Wilcox in Hunter Valley at page 320 stated that:

``A distinction is to be made between the case of a person who, by non-curial means, has continued to make the decision-maker aware that he contests the finality of the decision (who has not `rested on his rights';)... and a case where the decision-maker was allowed to believe that the matter was finally concluded.... The reasons for this distinction are not only the `need for finality in disputes'... but also the `fading from memory' problem referred to in
Wedesweillar v Cole (1983) 47 ALR 528.''

37. The Tribunal is of the opinion that the applicant rested on his rights and took no steps to make the decision-maker aware that it was contesting the finality of the decision.

Factor (C) - Prejudice

38. On the authority of
Windshuttle v DFC of T 93 ATC 4992, the onus is on the respondent to adduce any evidence of prejudice that is likely to be suffered. In this case, no such evidence has been adduced on behalf of the respondent and the Tribunal therefore finds that the respondent would not be prejudiced if an extension of time were granted. However, the Tribunal notes that it is clear that the applicant would be prejudiced if an extension of time were not granted because the applicant would not be able to recover the fringe benefits tax that was overpaid in the 1988/89 financial years.

Factor (D) - Unsettling of other persons and disruption to established practices

39. If the application to extend time is granted on the ground of common law principles of unjust enrichment, despite the limitations imposed by the statute, it would create massive disruption in the administration of the scheme regarding overpayments. A proper administration of the statutory provisions however, will not unsettle others or cause disruption to established practices.

Factor (E) - Merits of substantive application

40. It is conceded by the respondent in this matter, that if the extension of time is granted to lodge the objections to assessments, then the respondent would allow the substantive claim.

Factor (F) - Considerations of fairness: other persons in like positions

41. The Tribunal notes that there may be other taxpayers in a similar situation as the applicant who did not apply for an extension of time. However, the fact that an extension of time is granted or not granted in this matter depends on the factual circumstances of this case. Therefore the only consequence of a decision to refuse an extension of time is to deny the applicant the taxation benefits which it would otherwise have obtained. It will not be conclusive against other applicants who may rely on different factual circumstances.

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Consideration of fairness to others will not be raised by this decision.

42. Applying these comments, the Tribunal finds that this factor does not support the granting of an extension of time.


43. The Tribunal notes the comments of Senior Member Barbour in Pulitano and Telstra Corporation Limited which were referred to in Case 26/95,
95 ATC 269 (at 272):

``Limitation periods in statutes are not to be ignored, and the policy behind this is clear; it works to the advantage of all parties concerned in litigation that matters are brought speedily to their conclusion, and limitation periods ensure that applicants commence actions promptly. But the discretion to extend time limits envisages that other matters may be relevant in fixing the period in which an applicant ought to be able to begin proceedings, and the strict enforcement of statutory time frames may be an anathema to the process of merit and judicial review which leads ultimately to what is just and equitable between the parties.''

44. This is a commercial case involving an applicant who had the benefit of professional advice and assistance in the preparation and lodgement of the income tax returns in the years in question. The Tribunal considers that, on all the evidence before it and in light of the principles in Hunter Valley, it is not appropriate to grant the extension of time sought by the applicant.


45. In accordance with s. 43 of the Administrative Appeals Tribunal Act 1975, the Tribunal affirms the reviewable decision of the respondent dated 10 February 1995.

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