ATO Interpretative Decision
ATO ID 2003/799
Income Tax
Division 974: taxpayer's right to object against the determinations of the CommissionerFOI status: may be released
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This ATOID provides you with the following level of protection:
If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.
Issue
Can a taxpayer who is dissatisfied with a determination made by the Commissioner under the provisions of subsection 974-112(1) of the Income Tax Assessment Act 1997 (ITAA 1997) object against the determination?
Decision
Yes. A taxpayer who is dissatisfied with a determination made by the Commissioner under the provisions of subsection 974-112(1) of the ITAA 1997 can object against the determination
Facts
The Commissioner makes a determination under sub-section 974-112(1) of the ITAA 1997. The determination is made on the Commissioner's own initiative and a notice of the determination is served on the taxpayer.
The taxpayer seeks to object against the determination.
Reasons for Decision
Where the Commissioner has made a determination under section 974-112 of the ITAA 1997, subsection 974-112(5) of the ITAA 1997 provides that a taxpayer who is dissatisfied with the determination may object against the determination in the manner set out in Part IVC of the Taxation Administration Act 1953 (TAA).
The term 'dissatisfied' is not defined in either the ITAA 1997 or the TAA. The meaning of the term was considered by the Full Federal Court in CTC Resources NL v FC of T 94 ATC 4072; (1994) 27 ATR 403. In this case, the taxpayer appealed to the Full Federal Court against two notices of private ruling pursuant to section 14ZZ of the TAA. Broadly, that section provides that a taxpayer who is 'dissatisfied' with the Commissioner's decision on the objection may appeal to the Federal Court against the decision.
His Honour Gummow J stated at ATC 4079; ATR 411:
The use of the term "dissatisfied" as an identification of the class of persons who are given a right of further recourse to a court or an administrative body in respect of an adverse decision by the Commissioner on an objection, has a long legislative history. ... However, in the past, the cause for the dissatisfaction of the taxpayer has been a particular assessment to tax which because it leads to the creation of a debt in favour of the Commonwealth undoubtedly has an immediate and direct effect in a legal sense upon the taxpayer.
His Honour further stated at ATC 4082; ATR 414:
...[T]he "dissatisfaction" of the person initiating the proceeding is of the following nature. It is a dissatisfaction with the absence of a favourable decision upon the objection which would, if now rectified by the Court, place the party in the position for the administration of the taxation laws which should have applied if the ruling had been made by the Commissioner in the terms sought. A mere curiosity or interest in having a formal ruling by the Commissioner for some collateral commercial purpose of the applicant is not sufficient to amount to "dissatisfaction" in the relevant sense.
His Honour Hill J said at ATC 4100; ATR 435:
There is no definition of "dissatisfied" in this context but the word must bear more than its ordinary dictionary meaning of "displeased with" or "not contented with". More is required than mere lack of satisfaction with the objection decision. It can hardly be said that a university lecturer, learning of the disallowance of an objection by a public company of which he or she was neither a director or shareholder, could, because he or she was not happy with the objection decision, refer the matter to the Court, thus binding the Court to hear and determine an appeal in the original jurisdiction of the Court. ... In my opinion a person will only be "dissatisfied" in the relevant sense if that person is a person to whom the "ruling" is still capable of having legal effect.
Accordingly, to lodge an objection, the taxpayer must be dissatisfied with the determination. In this example, the entity seeking to object to the determination is one to whom it will have legal effect. The taxpayer entity is directly affected by the determination. As such, and having regard to the facts of this case, the taxpayer can be dissatisfied with the determination, and is thus able to object against it for the purposes of subsection 974-112(5) of the ITAA 1997.
Date of decision: 21 August 2003Year of income: Year ending 30 June 2004
Legislative References:
Income Tax Assessment Act 1997
Division 974
subsection 974-112(1)
subsection 974-112(5)
Section 14ZZ
Case References:
C T C Resources NL v. Federal Commissioner of Taxation
(1994) 48 FCR 397
94 ATC 4072
(1994) 27 ATR 403
Other References:
Explanatory Memorandum: New Business Tax System (Debt and Equity) Act 2001
Keywords
Debt equity borderline
Objection rights
ISSN: 1445-2782
| Date: | Version: | |
| You are here → | 21 August 2003 | Original statement |
| 16 March 2007 | Archived |