Physiotherapy Rehab Centre Pty Ltd v FC of T

Members:
Bernard J McCabe DP

Tribunal:
Administrative Appeals Tribunal, Adelaide

MEDIA NEUTRAL CITATION: [2021] AATA 4760

Decision date: 17 December 2021

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BJ McCabe (Deputy President)

1. Jobkeeper payments were made available to businesses during the height of the pandemic but the scheme is now being wound up. Some applications that were made in a timely way are still making their way through the review process after the entities making the applications were found to be ineligible to receive the payment. The Commissioner of Taxation says the legislative scheme which established the Jobkeeper payment creates a deadline which means those reviews must be concluded and (if the application is resolved in favour of the business) the payment must be made by 31 March 2022.

2. If that deadline applies to those who have already launched review proceedings, the Commissioner argues the Tribunal's review will need to be finalised in advance of the 31 March 2022 deadline. That has implications for case management.

3. The Commissioner and the applicant in these proceedings have asked the Tribunal to make directions for an accelerated timetable with a view to an expedited hearing. I took the opportunity to invite the Commissioner to put on written submissions addressing whether those who commenced review proceedings under Part IVC of the Taxation Administration Act 1953 (C'th) (the Administration Act) in a timely way could assume a favourable decision requiring payment would still be implemented if that decision came after the 31 March deadline.

4. The applicant did not make submissions. That is fair enough. The applicant should not be put to the expense of doing so when they agree with the proposed directions. The Commissioner's submissions were limited. In fairness, those submissions were prepared quickly on the basis there would be an opportunity for oral argument. As it happens, I do not think it necessary to trouble the

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parties with oral arguments in this case given the question I have identified in relation to time limits technically remains a hypothetical one. For present purposes, I need only decide whether I should factor in the risk that the Commissioner is right about the deadline when considering whether to make direction for an expedited timetable. The Tribunal should always be wary of answering hypothetical questions, especially where (in a case like this) it does not have the benefit of focused and informed submissions from both sides. It is enough for present purposes that I decide whether expedition is appropriate, but I will take the opportunity to canvass the arguments about the deadline so that other parties might reflect on the litigation risk associated with delay. If there are unavoidable delays in finalising proceedings before the supposed deadline, the Tribunal may yet be required to make a formal decision about the effect of the provisions purporting to impose a deadline

THE LEGISLATIVE SCHEME AND THE TRIBUNAL'S REVIEW

5. The Coronavirus Economic Response Package (Payments and Benefits) Act 2020 (the CERP Act) authorised the establishment of payments to assist businesses that were affected by the disruption associated with the Coronavirus pandemic. To this end, ss 7 and 20 of the CERP Act authorised the Treasurer to make rules creating and regulating the payments. The specific authorisation is contained in s 20(1) but s 20(2) sets out limits which make clear what the rules may not do. Relevantly, s 20(2)(e) says the rules many not "directly amend the text of this Act ." That limitation is implicit in any event: it is an established principle of administrative law that delegated legislation must be consistent with and not derogate from the legislation from which it is derived^[1] Esmonds Motors v Commonwealth (1970) 120 CLR 463 , 477 . . I will return to potential implications of this limitation below.

6. The 'Jobkeeper' payment was one of the payments established pursuant to the CERP Act. The payment is provided for in the Coronavirus Economic Response Package (Payments and Benefits) Rules 2020 (the Rules). As the name 'Jobkeeper' implies, the payment was available to eligible businesses to help them meet the costs of keeping workers on the payroll in the short term in circumstances where those workers might otherwise be stood down because of the pandemic: see s 5 of the Rules. (The payment was also available to eligible business participants, most obviously sole traders and other small enterprises defined in s 12 of the Rules.) Section 5 of the Rules outlines the objective of the payment and goes on to explain:

• 1 The jobkeeper scheme starts on 30 March 2020 and ends on 27 September 2020.
• 2 A business that has suffered a substantial decline in turnover can be entitled to a jobkeeper payment of $1,500 per fortnight for each eligible employee. It is a condition of entitlement that the business has paid salary and wages of at least that amount to the employee in the fortnight.
• 3 A business can also be entitled to a jobkeeper payment of $1,500 per fortnight for one business participant who is actively engaged in operating the business.
• 4 The jobkeeper scheme is administered by the Commissioner of Taxation.
• 5 The Commissioner pays the jobkeeper payment to entities shortly after the end of each calendar month, for fortnights ending in that month.
• 6 Some of the administrative arrangements for the scheme are set out in the Act.

7. Section 13(1) of the CERP Act says an entity that is dissatisfied with one of the decisions referred to in sub-section (2) may object to the decision using the process described in Part IVC of the Administration Act. In doing so, the CERP Act - as opposed to the Rules - confers the right to object and to seek review of the objection in the ordinary way.

8. The applicant in this case sought Jobkeeper while the scheme was still open. The applicant also objected to the adverse eligibility decision in a timely way. It subsequently applied to the Tribunal for review within the appropriate time limit. But time is running short if the review is to be completed before the end of March next year. It is still possible the matter will be resolved in the course of pre-hearing dispute resolution processes. That would obviate the need for a hearing.

9.

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A hearing is generally the most expensive part of the process because the Tribunal is obliged to put the taxpayer to proof. In doing so, the Tribunal is required to act on cogent evidence that is gathered in a procedurally fair way. While the Tribunal's Small Business Taxation Division (SBTD) aims to be as informal and user-friendly as possible, the forensic fact-gathering process required under the legislation creates an irreducible minimum of formality if the matter must be resolved at a hearing. (Just because a dispute involves a small business does not mean the dispute is inevitably small or unimportant or lacking in complexity. Many small business taxation matters involve questions of fact or law that are as complex as those faced by big-business taxpayers, and almost all of the disputes are important to the business concerned.) The Tribunal must also apply s 14ZZK(a) of the Administration Act which says the applicant in a case like this must positively establish how the Commissioner's decision should have been made differently. That creates an evidentiary burden for the applicant that cannot be ignored in an attempt to reduce time or save cost.

10. The SBTD has responded to the challenge by introducing case management and alternative dispute resolution processes that work within the framework established by Part IVC of the Administration Act.^[2] The objective of the SBTD is ultimately the same as that of the Tribunal. Section 2A of the Administrative Appeals Tribunal Act 1975 says the Tribunal aims to establish a review mechanism that: (a) is accessible; and (b) is fair, just, economical, informal and quick; and (c) is proportionate to the importance and complexity of the matter; and (d) promotes public trust and confidence in the decision-making of the Tribunal . Those processes encourage an applicant to explain their case at an early stage. That is an effective strategy for containing costs, reducing delay and minimising complexity because experience shows most cases which are successfully resolved in favour of an applicant are resolved in that way because the decision-maker is provided with more evidence that better explains the applicant's case. That extra information almost inevitably comes from the applicant. One must not forget the Commissioner of Taxation (and the Tribunal on review) is usually at an informational disadvantage compared to the applicant. Requiring the applicant to produce and explain evidence in the course of establishing the correct or preferable decision makes sense where:

• (a) the precise incidence of many of the taxes administered by the Commissioner (or the availability of benefits like those under consideration here) depends on the individual's unique facts and circumstances; and
• (b) the individual will almost always be in the best position to know and explain those facts and circumstances, whereas the Commissioner will mostly be guessing.

11. The alternative to a system of self-assessment where the applicant is put to proof in the event of a dispute would be to impose much more onerous reporting requirements and to equip the Commissioner with more intrusive powers to monitor and investigate the taxpayer's personal circumstances. Those measures would be necessary so the Commissioner could satisfy himself the correct amount of tax is being paid by each individual. That approach would make our taxation system (assuming the current mix of taxes) vastly more expensive and less efficient. It would also have serious implications for civil liberties.

12. The implications of all that might prompt public debate about reform of the current tax mix, but the Tribunal has no formal role to play in that debate. We make decisions according to the law which Parliament has enacted.

DO THE RULES IMPOSE A DEADLINE THAT APPLIES TO THE TRIBUNAL'S REVIEW?

13. The CERP Act does not expressly impose deadlines on Jobkeeper or any other payment. The Commissioner argues the power to make and impose a deadline with respect to Jobkeeper is included in the Rules. The Rules are made under s 20 of the CERP Act, as I have explained.

14. In written submissions, the Commissioner focused on the interpretation of the language contained in s 19 of the Rules. The submissions did not address whether the interpretation of the language in s 19 should be read down in light of the language in s 13 of the CERP Act which confers the right of review through the objection process in Part IVC of the Administration Act. I will discuss the Commissioner's arguments in relation to the text of s 19 (ie I will consider the Commissioner's argument on its own terms) before briefly dealing with the question of how the Rules interact with Part IVC of the Administration Act.

15.

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That brings me to s 19 of the Rules, which provides:

19 Time limit for jobkeeper scheme

Despite anything in this Part:

• (a) the Commissioner must not pay an amount by way of a jobkeeper payment after 31 March 2022; and
• (b) if:
  • (i) an entity is entitled to a jobkeeper payment for a fortnight (disregarding this paragraph); and
  • (ii) the Commissioner would contravene paragraph (a) by paying that jobkeeper payment;

    the entity is not entitled to the jobkeeper payment for the fortnight.

16. The Commissioner points out the Tribunal steps into the Commissioner's shoes when conducting a review. The Tribunal makes the decision again but - in the absence of statutory language that requires a different approach - the Tribunal makes the decision with reference to the same law. That means the Tribunal has the same powers and is subject to the same legal constraints imposed on the Commissioner. While the Tribunal is usually able to have regard to information that was not before the Commissioner when the primary or objection decisions were made, the Tribunal is not ordinarily able to reach a decision on review that was not legally open to the Commissioner: see, generally,
Frugtniet v Australian Securities and Investments Commission [2019] HCA 16; see also
Schroeder and Australian Securities and Investments Commission [2021] AATA 3519 where the Tribunal explored the limited circumstances in which the Tribunal might (a) have additional powers and (b) be instructed to answer a different question to the one that was before the primary decision-maker.

17. That is uncontroversial, as far as it goes^[3] I do not need to consider the effect of the purported limitation on the taxpayer’s alternative remedy of seeking a review by the Federal Court. Provisions limiting opportunities for judicial review would ordinarily attract very careful scrutiny. While there are important constitutional differences between the Tribunal and the Federal Court, it would be inelegant if the option of Tribunal review were foreclosed while judicial review remained an option. That surely was not an intended outcome. But it is important to appreciate s 19 of the Rules addresses the Commissioner making payments. The reviewable decision before the Tribunal relates to eligibility, not payment. A limitation applying to the Commissioner's execution of a favourable eligibility decision made by the Tribunal does not inevitably limit the Tribunal's ability to make a decision on eligibility in the first place - although there may be a question over whether such a decision would be futile if the law prohibits the Commissioner from doing anything about it. An argument about futility in that sense might be relevant if the Commissioner were to make an application under s 42B of the Administrative Appeals Tribunal Act 1975 (C'th) (the AAT Act) after 31 March 2022. But the Commissioner appears to make a more ambitious argument than that. He appears to assume s 19 limits the Tribunal's power to make an eligibility decision in the applicant's favour once the deadline has passed. That argument appears to assume the deadline in s 19 is imported into the review process itself.

18. The Commissioner argues the language in s 19 admits of only one possible interpretation: the Commissioner is prohibited from making a Jobkeeper payment after 31 March 2022. That is the plain meaning of the words when read in the context of the legislative instrument which established a scheme to provide emergency assistance in response to the disruption created by the pandemic. I note the deadline has already been extended once (from 30 September 2021) after the disruption associated with the pandemic persisted for longer than expected. That change reflected the fact the scheme was always intended to be time-limited. Importantly, the change was made by the Treasurer. On that approach, the Tribunal should respect the Treasurer's role and accept the time-limits he imposed.

19. If there was any doubt remaining after reading the text of s 19, the Commissioner says that doubt is surely resolved by reference to the explanatory memorandum which accompanied the Rules when they were introduced. The explanatory memorandum provides, relevantly:

• • While it is expected that most JobKeeper payments will be paid by October 2020, it may be appropriate for a payment to be paid to an entity beyond this time. For example, if an entity has satisfied all the entitlement requirements, but has been underpaid by the Commissioner, a payment may be made after October 2020.
• • However, section 19 of the Rules provides that despite any entitlement to a payment that has not been made, the Commissioner

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  must not make any JobKeeper payments after 30 September 2021. The Rules further provide that for any unpaid amount to which an entity would otherwise be entitled to, the entity is not entitled to that amount after 30 September 2021. The Rules provide a cessation date for the JobKeeper scheme consistent with the intention that the scheme only applies on a time limited basis.

20. The reference to October 2020 and 30 September 2021 must be read in light of the subsequent amendment to s 19 to extend the deadline to 31 March 2022. But the Commissioner says the intent behind the provisions is the same. The Treasurer was creating a hard deadline that applied to the Commissioner. The Commissioner says the deadline must be factored into the review process insofar as it practically constrains the decision the Tribunal can make.

21. It is one thing to argue a decision on eligibility would be futile if made after a particular date. I do not need to express a concluded view about that now. But the argument that s 19 imports a limitation into the Tribunal's review does require some more thought at this juncture because it goes to the heart of the review process established in Part IVC of the Administration Act. That process is carefully structured. The provisions include time limits for the participants in the review process to complete some of the steps identified, but other steps are not subject to time limits. And then there is s 14ZZL(1), which provides:

Implementation of Tribunal decisions

• (1) When the decision of the Tribunal on the review of a reviewable objection decision or an extension of time refusal decision becomes final, the Commissioner must, within 60 days, take such action, including amending any assessment or determination concerned, as is necessary to give effect to the decision.

22. I have some difficulty reconciling that provision with the Commissioner's contentions about the effect of the Rules on the review process. Section 14ZZL appears on its face to require the Commissioner to give effect to the Tribunal's decision. The only mention of a temporal limit is a positive requirement that the Commissioner give effect to the Tribunal decision within 60 days of the decision becoming final. Section 13 of the CERP Act which establishes the right of review does not mention a different time limit. The Commissioner would need to establish the Rules modified the statutory language in s 14ZZL of the Administration Act and the other provisions of Part IVC to import a different temporal limitation.

23. In the course of written submissions in relation to the effect of s 19, the Commissioner referred to the decision of Moshinsky J in
Coles Supermarkets Australia Pty Ltd v Commissioner of Taxation [2019] FCA 1582. His Honour made some obiter remarks about the interaction between the provisions of Part IVC and s 47-5 of the Fuel Tax Act 2006 (C'th) that might be relevant for present purposes. The Commissioner had referred to a temporal limitation contained in s 47-5 which placed a time limit on the applicant's ability to claim credits. He argued the time limitation was effectively imported into the Part IVC objection and review process. On that interpretation, an applicant might be disentitled to the benefit of a favourable decision on review that was made after the deadline even though the application for review was commenced within time. Moshinsky J was not immediately attracted to the argument. His Honour explained (at [139]):

…the Tax Administration Act provides for a separate dispute resolution mechanism (i.e. objection and review) once a return has been lodged or a default assessment issued; and once a return has been lodged and objected to, there is no scope for the operation of s 47-5 to disentitle a taxpayer to fuel tax credits as the rights of the Commissioner and the taxpayer are, relevantly, preserved and protected by ss 14ZY, 14ZZP and 14ZZQ of the Tax Administration Act and s 155-60 of Sch 1 to that Act.

24. That reasoning might be relevant here. It is not yet clear to me whether s 19 of the Rules effectively amend the provisions of Part IVC including s 14ZZL of the Administration Act. An argument to that effect presumably requires careful consideration of the power in s 20 of the

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CERP Act to make rules "prescribing matters… necessary or convenient to be prescribed for carrying out or giving effect to this Act." There is presumably an argument that a rule imposing a temporal requirement on the review process might be necessary or convenient for the purposes of the CERP Act if one argues the CERP Act is intended to create emergency assistance that is, of its nature, time-limited. But that argument is not clear-cut. Further submissions will be required before one could safely reach a concluded view to that effect.

CONCLUSION

25. The Tribunal has been asked to agree to an expedited timetable to ensure these proceedings are brought to a timely end before 31 March 2022. There is a question-mark over whether that date is as immutable as the Commissioner contends. Even so, I accept the parties have established the timetable should be expedited given the risk. Other parties (including the Commissioner) should keep that in mind. The Tribunal does not have an unlimited capacity to deal with a late rush of applications as the purported deadline looms.