ATO Interpretative Decision

ATO ID 2002/47

Superannuation

• This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Issue

Should objections in relation to the years ended 30 June 1989 to 30 June 1995 inclusive be accepted as duly lodged?

Decision

It is fair and reasonable in the circumstances that the objections in relation to the years ended 30 June 1992 to 30 June 1995 inclusive should be accepted as duly lodged. Further, if the taxpayer is able to provide copies of income tax returns for the years ended 30 June 1989 to 30 June 1991 that can be verified against copies of notices of assessment already held by the Australian Taxation Office (ATO), then the objections in relation to those years of income will also be accepted as duly lodged.

Facts

In the year ended 30 June 1989, the taxpayer commenced to receive a death benefit pension from a superannuation fund.

The taxpayer, pursuant to section 175A of the Income Tax Assessment Act 1936 (ITAA 1936), objected against assessments for the years ended 30 June 1989 to 1995 inclusive, claiming a superannuation pension rebate and deductible amount in relation to the pension for each year. As the objections were lodged outside the 4 year time limit set down in section 14ZW of the Taxation Administration Act 1953 (TAA 1953), the taxpayer also lodged a written request asking the Commissioner to deal with the objections as if they had been lodged on time.

The taxpayer stated that neither the taxpayer nor the taxpayer's previous tax agent had been aware of the entitlements now claimed.

From the documentation provided there is no doubt that a deductible amount and superannuation pension rebate applies to the relevant pension

The Commissioner holds records showing details lodged in the income tax returns of the taxpayer for the years ended 30 June 1992 to 30 June 1995 inclusive.

The Commissioner holds copies of notices of assessment issued to the taxpayer for the years ended 30 June 1989 to 30 June 1995 inclusive.

Reasons for Decision

The taxpayers request was considered on the following criteria;

1. Is there an acceptable explanation for the delay and is it fair and reasonable in all the circumstances to extend the time. In considering whether there is an acceptable explanation of the delay, it will be relevant to consider what action a taxpayer has taken to make the Commissioner aware that he or she contests the finality of the decision.

The taxpayer has indicated that the failure to claim the relevant entitlements was due to ignorance, and was at least in part attributable to the omission of the taxpayer's tax agent at the time. When considering the role of a tax agent in contributing to the delay in lodging objections it is necessary to consider, in the context of the case, any evidence that the tax agent has not properly represented the taxpayer. It is not sufficient, for these purposes, for a taxpayer to say that a tax agent should have known of and advised the taxpayer of an entitlement which was overlooked. Taxation Appeals No. NT93/199 AAT No. 9568 (1994) 94 ATC 327 relates.

It is relevant that;

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the law in relation to the nature and quantum of the claims in question has at all material times been settled, and

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there is no alleged uncertainty, either at the time or in light of subsequent events, as to the application of the law to the given facts.

The taxpayer has not provided an acceptable explanation of the delay for the purposes of deciding on extended time. An acceptable explanation of delay, while relevant, is not a pre-condition for success of an application (Brown v. Commissioner of Taxation [1999] FCA 563; AAT Case 9379).

The length of the delay is a factor that weighs against the taxpayer (Brown).

In this case the Commissioner has been allowed to believe that the assessments in question were finally concluded. As noted in Hunter Valley Developments Pty Ltd v. Cohen ( 1984) 3 FCR 344, a distinction is to be drawn between the case of a person who has continued to make the decision-maker aware that he or she contests the finality of a decision and a case where the decision-maker was allowed to believe that the matter was finally concluded. In this case that taxpayer was simply unaware of the entitlements (Re The Club and FCT Case [2000] AATA 114 relates).

2. Is there any prejudice to the Commissioner if an extension is granted? The mere absence of prejudice to the Commissioner will not, of itself, be sufficient to justify an extension.

It is incumbent on the Commissioner to demonstrate any prejudice arising if extended time were to be allowed. As noted by von Doussa J in Windshuttle v. Deputy Commissioner of Taxation (1993) 27 ATR 88;

"Relevant matters will be whether witnesses have disappeared or their recollections have faded (provided of course that the evidence of the witnesses would have been material) ... ; whether avenues of useful enquiry have dried up; and whether material documents have been destroyed. ... So, if a party against whom an extension of time is sought, intends to oppose that extension on the grounds of prejudice, that party should adduce evidence which shows the nature and extent of that prejudice."

It is relevant whether the Commissioner still has access to records to be able to confirm;

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the quantum (if any) of the particular pension income that has been declared by the taxpayer in the relevant year of income, and

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the quantum (if any) of rebate and deductible amount claimed against the pension income in the relevant year of income,

and records from the taxpayer's income tax returns to enable correct amendments to be made based on the decision in relation to the substantive objections.

The Commissioner holds the necessary income tax return records for the years ended 30 June 1992 to 30 June 1995 inclusive. The Commissioner also holds copies of the notices of assessment issued to the taxpayer for the years ended 30 June 1989 to 30 June 1991 inclusive. These are, however, insufficient to confirm the information mentioned above. Should the taxpayer be able to provide copies of the tax returns lodged for the relevant years, these can be compared to the notices of assessment and would be sufficient to ensure that correct amendments can be made.

3. The merits of the substantive application, that is, of the objection itself.

The question to be considered is whether, on the face of it, the taxpayer has an arguable case in relation to the substantive objections. The stronger the case the more likely that the discretion would be exercised in favour of the taxpayer even where the explanation for the delay is not strong. In this case, there is no doubt that a deductible amount and superannuation pension rebate apply to the pension in question.

4. Considerations of fairness as between the applicant and other persons in a similar position.

As noted by Hill J in Brown v. Federal Commissioner of Taxation (1999) 42 ATR 118;

"That is clearly a relevant matter when a public law issue is involved. It will seldom have any significance in the context of income tax assessments. In the present case the tribunal appears to have considered that it should take into account persons who decided not to object to assessments. But there can be no question of fairness arising so far as other taxpayers are concerned. They are entitled to lodge objections and if out of time to seek an extension of time in which to lodge their objections, just as Mr Brown is. If the tax is collected at the time it becomes due Mr Brown gains no advantage over other taxpayers. If is has not been collected, that is not a matter which is within Mr Brown's control."

This test requires consideration of the public interest. There is no evidence that the public interest is relevant to the decision in this case.

Conclusion

Despite that fact that the taxpayer's explanation for the delay is not in his favour, it is fair and reasonable in the circumstances that the objections in relation to the years ended 30 June 1992 to 30 June 1995 should be accepted as duly lodged. Further, in this case, if the taxpayer is able to provide copies of the income tax returns for the years ended 30 June 1989 to 30 June 1991 inclusive that are consistent with the copies of the relevant notices of assessment , then the objections in relation to those years of income should also be accepted as duly lodged.

Legislative References:
Taxation Administration Act 1953
   Section 14ZW
   Section 14ZX

Case References:
Hunter Valley Developments Pty Ltd v. Cohen, Minister for Home Affairs & Environment
   (1984) 7 ALD 315
   (1984) 58 ALR 305
   (1984) 3 FCR 344

Related Public Rulings (including Determinations)
IT 2455

Keywords
Superannuation pension rebates
Undeducted purchase price
Objection rights
Superannuation

Business Line:  Superannuation

Date of publication:  24 January 2002

ISSN: 1445-2782