R v The Deputy FCT; Ex parte Hooper

(1926) 37 CLR 368
[1926] 32 ALR 101
(1926) R and McG 70
BC2600033

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(Judgment by: Isaacs J.)

The King
v The Deputy FCT; Ex parte Hooper

Court:

Judges: Knox CJ

Isaacs JRich J

Hearing date: 20 October 1925
Judgment date: 22 March 1926

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Judgment by:
Isaacs J.

Naomi Hooper applies for a writ of mandamus commanding the Deputy Federal Commissioner of Taxation for South Australia to consider and treat as an appeal a certain objection in writing, dated 27th March, 1925, lodged against an amended assessment for income tax dated 6th March, 1925, and numbered 5754.

The relevant facts are these: On 4th December, 1924, the applicant was notified by the Deputy Commissioner that by assessment H7085 he had assessed the tax payable by her for the financial year 1923-1924 at £898 11s. 2d. About 24th December the applicant, pursuant to s 50, subs (1), of the Assessment Act, objected in writing to the assessment, claiming a reduced basis of taxation. On 5th February, 1925, she received a reply notifying her that the objection was disallowed, and informing her that, under s 50 (4) of the Act of 1922, she could within thirty days have her objection treated as an appeal if dissatisfied with the decision. The period of thirty days would expire on 7th March. Meanwhile, on 19th February, she asked that certain specified payments amounting to £279 18s. 10d. should be allowed, and that she be reassessed accordingly. On 7th March she received notification of an amended assessment dated 6th March (No 5754), whereby her assessment was reduced by £65 0s. 3d., leaving the net amount of tax assessed at £833 10s. 11d. In fact, of the £279 18s. 10d. claimed as deductions the Commissioner allowed £269 9s. This notification, however, had indorsed upon it that an objection might be lodged within forty-two days, and if dissatisfied with the decision of the Commissioner thereon the taxpayer might appeal within thirty days.

On 27th March a fresh objection was lodged to this assessment, claiming generally to be assessed on a greatly reduced basis, as if it, the amended assessment, were entirely an assessment de novo. On or about 1st April the Deputy Commissioner acknowledged receipt of the objection of 27th March, and declined to treat it as an objection, as the amendment was by way of reduction. This was contested by the applicant, who now seeks by mandamus to compel the Deputy Commissioner to treat the amended assessment of 6th March (No 5754) as an independent assessment, entirely replacing the original assessment of 4th December (No 7085).

The various steps have been narrated as the matter is of general importance. The indorsements on the amended assessment were apparently by clerical inadvertence allowed to remain. That is always regrettable, as a recipient might be thereby misled. There was that possibility in this case, as the amended assessment was received on 7th March. But there are many thousands of such notices to issue, and such a slip might easily occur. It is certainly due to the Deputy Commissioner to say that there is no evidence that anyone was actually misled by the indorsement. In any event, my province is to apply the relevant law, as I understand it, to the facts set out.

The applicant contends that the Act contemplates the possibility of repeated independent and substitu-tory assessments, each of which when made created a new starting point for liability, objection and appeal. The Crown contends that there is one and only one main assessment, though there may be amendments of that assessment which are separately dealt with according to their nature. To my mind, an examination of the Statute makes the matter very simple and supports the Crown's view.

Before indicating in detail the successive provisions of the Act, one general deduction from those provisions may be stated, a deduction possibly obvious but very necessary to remember. It is as to the nature of an assessment. An "assessment" is not a piece of paper; it is an official act or operation, it is the Commissioner's ascertainment in 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 -- s 54 -- "Income tax shall be due and payable thirty 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 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.

I now turn to the words of the Statute. Part IV. is headed "Returns and Assessments," and consists of a group of ss 32 to 40. Section 32 says, in subs (i), that for the purpose of "assessment" returns are to be made. Subsection (2) is of the utmost importance in this case, and, as I view it, practically decisive. It says --

The first assessment of income tax under this Act shall be for the financial year commencing on the first day of July 1922 and each subsequent assessment shall be for the succeeding financial year provided that nothing in this sub-section shall prevent the Commissioner requiring returns to be furnished to him before the commencement of the financial year for which income tax is to be assessed.

So far it is that for each year, commencing with 1922, there is one assessment. A "sub-sequent assessment" must be for a subsequent year, that is a subsequent main or basic assessment. Then s 33, in subs (1), provides for returns specially required and further and fuller "returns." subs (2) then says -- "All the provisions of this Act shall extend and apply to any such return or further and fuller return and assessments may be made upon or in respect of it by the Commissioner in such manner as may be necessary." This sub-section is relied on by the applicant as indicating that an assessment already made for the financial year may be abandoned and treated as if never made. That is not its meaning. It means not that any yearly assessment already made is to be abandoned, as if it never had been made, but that notwithstanding that the provisions of s 32 (i) which provide directly for returns on which to base assessments, the special returns mentioned in s 33 may be utilised for the same purpose. But what assessments may be made must depend on other sections of the Act. Section 35 places a statutory duty on the Commissioner to make assessments. Section 36 provides for exceptional cases in relation to returns where assessments may be made. Up to that point provision is actually made simply for one yearly assessment. But s 37 provides -- subs (1) -- for "alterations in or additions to any assessment" as the Commissioner thinks necessary in order to insure its completeness or accuracy. Obviously an "alteration" may be for or against a taxpayer. If against him the proviso to subs (1) requires it to be "notified" to him, that is simply an "alteration or addition," and that shall, unless made by consent, be "subject to objection." If in his favour there is no statutory requirement to notify, because no objection is provided for. That is only natural and common sense. But in that case a refund may take place, and naturally will, except where otherwise provided. Sections 38 and 39 are immaterial for present purposes. Section 40 requires notice of any assessment to be given. But omission to give notice does not invalidate the "assessment."

Collecting, so to speak, the points of the matter, it appears there is one main assessment which is amendable. If an amendment increases the liability that is separately open to objection and appeal. If an amendment decreases liability there is nothing in itself to object to, and it does not affect the reduced assessment. No office error or unauthorised notification can alter the statutory provisions as to the effect of an assessment or the conditions of objection or appeal. The notice of amended assessment of 6th March gave no new right of objection or appeal. It was a mere "alteration" of the main assessment, and an alteration which did not increase liability.

The rule nisi should be discharged.