FEDERAL COURT OF AUSTRALIA

Tey v Federal Commissioner of Taxation

[2005] FCA 320

French J

23 March 2005 - Perth

French J. On 21 May 2004, a Deputy Commissioner of Taxation sent to Skyland Travel Service, which is a business operated by Kok Yong Tey, a notice of penalties imposed for failure to lodge activity statements on time. The total penalty imposed in respect of some 5 periods between December 2002 and March 2004 was $2530.

2 On 15 October and 5 November 2004, Mrs Tey wrote to the Deputy Commissioner of Taxation requesting remission of the penalty. By a letter dated 29 November 2004, the Deputy Commissioner of Taxation wrote back to Mrs Tey that consideration had been given to her letter of 5 November requesting remission of the penalty for failure to lodge activity statements by the required date for the quarters ended 31 December 2002, 31 March 2003, 30 June 2003, 30 September 2003, 31 December 2003 and 31 March 2004. The Deputy Commissioner advised that a partial remission of penalty should be granted. Accordingly, the amount of penalty for failure to lodge activity statements on time (FTL penalty) was reduced by $1980 to $660. A penalty of $110, which represents one penalty unit, had been maintained on each of the relevant activity statements.

3 Following this notification Mrs Tey lodged an application for review of the decision in the Administrative Appeals Tribunal (AAT). In the reasons for her application she said:

… $660 penalty for failure to lodge BAS should not be imposed. It should be waived, and remitted to the applicant (Mrs Kok Yong Tey).

4 On 23 December 2004, the General Counsel for the Australian Taxation Office (ATO) wrote to the AAT asserting that the decision appealed against was not an objection decision. A right of objection would only exist pursuant to s 298-20(3) of Sch 1 to the Taxation Administration Act 1953 (Cth) (the TAA) where the amount of the penalty after the remission decision was more than 2 penalty units. No objection decision therefore having been made, it was submitted that it was not a matter reviewable by the AAT.

5 The AAT wrote to Mrs Tey enclosing a copy of the letter from the ATO and invited her to give a written response setting out the basis upon which she claimed that the AAT had jurisdiction to deal with her application for review. Mrs Tey responded on 14 January 2005. Her response largely related to the merits of the remission decision. She asserted that the amount of $660 was an unreasonable "revenue created by the ATO". She said that the ATO could not rely on s 298-20(3) of Sch 1 because in its remission decision it had "intentionally reduced the penalty to one penalty unit to present its case". This she claimed amounted to an obstruction of justice.

6 On 25 January 2005, a Deputy President of the AAT made the following directions:

The tribunal is satisfied that the applicant has been notified in writing that the decision for which an application for review has been lodged, does not appear to be reviewable; and

The applicant has not shown within the prescribed time of 14 days that the decision is reviewable by the tribunal.

The tribunal therefore dismisses the application pursuant to s 42A(4) of the Administrative Appeals Tribunal Act 1975 (Cth) without proceeding to review the decision.

7 Mrs Tey was notified of the AAT's decision on 29 January 2005. On 25 February 2005, she lodged an appeal against the decision of the AAT. In her grounds she asserted that if the Commissioner of Taxation had not reduced the penalties to $110 per return she would have had an "absolute right to object to the decision of the respondent, and matter raised herewith would be and can be reviewable by the Administrative Appeals Tribunal …". None of the other matters appeared to go to the basis of the AAT's decision to refuse jurisdiction.

8 Section 298-20 of Sch 1 of the TAA provides, inter alia:

(1) The Commissioner may remit all or a part of the penalty.

(2) If the Commissioner decides:
(a) not to remit the penalty; or

(b) to remit only part of the penalty;

the Commissioner must give written notice of the decision to the entity.

(3) If:
(a) the Commissioner refuses to any extent to remit an amount of penalty; and

(b) the amount of penalty payable after the refusal is more than 2 penalty units; and

(c) the entity is dissatisfied with the decision;

the entity may object against the decision in the manner set out in Pt IVC.

9 Part IVC which deals with taxation objections applies if a provision of an Act or Regulation provides that a person who is dissatisfied with an assessment, determination, notice or decision may object against it in the manner set out in this Part. By s 14ZL(2) such an objection is called a "taxation objection".

10 Where a taxation objection has been lodged with the Commissioner within a required period the Commissioner must decide whether to allow it, wholly or in part, or disallow it. Such a decision is called an "objection decision": s 14ZY(1) and (2).

11 The AAT is given authority to review objection decisions by Div 4 of Pt IVC. However that Part does not apply where the amount of penalty payable after a refusal, to any extent, to remit penalty is equal to or less than 2 penalty units. This follows from s 14ZL(1) read with s 298-20(3) of Sch 1 of the TAA.

12 The matter came on for directions before me on 23 March 2005. At the directions hearing counsel for the Commissioner of Taxation advised that the Commissioner would remit the outstanding penalty of $660 and would consent to the appeal being dismissed with no order as to costs.

13 Mrs Tey, who was representing herself, did not dispute at the directions hearing that the AAT lacked jurisdiction to entertain the application for review in respect of the penalties which had been in issue, namely $110 per late lodgment. She endeavoured however to raise certain other matters before the court relating to the omission of GST credits to Centrelink instead of to the appropriate account in her name. I pointed out to Mrs Tey that these matters had no bearing upon the appeal which she was seeking to bring against the AAT's decision. They were matters which she would have to take up with the ATO. She complained that the $660 penalty had been deducted from her GST credits. Again, I pointed out and Mr Burrows confirmed, that the remitter of that penalty would give rise to a credit in her favour and no doubt that would be reflected in a payment to her unless there were any other outstanding debits in respect of which it could be offset. I also made clear to Mrs Tey that in so saying I was not asserting that there were any such debits.

14 It is clear that this appeal never had any prospect of success. To allow it to go beyond the directions stage, particularly in the circumstances where the Commissioner has remitted the balance penalty of $660 and seeks no order for costs against Mrs Tey, would be an exercise in futility. I will therefore dismiss the appeal.