CTC RESOURCES NL v FC of T

Judges:
Jenkinson J
Gummow J
Hill J

Court:
Full Federal Court

Judgment date: Judgment delivered 3 March 1994

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Jenkinson J

These two proceedings and the circumstances relevant to their determination are expounded in the opinions of the other two members of the court, which I have had the advantage of reading.

The assertion by the Commissioner concerning the existence of ``a lien or beneficial interest over the funds'', which is made in his reasons for each of the two objection decisions now under consideration in these proceedings, is not to be found in the notice of either private ruling. Section 14ZAS [of the Taxation Administration Act 1953 ] provides:

• ``(1) A notice of a private ruling must set out the matter ruled on and, in doing so, identify the person, tax law, year of income and arrangement to which the ruling relates.
• (2) If the correctness of a private ruling depends on an assumption, the assumption is, for the purposes of subsection (1), an aspect of the arrangement to which the ruling relates.
• (3) An arrangement may be identified in a private ruling by reference to matters set out in a document identified in the ruling and which, or a copy of which, is available to the rulee.''

The effect of the section is that an assumption made in pursuance of s. 14ZAQ must be stated in the notice of the private ruling (or in a document of the kind specified in sub-section 14ZAS(3)) as part of the identification of the arrangement which sub-section 14ZAS(1) requires. The question then arises as to whether the power conferred by s. 14ZAQ is exercisable after the private ruling has been made (that is, after notice of it has been served on the applicant: s. 14ZAT) and in the course and for the purpose of deciding whether to allow or disallow an objection against the ruling, pursuant to s. 14ZY(1). It is not obvious to me that grant of a power such as s. 14ZY(1) confers, to allow, wholly or in part, or to disallow an objection against a private ruling, implies the grant of a power expressed to be conferred for the purpose, and to be exercisable in the course, of making that private ruling. Both of the other members of the court contemplate that another function expressed to be conferred for the purpose, and to be exercisable in the course, of making a private ruling is also available after the ruling has been made: that conferred by s. 14ZAM of requesting further information. Hill J. expressly contemplates that the private ruling would have to be set aside if further information furnished in response to such a request were to require that the identification of the arrangement to which the ruling should relate be modified, because of the provisions contained in sub- section 14ZAS(1). Certainly the availability to the Commissioner, during his consideration of the objection, of powers and functions of the kind conferred by ss. 14ZAM and 14ZAQ would be likely to conduce to efficient administration of Part IVAA. Sub-section 14ZAZB(2) provides:

``If:

• (a) the Commissioner makes an objection decision allowing, wholly or in part, a taxation objection against a private ruling; and

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  ATC 4075

• (b) the period in which an appeal against, or an application for the review of, the decision may be made has ended; and
• (c) neither such an appeal nor application has been made;

the ruling is taken to be the ruling as altered by the decision.''

That provision is not inconsistent with the availability of those powers and functions. I am not prepared to dissent from the view that they are available to the Commissioner. But each is in my opinion available only after the Commissioner has reached a stage in his consideration of the objection at which he has concluded that the private ruling the subject of the objection was not the correct ruling in relation to the arrangement which the notice of ruling identified. That is because those powers and functions, conferred by ss. 14ZAM and 14ZAQ, are available for use in performance of the function of making a ruling. The Commissioner will have no occasion for exercising those powers in his consideration of the objection unless and until he determines that the ruling the subject of objection was not the correct ruling in relation to the arrangement identified in the notice of ruling and that he will have to determine what the correct ruling upon the application for ruling should be.

The practical importance of that analysis emerges when attention is turned to s. 14ZAN. It seems improbable that the legislature contemplated that the discretionary powers conferred by s. 14ZAL(2) and s. 14ZAN would be available in the course of deciding any objection against a ruling even if the Commissioner had not come, in the course of making that decision, to a conclusion that the ruling was incorrect in relation to the arrangement identified in the notice of ruling. I would not accept that any of the powers conferred by ss. 14ZAN and 14ZAL(2), 14ZAM and 14ZAQ are available before that conclusion has been reached. I am not prepared to dissent from the view that they are available once that conclusion has been reached.

The assertion in the reasons for the objection decisions concerning ``lien or beneficial interest'' is, however, incapable of constituting the making of an ``assumption'' within the meaning of that word in Part IVAA, in my opinion. It is devoid of reference to any factual circumstance by reason of which the legal conclusion asserted may be supported. An ``assumption'' is in my opinion to be understood in s. 14ZAQ and elsewhere in Part IVAA as having reference to fact, not law. (Of course the existence of a law or the occurrence of a judicial decision may be a fact which is what in s. 14ZAS(2) is called ``an aspect of the arrangement to which the ruling relates''.) It may be that an assumption, for the purposes of s. 14ZAQ, can be given acceptable expression in the form of a legal conclusion, as in the example, drawn by Gummow J. from the Explanatory Memorandum, of beneficiaries assumed to be Australian residents. The expression of a legal conclusion of that kind is a shorthand expression of the existence of a number of facts as the assumptions desired to be made. But such an expression will be acceptable only if the set of facts, or each of several alternative sets of facts, by reason of which the legal conclusion is justified can be confidently identified. That is not the case here. Here the assertion is one for which the information and documents given do not provide a justification and one which leaves unascertainable the facts intended to be the given assumptions.

It follows that private ruling No. 5588 was not justified and should have been ``altered'' by the Commissioner's decision on the objection. The Commissioner's decision on the objection against private ruling No. 5588 should be set aside, and the objection against that private ruling should be remitted to the Commissioner for determination according to law.

Subject to the foregoing observations, I agree in the judgment of Gummow J. I concur in the orders he and Hill J. propose in both proceedings.