GOODS AND SERVICES TAX - whether sale of land a GST-fee supply of a going concern or a taxable supply - whether parties agreed in writing that supply is of a going concern - whether contemporaneous statutory declarations of supplier recipient of supply together constitute an agreement in writing that supply is of a going concern - timing of agreement in writing that supply is of a going concern under s 38-325(1)(c) - validity of Commissioner's s 105-50 notice -consideration of s 255-10 of the TAA - alleged inconsistent GST treatment by Commissioner of supplier and recipient of supply - GST neutrality - Commissioner's objection decision affirmed

A New Tax System (Goods and Services Tax) Act 1999 (Cth) - s 9-5 - s 31-8 - s33-3 - Subdivision 38-J - Division 38 - s 38- 325(1)(a), (b) and (c) - s38-325(2) -

Taxation Administration Act 1953 (Cth) - s 14ZZK(a) - s14ZZK(b)(i) - s 105-50(1) and (3) - s 255-10(1) and (2)

Administrative Appeals Tribunal Act 1975 (Cth) - s 33(1)(c) - s43(1)

Property Law Act 1969 (WA) - s 34

Bankruptcy Act 1966 (Cth)

Eldridge v Federal Commissioner of Taxation (1990) 90 ATC 4907

Federal Commissioner of Taxation v Dalco (1990) 168 CLR 164

ANZ Savings Bank Ltd v Federal Commissioner of Taxation 94 ATC 4844

McCormack v Federal Commissioner of Taxation 79 ATC 4111; 80 ATC 4179

Macmine Pty Ltd v Federal Commissioner of Taxation 79 ATC 4133

Gauci & Ors v Federal Commissioner of Taxation [1975] HCA 54; (1975) 135 CLR 81

Midford v Deputy Federal Commissioner of Taxation [2005] AATA 623

SDI Group Pty Ltd v Commissioner of Taxation [2012] AATA 763

Re YXFP and Federal Commissioner of Taxation (2009) 73 ATR 679; [2009] AATA 805

Re Nitram Consulting Pty Ltd and Federal Commissioner of Taxation (2008) 71 ATR 755; [2008] AATA 1119

Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337

Cyonara Snowfox Pty Ltd v Commissioner of Taxation [2012] FCAFC 177

Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298

Re Sanctuary Lakes Pty Ltd and Commissioner of Taxation [2012] AATA 404, Stasos v Tax Agents Board [1990] FCA 379; (1990) 21 ALD 437

Kumar v Minister for Immigration and Citizenship [2009] AATA 124

Re Rodger and Secretary, Dept of Social Security (1991) 24 ALD 720

Witcombe v Talbot & Olivier [No 2] [2009] WASC 173

Chappel v Hart [1998] HCA 55; (1998) 195 CLR 232

Prast v Town of Cottesloe [2000] WASCA 274; (2000) 22 WAR 474

Shire of Gingin v Coombe [2009] WASCA 92

Copperart Pty Ltd v Federal Commissioner of Taxation 93 ATC 4779

Federal Commissioner of Taxation v Prestige Motors Pty Ltd [1994] HCA 39; (1994) 181 CLR 1

Revlon Manufacturing Ltd v Federal Commissioner of Taxation (1995) 96 ATC 4031

Central Equity Limited v Commissioner of Taxation [2011] FCA 908

Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60; 24 ALR 577

Re Brian Lawlor Automotive Pty Ltd and Collector of Customs (NSW) (1978) 1 ALD 167

Explanatory Memorandum to A New tax (Goods and Services Tax) Bill 1998

Law Administration Practice Statement PS LA 2009/3

1. This review application concerns whether the sale of land in Lake Clifton, Western Australia, by Brookdale Investments Pty Ltd (Brookdale) to Lonepine Enterprises Pty Ltd (Lonepine) for $3,500,000 was a GST-free supply of a going concern, for the purposes of s 38-325 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST Act), or a "taxable supply", as defined in s 9-5 of the GST Act. This essentially turns on whether Brookdale and Lonepine "agreed in writing" that the sale of the land is a supply of a going concern in satisfaction of the condition in s 38-325(1)(c) of the GST Act.
2. Specifically, Brookdale seeks a review of the Commissioner's objection decision (dated 20 December 2011) to disallow Brookdale's objection (dated 27 May 2011) to an assessment of GST (dated 3 February 2011) for the quarter ending 30 September 2006, for the amount of $318,182.

1. The relevant background facts which are not in dispute between the parties are as follows.
2. During the relevant period, Brookdale conducted a property development business, was registered for GST and accounted for GST on a cash basis, paying and reporting quarterly.
3. Prior to July 2006, Brookdale was the registered proprietor and beneficial owner of a number of properties on Southern Estuary Road, Lake Clifton, being Lots 22, 23 and 25 on Deposited Plan 21705 (Lake Clifton Properties).
4. By a standard Real Estate Institute of Western Australia (REIWA) "Contract of Sale of Land or Strata Title by Offer and Acceptance" form, dated 26 June 2006 (Contract), Brookdale sold the Lake Clifton Properties to Lonepine for $3,500,000.
5. Settlement of the sale occurred on 31 July 2006 (Settlement).
6. Brookdale reported the $3,500,000 sale proceeds as income in its income tax return for the year ended 30 June 2007.
7. Pursuant to ss 31-8 and 33-3 GST Act, Brookdale was due to lodge its Business Activity Statement (BAS) for the quarter ending 30 September 2006 by 28 October 2006. That did not happen.
8. Instead, Brookdale lodged its BAS for the quarter ended 30 September 2006 on 13 November 2006, reporting a net amount of -$1,870 for GST on purchases.
9. Brookdale did not include the $3,500,000 from the sale of the Lake Clifton Properties in its BAS for the quarter ended 30 September 2006 or remit any GST applicable to that sale to the Commissioner. Consequently, the "net amount" disclosed in Brookdale's BAS and refunded by the Commissioner in respect of the quarter ended 30 September 2006 was $1,870.
10. In 2010, the Commissioner commenced an audit of Brookdale's taxation affairs in relation to the period from 1 July 2006 to 30 June 2008.
11. On 9 November 2010, the Commissioner issued Brookdale with a "Notice to repay overpaid refund amounts and pay unpaid indirect tax" pursuant to s 105-50 of Schedule 1 to the Taxation Administration Act 1953 (Cth) (TAA) for the tax period from 1 July 2006 to 30 September 2006 (Section 105-50 Notice).
12. In summary, the Section 105-50 Notice stated that Brookdale had failed to report a taxable supply for the quarter ending 30 September 2006 (being the sale of the Lake Clifton Properties to Lonepine) and the GST payable with respect to that supply. The Commissioner determined that the GST payable by Brookdale on the sale of the Lake Clifton Properties was $318,182.
13. On 3 February 2011, the Commissioner issued Brookdale with a "Notice of Assessment of net amount" of GST for the period from 1 July 2006 to 30 September 2006 for the amount of $318,182 (Assessment).
14. On 2 April 2011, Mr John Popazzi, a director of Brookdale, signed a "Statutory Declaration", declaring that, among other things, at the time of the Contract and the Settlement, the Lake Clifton Properties were "purchased as a going concern".
15. On 24 May 2011, Mr Graham Harris, a director of Lonepine, signed a "Statutory Declaration", declaring that, among other things, at the time of the Contract and the Settlement, the Lake Clifton Properties were "purchased as a going concern".
16. On 27 May 2011, Brookdale objected to the Assessment (Objection). Brookdale's grounds for objection (as stated in the Objection) included, among other things, that:

(i) the sale of the Lake Clifton Properties by Brookdale to Lonepine was a GST-free supply of a going concern under s 38-325 of the GST Act; and

1. On 20 December 2011, the Commissioner notified Brookdale of his decision to disallow Brookdale's Objection in so far as it related to the GST payable on the sale of the Lake Clifton Properties (Objection Decision).
2. In his "Reasons for Decision" attached to the Objection Decision (Commissioner's Reasons for Decision), the Commissioner made the following comments (at 6 of 18) on whether the supply of the Lake Clifton Properties by Brookdale to Lonepine was a GST-free supply of a going concern under s 38-352 of the GST Act:

Since the requirements of subsection 38-325(2) of the GST Act are met, we then need to determine if the supply is GST-free pursuant to subsection 38-325(1) of the GST Act.

We accept that the supply was for consideration and the recipient is registered for GST. The issue therefore turns to whether you satisfy paragraph 38-325(1)(c) of the GST Act.

In your objection, you provided statutory declarations by both your director and the recipient's representative dated 2 April 2011 and 24 May 2011 respectively, stating that the supply was a going concern.

Although you have now provided in writing stating that both parties agree that the supply is a supply of a going concern, it is clear that there was no such agreement in place at the time of the supply.

'The supplier and the recipient must agree that the supply is a 'supply of a going concern' on or before the day of the supply.'

Further, paragraph 185 of the GSTR 2002/5 states:

"Where all of the things that are necessary for the continued operation of an enterprise are supplied to a registered recipient but there is no agreement in writing between the parties, there will not be a GST-free 'supply of a going concern'.

As there was no agreement in writing, at or before the day of supply, that the supply is a supply of a going concern. Accordingly, the supply is subject to GST." [Emphasis added]

1. In relation to the validity of the Section 105-50 Notice, the Commissioner's Reasons for Decision state (at 6 of 18):

"We have considered your contentions and determined that the notice issued to you on 9 November 2010 is valid, and complies with all the requirements of the TAA"

1. On 30 January 2012 Brookdale applied to the Tribunal for a review of the Objection Decision. Brookdale's stated "Reasons for Application" are as follows:

The Commissioner of Taxation has issued an amended Business Activity Statement to increase GST payable by determining a supply is taxable. [Brookdale] contends the supply is not taxable, the supply is GST free, a supply of a Going Concern.

The Deputy Commissioner of Taxation issued a notice to extend the period of amendment of a Business Activity Statement past the statutory period of 4 years. [Brookdale] contends the notice is invalid.

1. On 17 January 2013, the Tribunal allowed Brookdale's grounds of objection to be amended by the addition of the grounds set out in Brookdale's letter to the Tribunal dated 29 November 2012.

1. In support of its review application, on 3 December 2012 Brookdale filed a bundle of documents titled "Applicant's Evidence" (comprising documents A to R). At the hearing of this application, this bundle of documents was tendered into evidence as "Exhibit A1", excluding documents C, H, I and J on the grounds of relevance (Exhibit A1). Brookdale also filed a "Statement of Facts, Issues and Contentions" on 3 December 2012 (Brookdale's SOFIC).
2. Brookdale did not file any witness statements in support of its review application or call any witnesses to give evidence at the hearing of this application.

1. The Commissioner's evidence in this application comprises: (i) its "Sub-section 37(1AB) Statement in Lieu", or "T" documents, (titled "Amended Reasons for Decision and Relevant Documents" and filed on 9 May 2012), which was tendered into evidence as "Exhibit R1" (Exhibit R1); and (ii) a REIWA document titled "Joint Form of General Conditions for the Sale of Land" (2002 Revision), which was tendered into evidence as "Exhibit R2" (Exhibit R2). The Commissioner also filed a Statement of facts, Issues and Contentions" on 31 January 2103 (Commissioner's SOFIC).
2. The Tribunal notes that, although not a court, and hence not a forum where pleadings and the rules of evidence strictly apply (see s 33(1)(c) of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act)), in considering this application it is confined in its inquiries and deliberations to the taxpayer's objections and must reach its decision on the evidence before it: Eldridge v Federal Commissioner of Taxation (1990) 90 ATC 2907 at 4921.

1. The primary issue for determination by the Tribunal in this review application is whether the sale of the Lake Clifton Properties by Brookdale to Lonepine was the GST-free supply of a going concern for the purposes of s 38-325 of the GST Act. If not, the sale is a taxable supply for GST purposes and Brookdale, as supplier, is liable, under the GST Act, for any GST payable on the supply.
2. However, a threshold issue for determination by the Tribunal in this review application is whether the Commissioner's Section 105-50 Notice is valid. In short, if the Section 105-50 Notice is found to be invalid, then any GST payable by Brookdale on the sale of the Lake Clifton Properties to Lonepine (i.e. if it is a taxable supply for GST purposes) cannot be recovered by the Commissioner.
3. The Tribunal is also required to address Brookdale's contention that the Commissioner was not GST neutral in its application of the GST Act to Brookdale and Lonepine in respect of the sale of the Lake Clifton Properties.
4. BURDEN OF PROOF
5. By virtue of s 14ZZK(b)(i) of the TAA_,_ Brookdale bears the burden of proving that the Assessment is excessive: Federal Commissioner of Taxation v Dalco (1990) 168 CLR 164 and ANZ Saving Bank Ltd v Federal Commissioner of Taxation 94 ATC 4844. The standard of proof is on the balance of probabilities.
6. If Brookdale is unable to establish that the Assessment is excessive, then the Assessment must stand, irrespective of whether or not there are any facts or circumstances which would on the face of it support the Assessment: McCormack v Federal Commissioner of Taxation 79 ATC 4111; 80 ATC 4179 and Macmine Pty Ltd v Federal Commissioner of Taxation 79 ATC 4133_._
7. There is no onus on the Commissioner to show that the assessment concerned is reasonable or supported by evidence: Gauci & Ors v Federal Commissioner of Taxation [1975] HCA 54; (1975) 135 CLR 81 at 89 per Mason J.

1. Division 38 of the GST Act deals with "GST-free supplies" and Subdivision 38-J of Division 38 of the GST Act covers GST-free "Supplies of going concerns".
2. Section 38-325(1) of the GST Act provides that the following three conditions must be met for the supply of a going concern to be a GST-free supply:

(1) The supply of a going concern is GST-free if:

(b) the recipient is registered or required to be registered; and

(c) the supplier and the recipient have agreed in writing that the supply is of a going concern. [Emphasis added]

1. The phrase "supply of a going concern" is defined in s 38-325(2) as follows:

(2) A supply of a going concern is a supply under an arrangement under which:

(a) the supplier supplies to the recipient all of the things that are necessary for the continued operation of an enterprise; and

(b) the supplier carries on, or will carry on, the enterprise until the day of the supply (whether or not as a part of a larger enterprise carried on by the supplier). [Emphasis added]

1. It is common ground that the conditions in s 38-325(1) (a) and (b) of the GST Act were satisfied in relation to the supply of the Lake Clifton Properties by Brookdale. That is, it is not in dispute that the relevant supply was for consideration (s 38-325(1)(a)) and that that Lonepine, the recipient of the supply, was registered or required to be registered for GST purposes (s 38-325(1)(b)). Further, it is not contested that the sale of the Lake Clifton Properties is a supply of a "going concern" for the purposes of s 38-325(2) of the GST Act.
2. The issue to be determined, which is contentious, is whether Brookdale and Lonepine "agreed in writing" that the supply was of a going concern, thereby satisfying the condition in s 38-325(1)(c) of the GST Act and making the sale a GST-free supply of a going concern. This is issue considered in detail below.

Agreement that a supply is of a going concern

1. In relation to the condition in s 38-325(1)(c) of the GST Act that the parties must agree in writing that the supply is of a going concern, Brookdale's SOFIC states:
   1. Paragraph 38-325(1)(c) of the GST Act requires the parties to agree in writing. It does not require this event to be at or before the time of supply. The [Commissioner's] decision an agreement in writing must be at or before the day of supply is not specified in the GST Act.

24. The parties have agreed in writing the supply is of a going concern.

1. At the hearing of this application, Brookdale elaborated on this argument in more detail in its oral submissions (an outline of which was handed up to the Tribunal).
2. The GST Act is silent on at what time the parties must agree in writing that a particular supply is the supply of a going concern for the purposes of s 38-325(1)(c) of the GST Act. This raises the question whether, in relation to the sale of land, the written agreement must be entered into by the parties at the time of contract or at or before settlement? Or, is it acceptable, for s 38-325(1)(c) purposes, that the written agreement be entered into some time later, for example, after execution of the contract or after settlement? There is nothing in the Explanatory Memorandum to the A New Tax (Goods and Services Tax) Bill 1998, which introduced the GST Act (including s 38-325), to elucidate this issue.
3. In Midford v Deputy Federal Commissioner of Taxation [2005] AATA 623 the Tribunal (Member Barton) said, at [7], that the supply of a going concern is not ipso facto GST-free, but only if the supplier and recipient have wittingly agreed, in writing, that the supply is a GST-free supply of a going concern in the manner set out in s 38-325(1)(c) of the GST Act.
4. The Tribunal has previously found that in order to satisfy the condition in s 38-325(1)(c), the parties to a particular supply must, "at or before the time that the supply is made", have:

(i) agreed or settled between themselves that the supply is of a going concern; and

(ii) reduced that agreement to writing: see Midford [2005] AATA 623 at [8] per Member Barton , SDI Group Pty Ltd v Commissioner of Taxation [2012] AATA 763 at [20] per Member Hughes and Re YXFP and Federal Commissioner of Taxation (2009) 73 ATR 679; [2009] AATA 805.

1. The Tribunal has also previously found that for the purposes of s 38-325(1)(c) of the GST Act:
   • "agreed" must be given its ordinary meaning of "being of one mind or harmonized in opinion or feeling": and
   • the written agreement must identify the relevant supply and express a mutual understanding that it is a supply of a going concern: Midford [2005] AATA 623 at [8] per Member Barton.
2. In Re Nitram Consulting Pty Ltd and Federal Commissioner of Taxation (2008) 71 ATR 755; [2008] AATA 1119 the Tribunal found that a failure to comply with the written agreement requirement in a timely fashion will cause the relevant supply to fall outside the scope of s 38-325 and instead to be treated as a taxable supply. That is, in Re Nitram [2008] AATA 1119, Deputy President Walker said at [33]:

.....an agreement in writing between the parties before the supply is made is required before the supply is made is required for a suppl[y] (sic.) to be that of a going concern.

1. The Tribunal agrees with the approach previously taken by the Tribunal in Midford and Re Nitram as set out above, namely that in order to satisfy the condition in s 38-325(1)(c) of the GST Act the agreement that the relevant supply is of a going concern must be made on a timely basis and, more particularly, at or before the time that the supply is made.
2. The Tribunal considers that such an approach is consistent with the usual rules of contract which dictate that the relevant terms have to be in place prior to a contract being fully performed, namely when the agreement is still executory. The reason for this is that the only way to alter the express terms of a contract, after it is fully performed, is to apply to a court for rectification, or seek orders based on an implied term: see Codelfa Construction Pty Ltd v State Rail Authority of New South Wales [1982] HCA 24; (1982) 149 CLR 337 at 346.
3. The Tribunal notes that such an approach is also consistent with s 34 Property Law Act 1969 (WA) which requires dispositions of land to be reduced to writing.
4. Further, the Tribunal observes that the decision in Cyonara Snowfox Pty Ltd v Commissioner of Taxation [2012] FCAFC 177 at [89] ff, especially at [97], which, although concerned with the construction of s 75-5 of the GST Act regarding the margin scheme, and not s 38-325 of the GST Act, supports the above propositions.
5. The requirement that the relevant agreement be in existence on or before the settlement of the contract is also consistent with the Commissioner's approach to this issue, as set out in Goods and Services Tax Ruling GSTR 2002/5 (titled "Goods and Services Tax: when is a 'supply of a going concern' GST-free?") at [182], being that the parties "must agree that the supply is a 'supply of a going concern' on or before the day of the supply", and reflects the common law position outlined above.
6. Whilst, as stated above, pursuant to s 33(1)(c) of the AAT Act, the usual rules of evidence do not apply in the Tribunal, the weight of the evidence presented on behalf of Brookdale (as described above in paragraphs 26 and 27) is relevant in determining whether Brookdale has discharged its onus under s 14ZZK(b)(i) of the TAA. The Tribunal agrees with the Commissioner's contention that, in this case, much of Brookdale's evidence would be inadmissible in a court of law as being vague, conclusionary, speculative or hearsay and should therefore be accorded little weight by this Tribunal.
7. For example, Brookdale submits that, although there is no documentary evidence of a written agreement between Brookdale and Lonepine that the sale of the Lake Clifton Properties was the supply of a "going concern", such an agreement may nevertheless exist and that it just hasn't been able to be found. However, there is simply no contemporaneous documentary evidence before the Tribunal in support of this contention.
8. Rather, the evidence before the Tribunal is that the Contract did not provide that the sale of the Lake Clifton Properties by Brookdale to Lonepine was the supply of a "going concern" for GST purposes. The Contract is in the standard form approved by the Real Estate Institute of Western Australia (REIWA) for the sale of land by offer and acceptance. The Contract states that:

The 2002 General Conditions are incorporated into this Contact so far as they are not varied by or inconsistent with the express terms of this Contract.

1. Clause 18 of the REIWA 2002 General Conditions states, in part:

(a) Unless otherwise expressly stated in the Contract the Purchase Price does not include GST.

(b) Without affecting subclause (a), the Buyer is not required to pay to the Seller GST on the Purchase Price at Settlement unless otherwise expressly provided in the Contract.

If GST is applicable to this transaction or if the transaction is agreed to be a Going Concern then the relevant GST provision should be outlined in the Special Conditions below or in any GST Annexure, which shall form part of this Contract.

1. In this case, the Contract incorporates, as "Special Conditions", Annexures "A" to "E". Annexure D relates to the payment of GST. Relevantly, Annexure D provides:
   1. if any supply[Brookdale] makes under this contract is subject to GST, [Lonepine] must pay to [Brookdale]........., an amount equal to the GST payable by [Brookdale] on that supply.
2. Otherwise, the Contract does not address the GST treatment of the sale of the lake Clifton Properties. Specifically, the Contract does not state that the sale of the Lake Clifton Properties was a supply of a going concern.
3. Further, the contemporaneous documents prepared around the time of sale of the Lake Clifton Properties by Brookdale to Lonepine, particularly the Contact, clearly demonstrate there was no written agreement in writing between the parties, at the date of supply, that the sale of that land was a supply of a going concern.
4. There is also no evidence before the Tribunal that, at Settlement, there was an agreement in writing between Brookdale and Lonepine that the sale of the Lake Clifton Properties was the supply of a going concern for GST purposes.
5. Brookdale now appears to rely solely on the Statutory Declarations of Mr John Popazzi and Mr Graham Harris, being directors of Brookdale and Lonepine respectively, as evidence of a written agreement that the sale of the lake Clifton Properties was a supply of a going concern for GST purposes. However, in the Tribunal's view, these Statutory Declarations are not evidence of an agreement in writing "at or before the time that the supply [was] made": Midford and Re Nitram.
6. That is, both Statutory Declarations:
   • were executed on 24 May 2011, almost 5 years after the date of the supply and after the Commissioner had completed his audit of Brookdale's taxation affairs,; and
   • are in almost identical terms, which the Tribunal agrees with the Commissioner's submission, diminishes their reliability and the weight to be accorded to them: Macquarie Developments Pty Ltd & Anor v Forrester and Anor [2005] NSWSC 674 and Seamez v Mclaughlin [1999] NSWSC 9.
7. Furthermore, whilst it is true that an agreement may be evidenced in writing by two or more documents (see SDI Group), the Tribunal agrees with the Commissioner's submission that there is real doubt whether the two Statutory Declarations in this case can together constitute an "agreement" for s 38-325(1)(c) purposes at all (even if they had been executed before Settlement).
8. Further, the Statutory Declarations both state the following:

Annexed to this declaration and marked "A" is a copy of the Contract which sets out that [the] Land was sold as a going concern;

However, as discussed above, this is not what the Contract states at all. In contrast, Brookdale's Objection states that "the agreement in writing is not contained within the sale agreement".

1. Considering the problems with the Statutory Declarations, as identified above, and the fact that the onus is on Brookdale to prove, on the balance of probabilities, that the Assessment is excessive, Brookdale could have, indeed should have, called Mr Popazzi (a director of Brookdale) to give evidence. But, curiously, it chose not to. It was also open to Brookdale to call Mr Harris (a director of Lonepine, being the recipient of the supply for GST purposes). However, it chose not to. In such circumstances, the Tribunal agrees with the Commissioner's submission that it ought to be inferred that, as a result of Brookdale's failure to call any witnesses to support its case, that the witness' evidence would not have supported Brookdale's case: Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298, Re Sanctuary Lakes Pty Ltd and Commissioner of Taxation [2012] AATA 404 at 241, Stasos v Tax Agents Board [1990] FCA 379; (1990) 21 ALD 437, Kumar v Minister for Immigration and Citizenship [2009] AATA 124 at 112 and Re Rodger and Secretary, Dept of Social Security (1991) 24 ALD 720.
2. The Commissioner contended that in circumstances where the Statutory Declarations are inconsistent with the contemporaneous written evidence, and Brookdale has not called any evidence to explain this, no weight should be given to the Statutory Declarations. The Commissioner also contended that the Statutory Declarations ought not be relied upon as evidence of an agreement of the parties that the sale of the Lake Clifton Properties was the supply of a going concern for GST purposes at the relevant time. For the reasons already stated above, the Tribunal agrees with both of these contentions.
3. In reaching this conclusion, the Tribunal is mindful of the fact that the law generally places very little weight on hypothetical evidence given with the benefit of hindsight, such as the Statutory Declarations in this case: Witcombe v Talbot & Olivier [No 2] [2009] WASC 173 at [356], citing Chappel v Hart [1998] HCA 55; (1998) 195 CLR 232 at 246 and 272, Prast v Town of Cottesloe [2000] WASCA 274; (2000) 22 WAR 474 [49] and [62] to [63] and Shire of Gingin v Coombe [2009] WASCA 92 at [79] to [80].
4. For the above reasons, the Tribunal considers that the sale of the Lake Clifton Properties by Brookdale to Lonepine for $3,500,000 was not a GST-free supply of a going concern but, rather, a "taxable supply" for GST purposes. Consequently, Brookdale is, as the supplier, liable under the GST Act for the GST payable on that supply.

1. Section 105-50 of the TAA places a time limit on recovery by the Commissioner of unpaid net amounts. Section 105-50 of the TAA states:

Section 105-50 Time Limit on Recovery by the Commissioner

105-50(1) Any unpaid net amount, net fuel amount or amount of indirect tax (together with any relevant general interest charge under this Act) ceases to be payable 4 years after it became payable by you.

105-50(3) However, subsection(1) does not apply to an amount, and subsection (2) does not apply to an amount of an excess, if:

(a) Within those 4 years the Commissioner has required payment of the amount or the amount of excess by giving a notice to you; or ...."

1. As stated, it is not disputed that Brookdale was required, pursuant to ss 31-8 and 33-3 GST Act, to lodge its BAS, and pay the net amount for the quarter ended 30 September 2006, by 28 October 2006. However, this did not happen. Instead, Brookdale lodged its BAS for the quarter ending 30 September 2006 on 13 November 2006.
2. It is also not disputed that the Commissioner issued Brookdale with a Section 105-50 Notice on 9 November 2010 for the purpose of effecting paragraph 105-50(3)(a) to extend the 4 year period, in s 105-50(1) of the TAA, for the recovery of GST from Brookdale for the quarter ended 30 June 2006.
3. In relation to the validity of the Section 105-50 Notice, Brookdale's SOFIC states:
   1. The Notice issued pursuant to Section 105-50 of the TAA 1953 on the 9th November 2010 to extend the amendment date is over 4 years past the date the unpaid amount became payable. The September 2006 Quarterly BAS has a payable due date of 28th October 2006, as set out in section 33-3 of the GST Act, and so the Notice is invalid.
   2. Law Administration Practice Statement PS LA 2009/3 relies upon the decision in Copperart Pty Ltd v Federal Commissioner of Taxation 93 ATC 4779, which refers to the operation of the Sales Tax Procedure Act 1934. The relevant section of the Sales Tax Procedure Act 1934 is significantly and materially different to Section 105-50 of the TAA 1953 with the effect that the reliance upon PS LA 2009/3 will not produce a valid Notice.
4. At the hearing of this application, Brookdale expanded upon this contention in its oral submissions (a written outline of which was handed up to the Tribunal at the hearing).
5. In contrast, the Commissioner's contention, which is disputed by Brookdale, is that the Commissioner extended the lodgement and payment date for Brookdale's BAS (for the quarter ended 30 September 2006) from 28 October 2006 to 27 November 2006. Accordingly, the Commissioner says, Brookdale's net amount for the quarter ended 30 September 2006 became payable by 27 November 2006 and that since the Section 105-50 Notice was issued to Brookdale by the Commissioner on 9 November 2010 it was issued within 4 years of 27 November 2006 and was, accordingly, within time and valid.
6. In support of this contention (i.e. that 27 September 2006 is the extended due date for Brookdale's payment of its BAS for the quarter ended 30 September 2006), the Commissioner relies on the BAS (for the period from 1 July 2006 to 30 September 2006) contained in Exhibit R1 at pp 142 and 143 which states in the top right hand corner of p 142, "Form due on 27 November 2006" and "Payment due on 27 November 2006": see Exhibit R1, T24 at pp 142 to 147.
7. However, according to Brookdale, this document is not the BAS form issued by the Commissioner to Brookdale but, merely, an extract from the Commissioner's processing system. In support of this assertion, Brookdale observes that at the top left hand corner of this document the words "Instalment Processing System (IPS)" and "View and print" appear. That is, Brookdale's assertion is that "....T24 is a processing document printed from the [Commissioner's] processing system......[it] does not satisfy the conventions of a [s 105-50] Notice;".
8. In circumstances where Brookdale made its payment for the relevant quarter on 13 November 2006, after the usual due date provided in the Table to s 31-8 GST Act (being 28 October 2006), the Tribunal considers that it can be inferred that Brookdale did have adequate written notice of the revised due date for payment of 27 November 2006.
9. Further, it is clear from the following extract from the Section 105-50 Notice (Exhibit R1, T13 at p 65, first dot point) that the extended date for lodgement and payment was 27 November 2006:
   • Your activity statement (AS) for the period 01/07/2006 to 30/09/2006 had an extended lodgement and payment date being 27/11/2006. The original lodgement and payment date being [28]/10/2006 (sic.).
10. Despite this, in its Objection, Brookdale did not raise any argument in relation to the issue of whether the Commissioner had extended the date for lodgement of its BAS and payment of its GST for the quarter ended 30 September 2009. From this, the Tribunal considers (as was submitted by the Commissioner) it can also be inferred that Brookdale was provided with adequate written notice of the extended due date by the Commissioner.
11. In addition, Brookdale asserts that because of the words "has required payment of the amount" in s 105-50(3)(a) of the TAA, a notice under s 105-50 of the TAA must identify "the amount" which the Commissioner says is owing and that the Section 105-50 Notice, in this case, did not and it is, therefore, invalid. The Tribunal does not accept this contention and agrees with the Commissioner that this contention is wrong for the following reasons:

(i) Section 105-50 of the TAA does not stipulate that any particular formality is required by a notice under the section, provided the notice brings to the taxpayers attention that the Commissioner claims an entitlement to an unpaid net amount: see Federal Commissioner of Taxation v Prestige Motors Pty Ltd [1994] HCA 39; (1994) 181 CLR 1 at 14;

(ii) Section 105-50 of the TAA is directed at providing notice, not a formal claim or demand. All that is required by s 105-50 of the TAA is to bring to the taxpayer's attention that the Commissioner is of the view that there is an unpaid net amount. That is, all that s 105-50 of the TAA requires is that sufficient information be given to the recipient of the notice that the Commissioner is claiming an amount is due in respect of a particular tax and for a specified period: see Revlon Manufacturing Ltd v Federal Commissioner of Taxation (1995) 96 ATC 4031 at 4053; and

(iii) The decision of the Full Federal Court in Cyonara Snowfox Pty Ltd v Commissioner of Taxation [2012] FCAFC 177 at [135] to [142] makes it clear that a notice under s 105-50 of the TAA is not rendered invalid by reason of some later variation to an amount stated in it to be payable, distinguishing the statutory framework of the TAA from the stringent requirements of the Bankruptcy Act 1966 (Cth).

1. In its written submissions (dated 7 March 2013), Brookdale states:
   1. [Brookdale] is contending the amount must be identified in the [Section 105-50 Notice]. The [Section 105-50 Notice] should have identified "the amount", and it may have done so by specifically referring the specific the Land sale, referring to the sale of the land to Lonepine, or referring to the GST on that land sale. [Emphasis added]
2. With respect, the Tribunal notes that that is exactly what the Section 105-50 Notice in fact did. That is, the Section 105-50 Notice states:
   • You sold [the Lake Clifton Properties] to [Lonepine] for $3,500,000. The [Contract] was signed on behalf of both companies with dates of 22/06/2006 and 26/06/2006 stated. Settlement was effected on 31/07/2006.
   • The [Contract] was signed and dated in the 2007 financial year. You reported 'other sales of goods and services' of $3,500,000 on your 2007 Income Tax Return (ITR). You reported the sale of [the Lake Clifton Properties] on your 2007 ITR.
3. Based on the evidence before it, the Tribunal considers that, in this case, the Section 105-50 Notice fulfilled its purpose, being to bring to Brookdale's attention the Commissioner's claim to an entitlement to an unpaid net amount in respect of a particular tax period: Prestige Motors and Revlon Manufacturing. As such, the Section 105-50 Notice was, in this case, effective and valid: Central Equity Limited v Commissioner of Taxation [2011] FCA 908 at [70]- [80]; 82 ATR 550.
4. The fact that the Section 105-50 Notice did not specifically identify the unpaid net amount payable by Brookdale in respect of the relevant period does not, in the Tribunals' view, render the notice invalid: Cyonara Snowfox.

Section 255-10 of the TAA

1. Section 255-10 of the TAA (titled "To Defer the Payment Time") states, in part:

255-10(1) The Commissioner may, having regard to the circumstances of your particular case, defer the time at which an amount of a tax-related liability is, or would become, due and payable by you (whether or not the liability has already arisen). If the Commissioner does so, that time is varied accordingly.

255-10(2) The Commissioner must do so by written notice given to you.

1. In its submissions before the Tribunal, Brookdale referred to the fact that s 255-10(1) of the TAA "allows the Commissioner to defer the time at which an amount would become due and payable" and that s 255-10(2) of the TAA requires the Commissioner to do so by "written notice" but that, in this case, there is:
   1. ...........no evidence of any notice by the Commissioner to defer the time the September 2006 quarter BAS was or would be due and payable.
   2. It is contended any Notice issued to extend the amendment period for the September 2006 BAS must be made before the payable due date of the 28 October 2010. As the [Section 105-50 Notice] was issued on the 9th November 2010, the [Section 105-50 Notice] is outside the 4 year amendment, any unpaid amount ceases to be payable pursuant to subsection 105-50(1).
2. The Commissioner's response to this contention is that it gave written notice to Brookdale by the BAS (at Exhibit R1, T24 at pp 142 to 143), which clearly states that the form and payment is due on 27 November 2006 (i.e. instead of the earlier statutory date of 28 October 2006).
3. However, Brookdale's assertion (as set out in its written submissions) is that:

"14. ...........the first time [Brookdale] has seen T24 is within [the] T Documents [i.e. Exhibit R1]." As mentioned before T24 is a processing document printed from the [Commissioner's] processing system.

..........any alleged serving of a notice pursuant to 255-10(2) so long after the serving of the Section 105-50 [Notice] which relies on the subsection 255-10(2) render the Section 105-50 [Notice] invalid.

1. As stated earlier, The Tribunal is of the view that in the circumstances it can be inferred from the fact that Brookdale paid the relevant amount on 13 November 2006, after the due date provided in the Table to s 31-8 of the GST Act (being 28 October 2006), that it had adequate written notice of the revised due date for lodgement and payment (of 27 November 2006) for the purposes of s 255-10 of the TAA. Further, to reiterate, it was open to Brookdale to call its director, Mr Popazzi, (or the director of Lonepine, Mr Harris) to give evidence concerning this issue but it chose not to. In such circumstances, the Tribunal may infer from Brookdale's failure to call any witnesses in support of its review application that the witnesses would not have supported Brookdale's application, including its contentions relating to ss 105-50 and 255-10 of the TAA: Jones v Dunkel etc., see [65] above.
2. Finally, the Tribunal notes that, contrary to Brookdale's submission, it is clear from the words in s 255-10 of the TAA that that section is not limited in any particular way, other than the notice concerned must be in writing. Specifically, s 255-10 of the TAA has no time limitation, nor does it have any limitation as to the manner of notice other than "written notice given to you". That is, the limitations do not go so far as to specify the type of written notice, the content of the written notice, the timing of the written notice or how the written notice is to be provided.

1. In Brookdale's SOFIC, Brookdale makes the following contentions concerning the issue of GST neutrality:
   1. [Brookdale] and [Lonepine] are both properly GST registered, the Land is a creditable item for both entities, therefore the outcome of the GST treatment should be revenue neutral to the Commonwealth.

The [Commissioner's] decision to assess GST on the sale of the Land by [Brookdale], and at the same time determine the acquisition of the Land by [Lonepine] is GST Free demonstrates an indifference to the application and function of the GST legislation consistently.

These actions amount to an act of bad faith on the part of the [Commissioner].

1. At the hearing of this application, Brookdale developed this contention in more detail in its oral submissions (a written outline of which was handed up to the Tribunal at the hearing).
2. With respect, the taxation treatment of Lonepine is not relevant to the determination of this review application. The Tribunal's power to stand in the shoes of the decision-maker (in this case, the Commissioner), is exercisable only in relation to the decision under review (here, the Commissioner's Objection Decision, dated 20 December 2011): see s 43(1) of the AAT Act which states "For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred....on the person who made the decision...." The Tribunal has no general review power, nor does it have any general decision-making power.
3. The Tribunal is limited to performing a merits review of a decision by a decision-maker (here, the Objection Decision) and then reaching a decision that it objectively considers to be the correct and preferable decision: Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 at 78; 24 ALR 577 per Smithers J. That is, the Tribunal has no greater powers than those which may be exercised by the decision-maker: see Re Brian Lawlor Automotive Pty Ltd and Collector of Customs (NSW) (1978) 1 ALD 167 at 175. As such, whether or not the Commissioner was GST neutral in its treatment of Brookdale and Lonepine in relation to the sale and purchase of the Lake Clifton Properties is irrelevant to the Tribunal properly carrying out its merits review function pursuant to s 43(1) of the AAT Act.
4. The same can be said for Brookdale's allegation that the Commissioner acted in "bad faith" in its tax treatment of Brookdale. If Brookdale is dissatisfied with the Commissioner's conduct in relation to it, the better course of action would be for Brookdale to lodge a complaint with the Commonwealth Ombudsman. However, the Tribunal is not the appropriate forum for this concern to be dealt with.

(i) finds that Brookdale has failed to prove, on the balance of probabilities, that the Assessment is excessive and, as such, has not discharged its onus; and

I certify that the preceding 96 (nighty six) paragraphs are a true copy of the reasons for the decision herein of Senior Member C R Walsh.