Commissioner of Taxation v Administrative Appeals Tribunal

Federal Court of Australia (Full Court)|2011-03-17|Before: Keane CJ, Gordon JJ

INTRODUCTION 1 In 2007, the Federal Parliament passed the Tax Laws Amendment (Simplified Superannuation) Act 2007 (Cth) (the 2007 Superannuation Act). That Act, inter alia, set a taxpayer's non-concessional contributions cap at $1 million for the period from 10 May 2006 to 1 July 2007. Many people made additional contributions; some contributions were excessive. For those taxpayers who exceeded the cap set by the Act on non-concessional contributions, a penalty regime was imposed by the new Div 292 which was added to the Income Tax Assessment Act 1997 (Cth) (the 1997 Act). 2 In 2010, the Federal Parliament amended the rights of review available to taxpayers who exceeded the cap on contributions by the enactment of Sch 4, item 28 of the Superannuation Legislation Amendment Act 2010 (Cth) (the 2010 Act). This appeal is concerned with the review rights of a taxpayer under Div 292 prior to the amendments in 2010.

FACTS 3 The material facts are not in dispute and may be stated shortly. 4 On 9 May 2006, the Federal Government announced changes to the superannuation rules. One change was to abolish reasonable benefit limits and age-based deduction rules for contributions. On 13 June 2006, the Treasurer announced that persons could contribute up to $450,000 of non-concessional contributions in any three year period and that the cap would apply from 10 May 2006. 5 On 14 December 2006, Mr and Mrs McMennemin each contributed $138,484 to the McMennemin Superannuation Fund (the Fund). Their contributions made each of them eligible for the maximum age-based deduction of $105,113, as a concessional contribution under Div 292 of the 1997 Act. The balance of the contribution ($33,371) was a non-concessional contribution to the Fund. 6 On 7 December 2006, the bill for the 2007 Superannuation Act was introduced into Parliament. It came into operation on 15 March 2007. As noted earlier, the 2007 Superannuation Act permitted non-concessional capital contributions to superannuation of up to $1 million for the period from 10 May 2006 to 1 July 2007: s 292-80 of Pt 3 of Sch 1 to the 2007 Superannuation Act. 7 On 26 June 2007, Mr and Mrs McMennemin each contributed a further $1 million to the Fund in addition to the previous contributions of $138,484 each. On 16 October 2007, each lodged their income tax return for the 2007 financial year. 8 The Commissioner of Taxation (the Commissioner) decided that each of them had exceeded the non-concessional contributions cap applicable for the 2007 financial year by $33,371 and assessed each as liable to pay excess contributions tax (ECT) of $15,517.50. An ECT assessment was issued to each of them. 9 After each receiving the ECT assessment, Mr and Mrs McMennemin both applied to the Commissioner under s 292-465 of the 1997 Act for a determination that the Commissioner disregard the excess non-concessional contributions or allocate the excess non-concessional contributions to another financial year. The Commissioner refused to make the determinations. The Commissioner decided that the circumstances were not "special circumstances" within the meaning of s 292-465(3)(a) and that making the determinations would not be consistent with the object of Div 292 as required by s 292-465(3)(b). 10 On 23 July 2009, Mr and Mrs McMennemin each lodged an objection against the ECT assessment. The Commissioner disallowed their objections on 5 October 2009. Mr and Mrs McMennemin then applied to the Administrative Appeals Tribunal (AAT) for review of the Commissioner's objection decision. The only ground of objection advanced by Mr and Mrs McMennemin in the AAT was that the Commissioner should have made a determination under s 292-465 either that all or part of the concessional contributions be disregarded or allocated instead to another financial year. The AAT decided that it did not have jurisdiction to review the Commissioner's refusal to make a determination under s 292-465. The AAT further decided that, if contrary to its primary conclusion that the Tribunal did have jurisdiction to review that refusal, it would have affirmed the Commissioner's decision on the objection on the merits.

ISSUES ON APPEAL 11 The central issue in the appeal is whether the AAT's conclusion that it did not have jurisdiction to review the Commissioner's decision not to make a determination under s 292-465 is correct. The Commissioner submitted that it was not and that the AAT did have jurisdiction to review the Commissioner's decision. If that submission were to be accepted, a further issue would then arise as to whether the AAT was correct to conclude that the Commissioner's objection decision should be affirmed on the merits. 12 This appeal is somewhat unusual in that it is brought by the Commissioner even though the effect of the AAT's decision was to negate the taxpayers' application for review. Mr and Mrs McMennemin were not interested in resisting the Commissioner's appeal to this Court. Mr Peter Gray of Counsel was given leave to appear as amicus curiae to assist the Court. As will become apparent, Mr Gray's submissions were of considerable assistance to the Court. 13 We propose to look first at Pt IVC of the Taxation Administration Act 1953 (Cth) (the TAA). We will then consider the text of Div 292 of the 1997 Act and the review rights granted to a taxpayer under that division.

PART IVC OF THE TAA 14 The AAT has jurisdiction to review decisions only where an enactment authorises it to do so: s 25(1) of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act). Part IVC of the TAA provides that a person may make a taxation objection and apply to the AAT for review of a "reviewable objection decision". The AAT has jurisdiction to review only decisions that are reviewable objection decisions. 15 Part IVC of the TAA contains the objection, review and appeal procedures to be followed if a person dissatisfied with a 'taxation decision' made under a Commonwealth Tax Act wants to challenge that decision. It was inserted into the TAA by the Taxation Laws Amendment Act (No 3) 1991 (Cth). Part IVC commenced on 1 March 1992. Part IVC was described in the Explanatory Memorandum that accompanied the amending bill as: One set of generic, modern language provisions governing taxation objection, review and appeal procedures will be included in the [TAA]. … These changes will apply to all taxation decisions made on or after 1 March 1992 (the date fixed for proclamation), including decisions in relation to assessments made before that date … … 16 The text of Pt IVC of the TAA makes plain that for the Part to apply there are two requirements. First, there must have been a 'taxation decision'. A 'taxation decision' is defined in s 14ZQ of the TAA as "the assessment, determination, notice or decision against which a taxation objection may be, or has been, made". Secondly, there must be a provision of another Act or of regulations which provides that a person who is dissatisfied with that taxation decision may object against it in the manner set out in Pt IVC. In this regard, s 14ZL(1) provides: This Part applies if a provision of an Act or of regulations (including the provision as applied by another Act) 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. 17 It is the objection to a taxation decision which is known as a 'taxation objection': s 14ZL(2) of the TAA. 18 Part IVC of the TAA enables taxpayers to seek review of some decisions made by the Commissioner under that Part while leaving taxpayers to exercise other rights of review in relation to other decisions. The distinction between the two categories of decision is achieved through the definition of "taxation decision" in Pt IVC. 19 The first category of decisions which constitutes a "taxation decision" against which a person who is dissatisfied with that taxation decision may object in the manner set out in Pt IVC includes ss 45D(4), 82KL(9), 102UR(5), 128P, 136AF(6), 175A, 177EA(9), 177EB(9) and 177F(7) of the Income Tax Assessment Act 1936 (Cth) (the 1936 Act). There are provisions having similar effect in the 1997 Act: eg ss 87-85, 197-80(5), 202-85(6), 203-55(7), 204-55, 207-136, 214-80, 220-50(3), 250-295(3), 820-965, 974-112(5) of the 1997 Act. See also s 3-5(3) of the 1997 Act. In each case, the provision is in substantially the same terms providing: If a taxpayer to whom a determination relates is dissatisfied with the determination, the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953. 20 There are, however, other provisions of taxing Acts or Regulations which empower the Commissioner to make a decision or determination but which do not provide that a person affected may object under Pt IVC of the TAA. As a result, those decisions are not within the definition of a 'taxation decision' for the purposes of Pt IVC and Pt IVC does not apply to them. The affected person must seek another remedy. Provisions which empower the Commissioner to make a decision to which Pt IVC does not apply are not unusual. 21 Some such provisions do not go to the substantive liability of the taxpayer and thus may be of little consequence. An example of such a provision was considered in George v Federal Commissioner of Taxation (1952) 86 CLR 183. In George, the taxpayer alleged that the assessment issued to him was excessive because the opinion or judgment contemplated by s 167 had not been formed "by the right person and that in any case it had been formed on no material" (200). Dixon CJ, McTiernan, Williams, Webb and Fullagar JJ refused to order the giving of particulars relating to that issue. Their Honours said, "The formation of the judgment as to what is the amount of the income that ought to be taxed is no condition precedent to the power to assess. It is part of the very process of assessment itself. … The fact is that unless the taxpayer discharges the burden laid upon him by s 190(b) of proving that this ascertainment or judgment is excessive, he cannot succeed and it can be no part of the duty of the commissioner to establish affirmatively what judgment he formed [for the purposes of s 167], much less the grounds of it, and even less still the truth of the facts affording the grounds." (203-4) 22 Other decisions may affect the liability of a taxpayer but, nevertheless, may not be challenged by proceedings brought under Pt IVC. These include: 1. A decision not to remit, either in whole or in part, shortfall interest charge or general interest charge pursuant to s 8AAG of the TAA. And that is so even though the amount of the liability often appears on the notice of assessment itself. This sort of decision may, however, be subject to judicial review (where an error of law exists) in proceedings brought in the Federal Court under s 39B of the Judiciary Act 1903 (Cth) or the Administrative Decisions (Judicial Review) Act 1977 (Cth) (the ADJR Act); 2. a decision infected with jurisdictional error, so that it is not a decision at all. This could include a decision to issue an assessment. Again, such challenges (which are rare) may be made under the Judiciary Act 1903 (Cth) but they may not be pursued under Pt IVC of the TAA: Commissioner of Taxation v Futuris Corporation Limited (2008) 237 CLR 146 at [24] and [45] and Kennedy v Administrative Appeals Tribunal (2008) 168 FCR 566; 3. a decision of the Commissioner refusing an extension of time for payment under s 255-B of the TAA. A taxpayer does not have a right under the tax legislation to challenge that decision. But a taxpayer may seek judicial review of the refusal under the ADJR Act; 4. a decision by the Commissioner to exercise his access powers under s 263 of the 1936 Act or a decision by the Commissioner to issue a notice under s 264 of the 1936 Act; 5. a decision by the Commissioner under s 161 of the 1936 Act not to grant an extension of time to a taxpayer to lodge a return; and 6. a decision by the Commissioner to decline to transfer certain withholding payments to the taxpayer's running account balance: Re Command Recruitment Group (Qld) Pty Ltd v Commissioner of Taxation (2008) 108 ALD 177. 23 A number of other relevant principles should be noted here. First, by reason of the operation of ss 175 and 177 of the 1936 Act, production of a notice of assessment precludes judicial review of the assessment in proceedings under s 39B of the Judiciary Act 1903 (Cth) unless the purported assessment is tentative or provisional or was made in bad faith: Futuris at [24] and [47]. Secondly, s 3 and Sch 1 of the ADJR Act excludes from judicial review decisions "making, or forming part of the process of making, or leading up to the making of, assessments or calculations of tax, charge or duty, or decisions disallowing objections to assessments or calculations of tax, charge or duty, or decisions amending, or refusing to amend, assessments or calculations of tax, charge or duty" under various Commonwealth Tax Acts. No doubt the ADJR Act so provides because these decisions are expected to be reviewable under Pt IVC of the TAA. 24 Against that background, we turn to consider the legislation in issue in these proceedings.

DIV 292 OF THE 1997 ACT 25 Division 292 of the 1997 Act limits the superannuation contributions which may be made in a financial year by a person who receives "concessionally taxed treatment": s 292-1. The object of the division is to ensure that the amount of concessionally taxed superannuation benefits that a person receives results from superannuation contributions that have been made gradually over the course of the person's life: s 292-5. 26 Subdivision 292B defines concessional contributions and excess concessional contributions. Subdivision 292B and 292C impose a tax where the concessional or non-concessional contributions a person makes to a complying superannuation fund exceed the contributions cap: ss 292-20(2) and 292-85. Section 292-15 establishes a liability to pay ECT. 27 Section 292-230 provides for the making of an ECT assessment and the amendment of an ECT assessment. In particular, s 292-230 provides that: (1) The Commissioner must make an assessment (an excess contributions tax assessment) of: (a) if a person has *excess concessional contributions for a *financial year - the amount of the excess concessional contributions; and (b) the amount (if any) of *excess concessional contributions tax which the person is liable to pay in relation to the financial year. (2) The Commissioner must make an assessment (also an excess contributions tax assessment) of: (a) if a person has *excess nonconcessional contributions for a financial year - the amount of the excess nonconcessional contributions; and (b) the amount (if any) of *excess nonconcessional contributions tax which the person is liable to pay in relation to the financial year. (3) The Commissioner must give the person notice in writing of an *excess contributions tax assessment as soon as practicable after making the assessment. (4) The notice may be included in a notice of any other assessment under this Act (including an assessment under this section). 28 Section 292-245 provides that: If a person is dissatisfied with an *excess contributions tax assessment made in relation to the person, the person may object against the assessment in the manner set out in Part IVC of the [TAA]. 29 In the present appeal, we are concerned with s 292-465, which appears under the heading "Other Provisions". At the time relevant to this appeal, it provided that: (1) If you make an application in accordance with subsection (2), the Commissioner may make a written determination that, for the purposes of this Division: (a) all or part of your *concessional contributions for a *financial year is to be disregarded, or allocated instead for the purposes of another financial year specified in the determination; and (b) all or part of your *nonconcessional contributions for a financial year is to be disregarded, or allocated instead for the purposes of another financial year specified in the determination. (2) You may apply to the Commissioner in the *approved form for a determination under subsection (1). The application can only be made within: (a) the period: (i) starting on the day you receive an *excess contributions tax assessment for the *financial year; and (ii) ending 60 days after that day; or (b) a longer period allowed by the Commissioner. (3) The Commissioner may make the determination only if he or she considers that: (a) there are special circumstances; and (b) making the determination is consistent with the object of this Division. (4) In making the determination the Commissioner may have regard to the matters in subsections (5) and (6) and any other relevant matters. (5) The Commissioner may have regard to whether a contribution made in the relevant *financial year would more appropriately be allocated towards another financial year instead. (6) The Commissioner may have regard to whether it was reasonably foreseeable, when a relevant contribution was made, that you would have *excess concessional contributions or *excess nonconcessional contributions for the relevant *financial year, and in particular: (a) if the relevant contribution is made in respect of you by another person - the terms of any agreement or arrangement between you and that person as to the amount and timing of the contribution; and (b) the extent to which you had control over the making of the contribution. (7) The Commissioner must give you a copy of the determination. 30 In general terms, s 292-465 permitted the Commissioner, on application by a taxpayer and if satisfied of certain matters, to make a determination that for the purposes of Div 292, all or part of a person's contributions were to be disregarded or allocated instead to another financial year specified in the determination.

ANALYSIS 31 As noted earlier, the central issue in this appeal is as to the nature of the right of review available to a taxpayer if the Commissioner refused to make a determination under s 292-465 of the 1997 Act as it stood prior to the 2010 amendments. 32 The Commissioner submitted that even though no provision of Div 292 provided that the refusal of a determination under s 292-465 might be objected to under Pt IVC of the TAA, the refusal to make the determination was "sufficiently connected" or "integral" to the process of assessment of a taxpayer's liability to ECT that it was reviewable under Pt IVC of the TAA. In other words, the Commissioner contended that because the decision to refuse to make a determination in s 292-465 was "sufficiently connected" or "integral" to the process of assessment of a taxpayer's liability to ECT, it was open to the taxpayer to contend that the assessment was excessive because the Commissioner should have made a different decision under s 292-465. 33 The Commissioner's submission should not be accepted. The submission has no footing in the text of Div 292 of the 1997 Act. It requires a departure from the scheme established by Pt IVC without explicit legislative instruction in that regard. It assumes, wrongly, and contrary to the express words of s 14ZL of the TAA, that because the Commissioner has made a decision which is not a taxation decision at around the same time as making a taxation decision, the first decision can be brought under Pt IVC of the TAA. The assumption is wrong because it assumes that the Commissioner by his action may expand the categories of taxation decision which a taxpayer may object against in the manner set out in Pt IVC. And the submission is not supported by authority. 34 The criteria advanced by the Commissioner for deciding whether a decision made under the Act may be the subject of review under Pt IVC proceedings lack definite content. It is distinctly undesirable that entry across the threshold of a process of review should depend upon so open-textured an evaluation. It is by no means clear what decisions are, and what decisions are not, connected to or integral to the process of assessment. The Court must be slow to accept such uncertain criteria where to do so may lead to satellite litigation about whether a particular decision by the Commissioner falls within or outside the system of review provided by Pt IVC. Section 14ZL(1) was evidently intended to avoid just this kind of problem. In other words, it does not promote the certainty provided by s 14ZL(1) of the TAA to ask of a decision by the Commissioner whether it is "integral" to or sufficiently "connected" to the process of assessment in order to decide whether the decision or determination by the Commissioner may be the subject of review under Pt IVC of the TAA. 35 A particular difficulty which this matter presents in terms of the criteria advanced by the Commissioner is that the Commissioner's decision not to make a determination under s 292-465 affected the liability of Mr and Mrs McMennemin to tax but it was not a determination that formed a part of the process of assessment at all. The Commissioner accepted that, as the law stood at the relevant time, a determination under s 292-465 would be made only after that process was complete and an assessment had issued. A determination under s 292-465 might, or might not, lead to the making of an amended assessment. 36 The Commissioner sought to meet these difficulties by reliance on an amendment made to the 1997 Act after the events which give rise to the present proceedings (Sch 4, item 28 of the 2010 Act) and by referring to a number of previous decisions. We will deal in turn with each of those responses.

Amending legislation 37 Div 292 of the 1997 Act was amended by Sch 4, item 28 of the 2010 Act in two relevant respects. First, it expressly provided for the first time that a determination under s 292-465 may be included in a notice of assessment: s 292-465(8). Secondly, after subsection (8), it inserted the following: Review of determinations (9) To avoid doubt: (a) you may object under section 292245 against an *excess contributions tax assessment made in relation to you on the ground that you are dissatisfied with a determination that you applied for under this section; and (b) for the purposes of paragraph (e) of Schedule 1 to the [ADJR Act], the making of a determination under this section is a decision forming part of the process of making an assessment of tax under this Act. 38 A number of aspects of these provisions should be noted. They are not retrospective. Although the Commissioner accepted that they were not intended to be retrospective, the Commissioner's argument gave these provisions some retrospective effect in the sense that the legislative injunction of "avoiding doubt" was said to reflect the proper construction of the 1997 Act as it stood before the amendment. 39 The Act must be construed according to its terms in force at the relevant time. The avoidance of doubt is for the future; there is no indication of an intention to cure existing invalidity. The amendment speaks to those taxpayers who may wish to make objections in the future; it does not manifest any intention to cure invalidities in processes which have already occurred. 40 There was no ambiguity or doubt about the construction of Div 292 of the Act in relation to a taxpayer's review rights under the 1997 Act; but even if there were some ambiguity or doubt, the amendment would tend to suggest that the legislation as it was previously expressed did not have the same effect as the legislation as amended: cf Grain Elevators Board (Victoria) v President, Councillors and Ratepayers of the Shire of Dunmunkle (1946) 73 CLR 70 at 86; Allina Pty Limited v Commissioner of Taxation (1991) 28 FCR 203 at 212; Interlego AG v Croner Trading Pty Ltd (1992) 39 FCR 348 at 382; Hepples v Federal Commissioner of Taxation (1992) 173 CLR 492 at 539; Commissioner of Taxation v Energy Resources of Australia Ltd (2003) 135 FCR 346 at [19]. 41 As the law stood prior to the amendments, Pt IVC was engaged with respect to ECT assessments; but not with respect to a decision not to make a determination under s 262-465. The subsequent amendment to the statute suggests, if anything, that this was indeed the effect of Div 292 prior to the 2010 amendment. 42 Reference was made to the Second Reading Speech and the Explanatory Memorandum which accompanied the introduction of the 2010 Act. Both the Explanatory Memorandum and the Second Reading Speech described the amendments as "minor" amendments "to improve the operation of superannuation sections of the income tax legislation". The Explanatory Memorandum listed the amendments as including "allowing the Commissioner of Taxation to exercise discretion for the purposes of excess contributions tax before an assessment is issued": pp 5 and 39. In describing the context of the amendments, under the heading "Amend the timing of the Commissioner's discretion relating to excess contributions tax", the EM stated at para 4.10: Excess contributions tax applies to superannuation contributions that exceed the concessional or non-concessional contributions cap. The Commissioner can disregard or allocate to another financial year all or part of a person's contributions for the purposes of excess contributions tax. Such discretion can be exercised only where there are special circumstances and doing so is consistent with the purposes of the law in relation to excess contributions tax. However, the Commissioner cannot exercise this discretion without first issuing an excess contributions tax assessment. 43 According to the EM, the 2010 amendments were to allow the Commissioner to exercise the discretion to disregard or allocate to another financial year all or part of a person's contributions for the purposes of excess contributions tax before an assessment was issued: p 42. The reason proffered at p 47 for the amendment was to "facilitate administration of the timing of the use of the discretionary power". Additional amendments were made so that the Commissioner may include notice of a determination made in a notice of assessment, that a taxpayer may object against an ECT assessment on the ground that he or she is dissatisfied with a determination sought under s 292-465 and that the making of a determination is now a decision forming part of the process of making an assessment of tax for the purposes of the ADJR Act. Now the determination process is to occur before the assessment, it can be seen that each of these amendments was necessary to engage the review rights conferred by Pt IVC of the TAA. Nothing in the EM or the Second Reading Speech suggests that the 2010 amendments lead to a different conclusion.

The decided cases 44 The Commissioner submitted that support for his "integral to the assessment" criterion could be found in previous cases which drew a distinction between the Commissioner's "assessment functions" and his "administrative functions". Neither this distinction nor the cases cited by the Commissioner assist him. 45 Before turning to those cases, it is necessary to restate cl (e) of Sch 1 to the ADJR Act. It excludes from judicial review: decisions making, or forming part of the process of making, or leading up to the making of, assessments or calculations of tax, charge or duty, or decisions disallowing objections to assessments or calculations of tax, charge or duty, or decisions amending, or refusing to amend, assessments or calculations of tax, charge or duty, under any of the following Acts: A New Tax System (Goods and Services Tax) Act 1999 A New Tax System (Luxury Car Tax) Act 1999 A New Tax System (Wine Equalisation Tax) Act 1999 Customs Act 1901 Customs Tariff Act 1995 Excise Act 1901 Fringe Benefits Tax Assessment Act 1986 Fuel Tax Act 2006 Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Petroleum Resource Rent Tax Assessment Act 1987 Superannuation Guarantee (Administration) Act 1992 Taxation Administration Act 1953, but only so far as the decisions are made under Part 310 in Schedule 1 to that Act Training Guarantee (Administration) Act 1990 Trust Recoupment Tax Assessment Act 1985 46 The first group of cases cited by the Commissioner (Tooheys Ltd v Minister for Business and Consumer Affairs (1981) 54 FLR 421 at 434-436; Minister for Industry and Commerce v Tooheys Ltd (1982) 42 ALR 260; Intervest Corporation Pty Ltd v Commissioner of Taxation (1984) 3 FCR 591 at 595-6; Hadfield Finance Pty Ltd v Federal Commissioner of Taxation (1988) 19 ATR 1083 at 1089; Federal Commissioner of Taxation v Administrative Appeals Tribunal and AC Goode & Co Ltd (1990) 21 ATR 250 at 254-255) were decided before the introduction of Pt IVC. Unsurprisingly, none of the provisions in issue in those cases contained a section which might engage s 14ZL of the TAA. Under Pt IVC, if no provision of that nature exists, then review under Pt IVC is not available. 47 Moreover, in Tooheys at first instance and on appeal, (concerning a refusal by the Commissioner to allow a further period during which dividends might be paid for the purposes of making a sufficient distribution within the meaning of s 105A(1) of the Act as it then stood), in Intervest (concerning a similar decision under s 105AA(1) of the Act as it then stood) and in Goode (concerning fixing the time for lodgement of a return), the issue was whether the Commissioner's decision was of an administrative character and therefore a decision within s 3(1) of the ADJR Act or a decision excluded from review under the ADJR Act by s 3 and cl (e) of Sch 1 to the ADJR Act. The distinction drawn in those cases between the Commissioner's assessment functions and administrative functions (eg Intervest at 595-596) was relevant to the issue which arose under s 3 and cl (e) of Sch 1 to the ADJR Act. In each case, as is abundantly clear, the provision was "so far removed from the assessment process" that it could not be said that it "lead up to the making of an assessment". 48 As Smithers J said in Intervest at 595: But however widely the net is cast by the words of cl (e) it does not cover a decision not being part of the process of assessment and which relates only to the question whether a taxpayer shall be permitted to carry out transactions which may reduce the amount of income upon which he is liable to pay tax. It may result in the making of an amended assessment. But it is so far removed from the assessment process that it does not, in the relevant sense, lead up to the making of an assessment. 49 That is the position here. Although it is unnecessary to decide the issue, it would be surprising if the refusal to make a determination under s 292-465 of the Act, as it stood before the 2010 amendments, was not an administrative decision subject to review under the ADJR Act. Under the Div 292 at that time, the Commissioner considered making a determination under s 292-465 after the issue of the assessment. If exercised in favour of the taxpayer, it might have resulted in the making of an amended assessment. The decision did not however lead to the making of an assessment. 50 A number of other cases identified by Counsel appearing as amicus curiae were also decided before the introduction of Pt IVC of the TAA. These cases include: 1. Deputy Commissioner of Taxation v Clarke and Kann (1984) 1 FCR 322 at 325 discussing a demand under s 264 of the 1936 Act; 2. Balnaves v Commissioner of Taxation (1985) 8 FCR 589 at 593-594 dealing with a decision by the Commissioner not to extend the time for the lodging of a return; 3. Constable Holdings Pty Ltd v Commissioner of Taxation (1986) 11 FCR 136 at 138-140, dealing with a decision by the Commissioner refusing a request under s 47(2B) of the 1936 Act (as it then stood) for the allowance of a further period within which a company whose assets have informally been distributed to its shareholders might be dissolved; 4. Re O'Reilly; Ex parte Bayford Wholesale Pty Ltd (1983) 151 CLR 557 dealing with a refusal by the Commissioner to register a party as a wholesale merchant under the Sales Tax legislation; 5. Mercantile Credits Ltd v Commissioner of Taxation (No 1) (1985) 8 FCR 510 at 514-516 concerning a decision by the Commissioner under s 128H(2) of the 1936 Act refusing an application for a certificate in respect of a loan; and 6. Domaine Finance Pty Ltd v Commissioner of Taxation (Cth) (1985) 8 FCR 538 at 544-545 which considered a decision by the Commissioner under s 128H of the 1936 Act to withhold a certificate. 51 These cases do not assist the Commissioner's argument. They support the distinction between administrative and assessment functions in relation to the operation of cl (e) of Sch 1 of the ADJR Act. As the list of cases reveals, each was concerned with a decision which on its face did not lead to the making of an assessment. 52 Meredith v Commissioner of Taxation (2002) 125 FCR 308 was decided after the commencement of Pt IVC in March 1992. The issue was whether determinations made by the Commissioner under ss 177(1) and (2A) of Pt IVA of the 1936 Act were reviewable under the ADJR Act. The Court held that those decisions were part of the process of assessment and therefore excluded from judicial review under cl (e) of Sch 1 to the ADJR Act. In the present appeal, the Commissioner submitted that the analogy between a Pt IVA scheme determination and a s 292-465 determination was apposite as both determinations go directly to amounts that are to be included in the assessment. For the following reasons, we reject that contention. 53 As noted earlier, a determination under s 292-465 (as it stood prior to the 2010 amendments) could only be applied for and made after an ECT assessment had been made and received by the taxpayer. As a result, an amended assessment might arise only if the Commissioner in fact made a s 292-465 determination. If the Commissioner refused to make a determination, no amended assessment would issue. It could not be said that the determination was necessarily anterior for the ECT assessment to which the taxpayer had a right of review under Pt IVC of the TAA. By way of contrast, the making of determinations under s 177F(1), (2) and (2A) of the 1936 Act are part of the process of assessment which go to the ascertainment of the substantive liability of the taxpayer and give rights of objection and appeal under Pt IVC of the TAA: Deputy Commissioner of Taxation v Richard Walter Pty Limited (1995) 183 CLR 168 at 178, 183-184, 199 and 203 and Meredith at [43]. 54 Some other points should be noted. Under s 177F(7), "[i]f the taxpayer is dissatisfied with the Commissioner's decision on the request, the taxpayer may object against it in the manner set out in Pt IVC of the [TAA]". No such provision existed in s 292-465 before the 2010 amendments. As the amicus curiae submitted, in light of the fact that Pt IVC was in operation when Div 292 was enacted, it suggests that in enacting Div 292 of the 1997 Act, Parliament made a choice to provide for objections against ECT assessments but not to provide for objections under Pt IVC under s 292-465. It is not the first time that such a choice was made by the Parliament: see [17] to [21] above. 55 That leaves the decision of Isaacs v Commissioner of Taxation (2005) 144 FCR 194 at [44]-[61]. That case was concerned with a decision by the Commissioner to refuse an extension of the period of time for the taxpayer, Mr Isaacs, to make an election under s 139E of the 1936 Act. Section 139E formed part of the division of the 1936 Act dealing with employee share schemes. Conti J concluded that the discretion conferred upon the Commissioner by s 139E(2) to allow further time to make an election after the taxpayer had lodged the return for the income year was "logically anterior to the process of assessment of the taxable income" of the taxpayer: at [68] citing Harts Australia Ltd v Federal Commissioner of Taxation (2001) 48 ATR 37 at [60]. Conti J concluded that the Commissioner's decision (not to allow further time pursuant to s 139E) did not form part of the assessment process and therefore the Tribunal did not have jurisdiction to review the decision. That conclusion was not surprising. Neither the 1936 Act nor the 1997 Act directly provided for review under Pt IVC of the TAA of a decision made by the Commissioner purportedly under or pursuant to s 139E of the 1936 Act to allow or not to allow "further time" to "make an election under" that section.

Conclusion 56 The question which arises in this appeal depends upon the proper construction of the relevant provisions of Div 292 of the 1997 Act in light of Pt IVC of the TAA. Resolution of that question must begin and end in the text of the statutes: Spencer v The Commonwealth (2010) 241 CLR 118 at [50] and the authorities there cited. Reference to decisions about the operation of other differently worded statutory provisions is apt to distract attention from the task at hand. 57 The AAT was correct to conclude that it did not have jurisdiction to review the decision of the Commissioner to refuse to make a determination under s 292-465 of the 1997 Act as part of its review of Mr and Mrs McMennemin's objection decision dated 5 October 2009.

OTHER MATTERS 58 Given the view we have formed that the Tribunal did not have jurisdiction to review the Commissioner's refusal to make a determination under s 292-465 as it stood prior to the 2010 amendments, it is unnecessary to consider: 1. the Commissioner's application for relief against the AAT under ss 39B(1) and 39B(1A)(a) of the Judiciary Act 1903 (Cth); and 2. whether it was open to the Tribunal to consider the matter on the alternate basis that it did have jurisdiction.

ORDERS 59 For the reasons we have given, we would dismiss the appeal and order the Commissioner to pay the amicus curiae's costs of the appeal. As these reasons reflect, the submissions made on behalf of the amicus curiae were of considerable assistance to the Court in resolution of this appeal. I certify that the preceding fifty-nine (59) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Chief Justice Keane and Justice Gordon.

Associate: Dated: 17 March 2011 IN THE FEDERAL COURT OF AUSTRALIA VICTORIA DISTRICT REGISTRY GENERAL DIVISION VID 738 of 2010

BETWEEN: COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

JUDGE: DOWNES J DATE: 17 MARCH 2011 PLACE: MELBOURNE

DOWNES J: 60 Division 292 of the Income Tax Assessment Act 1997 (Cth) relates to "excess contributions tax" on superannuation contributions deemed to be excessive. Where a taxpayer has made excess contributions the Commissioner is obliged to make an excess contributions tax assessment and give notice to the taxpayer as soon as practicable (s 292-230). 61 A taxpayer dissatisfied with an excess contributions tax assessment may object against the assessment in accordance with Part IVC of the Taxation Administration Act 1953 (Cth) (s 292-245). The Commissioner must decide whether to allow or disallow the objection (s 14ZY). Generally, the taxpayer can apply to the Administrative Appeals Tribunal for review of the objection decision (s 14ZZ). 62 Subdivision 292-H of the Assessment Act gives a discretion to the Commissioner, on written application of the taxpayer, after an assessment has been made, to disregard all or part of the contributions giving rise to the excess contributions tax assessment or to re-allocate them to another financial year. Application cannot be made until receipt of an assessment and must be made within 60 days (s 292-465). The determination can only be made if there are special circumstances and the determination is consistent with the object of Division 292. 63 Part IVC of the Administration Act deals with taxation objections, reviews and appeals, including review by the Administrative Appeals Tribunal. Part IVC is, by s 14ZL, expressed to apply: If a provision of an Act … 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. Although s 292-245 confers on taxpayers the right to object against an excess contributions tax assessment, no similar provision is to be found relating to the making or refusal of a determination that excess contributions may be disregarded or re-allocated. 64 The present taxpayers received excess contributions tax assessments. They applied for determinations disregarding or re-allocating the contributions. The Commissioner declined to make the determinations. 65 Each taxpayer objected against the Commissioner's refusal to make a determination. These were treated by the Commissioner as objections against the assessments. The objections were disallowed on their merits. They were not disallowed on the basis that the determination decisions were not subject to objection. The taxpayers applied to the Tribunal for review of the objection decisions. 66 Deputy President Forgie found that the Tribunal had no jurisdiction to review the Commissioner's disallowance of the objections because the objections related to determination decisions which were not subject to a right of objection. Accordingly, no right of review to the Tribunal was conferred. DP Forgie went on to say, however, that she would have affirmed the Commissioner's decisions had she had jurisdiction to deal with the matters. 67 The question in this appeal is whether the Tribunal did have jurisdiction. Subsequent amendments to the Assessment Act have changed the position for later excess contributions tax assessments. The appellant is the Commissioner, although the result in the Tribunal was that the Commissioner's decision stood. The taxpayer's have not sought to challenge the Tribunal's opinion that the Commissioner's decision should be affirmed if the Tribunal did have jurisdiction. 68 I must say that I see the resolution of the problem which is before us in simple terms. The Commissioner treated each objection as an objection to the assessment and addressed the question whether a favourable determination to disregard or re-allocate should have been made. The objections were disallowed. Applications were made to the Tribunal for review of the objection decisions. It is not in doubt that the taxpayer could object to the assessments. It is not in doubt that the taxpayers could apply to the Tribunal for review of objection decisions. 69 I fail to see why these provisions are not vehicles which permitted the taxpayers to bring applications for review of the decisions not to disregard or re-allocate. The ultimate question in tax cases is generally whether the assessment is excessive (Administrative Act, s 14ZZK). The burden on the objection and on the application to the Tribunal is to show that the assessment was excessive. The present assessments were excessive, so the taxpayers contended, because no disregarding or re-allocating of contributions went into their calculation. The objections and the applications for review addressed the assessments just as much as they might have addressed the decisions not to make determinations. It does not matter that there is no express provision conferring a right to object against a decision on an application to disregard or re-allocate a contribution. 70 It is worth noting, although not critical, that s 292-465 does not appear to recognise positive and negative determinations, but, rather, the presence or absence of a determination. Here there are no determinations. If s 292-245 had extended to determinations, how would it apply to the present case? This potential dilemma may have been deliberately avoided by leaving the taxpayer to challenge the presence of an unsatisfactory determination, or the absence of any determination, by an objection to the assessment. 71 I do not see any need to attempt to identify an association between an assessment and a determination and to characterise the determination as "sufficiently connected" with or "integral" to the assessment. An objection to an assessment, which challenges a decision of the Commissioner not to make a determination, is simply an objection to the assessment. If the taxpayer is right, the assessment is excessive. 72 Nor do I consider that the construction I have adopted undermines the integrity of the scheme of the Act relating to objections, appeal and review. The initial assessment precedes consideration of one of the matters which the assessment will ultimately reflect. That sets it apart from ordinary cases. Because the present case is an anomaly, it will not upset the broad cohesiveness of the scheme. If there is a problem, it relates to the particular structure applying to excess contributions assessments and not to the scheme of Part IVC. 73 It does not seem to me that the fact that a decision on an application is made after an assessment is made should affect the situation. That would be to put form over substance. In either case the question is simply whether the assessment is excessive. 74 I do not think that characterising the process as either "assessment" or "administration" is helpful. Likewise, I do not think that the enquiry is assisted by asking whether the process involves an alteration of the "factual substratum" or an assessment of the taxation effects of identified facts. Such approaches do not seem to me to pay sufficient attention to the High Court's warnings that, in cases of statutory construction the correct approach, wherever possible, is "to ask the question in terms of the language of the legislation itself" and not to permit "decided cases… to distract attention from the language of the … statute …" (McKinnon v Department of Treasury (2006) 228 CLR 423 at 468 [131] and Shi v Migration Agents Regulation Authority (2008) 235 CLR 286 at 311 [92]). 75 The use of later legislation as an aid to the construction of earlier legislation is fraught with problems and generally best avoided. I have avoided it in this case. However, I am comforted by the amendment to s 292-465, made to "avoid doubt", which confirmed jurisdiction in cases like this, for the future. The amendment was made after the decision of the Tribunal holding that there was no jurisdiction. The amendment appears to reflect a legislative intention that the sections under consideration were always to have the operation which I have found them to have. 76 The application should succeed. However, nothing would be gained by remitting the matter, because the taxpayers do not wish to challenge the Tribunal's opinion that the objection decisions should be affirmed on their merits. I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Downes.

Superannuation Legislation Amendment Act 2010(Cth)

Tax Laws Amendment (Simplified Superannuation) Act 2007(Cth)

Commissioner of Taxation v Administrative Appeals Tribunal [2011] FCAFC 37

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