Commissioner of Taxation v Cancer and Bowel Research Association Inc

Federal Court of Australia (Full Court)|2013-11-25|Before: Ms JJ, O'Connor J, Davies JJ

INTRODUCTION 1 The Commissioner of Taxation has instituted two proceedings to challenge the disposal by the Administrative Appeals Tribunal ("the Tribunal") of two related applications by the Cancer and Bowel Research Association Inc ("the trustee") in its capacity as trustee of the Cancer and Bowel Research Trust ("the trust"). The two matters which had been before the Tribunal concerned: (a) the Commissioner's revocation of endorsements previously issued to the trustee for various charity tax concessions and of endorsement by the trustee as a tax deductible gift recipient (AAT matter 2012/3665); and (b) a refusal by the Commissioner to disallow an objection by the trustee to a deemed refusal of its application to be endorsed as a health promotion charity (AAT matter 2013/1720). The two proceedings before the Tribunal were heard together as they raised similar issues upon common facts with the evidence in each proceeding being treated as evidence in the other. A matter in those proceedings ruled upon by the Tribunal, which the Commissioner seeks to challenge, concerned the construction of s 426-55 of Schedule 1 of the Taxation Administration Act 1953 (Cth) ("1953 Act"). The way in which the Tribunal dealt with the proceedings, however, raises procedural questions about whether, and if so how, the construction of s 426-55, which the Commissioner wishes to challenge, may be raised in this court. 2 The two proceedings which the Commissioner has instituted in this Court seek to challenge by alternative process the Tribunal's disposal of the two applications which had been before the Tribunal. In one of the proceedings instituted in this Court (SAD 150 of 2013), the Commissioner challenges the outcome in the Tribunal as a statutory appeal from a "decision" under s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) ("AAT Act") ("the statutory appeal"). The competency of that proceeding depends upon whether the way in which the Tribunal disposed of the proceedings before it amounted to a "decision" by the Tribunal within the meaning of s 44(1). In the other proceeding in this Court (SAD 151 of 2013) the Commissioner challenges the Tribunal's decision by way of judicial review under s 39B(1A) of the Judiciary Act 1903 (Cth) ("the judicial review proceeding"). The outcome of the judicial review proceeding depends in part upon whether the Court should, in the exercise of its discretion, entertain that proceeding. The trustee challenges the competence of the statutory appeal proceeding to this Court contending that no reviewable error was made by the Tribunal, that any relief in the judicial review proceeding should be refused as a matter of discretion and that, in any event, the construction of s 426-55 adopted by the Tribunal was correct.

THE TRIBUNAL'S DECISION 3 For present purposes, the relevant facts are set out in the reasons of the Tribunal published on 24 May 2013 and are not in dispute. The principal dispute in the Tribunal was the dispute in AAT matter 2012/3665 arising from an application to review an objection decision made by the Commissioner on 20 August 2012 to disallow an objection by the trustee to the revocation of endorsements previously issued for various charity tax concessions and of endorsement as a tax deductible gift recipient. The Tribunal found, and for present purposes it is not challenged otherwise, that the trustee had been endorsed as a tax deductible gift recipient from 20 February 1998 and had been granted endorsement as exempt from income tax as a tax concession charitable institution from 19 May 2000. Formal advices of endorsement were issued by the Commissioner with effect from 1 July 2000 which the Tribunal found (and it is not presently contended otherwise) applied to the trustee. 4 The trustee was granted concessions comprising: an exemption from income tax from 19 May 2000 as a charitable institution under subdivision 50-B of the Income Tax Assessment Act 1997 (Cth); GST concessions from 1 July 2005 as a charitable institution under subdivision 176 of the A New Tax System (Goods Services Tax) Act 1999 (Cth); and fringe benefits tax exemption from 1 July 2005 under s 123D of the Fringe Benefits Tax Assessment Act 1986 (Cth). However, by letter dated 16 February 2012 the Commissioner advised that he had decided that the trust did not satisfy the requirements for endorsement as a tax deductible gift recipient or as a charitable institution for the purposes of any of these provisions and that the trustee had not satisfied those requirements since 1 July 2000. The Commissioner, accordingly, decided to revoke the endorsements from 1 July 2000. It was that decision which was before the Tribunal in AAT proceeding 2012/3665. The proceeding was heard by the Deputy President over nine days between 28 February 2013 and 19 April 2013 with final submissions received by him on 26 April 2013. 5 A fundamental issue that arose in that proceeding concerned the Commissioner's power of revocation under s 426-55 of Schedule 1 of the 1953 Act. That section relevantly provides: (1) The Commissioner may revoke the endorsement of an entity if: (a) the entity is not entitled to be endorsed; or … (2) The revocation has effect from a day specified by the Commissioner (which may be a day before the Commissioner decided to revoke the endorsement). The critical issue concerning the construction of this provision was the date upon which the Commissioner was required to determine whether the entity was not entitled to be endorsed. The Tribunal construed the power of revocation to depend upon an adverse finding of an entity's entitlement to endorsement as at the date upon which the Commissioner was making the decision to revoke (namely, 16 February 2012) notwithstanding that he might then revoke the endorsement from an earlier date. 6 The practical consequence of the construction adopted by the Tribunal was, as the learned Deputy President perceived the matter, that any revocation required a finding of the trustee's entitlement to endorsement as at 16 February 2012. As the learned Deputy President said at [79]: I therefore consider that in the present case (unlike the situation where a new endorsement is applied for and under consideration) I am required to consider the applicant's entitlement to endorsement as at 16 February 2012, and not during earlier taxation years. That is not to say, of course, that evidence as to events in earlier taxation years might not inform the position as at 16 February 2012. The learned Deputy President, however, considered that the material before him (standing in the shoes of the decision maker with the ability to exercise the powers of the decision maker: see [79]) was insufficient without further investigation "to make a properly informed decision as to whether as at 16 February 2012 the discretion to revoke the applicant's endorsements should have been exercised": see [113]. 7 The Tribunal identified a number of matters which it considered relevant to the inquiry of the trustee's entitlement to endorsement upon its construction of s 426-55 (see [114]) accepting, however, that a determination of those facts as at 16 February 2012 could be made by reference to events after that date (see [115]). The Tribunal took the view that the proper course to be followed in those circumstances would ordinarily have been for the Tribunal itself to seek further evidence. That view, if it had been open to be adopted by the Tribunal, was critical to what the Tribunal in fact did. The learned Deputy President reasoned that ordinarily he "would have further adjourned the hearing to enable the parties to adduce further evidence" but that for a variety of reasons that was not the appropriate course in this case and that in all the circumstances what was appropriate was "to remit the matter for further consideration pursuant to s 42D of the AAT Act". Relevantly the Tribunal said: 116. Ordinarily, once it had become apparent that the evidence before the Tribunal did not address what I now perceive to be the relevant period of time, I would have further adjourned the hearing to enable the parties to adduce further evidence. However, it did not seem appropriate to do that in this case. The Commissioner has not considered this matter by reference to what I consider is the correct approach, namely that the matter must be determined by reference to the 2011 Deed and not the original Trust Deed, or by reference to the events applicable as at the date of the revocation of the endorsements. There were also practical difficulties because of my impeding retirement from the tribunal and because counsel for the Commissioner will be unavoidably unavailable until after that. The considerations which I have identified in paragraph 114 above are such that it will be necessary for the applicant to have an adequate opportunity to investigate the further action to which I have referred above, and to place further information before the Commissioner, and then for the Commissioner to have an adequate opportunity to investigate and consider the applicant's proposals. 117. I am mindful that the situation of the applicant might be different in significant respects from the situation on which the Commissioner's decisions were based, having regard not only to the 2011 Trust Deed and the change in management (which I assume has resulted in many of the persons previously identified as being associated with Mr Manhire no longer either being involved with the applicant or regarded as related parties), but also because not-for-profit organisations, including charities, are now subject a new regulatory regime under the auspices of the Commissioner of the Australian Charities and Not-for-profits Commission. I am also mindful that the applicant is an established organisation with experienced managers and employees who have been trained in its activities, and has a database of donors and procedures that it employs to pursue its charitable activities. I assume that the applicant will be making an application to obtain endorsement as a DGR, and if that application is successful, its capacity to raise additional funds and so increase expenditure on charitable purposes will be enhanced. I am also mindful that on the evidence before me, the applicant has up to 200 employees and contractors for whom it provides employment, and a significant proportion of those people might otherwise be unemployable, and become dependent on social welfare, if the issues that have arisen cannot be resolved, and the applicant is wound up. In all of the circumstances, to enable all of these factors to be taken into account to the extent that they are relevant, I think it appropriate to remit the matter for further consideration pursuant to s 42D of the AAT Act. The learned Deputy President gave effect to that reasoning by furnishing the parties with a document described as a "decision" and, relevantly, in matter 2012/3665 "deciding" that the Tribunal: 1(b) remits the objection decision to the respondent for further consideration pursuant to s 42D of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act) insofar as the decision relates to whether the applicant is entitled to be endorsed as an entity exempt from income tax under s 50-105 of the Income Tax Assessment Act 1997 (Cth) and as a charitable institution under s 176-1 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) and s 123E of the Fringe Benefits Tax Assessment Act 1986 (Cth). In the same document, in paragraph 2, the whole of matter 2013/1720 was remitted to the Commissioner for further consideration "pursuant to s 42D of the AAT Act" and in both cases the Tribunal specified that "the period within which the Commissioner is to reconsider the objection decisions remitted to it pursuant to paragraphs 1(b) and 2 above is the period commencing on the date of this decision [24 May 2013] and expiring on 23 September 2013".

IS THE STATUTORY APPEAL COMPETENT? 8 The first question to consider in the statutory appeal to this Court is, therefore, whether what the Tribunal did amounted to a decision within the meaning of s 44 of the AAT Act. Section 44(1) provides: A party to a proceeding before the Tribunal may appeal to the Federal Court of Australia, on a question of law, from any decision of the Tribunal in that proceeding. In Director-General of Social Services v Chaney (1980) 31 ALR 571 ("Chaney") it was held that "decision" in the context of s 44(1) was used in a restricted sense referring to a final decision or determination. Deane J (with whom Fisher J agreed generally) said at 592-4: The provisions of s.44 themselves tend to indicate that the decision of the Tribunal from which an appeal may be brought, as of right, to this court, is the final decision which disposes of the proceedings and which will have been reduced to writing and served upon the parties in accordance with s 43 of the Act. Sub-section 2A, which was inserted in s 44 by the amending Act of 1977, provides that an appeal to the Tribunal shall ordinarily be instituted not later than the 28th day after the day on which a document setting out the terms of the decision of the Tribunal is furnished to the person desiring to appeal. One would neither anticipate that an intermediate decision, which was reached in the course of the conduct of proceedings, would be reduced to writing nor expect that separate times for appeal would run in respect of each such intermediate decision on the path to ultimate or operative decision. In addition, s 44(2) seems to assume that special provision was necessary to provide an appeal from a "decision" of the Tribunal that the interest of an applicant for review or an applicant to be made a party are not affected by the decision which it is sought to have the Tribunal review. It should be stressed that the issue is not whether, after the Tribunal has determined the application for review, an appeal lies to this court on every ruling or adjudication upon a question of law which proves to be part of the structure of the ultimate decision. The issue is whether such an appeal lies, instanter, from a ruling or adjudication upon the road to ultimate decision, regardless of whether that ruling or adjudication may prove irrelevant to the ultimate decision or whether further evidence, increased understanding or, indeed, plain reconsideration may lead to its reversal by the Tribunal itself before the ultimate decision is delivered. It may be suggested that the proliferation of opportunities to appeal should be seen as a safeguard of the rights of the individual subject. Such a suggestion would, in my view, be misconceived. Indeed, if the view propounded on behalf of the Director-General in the present matter, namely, that an appeal lies as of right from every intermediate decision on a question of law in the course of the hearing by the Tribunal of an application to review, be accepted, the result would be that the individual subject who challenged a decision of the Executive before the Tribunal would not only have no assurance of an orderly and reasonably prompt resolution of his or her case by the Tribunal but that, in confronting the Executive, even if only to claim a widow's mite, he or she would be stepping into a maze in which the financial ruin of a myriad of possible appeals awaited at the whim of those who fund their enthusiasm for the fray not from their own purses but from the long purse of Government (cf. per Jordan CJ. In Re the Will of Gilbert, (1946) 46 S.R. (N.S.W.) 318 at p. 323). The conclusion which I have reached is that, subject to the qualifications mentioned below, an appeal under s 44(1) of the Act lies only from a decision of the Tribunal which constitutes the effective decision or determination of the application for review. Ordinarily, such a decision will be the final decision formulated in accordance with the provisions of s 43 of the Act. The qualifications referred to are an appeal pursuant to s 44(2) from a decision that the interests of a person are not affected by a particular decision and the case where the proceeding before the Tribunal can properly be divided into two or more separate parts in respect of which independent "decisions" may properly be given. As has been said, the ruling that the Tribunal had jurisdiction to hear the application for review simply asserted the Tribunal's jurisdiction to continue to hear the application on the merits. That ruling did not effectively dispose of the proceedings or any independent part thereof. It was not, in my view, a decision from which an appeal lay, on a question of law, to this court pursuant to the provisions of s 44(1) of the Act. In the event that the Tribunal adheres, in the light of all the evidence, to its present ruling that jurisdiction exists and ultimately decides to set aside or vary the decision of the Director-General, an appeal will lie from that ultimate decision of the Tribunal on any question of law involved in the ruling for the reason that the assertion as to jurisdiction will constitute part of the structure of such an ultimate decision. The position would, of course, have been different if the ruling had gone the other way and the Tribunal had held that it had no jurisdiction to deal with the matter. In that event the decision of the Tribunal would have effectively disposed of the proceeding before it. (Emphasis added) Fisher J said at 596: In this matter I have had the advantage of reading the reasons for judgment of Deane J, and I agree with those reasons and his conclusion that an appeal from the preliminary ruling of the President that the Tribunal possesses jurisdiction is incompetent. Such conclusion denying a right of appeal to this court on the preliminary ruling at this stage of the proceedings before the Tribunal conforms, in my opinion, not only with the scheme of the Administrative Appeals Tribunal Act 1975 (the Act) and its true construction but also with the restraint properly accepted by courts when appeals from administrative tribunals are limited to errors of law. In such circumstances it is generally considered inappropriate for courts to intervene until the statutory process is completed. Section 43A(1)(a) of the Act lends some support to this view. Under the Act the statutory process is complete when the Tribunal either decides to refuse to review the decision of the Administrator or makes a decision in writing affirming, varying or setting aside the decision (s 43(1)). In my opinion, it is such a decision as aforementioned which the legislature has in mind in conferring on this court by s 44(1) a right to hear an appeal on a question of law "from any decision of the Tribunal in that proceeding". If a question of law arises in the proceedings before the Tribunal which the parties or a party see as fundamental to the determination of the review, the procedure in the Act (s 45(1)) for reference of that question of law by the Tribunal to this court is available. In this way the jurisdictional issue in this matter could, if the Tribunal considered it appropriate, have been determined as a preliminary issue "so that many hours are not spent preparing a case that might not be accepted by the Tribunal". An appeal under s 44(1) requires that the disposition by the Tribunal be "the effective decision or determination of the application for review". In the usual case an effective decision by the Tribunal will be reflected in the orders made under s 43, but, as was explained by Deane J in Chaney, a decision may come within s 44 where it is (a) that the interests of a person are not affected by a particular decision (see AAT Act s 44(2)) and (b) where it is of a part of a proceeding which can properly be divided into separate parts. In such cases the disposition by the Tribunal can be seen as deciding finally some aspect of a party's entitlements and, therefore, as having the effect of finally deciding or determining an aspect of a proceeding. Its quality as a decision within the meaning of s 44 is that it ends the whole or a properly separable part of the matter before the Tribunal. 9 The Tribunal in this case did not purport to decide a separate part of the proceeding before it. Indeed, it did not, and expressly considered that it could not, decide any part of the proceeding which had been referred for its review. Rather, the Tribunal was of the view that it could make no decision on the evidence. The options available to the Tribunal when it is unable to reach a definitive view upon the evidence available to it were considered in Re Ego Pharmaceuticals Pty Ltd and Minister for Health and Ageing (2010) 120 ALD 105. In that matter the Tribunal had come to the view that it was not able to reach a final decision on the material then available to it as it was not satisfied that the pharmaceutical product under consideration should be registered without further testing. The Tribunal in that case considered the alternatives available saying: 2. There are three alternatives available to the Tribunal. The first, and in a sense the most logical, determination, is that the decision not to register the pharmaceutical products should be affirmed. I say this is the most logical consequence because the tribunal is not satisfied on the material before it that registration should be effected and the usual consequence in those circumstances is that the decision under review is affirmed. However, the tribunal, for reasons it has given, considers that the unusual course of providing an opportunity for some further testing to be carried out without the matter being finally disposed of, is the preferable decision in the present case. That takes me to the alternatives available. The first alternative is to set aside the decision under s 43 of the Administrative Appeals Tribunal Act 1975 (Cth) and remit the matter to the decision-maker for further consideration in accordance with directions from the tribunal. It has been suggested that the tribunal might not be able to adopt this course because there is not a basis in the material before the tribunal to set aside the decision under review. We do not agree with this. It seems to us that the tribunal can set aside a decision without making a determination that the decision under review was, with certainty, wrong. It seems to me that a decision can be set aside merely because it might be wrong and to give the opportunity for further consideration to that matter. However, there is a third alternative, which might be the most satisfactory way of disposing with this matter. The third alternative is a remittal under s 42D. 3. The Tribunal has power to remit for reconsideration under s 42D at any stage of proceedings and there is no suggestion that now is not such a stage. The section does not, however, in its terms, permit any direction as to the way in which the reconsideration is to be undertaken. The section needs to be considered in its context, however, and that context must be that, generally, something has occurred in the process of review which raises some particular matter or matters which are appropriate to be the subject of the reconsideration. In the present case, those matters relate to the possibility of undertaking similar testing to the testing that was carried out before, but undertaking that testing in a way which is not defective in any way. As the Tribunal indicated in its more detailed reasons, its present inclination is to think that, if further vasoconstrictor assay testing is satisfactory, then, unless other technical requirements are in issue, registration should be effected". The Tribunal also considered the use of the power in s 42D in Re Taxpayer v Federal Commissioner of Taxation (2010) 79 ATR 170, N1112/00A v Minister for Immigration & Multicultural Affairs (2000) 32 AAR 76, Re Lavery and Registrar of the Supreme Court of Queensland (No 2) (1996) 43 ALD 13 and Re Jackson and Minister for Immigration and Citizenship (2011) 128 ALD 355. 10 The Tribunal in this case formed a view about a question of law upon which its final decision upon the review of the objection decision depended, namely the construction of s 426-55 in Schedule 1 of the 1953 Act, and in consequence of that construction considered that the application of the section to the trustee required further evidence before a final decision could be made upon the objection decision under review. The Tribunal chose not to determine the application for review by making a decision under s 43 of the AAT Act but instead chose to remit the objection decision to the Commissioner under s 42D for further consideration. A decision by the Tribunal to reconvene at a later date to receive the further evidence itself would not have been an appellable decision (in the sense considered in Chaney). The Tribunal's decision to remit the further consideration of the trustee's entitlement to endorsement as at 16 February 2012 was similarly not a decision in the sense explained in Chaney because no part of the proceeding before the Tribunal was decided or determined. The power in s 42D permits the Tribunal to remit a matter for reconsideration by a primary decision maker without the need for the Tribunal to set aside the decision and was enacted to permit the Tribunal to deal with a proceeding without having to make a final decision. The purpose of the provision was explained in the accompanying explanatory memorandum when s 42D was enacted: 99. The Tribunal does not have the power to order that a matter be remitted the decision-maker for further consideration unless it sets aside the decision under subparagraph 43(c)(ii) of the Act. This can result in matters proceeding to a hearing even where the parties agree that the decision-maker should review the decision. 100. Item 21 of Schedule 2 inserts new section 42D which will provide that the Tribunal has the power to order that a matter may be remitted to the decision-maker for further consideration at any stage of the proceedings. Where a decision is remitted the decision-maker may affirm, vary, or set aside the decision and make a new decision in substitution for the decision set aside. 101. New subsections 42D(3) and (4) will provide that where a decision is varied, or a new decision is substituted, the applicant may proceed with the application for review in respect of the varied or new decision or withdraw the application. The use of s 42D in this case was expressly contemplated and explained by the Tribunal as directed to enabling the proceeding before the Tribunal to be reconsidered without final determination or decision. It follows that the Commissioner's statutory appeal is incompetent and should be dismissed. 11 It is not necessary to consider the other matters raised by the parties concerning the competence of the statutory appeal but it may be desirable to deal with one argument advanced by the Commissioner. The Commissioner contended that the Tribunal must be seen as having exercised the power under s 43 and not that under s 42D. A difficulty with the argument is that the learned Deputy President undoubtedly thought and intended to exercise the power under s 42D and it did so for the express reason that the learned Deputy President wished to ensure that the Tribunal's decision would result in the Commissioner obtaining further evidence upon the relevant taxing provisions as the Tribunal had construed them. That is to say, that the learned Deputy President intended the outcome of the proceeding to be achieved through the express mechanism provided by s 42D. The Tribunal had the power to use s 42D as it did and it expressly used the power in s 42D rather than s 43. It expressly sought to avoid making a final decision in the sense that would have invoked s 43, but rather, expressly sought to use the power in s 42D which would not have resulted in a final determination of the objection decision or of any part of the objection decision which could properly be divided for final decision.

JUDICIAL REVIEW PROCEEDING 12 The Commissioner's alternative challenge in the judicial review proceeding does not depend upon whether there was a "decision" within the meaning of s 44 of the AAT Act. In that proceeding there arises a question concerning whether the conditions for the grant of a writ of certiorari have been established. The Commissioner contends that there were two errors of law: (1) in the Tribunal's construction of s 426-55 of Schedule 1 to the 1953 Act; and (2) by reason that s 42D did not permit the Tribunal to remit the matter under review to the Commissioner with a direction as to the construction and application of s 426-55 of Schedule 1 to the 1953 Act. The trustee, in contrast, contends that there was no error of law in either the Tribunal's construction of s 426-55 or in relation to the exercise of power under s 42D of the AAT Act and that even if there were such errors, the Court should refuse to grant an order for certiorari in the exercise of its discretion.

(a) Discretionary Considerations 13 The grant of relief pursuant to 39B of the Judiciary Act is a matter of discretion: SZBYR v Minister for Immigration and Citizenship (2007) 235 ALR 609 at [28]. In Re Refugee Review Tribunal; Ex parte Aala (2000) 204 CLR 82, Gaudron and Gummow JJ at [56] noted that: Some guidance, though it cannot be exhaustive, as to the circumstances which may attract an exercise of discretion adverse to an applicant is indicated in the following passage from the judgment of Latham CJ, Rich, Dixon, McTiernan and Webb JJ in a mandamus case, R v Commonwealth Court of Conciliation and Arbitration; Ex parte Ozone Theatres (Aust) Ltd. Their Honours said [(1949) 78 CLR 389 at 400]; "For example the writ may not be granted if a more convenient and satisfactory remedy exists, if no useful result could ensue, if the party has been guilty of unwarrantable delay or if there has been bad faith on the part of the applicant, either in the transaction out of which the duty to be enforced arises or towards the Court to which the application is made. The Court's discretion is judicial and if the refusal of a definite public duty is established, the writ issues unless circumstances appear making it just that the remedy should be withheld." Ordinarily, the availability of appeal as an avenue to correct an error of law would be a powerful discretionary reason not to grant certiorari: Kirk v Industrial Court (NSW) (2010) 239 CLR 531 at 578 [87] (French CJ, Gummow, Hayne, Crennan, Kiefel and Bell JJ); Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146. Ordinarily also, a court would be reluctant to entertain a judicial review application where the challenge is to an intermediate direction or determination made along the way to reaching an ultimate determination of the substantive issue: Geographical Indications Committee v The Honourable Justice O'Connor (2000) 64 ALD 325 [26] - [28] (Von Doussa, O'Loughlan and Mansfield JJ). As the cases illustrate, these principles ordinarily should lead the Court to exercise its discretion to refuse relief under s 39B of the Judiciary Act. 14 In the present case, however, it is relevant that here the challenge is to the Tribunal's use of the s 42D process where the Tribunal formed the view that the Commissioner had based his objection decision on a wrong construction of s 426-55 of Schedule 1 to the 1953 Act. It is relevant also that there is no available avenue to challenge that exercise of the s 42D power other than by way of judicial review in circumstances where the Tribunal could have, but did not, make a decision under s 43 of the AAT Act setting aside the objection decision which would have enlivened the Commissioner's statutory appeal rights under s 44 of the AAT Act. The Commissioner's challenge to the Tribunal's exercise of the power in s 42D was not able to be challenged under s 44 and judicial consideration of s 42D, and how it was exercised by the Tribunal in this case, is of sufficient significance to dispose of the judicial review proceedings upon its merits and not by discretionary considerations.

(b) Section 42D 15 We find no error of law in the Tribunal's exercise of the s 42D power. The Commissioner had contended that the Tribunal had erroneously exercised the power in s 42D by remitting the objection decision to the Commissioner in a way not permitted by s 42D: that is, with an impermissible direction to apply s 426-55 by reference to the approach considered by the Tribunal to be the correct approach. The Commissioner was correct in his submission that s 42D does not permit the Tribunal to remit the matter back to the primary decision maker with a direction as to how the Commissioner must determine the objection decision. The Tribunal, however, did not purport to do so. It had expressed a view about the proper construction of s 426-55 which, if correct, required additional facts if the Commissioner was to exercise his power according to law. The Tribunal's expression of a view as to s 426-55 did not bind the Commissioner. The Commissioner, acting responsibly, could still affirm his earlier decision leaving it for the Tribunal, if minded to maintain the contrary view, to decide the proceeding by setting aside the Commissioner's decision under s 43. It follows that the judicial review proceeding should be set aside on the basis that the error concerning s 42D was not made out.

(c) Section 426-55 16 The second error of law sought to be raised by the Commissioner concerned the Tribunal's construction of s 426-55. However that construction, if it be erroneous, is one that is able to be considered in any appeal under Part IVC of the 1953 Act from any subsequent decision by the Tribunal if the Commissioner continues to maintain his construction of s 426-55 and if the Tribunal continues to maintain its contrary construction. That ordinarily, would be sufficient for the court to decline to entertain the application for judicial review. However, a consideration of the Tribunal's construction of s 426-55 was desirable in the consideration of how s 42D was exercised. As the catalyst for the Tribunal's exercise of the s 42D power was the Tribunal's construction of s 426-55, the construction of s 426-55 has been fully argued before this Court and as a successful challenge by way of judicial review to the exercise of the power in s 42D is likely to be rare and exceptional, we consider that it is desirable to bring finality to the question of construction by determining that question of law: R v Foster; ex parte the Commonwealth Steamship Owners' Association (1953) 88 CLR 549. 17 Section 426-55 has previously been set out but for convenience of exposition its relevant provisions are: (1) The Commissioner may revoke the endorsement of an entity if: (a) the entity is not entitled to be endorsed; or … (2) The revocation has effect from a date specified by the Commissioner (which may be a day before the Commissioner decided to revoke the endorsement). The Tribunal reasoned that the application of this provision involved two steps. The first was the determination of whether an entity was entitled to be endorsed. The second was to determine the date from which any revocation was to apply assuming, that is, that the entity was not entitled to be endorsed. The critical passage in the Tribunal's reasoning relevantly stated: 79. This section entailed determining whether, as at 16 February 2012, the Commissioner's discretion to revoke the applicant's endorsement should be exercised. It follows from the express words s 426-55(1) that it is only if that discretion is exercised that the power in s 426-55(2) to decide that the revocation should take effect from an earlier date is enlivened. The Tribunal's adoption of 16 February 2012 as the date upon which the Commissioner was to make a finding of the trustee's entitlement for endorsement was the combination of the fact that it was upon that day that the Commissioner had made the decision and the words in subsection (1) above expressed in the present tense. Thus, the Tribunal reasoned that it was a pre-condition to the retrospective exercise of the power in subsection (2) that an entity was not entitled to be endorsed as at the date upon which the decision concerning endorsement was being made by the Commissioner. 18 It is perhaps desirable to set out the entirety of the two relevant paragraphs setting out the Tribunal's reasoning in respect of the construction which it adopted: 79. It is well established that this tribunal, when determining applications for review, stands in the shoes of the decision-maker, and can exercise the powers of that decision-maker. In the present case, the practical effect of the revocation decision and its retrospective operation to 1 July 2000 is that the applicant was not entitled to endorsement in any of the taxation years from and after the 2001 financial year. However, the power to make the decision to revoke the endorsements is provided for in s 426-55 of Schedule 1 to the TAA 1953. This section entailed determining whether, as at 16 February 2012, the Commissioner's discretion to revoke the applicant's endorsement should be exercised. It follows from the express words of s 426-55(1) that it is only if that discretion is exercised that the power in s 426-55(2) to decide that the revocation should take effect from an earlier date is enlivened. I also observe that s 426-55(1)(a) is expressed in the present tense. If Parliament had intended the discretion to be exercised by reference to the entity's ineligibility to be endorsed in earlier tax years, one might have expected s 426-55(1)(a) to have read: "the entity is not, or has not previously been, entitled to be endorsed", but that is not how paragraph (a) is worded. I therefore consider that in the present case (unlike the situation where a new endorsement is applied for and under consideration) I am required to consider the applicant's entitlement to endorsement as at 16 February 2012, and not during earlier taxation years. That is not to say, of course, that evidence as to events in earlier taxation years might not inform the position as at 16 February 2012. 80. I have concluded for the above reasons that any failure by the applicant to comply with the original trust deed will not disentitle the applicant to endorsement as at the date of the Commissioner's revocation decision, and that it is necessary to consider whether there has been compliance with the 2011 Deed, that being the deed that was in force at the date of the Commissioner's revocation decision. It is the conclusion and reasoning in these paragraphs which led to the Tribunal to remit the matter back to the Commissioner for determination of the trustee's entitlement to endorsement as at the date the Commissioner was making a decision concerning its entitlement to endorsement. The fundamental textual aspect of the Tribunal's reasoning is the use of the present tense in the first subsection about which we find no fault. 19 There is, however, as a matter of policy, nothing intrinsically erroneous about the construction of a power for the retrospective cancellation of an endorsement being made to depend upon a lack of entitlement to the endorsement as at the date of the decision being made. Such a provision, so construed, would, to some extent, preserve endorsements during periods where the entitlement for endorsement had ceased but where any defect had been cured by the date the Commissioner was making a decision. In that way the provision would only operate to permit revocation where there was a continuing lack of the entity's entitlement to be endorsed. That, in substance, is the effect of the Tribunal's decision. 20 Subsection 426-55(1) is expressed in the present tense because it may be assumed that its terms were intended to operate on an ongoing basis and were relevantly to be exercised where an entity which had been endorsed ought not to be endorsed as at the date of the Commissioner's consideration. The provision is directed to compliance and is designed to permit the Commissioner to stop something which should no longer continue and assumes that the condition for the Commissioner's decision is operative as at the date of decision making. Nothing in the provision, of course, prevents the Commissioner from enquiring into the past to determine the period from which any revocation is to take effect. Nor did the Tribunal suggest otherwise. The provision, and the Tribunal's construction of it, do require the condition for revocation to exist both at the date of decision making and from any earlier period the Commissioner may consider to revoke the endorsement. 21 This view is strengthened by the terms of s 426-55(3), the absence of s 426-55 of any provision for partial suspension or revocation of an endorsement and the absence in s 426-55 of any provision (and comparable safeguards) like those permitting amended assessments. Sub-section 426-55(3) provides: "(3) However, if the Commissioner revokes the endorsement because the entity is not entitled to it, the Commissioner must not specify a day before the day on which the entity first ceased to be entitled." This subsection expressly limits the section from which a revocation may take effect and assumes that the revocation is otherwise effective until and from the date of revocation. The subject matter of the power in s 426-55 as one of revocation is capable of attaching only to the single fact of a prior endorsement so that any revocation of the endorsement is complete and must necessarily take effect for the whole of the time it had otherwise applied. The provisions, in other words, cannot operate to effect a suspension of endorsement over time. In our view the text of s 426-55, its context and policy consideration all support the Tribunals construction. ORDERS 22 Accordingly both proceedings will be dismissed and we will hear the parties on the question of costs. I certify that the preceding twenty two (22) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justices Edmonds, Pagone and Davies.

A New Tax System (Goods Services Tax) Act 1999(Cth)

Administrative Appeals Tribunal Act 1975(Cth)ss 42D, 43, 44(1)., ss 42D, 43, 44(1)

Judiciary Act 1903(Cth)ss 39B, 39B(1A)

Commissioner of Taxation v Cancer and Bowel Research Association Inc [2013] FCAFC 140 CORRIGENDUM 1 In the Reasons for Judgment, the dates on the two Orders pages and the Reasons page have been amended to 25 November 2013 being the date the orders were made and the judgment handed down. I certify that the preceding one (1) numbered paragraphs are a true copy of the Corrigendum to the Reasons for Judgment herein of the Honourable Justices Edmonds, Pagone and Davies.

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