Dalton v. Deputy Commissioner of Taxation [1985] FCA 121

FRANKI J. The applicant, Mr. Thomas Andrew Dalton, a taxpayer, has applied for a review, pursuant to s.5 of the Administrative

Decisions (Judicial Review) Act 1977 of two decisions of the Deputy Commissioner of Taxation (the "Commissioner"). The

Commissioner has refused £o apply s.25D of the Acts

Interpretation Act 1901 to the provisions of reg.35(1) of the

This application has been conducted by both counsel with great expedition and they have made every effort to get a decision as quickly as possible. A statement of agreed facts was

tendered and an affidavit of Mr. John Michael Herlihy, the

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solicitor for the applicant was read, but no oral evidence was

The applicant lodged income tax returns in respect of the years ended 30 June 1979 and 1980. The resolution of this case does not require consideration of the details of the tax position of the applicant. It is sufficient to say that the return contained a document headed "Thoroughbred Trading and Profit and Loss Account for the year ended 30 June 1979" which

showed a loss of $12,044 anda similar trading and profit and

loss account showing a loss of $17,449 was contained in the return for the next year. The respondent disallowed deduction of the losses in each case on the ground, in substance, that the taxpayer was not carrying ona business. The taxpayer objected to both the assessments. The Commissioner disallowed both objections pursuant to s.186 of the Income Tax Assessment Act 1936 and the taxpayer requested the Commissioner to refer the decisions to a Board of Review pursuant to s.187. This was done by the Commissioner and various documents were furnished by the Commissioner pursuant to reg.35(1) of the Income Tax Regulations. The taxpayer wrote to the Commissioner and referred to s.25D of the Acts Interpretation Act and complained that the documents furnished under reg.35(1) did not comply with the requirements of s.25D of that Act. The Assistant Commissioner replied by saying

that advice was being sought but that "... the present view of

this Office is that the section has no application to particulars

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which the Commissioner is required to provide toa Board of

It appears that the hearing of the matter before the Board of Review is fixed for 16 April 1985. I set out the

provisions of ss.186 and 188 of the Income Tax Assessment Act:

"186. The Commissioner shall consider the objection, and may either disallow it, or allow it either wholly or in part, and shall serve the taxpayer by post or otherwise with written notice of his decision."

fee of $2, the Commissioner shall refer the decision or forward the objection to a Board er Court in accordance with the request.

Section 25D of the Acts Interpretation Act provides:

"Where an Act requires a tribunal, body or person making a decision to give written reasons for the decision, the instrument giving the reasons shall also set out the findings on material questions of fact and vefer to the evidence or other material on which those findings were based."

"35(1) The Commissioner, in referring a decision to a Board of Review in accordance with sub-section (1) of section 188 of the Act or section 189 of the Act, shall furnish the Board with a printed or typewritten

statement, in quadruplicate, containing - (a) the name and address of the taxpayer;

(b) full details of the taxpayer's claim as made to the Commissioner; and

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{c) the Commissioner's reasons for disallowing the taxpayer's clain.

35(2) The Commissioner shall at the same time furnish the taxpayer with a copy of the statements referred to in sub-paragraphs (hb) and {c) of the last preceding sub-regulation."

Section 46 of the Acts Interpretation Act has the effect that the

word "regulation" may be substituted for the word "Act" in s.25D.

The applicant pointed out that reg.35(1)(c) required the Commissioner to furnish the Board with a printed or typewritten statement of the Commissioner's reasons for disallowing the taxpayer's claim. He argued that the Commissioner was obliged by s.25D to incorporate in this statement his findings on material

questions of fact and refer to the evidence or other material on

"1. Whether the duty imposed on the Commissioner by subreg. 35(1) ITR is expanded by s.25D AIA.

2. If it is, whether a taxpayer will he heard to complain to the Court about an alleged failure by the Commissioner to comply with this expanded duty.

. successfully or if the Commissioner has voluntarily furnished to the Board the additional information referred to in s.25D AIA, whether subreg. 35(2) ITR or s.25D AIA or both in combination impose on the Commissioner a duty to furnish that additional information to the taxpayer."

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I will consider these questions against the background of two judgments of the High Court and one of a single Judge of this Court. In Sutton v. Commissioner of Taxation (1959) 100 C.L.R. 518, the High Court, ina joint judgment, held that a Board of Review had no power over the Commissioner as a litigant party to impose on him a legal obligation to formulate his case by pleadings or particulars or to give discovery by answering interrogatories or to fulfil some other procedural requirement borrowed from the courts of justice. This judgment was applied by the High Court in The Queen v. Cain; Ex Parte Evatt (1975) 133 C.L.R. 37.

Both of these cases were of course decided before s.25D was enacted. That section was enacted by an amendment to the

Acts Interpretation Act (No. 27 of 1984) operative from 12 June

In Robinson v. Deputy Commissioner of Taxation (1984) 52 A.L.R. 719, Lockhart d. considered whether the Deputy

Commissioner was required to furnish particulars of grounds upon which he relied for disallowing an objection in a case where the taxpayer had not then made a decision whether not to proceed further or to request a reference to the Board or to appeal to the Supreme Court. The taxpayer sought to rely on s.186 but Lockhart J. held that it did not require the Deputy Commissioner

to give particulars of the grounds of his disallowance of the

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taxpayer's objection. This judgment was delivered on 13 April

Prior to the enactment of s.25D a taxpayer whose objection had been disallowed was not entitled to get any particulars from the Commissioner (Robinson v. Deputy Commissioner of Taxation, supra). If he chose to appeal to the High Court, the ordinary powers of the Court over litigants applied to the Commissioner and particulars and similar matters

could be sought (Bailey v. Federal Commissioner of Taxation (1977) 136 C.L.R. 214).

The first question for me to consider is whether s.25D requires the Commissioner to furnish the Board of Review not only with its reasons for disallowing the taxpayer's claim but also with the findings on material questions of fact and the other matters to which that section refers. The only obligation under s.186 upon the Commissioner is to consider the objection and either disallow it or allow it wholly or in part and serve the taxpayer with written notice of his decision. The taxpayer then has to decide whether he will accept the assessment or request a reference to a Board of Review or appeal to the Supreme Court. If a taxpayer requests the Commissioner to forward the objection to the Board of Review, the Commissioner has to comply with reg.35(1) & (2). In that case the Commissioner must furnish the Board with his reasons for disallowing the taxpayer's claim. The

critical point 1s that at the stage where the Commissioner has an

obligation to furnish written reasons he is not making a decision. The decision has been made earlier under s.186 and the Commissioner, at that stage, has no obligation to furnish any reasons. He only has to serve the taxpayer with written notice

Section 25D is, of course, a remedial section. It was not submitted that any material within any category set out in s.15AB of the Acts Interpretation Act was relevant, nor was

In general, I agree respectfully with the comments of

_. Lockhart J. in Robinson v. Deputy Commissioner of Taxation,

supra, about the "requirement of fairness". I consider that it is not possible to construe s.25D as extending to reg.35 without

making an unwarranted guess about "the purpose or object

underlying the Act" (ss.15AA of the Acts Interpretation Act).

In my opinion s.25D does not extend to reg.35 and the

words of s.25D must be given their ordinary meaning.

At one stage of the proceedings I had some doubt whether

the Court had jurisdiction but it seems that the decisions which it 1s sought to have reviewed do not fall within schedule 1 of

the Administrative Decisions (Judicial Review) Act.

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If I am wrong in the views I have expressed as to the operation of s.25D the applicant would still have to show that he was a person aggrieved within the meaning of s.5 of the Administrative Decisions (Judicial Review) Act. In this regard, my attention was directed to the passage in Sutton Vv. Commissioner of Taxation, supra, where it was said that s.35(1)(c) is not directed to ensuring that the taxpayer is informed of the Commissioner's reasons but to supplying the Board with them. In this case, there is no evidence that the Board has

expressed any dissatisfaction over the present position.

Because of the view I have expressed and because no 1ussues of fact are involved, I consider it would be unwise for me

to deal in detail with any further grounds of opposition to the

For the reasons that I have set out, I dismiss the application and order that the applicant pay the Commissioner's