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[2003] FCA 1043
respondent. Application dismissed; applicant ordered to pay respondent's costs (Order dated 3 October 2003).
Fabry challenged the Commissioner's June 2002 Part IVA determinations and the amended assessments made to give them effect. He argued (1) an amended assessment that does not change the numerical taxable income or tax payable cannot be an 'alteration' or 'addition' under s170(1), and (2) once his objections were before the AAT only the AAT could exercise Part IVA powers or alter the objection decisions. Merkel J rejected both arguments. He applied existing authority (Jackson) that a Part IVA-driven amendment does alter a 'particular' of the assessment even if the amounts are unchanged. He also held that s170(1) expressly allows the Commissioner to amend 'at any time' and that this specific statutory power is not implicitly taken away by the later general s26 AAT Act; accordingly the Commissioner validly made the determinations and amended assessments. Fabry's application was dismissed and costs ordered against him.
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8 cited instruments linked from this judgment.
Allan Fabry challenged Part IVA action taken by the Commissioner of Taxation. The factual sequence was:
Merkel J heard the matter on agreed facts and dismissed Fabry's application (final orders dated 3 October 2003).
There are two core strands to Merkel J's reasoning.
Merkel J held he was bound by the Full Court decision in Commissioner of Taxation v Jackson (1990) 27 FCR 1. Jackson analysed the distinctive operation of Part IVA and concluded that a change in the process by which a liability is assessed because of the application of Part IVA necessarily produces an 'alteration' in a 'particular' of the assessment even if the arithmetic outcome (taxable income and tax payable) is unchanged (paras 14-16). Merkel J accepted Jackson and the Full Court's consideration in Puzey that Jackson remains authority that amendment may be necessary for a Part IVA determination despite no numerical change (para 17). Accordingly, the first ground of invalidity failed: an amended assessment was validly issued under s 170(1) even though the assessed amounts were unchanged (paras 14-18).
Fabry's second ground relied upon the concept that once an objection decision is before the AAT the original decision-maker is functus officio or, statutorily, s 26 of the AAT Act precludes alteration of the decision except by the Tribunal (paras 29-31, 26-28). Merkel J examined the wider statutory scheme: s 170(1) expressly says the Commissioner may "at any time amend any assessment", s 177F(1) empowers the Commissioner to make Part IVA determinations and take action to give effect to them, and s 177G(1) extends the s 170 time limits for amendments to give effect to Part IVA (paras 20-21, 33-35). That explicit statutory language manifests an intention to permit the Commissioner to reconsider assessments, subject to time limits expressly supplied in the taxation statute itself (para 32).
Applying the presumption against implied repeal and the maxim generalia specialibus non derogant (paras 11, 36-41), Merkel J concluded that the later and general s 26 AAT Act was not intended to derogate from the specific and earlier power conferred by s 170(1) of the ITA Act. He relied on authorities that where a later general provision can sensibly operate without derogating a prior special provision, the earlier special provision should be given effect (paras 36-41). He also reasoned, alternatively, that s 170(1) should be treated as the leading provision and s 26 subordinate where conflict appears (para 41). Therefore the second ground also failed (paras 40-41).
He further observed (para 44) that the AAT could itself make Part IVA determinations after the s 177G(1) date when a matter is reviewed, because s 170(7) permits amendment to give effect to decisions on review or appeal.
Before this decision (as of Merkel J's writing) the following positions were authoritative or relevant:
Merkel J's decision confirms and applies Jackson on the Part IVA amendment point and clarifies that, under the ITA/TA/AAT statutory matrix, s 170(1)'s specific power to amend "at any time" is not implicitly displaced by the AAT Act's s 26. Post-decision, the law at least in the Federal Court's Victoria registry was that: (a) Part IVA amendments may validly be made even where liability numbers do not change; and (b) a referral to the AAT does not automatically strip the Commissioner of the power to make Part IVA determinations and issue s 170 amended assessments, provided statutory time limits are satisfied.
Para 14-16 (Jackson's proposition adopted): Merkel J summarises that Part IVA operates differently from ordinary changes of legal basis: when Part IVA is applied the steps and considerations by which the liability is calculated are changed. Plain English: even if the tax number is the same, changing the legal basis (for example, saying the income should be assessed under a different head or by reference to Part IVA) alters how the liability was determined and so is an 'amendment' for s 170(1) purposes.
Para 20 (text of s 170(1)): "The Commissioner may ... at any time amend any assessment ... by making such alterations therein or additions thereto as he thinks necessary." Plain English: the tax statute specifically gives the Commissioner power to amend assessments at any time, subject to other constraints in the Act.
Paras 32-41 (construction of s 170(1) v s 26 AAT Act): Merkel J applies the presumption against implied repeal: where Parliament has given a specific power (s 170(1)) and later enacted a general provision (s 26 AAT Act) it should not be implied that the general provision removed the specific earlier power unless that intention is clearly required. Plain English: because the tax statute expressly gives the Commissioner a specific power, a later general prohibition in the AAT Act should not be read to cancel that specific tax power, unless Parliament's intention to do so is unmistakable.
Para 41 (leading provision): Merkel J explicitly states s 170(1) is the leading provision and, to the extent of conflict, s 26 gives way. Plain English: the specific tax law governs here, rather than the more general AAT rule preventing alterations by anyone other than the AAT.
This decision will be engaged where:
In such configurations Merkel J's reasoning supports the validity of the Commissioner acting under s 170(1) and s 177F(1) provided the statutory time limits (including s 177G(1)) are satisfied.
Merkel J applied and followed Jackson. He noted Puzey (Full Court) observed some arguable doubt but nonetheless accepted Jackson continued authority and Puzey itself accepted Jackson's core proposition (para 17). Merkel J distinguished Richard Walter when discussing the Hickman principle and constraints on challenging assessments in court (para 13). Merkel J also cited Vincent for the proposition that s 177G(1) extends the s 170 limits (para 44). Within this judgment, Merkel J treated Jackson as binding and Puzey as supportive of Jackson, and treated Richard Walter as distinguishable. The decision therefore stands in line with existing Full Court authority as reported in this judgment.
Note: Merkel J did not purport to catalogue subsequent appellate treatment beyond the authorities he cited; the present deep dive reports only how Merkel J used those authorities.
Scope of 'alteration' in other contexts: Merkel J adopted Jackson's proposition for Part IVA. There may remain questions about other contexts where the legal basis of assessment changes without numerical change and whether Jackson's reasoning extends beyond Part IVA. Merkel J confined the reasoning to the special character of Part IVA (paras 14-16).
Interaction of AAT exercise and Commissioner exercise in tight timeframes: Merkel J accepted the Commissioner may act to preserve rights in the face of a statutory limitation (s 177G(1)), and observed the AAT could itself act to give effect to Part IVA after the relevant date by s 170(7) (para 44). But operational questions persist about the proper sequencing, notice, and procedural fairness where both decision-makers might act within constrained timeframes.
Extent of 'express' authorisation needed to displace s 170(1): Merkel J required a clear implication to read s 26 as derogating from s 170(1). Future disputes may test what qualifies as sufficiently 'clear' in other legislative contexts or where different drafting or timing of enactments exists.
Finality and challenge under ss 175 and 177: Merkel J acknowledged the Hickman line of authority may limit collateral attack on assessments where review or appeal mechanisms exist, but he also accepted that if there was no statutory power to issue an assessment it could not be clothed as an assessment for that purpose (para 13). This tension between the limits on collateral challenge and the basic requirement that the assessment be validly made invites further litigation in different factual matrices.
This analysis explains what Merkel J decided in Fabry v Commissioner of Taxation [2003] FCA 1043 and how the Court applied statutory text and precedent. It is legal information only, not legal advice. I can make mistakes. Before you rely on or act on this material, or on any draft arising from it, get a qualified Australian lawyer to check it.
REASONS FOR JUDGMENT 1 The applicant ("Fabry") commenced a proceeding in the Court pursuant to s 39B of the Judiciary Act 1903 (Cth) for declarations that the determinations made on 12 June 2002 by the respondent ("the Commissioner") under s 177F of the Income Tax Assessment Act 1936 (Cth) ("the ITA Act") ("the 2002 Pt IVA determinations"), and the amended assessments issued on 12 June 2002 by the Commissioner under s 170(1) of the ITA Act ("the 2002 Pt IVA amended assessments") to give effect to the 2002 Pt IVA determinations, are invalid. 2 The Commissioner moved the Court for summary judgment on the ground, inter alia, that there was no reasonable cause of action to support Fabry's claims for declaratory relief. During the course of the hearing of the Commissioner's motion it became clear that the questions raised by the motion were essentially questions of law which could be determined by the Court on the basis of undisputed facts. In those circumstances the parties agreed that the hearing of the motion be treated as the final hearing of Fabry's application for declaratory relief. 3 The relevant background facts may be summarised as follows. During the years of income ended 30 June 1991, 1992, 1993 and 1994 ("the relevant years of income") income was received by the trustee of Fabry's family trust in respect of personal services provided by Fabry. In 1996 the Commissioner issued notices of assessment for the 1991, 1992 and 1993 years of income and a notice of amended assessment for the 1994 year of income ("the 1996 assessments") assessing Fabry in respect of the income received by the trustee of his family trust. The Commissioner also imposed penalty tax pursuant to s 223 of the ITA Act for the 1991 and 1992 years of income and pursuant to s 226G for the 1993 and 1994 years of income. In the 1996 assessments, in reliance upon ss 19 and 25 of the ITA Act, the Commissioner treated the income received by the trustee of Fabry's family trust as having been derived by, and therefore as assessable income of, Fabry. Fabry duly lodged notices of objection in respect of the 1996 assessments. The Commissioner allowed the objections in part by allowing a spouse rebate in each of the relevant years of income and reducing the amount of salary and wages assessed in two of the years of income ("the objection decisions"). In 1999 the Commissioner issued amended assessments ("the 1999 amended assessments") to give effect to the objection decisions. 4 Fabry was dissatisfied with the Commissioner's objection decisions and applied to the Administrative Appeals Tribunal ("the AAT") for the review of those decisions pursuant to s 14ZZ(a)(i) of the Taxation Administration Act 1953 (Cth) ("the TA Act"). Fabry claimed that the Commissioner had erred in treating him as having derived the taxable income in the relevant years of income. In the AAT the Commissioner did not rely upon Pt IVA of the ITA Act as a ground for treating the taxable income as income derived by Fabry. The AAT affirmed the 1999 amended assessments and Fabry appealed to the Court pursuant to s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) ("the AAT Act") against the decision of the AAT. On the appeal the Court concluded that the AAT had erred on a question of law and allowed the appeal, set aside the decision of the AAT and remitted the matter to the AAT to be determined in accordance with law: see Fabry v Commissioner of Taxation of the Commonwealth of Australia [2001] ATC 4697. 5 After the Court remitted the matter to the AAT the Commissioner, relying upon the decision of the Full Court in Fletcher v Commissioner of Taxation (1988) 19 FCR 442 ("Fletcher"), decided to seek to have the AAT make determinations under Pt IVA of the ITA Act. If the determinations were made by the AAT that would provide the Commissioner with an alternative basis for upholding the 1999 amended assessments. In accordance with the AAT's directions the parties filed submissions in relation to whether the AAT should make determinations under Pt IVA in respect of the relevant years of income. 6 The Commissioner became concerned that, by reason of the limitation period prescribed in s 177G(1) of the ITA Act, any amendment to an assessment for the purpose of giving effect to a determination under Pt IVA would have to be issued prior to 18 June 2002. Accordingly, on 12 June 2002, the Commissioner made the 2002 Pt IVA determinations and issued the 2002 Pt IVA amended assessments. By the determinations, which were made pursuant to s 177F of the ITA Act, the Commissioner determined that the tax benefits Fabry obtained as a result of the taxable income that was received by the trustee of his family trust in the relevant years of income, be included in his taxable income for those years. The taxable income assessed in, and the amount of tax payable under, the 2002 Pt IVA amended assessments was the same as the taxable income assessed in, and the amount of tax payable under, the 1999 amended assessments. 7 Although Fabry is entitled to lodge notices of objection in respect of the 2002 Pt IVA amended assessments, he nonetheless claimed that those amended assessments are invalid on two discrete grounds. The first ground is that the power of the Commissioner to amend an assessment under s 170(1) of the ITA Act can only be exercised to amend an assessment "by making such alterations therein or additions thereto" as the Commissioner thinks necessary. Fabry contends that an "amendment" of an assessment, which results in the same amount of taxable income and the same amount of tax payable cannot satisfy the requirement that there can be an "alteration" in, or an "addition" to, an assessment. Thus, it was contended that there was no power in the Commissioner to issue the 2002 Pt IVA amended assessments. 8 The second ground of invalidity is based upon the reference of the objection decisions to the AAT. Fabry contended that, upon the objection decisions being referred to the AAT, only the AAT was empowered to exercise the powers and discretions conferred by the ITA Act on the Commissioner in respect of the relevant years of income, including any powers conferred on the Commissioner under Pt IVA of that Act. In substance, Fabry contended that under the legislative scheme for the review of assessments there is only one repository at any one time of the Commissioner's statutory powers and discretions in respect of the tax assessed and payable in relation to the relevant years of income and that, upon the objection decisions being referred to the AAT, the repository of those powers and discretions was the AAT. Accordingly, so it was contended, in June 2002 only the AAT had the power to make determinations under Pt IVA in respect of the relevant years of income and to give directions or make decisions concerning amended assessments to give effect to those determinations. 9 In the alternative Fabry relied on s 26(1)(a) of the AAT Act which provides that after an application is made to the AAT for the review of a decision, the decision may not be altered otherwise than by the AAT, unless the decision to be altered was expressly permitted by the enactment that authorised the making of the application to the AAT. Fabry contended that the 2002 Pt IVA determinations and the 2002 Pt IVA amended assessments had the effect of altering the objection decisions of the Commissioner by adding a ground under Pt IVA of the ITA Act to support those decisions and that that alteration was not authorised by the TA Act, which authorised Fabry's application to the AAT. 10 The Commissioner disputed each of Fabry's contentions. He contended that the first ground of invalidity relied upon by Fabry is precluded by the decision of the Full Court in Commissioner of Taxation v Jackson (1990) 27 FCR 1 ("Jackson"), in which it was decided that, for the purposes of s 170(1) of the ITA Act, an amended assessment based on Pt IVA of the ITA Act necessarily involves an alteration in or addition to the assessment being amended. The Commissioner also disputed the contention that his powers and discretions under the ITA Act were spent in respect of amending assessments in relation to the relevant years of income when the objection decisions in respect of those years of income had been referred to the AAT. The Commissioner claimed that the power of amendment under s 170(1) of the ITA Act may be exercised "at any time", subject only to the time limits provided for in ss 170(2) and 177G(1) of the ITA Act, which had been complied with. 11 In so far as s 170(1) was inconsistent with s 26 of the AAT Act the Commissioner relied upon the maxim "generalia specialibus non derogant", which applies to cases in which the legislature, after having dealt specially with a particular matter, afterwards passed an enactment in general terms wide enough to repeal, supersede or qualify the original provision: see Maybury v Plowman (1913) 16 CLR 468 at 473-474. The principle involved in the maxim was said by the Commissioner to require that the earlier specific provision (s 170(1) of the ITA Act) not be treated as repealed, altered or derogated from by the later general provision (s 26 of the AAT Act), unless an intention to that effect is necessarily to be implied. In the present case it was contended that there is no basis for such an implication. 12 The Commissioner also contended that, in any event, s 26 of the AAT Act did not apply in respect of the 2002 Pt IVA determinations and amended assessments as those determinations and assessments did not alter the objection decisions but, rather, merely created an additional ground for supporting those decisions: cf The Commissioner of Taxation of the Commonwealth of Australia v Australia and New Zealand Savings Bank Limited (1994) 181 CLR 466 at 478-479. Alternatively, the Commissioner contended that, if the 2002 Pt IVA determinations and amended assessments altered the objection decisions, the alteration was expressly authorised by "the enactment" that authorised the making of the application to the AAT. The "enactment" was claimed to be the ITA Act and the TA Act, and s 170(1) was said to expressly authorise the alteration to the objection decisions. 13 The Commissioner also relied upon the "Hickman" principle (R v Hickman; Ex parte Fox and Clinton (1945) 70 CLR 598 at 615) to contend that ss 175 and 177(1) of the ITA Act precluded the applicant from challenging the 2002 Pt IVA amended assessments. The Commissioner contends that, except in a proceeding in which the assessment is the subject of a review or an appeal under the ITA Act and the TA Act, ss 175 and 177(1) required the Court to treat the 2002 Pt IVA amended assessments as having been duly made: see Deputy Commissioner of Taxation of the Commonwealth of Australia v Richard Walter Pty Limited (1995) 183 CLR 168 ("Richard Walter") at 186, 199, 211, 222-223 and 233. However, senior counsel for the Commissioner accepted, correctly in my view, that, if there was no power under the ITA Act to issue the 2002 Pt IVA amended assessments, they could not be regarded as assessments for the purpose of ss 175 and 177 of the ITA Act: see Plaintiff S157/2002 v Commonwealth of Australia (2003) 195 ALR 24 at 45 [76] and Commissioner of Taxation v Stokes (1996) 72 FCR 160 ("Stokes") at 171. 14 The first ground of invalidity relied upon by Fabry can be dealt with briefly. In Jackson, Hill J (with whom Burchett and von Doussa JJ agreed) at 13-16 carefully considered the circumstances in which an assessment made without reliance on Pt IVA may be amended by a subsequent assessment made in reliance upon Pt IVA, notwithstanding that the amended assessment did not alter the taxable income of, or the tax payable by, the taxpayer. Hill J accepted that, in general, there is no need for the Commissioner to amend an assessment where he is relying upon a different section of the ITA Act from that upon which he originally relied because, in making his assessment, he is making no alteration to any constituent element or particular of the assessment. However, (at 16-21) Hill J explained why Pt IVA applies in a different manner with the consequence that an amended assessment arising by reason of the application of Pt IVA by the Commissioner will "invariably" involve an alteration to a "particular" of the assessment because there has been a substantive alteration to or amendment made in the process of assessment. 15 An important aspect of the analysis of Hill J in Jackson was his Honour's reliance on s 185(2) of the ITA Act (the present counterpart of which is s 14ZV of the TA Act), which provided: "Where an assessment has been amended in any particular, the right of a taxpayer to object against the amended assessment is limited to a right to object against alterations or additions in respect of, or matters relating to, that particular." 16 His Honour was of the view that the steps required to be taken by the Commissioner under Pt IVA, including the making of a determination that would give rise to an amended assessment, constituted an amendment in a particular to the unamended assessment that had not previously been based upon Pt IVA and, as a consequence, the amended assessment had to "invariably" involve an alteration to a constituent element of, and therefore to a particular of, the assessment: see Jackson at 16-18. 17 It is unnecessary for present purposes, to consider the detail of his Honour's analysis because senior counsel for Fabry accepted that I am bound to follow Jackson, notwithstanding that in the recent Full Court decision of Puzey v Commissioner of Taxation [2003] FCAFC 197 ("Puzey") Hill and Carr JJ (with whom French J agreed) observed that it was arguable that the subsequent decision of a Full Court in Stokes might raise some doubt about the decision in Jackson (see [91]) but concluded that it was unnecessary to decide that question. In Puzey, Hill and Carr JJ accepted that Jackson continued to be authority for the proposition that it is necessary to amend an assessment when making a determination under s 177F(1) even when a taxpayer's taxable income and the tax payable thereon remains the same. Their Honours (at [93]) rejected the argument that an amended assessment must increase or reduce the taxable income and agreed with the following observation by the primary Judge (Puzey v Federal Commissioner of Taxation (2002) 51 ATR 616 at 618 [12]): "The amendment of an assessment pursuant to s 170(1) by 'alterations therein' or 'additions thereto' describes changes in the process of assessment by which the liability to tax has been calculated. It may or may not, result in variation of the amount payable pursuant to the amended manner of assessment, (See: Meredith v FCT (2002) 50 ATR 528; 2002 ATC 4730 at [43]-[45].)" 18 Accordingly, Fabry must fail on his first ground for contending that the 2002 Pt IVA amended assessments were invalid. 19 The contention of Fabry that the Commissioner's powers under Pt IVA are spent once the objection decisions were referred to the AAT requires consideration of the legislative scheme for assessments and the review of assessments contained in the ITA Act, the TA Act and the AAT Act. 20 The Commissioner may make an assessment of the amount of taxable income of any taxpayer, and any tax payable thereon: see ss 166 and 169 of the ITA Act. Section 170 of the ITA Act, relevantly, provides: "(1) The Commissioner may, subject to this section, at any time amend any assessment by making such alterations therein or additions thereto as he thinks necessary, notwithstanding that tax may have been paid in respect of the assessment. … (7) Nothing contained in this section shall prevent the amendment of any assessment in order to give effect to the decision upon any appeal or review, or its amendment by way of reduction in any particular in pursuance of an objection made by the taxpayer or pending any appeal or review." 21 Section 173 provides that an amended assessment is an assessment for the purposes of the ITA Act. Section 175A provides: "A taxpayer who is dissatisfied with an assessment made in relation to the taxpayer may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953." 22 The relevant objection and review procedure in Pt IVC of the TA Act is as follows. Section 14ZV provides: "If the taxation objection is made against a taxation decision, being an assessment or determination that has been amended in any particular, then a person's right to object against the amended assessment or amended determination is limited to a right to object against alterations or additions in respect of, or matters relating to, that particular." 23 Section 14ZY provides: "(1) If the taxation objection has been lodged with the Commissioner within the required period, the Commissioner must decide whether to: (a) allow it, wholly or in part; or (b) disallow it. (2) Such a decision is in this Part called an 'objection decision'. (3) The Commissioner must cause to be served on the person written notice of the Commissioner's objection decision." 24 Section 14ZZ provides: "If the person is dissatisfied with the Commissioner's objection decision, the person may: (a) if the decision is both a reviewable objection decision and an appealable objection decision - either: (i) apply to the Tribunal for review of the decision; or (ii) appeal to the Federal Court against the decision; or (b) if the decision is a reviewable objection decision (other than an appealable objection decision) - apply to the Tribunal for review of the decision; or (c) if the decision is an appealable objection decision (other than a reviewable objection decision) - appeal to the Federal Court against the decision." 25 Section 14ZZA provides: "The AAT Act applies in relation to: (a) the review of reviewable objection decisions; and (b) the review of extension of time refusal decisions; and (c) AAT extension applications; subject to the modifications set out in this Division." 26 Relevantly, the AAT Act provides in s 25: "(1) An enactment may provide that applications may be made to the Tribunal: (a) for review of decisions made in the exercise of powers conferred by that enactment; or (b) for the review of decisions made in the exercise of powers conferred, or that may be conferred, by another enactment having effect under that enactment." 27 Section 26 provides: "(1) Subject to section 42D, after an application is made to the Tribunal for a review of a decision, the decision may not be altered otherwise than by the Tribunal on the review unless: (a) the enactment that authorised the making of the application expressly permits the decision to be altered; or (b) the parties to the proceeding, and the Tribunal, consent to the making of the alteration. (2) A reference in subsection (1) to the alteration of a decision is a reference to: (a) the variation of a decision; or (b) the setting aside of a decision; or (c) the setting aside of a decision and the making of a decision in substitution for the decision set aside." 28 Section 43, relevantly, provides: "(1) For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision and shall make a decision in writing: (a) affirming the decision under review; (b) varying the decision under review; or (c) setting aside the decision under review and: (i) making a decision in substitution for the decision so set aside; or (ii) remitting the matter for reconsideration in accordance with any directions or recommendations of the Tribunal." 29 The question is whether, in the events that occurred, the Commissioner's power to make determinations under Pt IVA in respect of the relevant years of income, and to issue amended assessments under s 170(1) of the ITA Act to give effect to those determinations, was spent by reason of Fabry's application to the AAT for the review of the Commissioner's objection decisions. Fabry relied upon the decision of the High Court in R v Moodie; Ex parte Mithen (1977) 17 ALR 219, which concerned a scheme to establish an entitlement to student assistance under the Student Assistance Act 1973 (Cth). The Act set in place a decision making process for the determination of an application for assistance culminating in an entitlement of an applicant to refer an adverse decision to the Student Assistance Review Tribunal for review. The High Court decided (at 225) that, under the statutory scheme for review, the authorised person whose decision was being reviewed became functus officio once a request for review of that decision had been referred to the Tribunal (together with all records and other relevant papers) because at that stage "there is no further function under the Act for the authorized person to perform". 30 A similar approach has been taken within the AAT in relation to the powers of a decision-maker once an application has been made to the AAT for the review of the decision and the AAT is properly seised of the matter: see Re Rebeiro and Comcare (1996) 44 ALD 632 at 645. The AAT observed that that position has been given statutory force by s 26(1) of the AAT Act. 31 The Refugee Review Tribunal, established under the Migration Act 1958 (Cth), has also been regarded as functus officio upon a valid decision being handed down in accordance with the requirements of that Act: see Singh v Minister for Immigration and Multicultural Affairs (2001) 109 FCR 18 at 28 [35]. However, as was observed by Gleeson CJ in Minister for Immigration and Multicultural Affairs v Bhardwaj (2002) 209 CLR 597 at 603 [8], in all such cases the question is "whether the statute pursuant to which the decision-maker was acting manifests an intention to permit or prohibit reconsideration in the circumstances that have arisen". 32 The fundamental difficulty confronting Fabry's reliance on the statutory scheme for review under the ITA Act, the TA Act and the AAT Act is that s 170(1) of the ITA Act expressly empowers the Commissioner, subject to time limits that are not presently relevant, to amend an assessment "at any time". Thus, the subsection manifests an intention to permit the Commissioner to reconsider the tax payable by a taxpayer in respect of a year of income. When regard is had to the fact that the central element of the statutory scheme is the process of assessment by which a taxpayer's true substantive tax liability is ascertained (see Richard Walter at 187) there is no basis for reading down s 170(1). Accordingly, I do not accept Fabry's contention that it is implicit in the statutory scheme that the Commissioner's power of amendment is suspended or spent when a matter has been referred to the AAT. 33 A similar situation applies in respect of Pt IVA. Section 177F(1) of the ITA Act provides for the Commissioner to make a determination in respect of tax benefits and empowers the Commissioner to "take such action as he considers necessary to give effect to that determination". Although no time limit is imposed in respect of a determination under s 177F(1), s 177G(1) provides: "Nothing in section 170 prevents the amendment of an assessment at any time before the expiration of 6 years after the date on which tax became due and payable under the assessment if the amendment is for the purposes of giving effect to subsection 177F(1)." 34 Section 177G(1) has the practical effect of extending the time limits in s 170 in respect of amended assessments made to give effect to Pt IVA determinations. 35 As it is not contended that the 2002 Pt IVA determinations and assessments were made outside of any of the prescribed time limits it must follow that, subject to any explicit limitation on the Commissioner's powers, those determinations and amended assessments were validly made. 36 In the alternative, Fabry relied upon s 26 of the AAT Act as being an explicit limitation on the Commissioner's powers. It is clear that s 26 limits a decision maker's power to vary a decision after an application had been made to the AAT for the review of that decision. The prohibition in the section is that the decision may not be altered, in the sense of being varied or set aside, otherwise than by the AAT on the review. However, there is a difficulty in applying a later general provision, such as s 26 of the AAT Act, to read down the specificity of an earlier special provision, such as s 170(1) of the ITA Act, which expressly authorises the amendment of an assessment at any time. The principle of construing apparently conflicting provisions on the presumption that parliament cannot have intended the general provision to have deprived the specific provision of effect, applies to cases where the conflicting provisions are in different statutes (see Smith v The Queen (1994) 181 CLR 338 ("Smith") at 348) or in the same statute (see Refrigerated Express Lines (A/Asia) Pty Ltd v Australian Meat and Live-Stock Corporation (1980) 29 ALR 333 at 347). 37 As was observed by Gaudron J in Saraswati v The Queen (1991) 172 CLR 1 at 17-18: "It is a basic rule of construction that, in the absence of express words, an earlier statutory provision is not repealed, altered or derogated from by a later provision unless an intention to that effect is necessarily to be implied. There must be very strong grounds to support that implication, for there is a general presumption that the legislature intended that both provisions should operate and that, to the extent that they would otherwise overlap, one should be read as subject to the other: see Butler v. Attorney-General (Vict.) (1961) 106 C.L.R. 268, at p. 276, per Fullagar J., and per Windeyer J. at p.290. More particularly, an intention to affect the earlier provision will not be implied if the later is of general application (as is the provision by which indecent dealing is constituted an offence under the Act) and the earlier deals with some matter affecting the individual (as does the limitation provision in s. 78). Nor will an intention to affect the earlier provision be implied if the later is otherwise capable of sensible operation. The position was stated by Lord Selborne in Seward v. The 'Vera Cruz' (1884) 10 App. Cas. 59, at p. 68, as follows: 'where there are general words in a later Act capable of reasonable and sensible application without extending them to subjects specially dealt with by earlier legislation, you are not to hold that earlier and special legislation indirectly repealed, altered, or derogated from merely by force of such general words, without any indication of a particular intention to do so.'" 38 The reason for the above approach was explained by Wood VC in Fitzgerald v Champneys (1861) 2 John & H 31 at 54-55: "In passing the Special Act, the Legislature had their attention directed to the special case which the Act was meant to meet, and considered and provided for all the circumstances of that special case; and, having so done, they are not to be considered by a general enactment passed subsequently, and making no mention of any such intention to have intended to derogate from that which, by their own Special Act, they had thus carefully supervised and regulated." 39 In my view there is no basis for implying a legislative intention that s 26 of the AAT Act is to repeal, alter or derogate from the power of amendment of the Commissioner under s 170(1) of the ITA Act. The legislature has turned its mind to limiting the Commissioner's powers in respect of amended assessments and has done so expressly by reference to time limitations. There is no proper basis for engrafting upon those limitations the additional limitation sought by Fabry. The present case is analogous to Smith in which the majority held that, to the extent that there was any apparent conflict between s 14(3) of the Supreme Court Act 1986 (Vic) (which dealt specifically with restrictions on appeals) and s 85(3) of the Constitution Act 1975 (Vic) (which dealt generally with jurisdiction), the former must prevail. At 348, Mason CJ, Dawson, Gaudron and McHugh JJ stated: "It is but common sense that Parliament having before it two apparently conflicting sections at the same time cannot have intended the general provision to have deprived the specific provision of effect." 40 Applying the approach in Smith it is "but common sense" that Parliament cannot have intended that s 26 of the AAT Act has deprived s 170(1) of the ITA Act of effect once an objection decision has been referred to the AAT. Accordingly, I do not accept Fabry's contention that s 26 of the AAT Act impliedly repeals, alters or derogates from the power of amendment under s 170(1) of the ITA Act. The same reasoning and outcome is applicable to the antecedent and related power of the Commissioner to make determinations under Pt IVA, to which effect is required to be given in an assessment or an amended assessment: see ss 177F(1) and 177G(1) of the ITA Act. 41 The same conclusion can be arrived at by reconciling the two apparently conflicting provisions by determining "which is the leading provision and which the subordinate provision, and which must give way to the other": see Institute of Patent Agents v Joseph Lockwood [1894] AC 347 ("Lockwood") at 360 and Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 at 382. In Lockwood at 360 Lord Herschell LC stated that reconciling an apparent conflict between a statutory rule having statutory force and the statute itself would probably be resolved by treating the statute as "the governing consideration and the rule as subordinate to it". For the reasons given above I am in no doubt that s 170(1) is to be treated as the leading, or governing, provision in relation to the Commissioner's power to alter an objection decision and give effect to the alteration by issuing an amended assessment. Thus, to the extent that s 26 of the AAT Act and s 170(1) of the ITA Act are in conflict, s 26 must give way s 170(1). 42 Accordingly, Fabry's second ground for claiming invalidity has not been made out. 43 In view of the above conclusions it is unnecessary to consider the Commissioner's additional grounds for upholding the validity of the 2002 Pt IVA determinations and amended assessments. However, I would observe that there is considerable substance in those grounds. 44 There is one final observation I would make. One of the contentions put forward by the Commissioner was that it was necessary for him to exercise his powers under Pt IVA prior to 18 June 2002 as it was unlikely that the AAT would exercise the powers and discretions it was entitled to exercise under Pt IVA prior to that date. In substance, it was contended that the time limit in s 177G(1) prevented the Commissioner and the AAT from applying Pt IVA after 18 June 2002. However, there is no time limitation upon the making of a determination under s 177F(1) and the time limitation in s 177G(1) provides for the time limit in s 170 to be extended in Pt IVA cases: see Vincent v Federal Commissioner of Taxation (2002) 193 ALR 687 at 706 [88]. As was pointed out by senior counsel for Fabry, s 170(7) provides, inter alia, that the s 170 time limits do not prevent the amendment of an assessment to give effect to a decision on appeal or review: see Stevenson v Federal Commissioner of Taxation (1991) 29 FCR 282 at 299. Thus, the AAT would have the power to make a determination under Pt IVA after 18 June 2002 and to give directions for an amended assessment to issue in order to give effect to that determination.
45 For the above reasons, Fabry has failed to establish that the 2002 Pt IVA determinations and the 2002 Pt IVA assessments were invalid and, as a consequence, his application must be dismissed with costs. I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Merkel.
Counsel for the Applicant: Mr T Murphy SC with Mr M Bearman
Counsel for the Respondent: Ms H Symon SC with Ms D Handing
Solicitor for the Respondent: Australian Government Solicitors
Fabry
Commissioner of Taxation of the Commonwealth of Australia
(1988) 19 FCR 442
(1990) 27 FCR 1
(1913) 16 CLR 468
(1994) 181 CLR 466
(1945) 70 CLR 598
(1995) 183 CLR 168
(2003) 195 ALR 24
Application dismissed; applicant ordered to pay respondent's costs (Order dated 3 October 2003).
(1996) 72 FCR 160
(1977) 17 ALR 219
(2001) 109 FCR 18
(2002) 209 CLR 597
(1994) 181 CLR 338
(1980) 29 ALR 333
(1991) 172 CLR 1
(1998) 194 CLR 355
(2002) 193 ALR 687
(1991) 29 FCR 282