Fisher v Deputy Commissioner of Taxation

1. The amended originating application filed on 30 August 2024 be dismissed.
2. The applicant pay the respondents' costs on the ordinary basis up to and including 4 October 2024 and thereafter on the indemnity basis. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

JACKMAN J: 1 By an amended originating application filed 30 August 2024, the applicant seeks declaratory, injunctive and interlocutory relief against the Deputy Commissioner of Taxation (First Respondent) and Deputy Commissioner of the Australian Business Register (Second Respondent). The matter has been listed for final hearing today. The respondents have filed an interlocutory application seeking summary judgment under s 31A of the Federal Court of Australia Act 1976 (Cth) (FCA Act) and r 26.01 of the Federal Court Rules 2011 (Cth), but there is no utility in that application, given that the matter has now been heard on a final basis. 2 The applicant seeks to have declared invalid, and set aside: (a) the decision to cancel his Australian Business Number (ABN) under the New Tax System (Australian Business Number) Act 1999 (Cth) (ABN Act) and backdate that cancellation; (b) the decision to cancel his registration for goods and services tax (GST) under the New Tax System (Goods and Services Tax) Act 1999 (Cth) and backdate that cancellation; and (c) the notice of amended assessments of net amount. 3 The applicant also seeks consequential relief as a result of the primary relief sought. 4 The applicant's ABN was initially cancelled on 23 February 2023. On 4 April 2023, the applicant reactivated his ABN registration, effective from 4 April 2023, and sought to backdate the effect of the ABN to 4 April 2020. 5 On 2 January 2024, the First Respondent issued a letter to the applicant confirming that his GST registration was effective from 2 January 2024. The effect of the GST registration was also backdated to 4 April 2020. On 26 March 2024, the Australian Taxation Office informed the applicant that an audit of his activity statements was being undertaken. On 16 July 2024, the Second Respondent issued a letter to the applicant notifying him of his decision to cancel his ABN registration on the basis that the applicant was not carrying on a business (ABN Cancellation Decision). The ABN Cancellation Decision took effect from 4 April 2020. 6 On 17 July 2024, the First Respondent issued a notice of amended assessments of net amount during the period between 1 April 2020 and 31 March 2024 (Amended GST Assessments). The applicant only ever claimed net refunds during the period between 1 April 2020 and 31 March 2024. During that period, the applicant claimed GST on input tax credits totalling $54,567, while GST on taxable supplies totalled $662. The First Respondent formed the view that as the applicant was not carrying on an enterprise, he was not entitled to claim input tax credits during the period 1 April 2020 to 31 March 2024. 7 On 22 July 2024, the applicant filed an originating application seeking judicial review of a number of decisions made by the respondents under s 39B of the Judiciary Act 1903 (Cth). That application was supported by an affidavit of the applicant dated both 11 and 19 July 2024, although it is more likely to have been sworn on the latter date. In that affidavit, the applicant describes a wide range of activities said to constitute the enterprise, including renovating his own house to "flip it", allegedly restoring and "flipping" motor vehicles, and running for political office. The activities are also said to include, among other things, future plans to build a motel at Cowra Airport with shipping containers, and investing in technology that can bring people back to life through gene technology. 8 On 26 July 2024, the First Respondent issued a letter notifying the applicant that his GST registration had been cancelled because he was not carrying on an enterprise (GST Registration Cancellation Decision). The GST Registration Cancellation Decision took effect from midnight on 30 June 2024. 9 Pursuant to Part IVC of the Taxation Administration Act 1953 (Cth) (TAA53), the applicant has the right to object against: (a) the ABN Cancellation Decision, including the decision to backdate the effect of cancellation (see s 21(2), item 3 and item 6 of the ABN Act); (b) the GST Registration Cancellation Decision, including the decision to backdate the effect of cancellation (s 110-50(2), item 5 of sch 1 to the TAA53); and (c) the Amended GST Assessments (s 155-90 of sch 1 to the TAA53). 10 On 2 August 2024, the applicant lodged taxation objections pursuant to Part IVC (the Objections) against: (a) the ABN Cancellation Decision, including the decision to backdate the effect of cancellation; (b) the GST Registration Cancellation Decision, including the decision to backdate the effect of cancellation; and (c) the Amended GST Assessments. 11 The Objections were supported by the same material the applicant filed and served in these proceedings, and the grounds of objection are the same grounds for which the applicant contends in these proceedings. The Objections are at present being considered by the First Respondent, who anticipates making a decision in December 2024. 12 On 30 August 2024, the applicant filed an amended originating application, together with a second affidavit dated 22 August 2024. 13 The applicant's submissions advance contentions to the effect that the First Respondent's audit was invalid, the First Respondent was not entitled to withhold the applicant's GST refunds, the First Respondent shared personal information with the Second Respondent which fell foul of the Privacy Act and resulted in a breach of procedural fairness, the First Respondent has failed to deal with the objection properly, the Australian Tax Office's conduct is corrupt, and the applicant is not challenging the merits of the decision and refuses to undertake merits review. 14 There is an insuperable obstacle in the applicant's path in seeking the remedies set out in the amended originating application, irrespective of any question of the merit or lack of merit in his underlying contentions. The pendency of a proceeding by the applicant under Part IVC of the TAA53 is in itself a sufficient reason for the Court to refuse the declaratory and other relief which he seeks: Commissioner of Taxation v Futuris Corporation Limited [2008] HCA 32; (2008) 237 CLR 146 at [48] (Gummow, Hayne, Heydon and Crennan JJ); [97], [167]-[168] (Kirby J). Even if the Objections had not actually been lodged under Part IVC, the availability of the rights of objection, review and appeal under Part IVC would be sufficient to dispose of the present application. This may be seen as a specific application of the general principle that the grant of the constitutional writs and the exercise of the jurisdiction conferred on the Federal Court by s 39B of the Judiciary Act 1903 (Cth) is discretionary, and the discretion will not be exercised favourably to the applicant where a more convenient and satisfactory remedy exists: SZBYR v Minister for Immigration and Citizenship [2007] HCA 26; (2007) 81 ALJR 1190 at [28] (Gleeson CJ, Gummow, Callinan, Heydon and Crennan JJ). 15 It should be noted that assessments have been issued in the present case and Item 2 of s 350-10(1) of sch 1 to the TAA53 contains an exception for proceedings under Part IVC to the conclusive effect of the production of a notice of assessment under a taxation law as evidence that the assessment was properly made on an appeal or review relating to the assessment. Further, there is no real prejudice to the applicant in the Court declining to issue the declaratory and other relief which he seeks, given the availability of the procedure under Part IVC in the event the Objections are disallowed, together with the exception from the evidentiary presumption to which I have referred contained in s 350-10(1) sch 1 to the TAA53. 16 Accordingly, the amended originating application should be dismissed. 17 The respondents seek costs on the indemnity basis relying on correspondence of 11 September 2024 and 3 October 2024, explaining why the applicant lacked any real prospect of success and offering that he could discontinue the proceedings by 25 September 2024 and 4 October 2024 respectively with no order as to costs. The relevant principles concerning the costs consequences of unreasonably rejecting an offer of compromise were restated in Wills v Chief Executive Officer of the Australian Skills Quality Authority (Costs) [2022] FCAFC 43 at [22]-[23] (Logan, Griffiths and Perry JJ), citing Anchorage Capital Partners Pty Ltd v ACPA Pty Ltd (No 2) [2018] FCAFC 112 at [7] (Nicholas, Yates and Beach JJ). As those authorities indicate, the relevant circumstances include: (a) the stage of the proceeding at which the offer was received; (b) the time allowed to the offeree to consider the offer; (c) the extent of the compromise offered; (d) the offeree's prospects of success, assessed as at the date of the offer; (e) the clarity with which the terms of the offer were expressed; and (f) whether the offer foreshadowed an application for indemnity costs if the offer was rejected. 18 All of those factors favour an award of indemnity costs, with the partial exception of the last. The letter of 11 September 2024 foreshadowed an application for a costs order against the applicant in the event that the proceedings were resolved in the respondents' favour or were discontinued at a later date, but made no reference to indemnity costs. That omission was remedied in the letter of 3 October 2024, which made an offer of discontinuance with no order as to costs expiring at 4 pm on 4 October 2024. Accordingly, in my view, it is appropriate to order that the applicant pay the respondent's costs up to and including 4 October 2024 on the ordinary basis and thereafter on the indemnity basis. I certify that the preceding eighteen (18) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Jackman.