Administrative Appeals Tribunal of Australia|2012-03-08

Kalafatis and Commissioner of Taxation [2012] AATA 150 (8 March 2012)

CORRIGENDUM TO DECISION [2012] AATA 150

The Tribunal amends its decision of 8 March 2012 as follows:

CATCHWORDS - TAXATION - taxpayer's assessable income included net capital gain resulting from interest in two parcels of land transferred to family members - folio entry in Register conclusive evidence of title unless affected by fraud - taxpayer argues transfers affected by fraud and commenced Supreme Court proceedings to have Register amended - resolution requires exercise of judicial power as requires determination of rights and duties of taxpayer and family members - Tribunal is part of Commonwealth's executive arm of government and cannot exercise judicial power.

CATCHWORDS - PRACTICE AND PROCEDURE - Tribunal has power to make findings of fact on other matters relevant to resolution of review - distinction between resolving questions of law and making findings of fact - Tribunal's inability to determine an issue crucial to the outcome of the review a relevant consideration - failure to defer hearing would be neither fair, just, economical, informal nor quick - Tribunal defers its proceedings pending determination of Supreme Court proceedings.

CATCHWORDS - PRACTICE AND PROCEDURE - withdrawal of application pending determination of Supreme Court proceedings cannot be made subject to a right to have application reinstated at a later time - nature of withdrawal is that application taken to be dismissed - applicant cannot change mind and withdraw withdrawal - no implied right of reinstatement - consideration of difficulties of applicant's applying for reinstatement on basis that application dismissed in error when withdrawal is applicant's act and dismissal is by operation of law - consideration of option to apply for extension of time to lodge new application.

Administrative Appeals Tribunal 1975, ss 2A, 25(1), 25(3), 25(4), 25(6), 26(2), 29, 30(1A), 41(2), 41(4), 42A(1), 42A(8), 42A(9), 42A(10), 42A(1A), 42A(1B), 42C(1), 42D, 43

Income Tax Assessment Act 1936, ss 6(1), 48, 160AY, 160A(1), 160M(1), 160M(1A), 160U(3), 160U(4), 160ZC, 160ZO, 169, 174, 175A, 204

Chambers 21st Century Dictionary, 1999, reprinted 2004, Chambers

Albarran v Members of the Companies Auditors and Liquidators Disciplinary Board [2007] HCA 23; (2007) 234 ALR 618; 95 ALD 220

Aon Risk Services Australia Limited v Australian National University [2009] HCA 27; (2009) 239 CLR 175; 258 ALR 14

Attorney-General of the Commonwealth of Australia v Alinta Limited [2008] HCA 2; (2008) 233 CLR 542; 242 ALR 1

Brandy v Human Rights and Equal Opportunity Commission [1995] HCA 10; (1995) 183 CLR 245; 127 ALR 1; 37 ALD 340

Hong Ye v Minister for Immigration & Multicultural Affairs [1998] FCA 341

Horvath v Commonwealth Bank of Australia [1998] VSCA 51; [1999] 1 VR 643

Huddart Parker & Co Pty Ltd v Moorehead [1909] HCA 36; (1909) 8 CLR 330; 15 ALR 241

Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611; 162 ALR 577; [1999] HCA 21

Pasini v United Mexican States [2002] HCA 3; (2002) 209 CLR 246; 187 ALR 409

Precision Data Holdings Ltd v Wills [1992] HCA 28; (1991) 173 CLR 167; 104 ALR 317

Prentis v Atlantic Coast Line Co [1908] USSC 160; (1908) 211 US 210

Qantas Airways Ltd v Gubbins (1992) 28 NSWLR 26

Queensland v J L Holdings Pty Ltd [1997] HCA 1; (1997) 189 CLR 146; 141 ALR 353; 71 ALJR 294

Re Basile and Minister for Immigration and Citizenship [2010] AATA 556

Re CKI Transmission Finance (Australia) Pty Ltd and Anor and Australian Taxation Office [2011] AATA 654; (2011) 123 ALD 378; 55 AAR 493

Re Kerferd and Secretary, Department of Families, Community Services and Indigenous Affairs [2007] AATA 1730

Re VCA and others and Australian Prudential Regulation Authority [2008] AATA 580; (2008) 105 ALD 236

Re White and Secretary, Department of Families, Community Services and Indigenous Affairs [2007] AATA 1712; (2007) 97 ALD 204; 46 AAR 208

Re Wilson and Commissioner of Taxation [2007] AATA 1721; (2007) 46 AAR 225; 69 ATR 308; 98 ALD 99

Retail Employees Superannuation Pty Ltd v Crocker [2001] FCA 1330; (2001) 48 ATR 359

Rola Co (Australia) Pty Ltd v Commonwealth [1944] HCA 17; (1944) 69 CLR 185

The Queen v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd [1970] HCA 8; (1970) 123 CLR 361

DECISION AND REASONS FOR DECISION [2012] AATA 150

Decision: The Tribunal decides that this matter not be listed for hearing until a date after the resolution of Supreme Court proceedings S CI 2009 04976.

On 15 August 2008, Mr Nicholas Kalafatis has applied to the Tribunal for review of a decision made by the Commissioner of Taxation (Commissioner) disallowing his objection to an assessment made for the year ended 30 June 1997. His objection had been made on 13 March 2008. It was to the effect that he should be permitted to remove a net capital gain of $100,526 from his taxation return for the year of income ending 30 June 1997 as the return had been completed incorrectly and lodged without his consent by the family accountant.

2. The family accountant, Mr Kalafatis alleges, had incorrectly stated that he had sold his interest in two parcels of land to members of his family in 1997. Title searches show the transfers in 1997 but Mr Kalafatis states that he had not signed any transfer papers. In 2007, he lodged a caveat on each title "To prevent fraudulent and improper dealings".[1] In 2009, Mr Kalafatis began proceedings in the Supreme Court of Victoria against certain members of his family and the trustee of the Kalafatis Family Trust in relation to the land. Those proceedings are continuing and orders have been made with a view to having the case listed for pre-trial directions on or after 9 April 2012 if it is not resolved beforehand.

3. The issue at this stage is whether the proceedings in the Tribunal should proceed to hearing or whether they should be deferred waiting on an outcome in the Supreme Court. I have decided that they should be deferred for the reasons I give below. In essence, my reasons are that, if Mr Kalafatis should be successful in the Supreme Court proceedings, it may be that there has been no change in the ownership of the property and so no liability to pay capital gains tax. The issue before the Supreme Court is not a matter that can be decided by the Tribunal but would be a relevant matter in considering whether there has been a CGT event. It is not a mere evidentiary matter on which the Tribunal may make a finding of fact and its resolution requires the exercise of judicial power and amendment of the Certificate of Title. Given that the proceedings in the Supreme Court are moving towards a hearing, considerations of substantive justice require that the Tribunal defer its consideration until the judgment is known. The proposal put on behalf of Mr Kalafatis that he withdraw his application in the meantime provided he was given a right to have it reinstated if he is successful in the Supreme Court is not a proposal that I have power to implement. There is no right of reinstatement conferred under the Administrative Appeals Tribunal Act 1975 (AAT Act).

A taxpayer's assessable income includes his or her net capital gain for the income year. In the year ending 30 June 1997, capital gains and capital losses were the subject of Part IIIA of the Income Tax Assessment Act 1936 (ITAA36). I will give only the most general overview in this passage as the Part sets out a detailed regimen of regulation subject to exceptions, exemptions and qualifications.

5. Capital gains were made or capital losses incurred if, on or after 20 September 1985, a taxpayer disposed of an asset which he or she had acquired before that day.[2] An "asset" was defined, in general terms, as "any form of property".[3] It included real property. The time of an asset's disposal was determined under s 160U. Where an asset was disposed of under a contract, the time of disposal was taken to be the time of making the contract.[4] When the asset was disposed of otherwise than under contract, it was to be taken to have been the time when the change in the ownership of the asset that constituted the disposal occurred.[5] Other provisions of s 160U applied to other situations but they do not appear to apply in this case. Section 160M set out what constituted a disposal or acquisition. I will begin with ss 160M(1) and (1A):

"(1) Subject to this Part, where a change has occurred in the ownership of an asset, the change shall be deemed, for the purposes of this Part, to have effected disposal of the asset by the person who owned it immediately before the change and an acquisition of the asset by the person who owned it immediately after the change.

(1A) It is declared for the avoidance of doubt that, subject to paragraphs (3)(a) and (aa), a change of the legal ownership of an asset does not constitute a change in the ownership of the asset for the purposes of this Part unless there is also a change in the beneficial ownership of the asset."[6]

A change of ownership is also taken to have occurred in the circumstances set out in s 160M(3). They include circumstances in which there has been a declaration of trust in favour of a person other than the person who owned the asset immediately before the creation of the trust.[7]

6. Where a net capital gain accrued to a taxpayer in respect of a year of income, his or her assessable income included that net capital gain in that year.[8] A net capital loss was dealt with under s 160ZC.[9] In calculating the taxable income of the taxpayer, therefore, any capital gains formed part of the assessable income from which were deducted all allowable deductions.[10]

THE PROGRESS OF THE APPLICATION IN THE TRIBUNAL

7. Since the application was lodged, various proceedings have occurred or steps taken in either the Supreme Court or in the Tribunal.

(2) Notice sent to Commissioner under AAT Act, s 29; and

Summonses issued to lawyer and accountants at request of Commissioner

(1) Conference vacated as Mr Kalafatis looking to institute Supreme Court proceedings against other family members; and

(2) Directions issued that Mr Kalafatis lodge signed witness statements, all relevant documents and a Statement of Facts and Contentions by 27 March 2009 and the Commissioner by 17 April 2009.

Hearing listed for 27 April 2009 to consider whether application should be dismissed for failure to comply with direction.

(1) By letter dated 15 April 2009, both parties consent to adjournment of application pending a judgment in the Supreme Court proceedings.

(2) Tribunal orders that, by consent, the proceedings are stayed pending the judgment in the Supreme Court proceedings.

Registry checked with Mr Kalafatis's solicitors regarding progress of Supreme Court proceedings and advised that they were in progress but could not envisage them being completed by the end of the year.

(1) Mr Kalafatis's solicitors send a copy of an order dated 11 March 2010 setting the timetable by which the parties must file and serve the material on which they rely and certain other procedural matters.

Directions hearing listed for 9 July 2010 to discuss progress of the matter.

Directions hearing vacated and re-scheduled for 25 October 2010.

(1) Applicant advised that filing in Supreme Court in accordance with its directions - amended schedule of timetable for filing not given to Tribunal.

(2) Applicant's solicitors to obtain instructions regarding disclosure of relevant information to the Commissioner.

(1) regarding the progress of the Supreme Court proceedings. They note that the Defendants filed an Amended Defence and predict that Mr Kalafatis will need to file a Second Amended Statement of Claim;

(2) seeking an adjournment of the Tribunal's proceedings or, alternatively, canvassing the possibility of his withdrawing his application with the Commissioner's consent and subject to the Commissioner's agreeing that he have a right of reinstatement.

(1) Options discussed and decision to wait further for outcome of Supreme Court proceedings.

(1) Details sought of precise steps taken in Supreme Court proceedings on behalf of Mr Kalafatis and stage reached.

Mr Kalafatis's solicitors advised directions hearing listed in Supreme Court for 21 July 2011 and resubmit to obtain timetable set by that Court.

Telephone calls by Tribunal to Mr Kalafatis's solicitors for timetable; no response.

Mr Kalafatis's solicitors returned telephone calls and advised would forward timetable.

(1) Telephone calls by Tribunal to Commissioner's representative advising no timetable received.

(2) Directions hearing listed for 28 September 2011.

Mr Kalafatis's solicitors lodge order made by Supreme Court on 21 July 2011 setting out a timetable for filing and serving material and concluding with a pre-trial directions hearing on 29 November 2011.

Mr Kalafatis's solicitors send copy of Minutes of Consent Orders dated 28 November 2011 extending timetable so that it concludes with a pre-trial directions hearing not before 9 April 2012.

(1) Discussion about progress of matter, power of Tribunal to decide ownership of the land and appropriateness or otherwise of waiting for outcome of Supreme Court proceedings.

The Tribunal's power to review the Commissioner's objection decision

8. Section 14ZZ(a)(i) of the Taxation Administration Act 1953 (TA Act) provides that, if a decision is a reviewable objection decision, a taxpayer may "apply to the Tribunal for review of the decision". Section 14ZZK provides that an applicant is limited to the grounds stated in the taxation objection unless the Tribunal orders otherwise. The applicant carries the burden of proving that the assessment is excessive or, if a franking assessment, that it is incorrect or, in any other case, that the taxation decision should not have been made or should have been made differently. Section 43(1) of the AAT Act applies to review in the Tribunal: s 14ZZJ. It permits the Tribunal to affirm, vary or set aside and either substituting another decision or remitting the matter for reconsideration.

9. In this case, the relevant basis of review will be that the Commissioner's assessment is excessive. In the year ending 30 June 1997, the word "assessment" was defined in s 6(1) to mean, among other things, "(a) the ascertainment of: (i) the amount of taxable income ... and of the tax payable on that taxable income or net income". "Taxable income" meant, for the purposes of this case in the year ending 30 June 1997 "... the amount remaining after deducting from assessable income all allowable deductions".[11] As a net capital gain was assessable income, regard was had to it in assessing a taxpayer's taxable income. Section 169 of ITAA36 provided that:

"Where under this Act any person is liable to pay tax, the Commissioner may make an assessment of the amount of such tax."

As soon as conveniently might be after an assessment was made, s 174 required the Commissioner to serve notice of it in writing upon the person liable to pay the tax. The tax became due and payable on the date specified in the notice and determined in accordance with s 204 of ITAA36.

The issue requiring resolution to review the objection decision

10. Assuming that Mr Kalafatis did not acquire his interest in the two parcels of land before 20 September 1985, the only matter that would seem to be in issue in this case is whether Mr Kalafatis disposed of an asset being his interest in two parcels of land.

11. In deciding that issue on a review of the decision, the Tribunal would look to the evidence of ownership of the land, the time of any changes in that ownership, whether a contract for disposing of that interest had been entered and, if so, when.

12. In looking at the first issue, regard would be had to the certificate of title relating to each parcel of land. A "certificate of title" is described in s 27B(1) of the Transfer of Land Act 1958 (Vic) (TL Act) as:

"... a document in writing containing the information, or an extract of the information, on a folio of the Register as at the date of production of the certificate of title."

13. The Register is kept under s 27 of the TL Act and consists of folios.[12] Each folio relates to one or more parcels of land and together comprise the Register[13] kept under s 27 of the TL Act. The Registrar of Titles (Registrar) creates a folio by recording a description of the land for which it is created and other information specified in s 27(7) of the TL Act. Among that information is the proprietor of the land and other estates or interests, if any, affecting the land. Each folio of the Register must contain recordings that are required or authorised to be made under an enactment and that affect the land for which the folio was created.[14] Having created a folio, the Registrar "... must keep a record of all dealings recorded in, or action taken in respect of, any folio of the Register, and any other information in relation to folios of the Register that the Registrar thinks fit."[15]

14. Section 41 of the TL Act provides, in so far as it is relevant, that:

"... every folio of the Register shall be received in all courts as evidence of the particulars recorded in it and all recordings of those particulars in the Register, and shall be conclusive evidence that the person named in the folio as the proprietor of, or having any estate or interest in, ... the land described in the folio is seised or possessed of that estate or interest ...".

This is so even if there is an informality or irregularity in any application or instrument or in any proceedings that occurred before the folio was created or before a record was made on it.[16]

"In any proceedings a document certified in writing signed by the Registrar to be a record, as at a particular date, of the information recorded on any part of a folio of the Register is conclusive proof, without production of the folio of the Register, that at that date the recordings on the folio to which the document applies were as stated in the document."

16. Section 44 of the TL Act is relevant if a folio or an amendment to a folio has been obtained by fraud. Section 44(1) provides:

"Any folio of the Register or amendment to the Register procured or made by fraud shall be void as against any person defrauded or sought to be defrauded thereby and no party or privy to the fraud shall take any benefit therefrom."

17. The effect of these provisions is that the person shown on the relevant folio, and so certificate of title, as the registered proprietor has an indefeasible title to the parcel of land described in that folio unless registration has been procured by fraud. That means that it cannot be questioned by the Tribunal unless it has been procured by fraud. If the certificates of title show that Mr Kalafatis transferred the parcels of land to family members, that means that they are conclusive evidence that he has divested himself of an asset which takes the form of his interest in the parcels of land.

18. There will be occasions, such as that in which Mr Kalafatis finds himself, in which it is said that the documents relied on by the Registrar in making amendments to the folio and showing changes in ownership were flawed or perhaps void or voidable. These were referred to by Ormiston J in Horvath v Commonwealth Bank of Australia[17] in the context of whether a mortgage executed by an infant and registered by a mortgagee is effective as against that infant. His Honour summarised the law in Victoria and explained the consequences of the TL Act's having provided for indefeasibility of title:

" In every case where indefeasibility arises as an issue, it is because the means chosen by the parties seeking registration has been a transaction which had what is alleged to be a vitiating element of some description. The party seeking to rely on a registered title or interest has been met with a challenge that the transaction which was registered or which led to registration of such title or interest was ineffective to pass title or create the interest. Where the vitiating element is 'fraud', then that is recognised in the Act (see ss.42, 43 and 44) as allowing the other party to go behind the record of registration. Otherwise, but subject to the exceptions set out in s.42, the concept of immediate indefeasibility as spelled out in Frazer v. Walker and Breskvar v. Wall is ordinarily recognised as defeating any claim that the transaction giving rise to the registered interest was void, voidable, unenforceable, illegal or otherwise ineffective, unless that party has a 'personal equity' of a kind which would entitle that person to an order requiring the registered holder to transfer or surrender up the

interest so acquired. As Barwick, C.J. expressed it in Breskvar v. Wall (at 386):

'Consequently, a registration which results from a void instrument is e_ffective according to the terms of the registration. It matters not what the cause or reason for which the instrument is void.'_

So, in the case of forgery of a transfer, unless the transferee was aware of the wrongdoing, registration of a document not even signed by a registered proprietor becomes indefeasible from the moment of registration: see Vassos v. State Bank of South Australia [[1993] VicRp 74; 1993] 2 V.R. 316 at 327-328 per Hayne, J., approved in Pyramid Building Society v. Scorpion Hotels Pty. Ltd. [1998] 1 V.R. 188. In each case it matters not what is the vitiating factor: the policy of the Act is that, subject to the stated exceptions, registration results in a title or interest which is incapable of challenge. 'The doctrine of an indefeasible title arising by registration was seen as the very essence of the Torrens system from the beginning': per Windeyer, J. in Breskvar v. Wall at 400. So the Privy Council concluded in Frazer v. Walker that 'registration once effected must attract the consequences which the Act attaches to registration whether that was regular or otherwise ... It is in fact the registration and not its antecedents which vests and divests title': at 580, a passage quoted with approval by Gibbs, J. in Breskvar v. Wall at 413."[18]

Who decides whether fraud procured amendment to the Register?

19. In the usual case, such a question would be decided by a Court. It would arise in the context of a dispute between two or more people as has happened here between Mr Kalafatis and other members of his family. Resolution of such a question would normally be resolved by a court exercising judicial power. As Kitto J explained in The Queen v Trade Practices Tribunal; Ex parte Tasmanian Breweries Pty Ltd[19] (Tasmanian Breweries):

"... Thus a judicial power involves, as a general rule, a decision settling for the future, as between defined persons or classes of persons, a question as to the existence of a right or obligation, so that an exercise of the power creates a new charter by reference to which that question is in future to be decided as between those persons or classes of persons. In other words, the process to be followed must generally be an inquiry concerning the law as it is and the facts as they are, followed by an application of the law as determined to the facts as determined; and the end to be reached must be an act which, so long as it stands, entitles and obliges the persons between whom it intervenes, to observance of the rights and obligations that the application of the law to facts has shown to exist. ...".[20]

20. In Rola Co (Australia) Pty Ltd v Commonwealth[21] (Rola), Starke J, who together with Latham CJ and McTiernan JJ formed the majority approved the statement made by Holmes J in Prentis v Atlantic Coast Line Co[22] that:

"A judicial inquiry investigates, declares, and enforces liabilities as they stand on present or past facts and under laws supposed already to exist. That is its purpose and end ..."

21. Judicial power of this sort is the subject of s 71 of the Commonwealth of Australia Constitution Act (Constitution). It provides that it shall be vested in the High Court and in such other federal courts as Parliament creates and in such other courts as it invests with federal jurisdiction. The nature of the judicial power was explored by the High Court in Huddart Parker & Co Pty Ltd v Moorehead.[23] Griffith CJ said that:

"... the words'judicial power' as used in sec 71 of the Constitution mean the power which every sovereign authority must of necessity have to decide controversies between its subjects or between itself and its subjects, whether the rights relate to life, liberty or property. The exercise of this power does not begin until some tribunal which has power to give a binding and authoritative decision (whether subject to appeal or not) is called upon to take action."[24]

22. Under the Constitution, an administrative body may not exercise judicial power. The distinctions between judicial power and administrative power exercised by an administrative body are not always clearly drawn. Together with then Member Fice, I explored the distinctions in Re VCA and others and Australian Prudential Regulation Authority[25] and adopt that analysis. For the moment, I note that an administrative power, rather than a judicial power, may be able to be identified by reference to the fact that, like an industrial award, it:

"... lays down rules of conduct for the future. It does not purport to ascertain and enforce existing rights; it is directed to the creation of new rights. ..."[26]

23. The fact that a power must be exercised judicially does not determine the matter either way for that may be true of both judicial and administrative power.[27] The fact that the exercise of a power creates new rights is not necessarily determinative of its being an administrative power. In Precision Data Holdings Ltd v Wills,[28] the High Court said:

" In some situations, the fact that the object of the determination is to bring into existence by that determination a new set of rights and obligations is not an answer to the claim that the function is one which entails the exercise of judicial power ... However, where, as here, the function of making orders creating new rights and obligations is reposed in a tribunal which is not a court and considerations of policy have an important part to play in the determination to be made by the tribunal, there is no acceptable foundation for the contention that the tribunal, in this case the Panel, is entrusted with the exercise of judicial power."[29]

24. The distinctions between judicial power and administrative power can be difficult to draw on occasion. Various factors may influence the characterisation as one or the other. They include whether the power has a disciplinary, rather than a punitive, function,[30] the method of decision-making prescribed and whether it is unsuited to one power or the other,[31] whether regard must be had to policy considerations[32] and whether a power to enforce a decision is conferred.[33] None is conclusive but the majority in Albarran expressly declined to canvass the line of authorities, such as Pasini v United Mexican States[34] "... which establish that there are some powers which appropriately may be treated as administrative when conferred on an administrative body and as judicial when conferred on a federal court or court exercising federal jurisdiction. ..."[35]

25. In the later case of Attorney-General of the Commonwealth of Australia v Alinta Limited,[36] Gummow J commented on the chameleon argument that "Where it applies, the 'chameleon' analogy supports a case for validity and not the opposite."[37] Hayne J emphasised that "... no single combination of necessary or sufficient factors identifies what is judicial power. So much is made plain by the so called chameleon-doctrine ... and the cases in which that doctrine has been engaged."[38] Although not referred to by name, the chameleon-doctrine had been recognised in Tasmanian Breweries by the majority when they recognised that there is a:

"... 'borderland in which judicial and administrative functions overlap' ...., so that for reasons depending upon general reasoning, analogy or history, some powers which may be treated as administrative when conferred on an administrative functionary may just as appropriately be seen in a judicial aspect and be validly conferred upon a federal court. ....".[39]

26. In the situation in which Mr Kalafatis finds himself, resolution lies not in the creation of new rights and liabilities but in a determination of past rights and liabilities between him and his family and the effect of past dealings and actions on those rights and liabilities. That determination will become the benchmark by reference to which his rights and liabilities in relation to the two parcels of land will be determined in the future. They will be determined not only for the purposes of resolving disputes among the Kalafatis family generally but more particularly disputes between Mr Kalafatis and other members of his family. A resolution of this sort can only come about through the exercise of judicial power. It cannot come about through the exercise of administrative power such as that which this Tribunal can exercise.

27. That this is so is clear from the nature of the judicial power and of administrative power as described in cases such as those to which I have referred. It is also clear when the constraints within which the Tribunal exercises its administrative power are examined.

28. In reviewing an objection decision made by the Commissioner, the taxpayer has the burden of establishing, on the balance of probabilities, that the Commissioner's assessment is excessive. Depending on whether the taxpayer successfully satisfies that burden or not, the Tribunal must exercise its powers under s 43(1) of the AAT Act to affirm, vary or set aside the objection decision and either substitute another decision or remit the matter for reconsideration.[40] In exercising these powers, the Tribunal is either affirming liabilities assessed by the Commissioner or determining new liabilities as the Commissioner did initially. It is the Commissioner or, subsequently, the Tribunal that determines the new liabilities rather than ITAA36 itself. I mean this in the sense that liabilities arise under ITAA36 but do not crystallise in the sense of tax becoming payable until the Commissioner makes an assessment and serves notice of that assessment on the taxpayer.[41]

29. The decision that is reviewed by the Tribunal also imposes constraints upon its powers to decide whether the amendments to the relevant folios in the Register were obtained by fraud. Section 160M turns on a change of ownership. If there is a change of legal and beneficial ownership of an asset, there is deemed to have been a disposal of the asset. The Commissioner, and so this Tribunal, must decide whether there has been such a change and can only do that on the basis of evidence or material. The evidence that is available to it at the moment comes from the relevant folios in the Registrar and shows a change of ownership in the parcels of land and, on its face, does not suggest that the beneficial ownership has not also changed. Section 41 of the TL Act provides that every folio of the Register is conclusive evidence of those having an estate or interest in the land. That means that this Tribunal cannot go behind the folio to make its own determination. Maintaining registers of transactions relating to real property is clearly within State legislative power. There is nothing in the Commonwealth law providing that the Tribunal may disregard State law.

30. The practical realities of a review of a decision in the Tribunal illustrate why the Tribunal could not determine, or even make a finding of fact, whether any amendment to a folio of the Register has been obtained by fraud. That is an issue that arises between Mr Kalafatis and members of his family, who are not parties to this proceeding. While the family members could be called to give evidence regarding their dealings with the land, they could not call their own witnesses or cross-examine those called on behalf of Mr Kalafatis. That they have an opportunity to do so would be essential before any determination or finding could be made.

31. The Tribunal does not have the power to give the Kalafatis family that opportunity. It would only be able to do so if its members could be joined as parties to the application but the Tribunal does not have power to do that. Its power is both conferred and limited by s 30(1A) of the AAT Act. It provides:

"Where an application has been made by a person to the Tribunal for a review of a decision, any other person whose interests are affected by the decision may apply, in writing, to the Tribunal to be made a party to the proceeding, and the Tribunal may, in its discretion, by order, make that person a party to the proceeding."

The decision to which the section refers is the decision which is under review. That is the objection decision made by the Commissioner that Mr Kalafatis's taxable income includes tax on a capital gain made on the sale of his interest in the two parcels of land. The interests of Mr Kalafatis's family are not affected by that decision. It is not to the point that their interests would be affected by a decision that any amendment to the relevant folios had been obtained by fraud as that is not the decision under review by the Tribunal. Therefore, they could not be joined as parties and the Tribunal would not be able to give them an opportunity to present their case. Quite apart from the legal constraints of s 41 of the TL Act's effectively preventing it from looking behind a folio of the Register, practical considerations of this sort mean that it would be entirely inappropriate for the Tribunal to attempt to make a finding of fact on the issue of alleged fraud.

32. If it were relevant to consider whether Mr Kalafatis had created a trust over the land and he were not the sole beneficiary of the trust (and I express no view on the matter), that would be an issue on which the Tribunal could make a finding of fact after considering the evidence. There are no statutory provisions that mirror those of the TL Act relating to the conclusive nature of folios of the Register. Determining a finding of fact would not involve a determination of Mr Kalafatis's rights and obligations against other persons or theirs against him. It would be a finding made purely for the purposes of reviewing the objection decision as required by the TA Act. As such, it would be a finding made in the exercise of administrative power and would have no legal effect or consequences beyond that review and the decision reached upon it.[42]

"In carrying out its functions, the Tribunal must pursue the objective of providing a mechanism of review that is fair, just, economical, informal and quick."

34. This provision sets the backdrop to a consideration of whether Mr Kalafatis's application should be adjourned pending the outcome of the Supreme Court proceedings that he has instituted. The ordinary meanings of the word "just" include:

"... 1 fair; impartial. 2 reasonable; based on justice. 3 deserved. ..."[43]

"... 1 the quality of being just; just treatment; fairness. 2 the quality of being reasonable. 3 the law, or administration of or conformity to the law ..."[44]

What is "fair" is "1 just; not using dishonest methods or discrimination. 2 in accordance with the rules. ...".[45] To be "economical" is to be "... not wasting money or resources ... thrifty; frugal or careful ... " while to be "quick" is to be "... taking little time ... brief ... fast; rapid; speedy ... not delayed; immediate ...".[46] The meanings of "informal" do not require further explanation in this context.

35. Given their ordinary meanings, it is apparent that it may well be impossible to achieve all of the objectives all of the time. They cannot, therefore, be regarded as prescriptive. A provision similar to s 2A was considered by the High Court in Minister for Immigration and Multicultural Affairs v Eshetu[47] (Eshetu). That provision was s 420 of the

Migration Act 1958 (Migration Act).[48] It decided that:

"... The history of legislative provisions similar to s 420 was examined in Qantas Airways Ltd v Gubbins[[49]]. They are intended to be facultative, not restrictive. Their purpose is to free tribunals, at least to some degree, from constraints otherwise applicable to courts of law, and regarded as inappropriate to tribunals. The extent to which they free tribunals from obligations applicable to the courts of law may give rise to dispute in particular cases, but that is another question."[50]

36. Provisions such as s 420 of the Migration Act and s 2A of the AAT Act do not affect substantive rights. In so far as those criteria can be achieved, they relate to the "mechanism of review" and so to the "... arrangements and action by which ..." review is achieved.[51] That touches upon procedures that are directed to resolving the case whether after review by the Tribunal or between the parties with or without the intervention or assistance of the Tribunal or its Conference Registrars and so upon the Tribunal's general management of the applications that are lodged. It also touches upon the right that is given to persons under enactments other than the AAT Act to have decisions reviewed.[52]

37. These can be competing factors. How they are to be balanced has been considered by the High Court when considering the way in which applications for adjournment or of amendment to pleadings had been decided at first instance. In the case of Aon Risk Services Australia Limited v Australian National University[53] (Aon), French CJ said:

" In the proper exercise of the primary judge's discretion, the applications for adjournment and amendment were not to be considered solely by reference to whether any prejudice to Aon could be compensated by costs. Both the primary judge and the Court of Appeal should have taken into account that, whatever costs are ordered, there is an irreparable element of unfair prejudice in unnecessarily delaying proceedings. Moreover, the time of the court is a publicly funded resource. Inefficiencies in the use of that resource, arising from the vacation or adjournment of trials, are to be taken into account. So too is the need to maintain public confidence in the judicial system. Given its nature, the circumstances in which it was sought, and the lack of a satisfactory explanation for seeking it, the amendment to ANU's statement of claim should not have been allowed. The discretion of the primary judge miscarried."[54]

38. His Honours' view mirrored that expressed in the joint judgment of Brennan, Deane and McHugh JJ in Haset Sali v SPC Ltd[55] (Haset Sali) when they said:

"11. In determining whether to grant an adjournment, the judge of a busy court is entitled to consider the effect of an adjournment on court resources and the competing claims by litigants in other cases awaiting hearing in the court as well as the interests of the parties. As Deane J pointed out in Squire v. Rogers ... [(1979) [1979] FCA 48; 27 ALR 330, at p.337] this 'may require knowledge of the working of the listing system of the particular court or judge and the importance in the proper working of that system of adherence to dates fixed for hearing'. What might be perceived as an injustice to a party when considered only in the context of an action between parties may not be so when considered in a context which includes the claims of other litigants and the public interest in achieving the most efficient use of court resources."[56]

" The contemporary approach to court administration has introduced another element into the equation or, more accurately, has put another consideration onto the scales ... The view that the conduct of litigation is not merely a matter for the parties but is also one for the court and the need to avoid disruptions in the court's lists with consequent inconvenience to the court and prejudice to the interests of other litigants waiting to be heard are pressing concerns to which a court may have regard. Because these considerations are singularly within the knowledge of the court to which an application for an adjournment is made, there is an added reason why this Court should not interfere with a decision made on such an application."[57]

39. French CJ approved both passages in Aon.[58] He continued:

" The observations made in the two joint judgments in Sali were linked to the particular knowledge that a judge or court, called upon to exercise a discretion to adjourn, would have of the state of that court's lists. However, the mischief engendered by unwarranted adjournments and consequent delays in the resolution of civil proceedings goes beyond their particular effects on the court in which those delays occur. In that connection, there have been a number of cases after Sali in which it has been accepted, in the context of Judicature Act Rules, that the public interest in the efficient use of court resources is a relevant consideration in the exercise of discretions to amend or adjourn ..."[59]

40. It is clear from the judgments and from the context in which the High Court considered the relevance of case management in Aon that case management is not a deciding factor. It is, instead, a relevant factor and the weight it is accorded can only be determined when regard is had to all of the factors that are relevant. In that particular case, the factors that the High Court had to consider included those in Rule 21 of the Court Procedure Rules (ACT). That Rule provides:

"(1) The purpose of this chapter, and the other provisions of these rules in their application to civil proceedings, is to facilitate the just resolution of the real issues in civil proceedings with minimum delay and expense.

(2) Accordingly, these rules are to be applied by the courts in civil proceedings with the objective of achieving -

(a) the just resolution of the real issues in the proceedings; and

(b) the timely disposal of the proceedings, and all other proceedings in the court, at a cost affordable by the respective parties.

(3) The parties to a civil proceeding must help the court to achieve the objectives.

(4) The court may impose appropriate sanctions if a party does not comply with these rules or an order of the court."

41. In their joint judgment, Gummow, Hayne, Crennan, Kiefel and Bell JJ weighed the objectives identified in Rule 21 when they said:

"97. The objectives of case management are now expressly stated in r 21 of the Court Procedures Rules. It cannot be overlooked that later rules, such as r 21, are likely to have been written with the decision in J L Holdings[[60]] in mind. ... The purposes stated in r 21 cannot be ignored. The Court Procedures Rules make plain that the Rules are to be applied having regard to the stated objectives of the timely disposal of the proceedings at an affordable cost. There can be no doubt about the importance of those matters in litigation in the courts of the Australian Capital Territory.

98. Of course, a just resolution of proceedings remains the paramount purpose of r 21; but what is a 'just resolution' is to be understood in light of the purposes and objectives stated. Speed and efficiency, in the sense of minimum delay and expense, are seen as essential to a just resolution of proceedings. This should not detract from a proper opportunity being given to the parties to plead their case, but it suggests that limits may be placed upon repleading, when delay and cost are taken into account. The Rule's reference to the need to minimise costs implies that an order for costs may not always provide sufficient compensation and therefore achieve a just resolution. It cannot therefore be said that a just resolution requires that a party be permitted to raise any arguable case at any point in the proceedings, on payment of costs.

99. In the past it has more readily been assumed that an order for the costs occasioned by the amendment would overcome injustice to the amending party's opponent. ... The modern view is that even an order for indemnity costs may not always undo the prejudice a party suffers by late amendment .... In the present case it is difficult to see that such an order could be sufficient compensation, given that Aon would be required to again defend litigation which was, effectively, to be commenced afresh.

102. The objectives stated in r 21 do not require that every application for amendment should be refused because it involves the waste of some costs and some degree of delay, as it inevitably will. Factors such as the nature and importance of the amendment to the party applying cannot be overlooked. Whilst r 21 assumes some illeffects will flow from the fact of a delay, that will not prevent the parties dealing with its particular effects in their case in more detail. It is the extent of the delay and the costs associated with it, together with the prejudice which might reasonably be assumed to follow and that which is shown, which are to be weighed against the grant of permission to a party to alter its case. Much may depend upon the point the litigation has reached relative to a trial when the application to amend is made. There may be cases where it may properly be concluded that a party has had sufficient opportunity to plead their case and that it is too late for a further amendment, having regard to the other party and other litigants awaiting trial dates. Rule 21 makes it plain that the extent and the effect of delay and costs are to be regarded as important considerations in the exercise of the court's discretion. Invariably the exercise of that discretion will require an explanation to be given where there is delay in applying for amendment."[61]

42. It is clear from this passage that their Honours saw a just resolution of proceedings as the paramount purpose of Rule 21 but it is equally clear that they recognised that justice does not take a single form. It is to be understood in, and take its form from, what is required to reach a just resolution of the "real issues" in the proceeding and what is required for the timely disposal of the proceedings and of all others. Those objectives are not to be attained at the expense of giving the parties the proper opportunity to present their case but what amounts to a proper opportunity is determined by reference to, among other relevant matters, the speedy and efficient disposition of the matter.

43. This approach is consistent with that adopted earlier by Brennan, Deane and McHugh JJ in Haset Sali. As they said, the "... contemporary approach to court administration ...has put another consideration onto the scales ...". That was consideration of the whole system of case management in the particular court. They did not, however, say that it was the only consideration. Indeed, an examination of the majority's judgment shows that they paid it no express regard in resolving the appeal. Instead, they had regard to the particular findings made by the Victorian Court of Appeal[62] when refusing to adjourn an appeal for a two week period rather than to its system of case management or of case management principles generally. The Court of Appeal had refused the adjournment after finding that the basis on which the application had been made included an assertion that the Senior Counsel engaged by Mr Haset Sali required three months' notice and was not available, that he had not attempted to obtain another Senior Counsel even though 29 appropriate Senior Counsel were available, that the application for adjournment was designed to stave off proceedings for sequestration of his estate, that the application was a tactic of delay and that the appellant did not want the appeal to go on at all.

44. It is clear from the following passage from the judgment of the majority that the particular circumstances of the case, rather than case management principles and the system of case management used in the court, were the determining factors:

"19. Having regard to the findings of the Full Court, the appellant suffered no injustice when the Court refused to adjourn the hearing for two weeks. It is true that it is only in extraordinary circumstances that the interests of justice will be served by a refusal of an adjournment in a case such as the present where the practical effect of the refusal is to terminate the proceedings. The members of the Full Court were, however, conscious of that fact. Thus, Tadgell J commented that it was, in his experience, 'unique' that the Full Court had had to refuse 'an application for an adjournment of this kind'. Clearly, their Honours considered that the circumstances before them were both extraordinary and extreme. On the findings which they made, they were fully entitled to be of that view. On those findings, the appellant was the author of his own misfortune."[63]

45. The principle that underlies both Haset Sali and Aon is that issues relating to case management are not deciding factors in any particular case. They are, instead, relevant factors and the weight they are accorded can only be determined when regard is had to all of the factors that are relevant. Those objectives are not to be attained at the expense of giving the parties the proper opportunity to present their case but what amounts to a proper opportunity is determined by reference to, among other relevant matters, the speedy and efficient disposition of the matter.

46. The principle that, consistently with Eshetu, underlies both Haset Sali and Aon is that objectives of the sort set out in s 2A of the AAT Act, and that are applicable in a case management system, must be understood and applied in a particular case in light of the particular circumstances of that case and in light of the Tribunal's functions and its duties i.e. its duties to act with procedural fairness and to reach the correct or preferable decision.

47. In this case, the "real issues" relating to disposition of ownership of the parcels of land could be resolved without waiting for the outcome of the Supreme Court proceedings. To do so would meet the objective of providing a mechanism of review that is quick, at least at this stage, but it would not be fair. It would not be fair to Mr Kalafatis, and would not seem to me to be consistent with the proper administration of justice to have an issue resolved on the basis of evidence that the Tribunal must treat as conclusive but that he has sought to have altered by the Supreme Court. Had Mr Kalafatis not made any application to the Supreme Court, considerations of fairness might not have led to the same conclusion. As it is, he commenced proceedings in the Supreme Court in 2009. That was at a date after he lodged his application for review in the Tribunal but he has lodged them and is pursuing his rights in that court.

48. The proceedings are moving towards a hearing date in the Supreme Court and the pace at which they do so is a matter for that court. As the issues raised by the application for review can only be properly resolved by waiting for the outcome of those proceedings, it seems to me that this Tribunal should defer listing the matter for hearing until that time. Should it appear that Mr Kalafatis is no longer pursuing his action with due diligence a different decision might be reached. At the moment, that does not appear to be the case and I have directed that the matter not be listed for hearing until the outcome of the Supreme Court proceedings is known.

49. On behalf of Mr Kalafatis, it was submitted that he could withdraw his application provided he had a right to have it reinstated should he be successful in his action in the Supreme Court. This is not an option available to an applicant and I will explain why I have reached that conclusion in this passage of my reasons. I will begin with a person's right to withdraw an application made to the Tribunal but then move to the nature of the right to make an application for the right to withdraw can only be understood if what is withdrawn is also understood.

"A person who has made an application to the Tribunal for a review of a decision may, in writing lodged with the Tribunal, at any time notify the Tribunal to the effect that the application is discontinued or withdrawn."

51. In ordinary usage, the meanings of the word "lodge" include "to deposit".[64] It does not mean "file" in the sense of "to put (papers, etc) into a file. ... to place (a document) on official or public record ...". The distinction between the two meanings was drawn by the Full Court of the Federal Court in Hong Ye v Minister for Immigration & Multicultural Affairs[65] when it said:

"What is meant by the word 'lodged' in the phrase 'lodged with a Registry of the Federal Court'? The first matter to notice is that s 478 is concerned with an act of a party and not with an act of the Court or an officer of the Court. This distinction is an important one. By the Rules of the Federal Court a proceeding in the original jurisdiction of the Court is commenced by the 'filing' of an application (see Order 4 rule 1(1)) and an appeal is instituted by the 'filing' of a notice of appeal (see order 52 rule 12[[66]]). 'Filing' is the word used to describe the process of placing a document in the records of a court or its registry: see Purden Pty Ltd v Registrar in Bankruptcy (1982) 43 ALR 512 at 515. Because s 478 is concerned with an act of a party it cannot be supposed that the word 'lodge' is synonymous with the word 'file'. A party who is required to 'lodge' a document does not have the power or ability to 'file' that document among the records of the Court or its registry. ..."

52. In so far as its ordinary meanings are relevant in this case, those of the word "withdraw" are "... to discontinue or cancel something. ..."[67] Those of the word "discontinue" are "... to stop or cease. ...".[68]

53. There is nothing in s 42A or in the AAT Act or Regulations made under it that prescribes that an applicant must follow a particular form in notifying the Tribunal that the application is discontinued or withdrawn. He or she may choose words that are used in s 42A(1A) or words to the same effect. Words to the same effect might be that the person wishes to cancel the application he or she lodged, end the review that was begun with his or her lodging that application or have nothing further to do with the proceedings or the review would generally all achieve that outcome. It is important that an applicant is aware of what he or she does. Therefore, I have never endorsed the practice, common among some in the Tribunal, of sending or giving, with or without a stamped self-addressed envelope, an applicant a pro forma document stating that he or she wishes to discontinue or withdraw his application and requiring only that they be signed and dated by an applicant. An applicant who intends to take such a serious step should take the trouble of writing a sentence above the signature to express his or her wishes.[69]

"If notification is so given, the Tribunal is taken to have dismissed the application without proceeding to review of the decision."[70]

55. The reference to "notification" must be a reference to notification given in the manner provided for in s 42A(1A) i.e. in writing lodged with the Tribunal to the effect that the application is withdrawn or discontinued. The outcome is that, as soon as an applicant's notification of withdrawal arrives at the Tribunal, be it physically in paper form or in electronic form,[71] it has been deposited in, and so lodged, in the Tribunal, the applicant's application is taken to have been dismissed. The applicant cannot have a change of heart and seek to withdraw the notification. Even if for some reason the Registry did not place the withdrawal on the appropriate file, the application would be withdrawn because s 42A(1B) takes effect on lodgement and not on filing.

56. It might be thought that this is a harsh outcome. The only relevance of that thought is that members, Conference Registrars and Registry staff generally should take care not to appear to encourage an applicant to withdraw an application. Of course, withdrawal may be mentioned as one of the options available to an applicant in the course of discussing settlement options between parties but only as one of the options. There are usually other options available that can be offered. Even if the decision-maker is making a decision in an applicant's favour and with which an applicant is entirely satisfied, there are options of putting that decision in writing and asking the Tribunal to make a decision by consent under s 42C(1). Alternatively, in light of the decision's having been altered to the satisfaction of the parties, they might agree that the Tribunal dismiss the application under s 42A(1).

57. If a notice is ambiguous, it is proper to ask what an applicant intended but care must be taken to go no further. It is not proper for the Tribunal to question an applicant as to why he or she has lodged a withdrawal. If later asked by an applicant who is regretting a decision to withdraw, it could, however, properly draw the attention of the applicant to the possibility of applying for an extension of time to lodge another application for the Tribunal would not have reviewed the decision and so would not have exhausted its powers or be functus officio. Assuming its power to extend time under s 29(7) of the AAT Act has not been modified, any decision made by the Tribunal to extend time would look at all the circumstances including the decision to withdraw the first application.

58. The Tribunal could also draw an applicant's attention to the Tribunal's power given to it by s 42A(10) to reinstate an application dismissed in error. Whether or not it would have the power to reinstate an application dismissed by operation of the AAT Act as a result of an act of an applicant would have to be resolved. That would involve consideration of the meaning of "error".[72] It would also involve consideration of whether an application that is "taken to have been dismissed" under s 42A(1B), and so by operation of law, can be said to "have ever been dismissed in error".

59. The Tribunal does not have power to reinstate an application under ss 42A(8) and (9) for that power is limited to circumstances in which the Tribunal has, under s 42A(2), dismissed an application for an applicant's failure to appear at a proceeding.

60. It is clear from the words of s 42A(1A) that a person may discontinue or withdraw "an application ... for a review of a decision" that the person has made to the Tribunal. From time to time, there are suggestions that an applicant has lodged a notice withdrawing part of an application but s 42A(1A) does not permit withdrawal of anything less than the whole. There are occasions when such attempts are made when multiple applications should have been made rather than the single application that has been made. Care must be taken to analyse both the notification of the withdrawal or discontinuance of the application and the application.

The right to make an application to the Tribunal

"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 review of decisions made in the exercise of powers conferred, or that may be conferred, by another enactment having effect under that enactment."

62. Where an enactment makes a provision in accordance with s 25(1), that enactment:

"(a) shall specify the person or persons to whose decisions the provision applies;

(b) may be expressed to apply to all decisions of a person, or to a class of such decisions; and

(c) may specify conditions subject to which applications may be made."[73]

63. Section 25(4) is the corollary of ss 25(1) and (3). It provides that:

"The Tribunal has power to review any decision in respect of which application is made to it under any enactment."

64. Section 25 is focused on the identification of the decisions for which review may be provided in an enactment other than the AAT Act. It does not identify the person or persons who may apply for that review. That is left to the particular enactment providing that applications may be made to the Tribunal for review of decisions. The TA Act provides an example. Part IVC of that legislation provides that it:

"... applies if a provision of an Act or of regulations (including the provision as applied by another Act) provides that a person who is dissatisfied with an assessment, determination, notice or decision, or with a failure to make a private ruling, may object against it in the manner set out in this Part."[74]

65. As well as providing the circumstances in which a person may apply to the Tribunal, the AAT Act sets out the Tribunal's powers and duties when an application is made to it. It also sets out the duties of those whose decisions are the subject of applications. In this way, the Tribunal has available to it a range of powers that it can, and must apply, in its review of decisions raising a very wide and varied range of subjects. At one level, that leads to consistency in the Tribunal's procedures but, as those powers are discretionary, it also leads to adaptability as its procedures can be shaped to suit the needs of the review of particular decisions, the subject matter to which they relate and the issues they raise. At times, that is not enough and s 25(6) provides:

"If an enactment provides for applications to the Tribunal:

(a) that enactment may also include provisions adding to, excluding or modifying the operation of any of the provisions of sections 27, 29, 32, 33 and 35 or subsections 41(1) or 43(1) or (2) in relation to such applications; and

(b) those sections and subsections have effect subject to any provisions so included."

The right to make an application for review of an assessment in this case

66. Section 14ZZ of the TA Act provides that a person dissatisfied with a reviewable objection decision may seek its review in the Tribunal.[75] A "reviewable objection decision" is "... an objection decision that is not an ineligible income tax remission decision".[76] An "objection decision" is the decision made by the Commissioner when a person dissatisfied with an assessment, determination, notice or decision, or with a failure to make a private ruling makes an objection, known as a "taxation objection" against it.[77] An "assessment, determination, notice or decision" is known as a "taxation decision".[78]

67. In this case, the Commissioner has made an assessment. Section 175A of ITAA36 provides for an objection to be made to an assessment. It provides:

"(1) 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.

(2) A taxpayer cannot object under subsection (1) against an assessment ascertaining that:

(b) the taxpayer has an amount of taxable income and no tax is payable;

unless the taxpayer is seeking an increase in the taxpayer's liability."

68. The Commissioner may make an assessment of the amount of tax that a person is liable to pay under ITAA36. Section 174 requires the Commissioner to serve notice of it in writing upon the person liable to pay the tax. Subject to a qualification in s 14ZR(2), s 14ZR(1) of the TA Act provides that taxation decisions covered by a single notice are treated as a single decision:

(a) a provision of an Act (including a provision as applied by another Act) provides that a person who is dissatisfied with a taxation decision may object against it in the manner set out in this Part; and

(b) a notice incorporates notice of 2 or more such taxation decisions;

then, for the purposes of the provision and of this Part, the taxation decisions are taken to be one taxation decision."[79]

69. Given the structure of these provisions, a person may lodge an application in the Tribunal for review of "an objection decision" that is made in respect of two or more assessments, determinations, notices or decisions i.e. taxation decisions when a taxpayer is notified of them in a single notice. In those circumstances, the objection itself will have been made in respect of more than one taxation decision.[80]

70. In this case, there has been only a single taxation decision in the form of an assessment issued for a single year of income. In other cases, there may be multiple assessments relating, for example, to different years of income. If the Commissioner gives notice of them in a single notice, the taxpayer will make a single objection on which the Commissioner will make a single objection decision. The taxpayer will lodge a single application to the Tribunal for review of it. It cannot be withdrawn in relation to one of the taxation decisions that are the subject of the taxation objection. That would be to attempt to withdraw part of an application and is not permitted under s 42A of the AAT Act.

Kalafatis and Commissioner of Taxation [2012] AATA 150 (8 March 2012)

At a glance

Court

Decision date

Source

Judgment (285 paragraphs)

Kalafatis and Commissioner of Taxation [2012] AATA 150 (8 March 2012)

Legislation Cited (9)

Cases Cited (16)