Zappia v Commissioner of Taxation

1. The appellant have leave to rely on her Further Amended Notice of Appeal dated 22 November 2017.
2. The appellant have leave to rely on the contentions in her Further Amended Notice of Appeal that the Commissioner was bound by the facts found in his objection decision.
3. The appeal be dismissed.
4. The appellant pay the respondent's costs, as agreed or taxed. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

ROBERTSON J: 1 I will ask Justice Pagone to deliver the first judgment.

PAGONE J: 2 The first issue in this appeal is whether the appellant discharged her statutory burden of proving that an assessment was excessive as required by s 14ZZO of the Taxation Administration Act 1953 (Cth) ("the 1953 Act"). It was submitted by the appellant that she was able to discharge her statutory burden of proof by relying upon what was described as "facts found by the Commissioner in his objection decision" and that the Commissioner was bound by those facts in proceedings under Part IVC of the 1953 Act. It was submitted for the appellant on that basis that the facts in the Commissioner's objection decisions required the learned primary judge to conclude that funds assessed to her were held on trust for Shingley Projects Pty Ltd as trustee for the Shingley Unit Trust and were not assessable as income to her. The appellant taxpayer did not otherwise establish that the funds held by her were not assessable to her because they were held on trust as said to have been found in the Commissioner's objection decision. 3 The appellant's submissions cannot be accepted and proceed from an erroneous premise. The question for a court hearing a tax appeal is whether a taxpayer has satisfied the burden cast by s 14ZZO: Federal Commissioner of Taxation v Australia & New Zealand Savings Bank Ltd (1994) 181 CLR 466 at 479. The burden imposed upon the appellant by s 14ZZO to prove that the assessment was excessive required her to establish the amount upon which tax was to be levied: Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614 at 625, 634; Gashi v Commissioner of Taxation [2013] FCAFC 30; 209 FCR 301 at [66]-[67], Rigoli v Commissioner of Taxation [2014] FCAFC 29; 96 ATR 19 at [26]. The statutory amendments relied on by the appellant do not affect this requirement of s 14ZZO. Proof of the amount upon which tax was to be levied is not established by showing error by the Commissioner in the evidentiary, factual or legal basis of assessment: Dalco, Rigoli. Statements made by the Commissioner in an objection decision do not establish the facts upon which tax was to be levied and do not bind the Commissioner, or the operation of the taxing provisions, except (perhaps) where the parties in proceedings have agreed to the facts for the purposes of the proceedings. The recital of facts found in an objection decision are not themselves the facts they purport to recite and their recitation does not bind the Commissioner, or the operation of the taxing statute, where a taxpayer is required to discharge the burden imposed by s 14ZZO to prove that an assessment is excessive. That can be done only by establishing the facts upon which the liability depends. The reasons in the joint judgment in Australia & New Zealand Savings Bank Ltd at 479 do not stand for a contrary proposition. 4 As to the remaining grounds in the further amended notice of appeal, grounds 10-14, they concern whether the appellant discharged her onus of proof. Senior Counsel for the appellant accepted that the primary judge had, at [2], correctly stated the obligation imposed upon the appellant by s 14ZZO(b)(i) and what was required to be done by her to discharge it. I see no error in the reasons or conclusion of the primary judge in that respect. The primary judge was not satisfied that the appellant had discharged that onus: his Honour made none of the errors set out in these grounds. 5 I therefore propose that the appeal be dismissed, with costs.