AAT again doubts taxpayers’ rights to object against ECT determinations

Hope and Commissioner of Taxation [2014] AATA 877

In Re McMennemin and Commissioner of Taxation [2010] AATA 573, the Administrative Appeals Tribunal found that it did not have jurisdiction to review a decision of the Commissioner under s 292-465 ITAA 1997 (discussed here).  The Commissioner appealed, and in Commissioner of Taxation v Administrative Appeals Tribunal [2011] FCAFC 37, a Full Court of the Federal Court upheld the Tribunal’s decision.  The Full Court said the absence of an express provision that the taxpayer could object against a decision under s 292-465 meant that no objection rights existed and no review was available in the Tribunal.

To provide taxpayers with objection rights, an amending Act was passed (before the hearing of the appeal to the Full Federal Court) inserting sub-section 292-465(9) as follows:

(9)      To avoid doubt:

(a)      you may object under section 292-245 against an *excess contributions tax assessment made in relation to you on the ground that you are dissatisfied with a determination that you applied for under this section; and

(b)      for the purposes of paragraph (e) of Schedule 1 to the [ADJR Act] the making of a determination under this section is a decision forming part of the process of making an assessment of tax under this Act.

It is therefore surprising that in Hope and Commissioner of Taxation [2014] AATA 877, the Tribunal again expressed doubt about taxpayers’ rights to object against a decision of the Commissioner under s 292-465.

The Tribunal’s decision turned in part upon the language of s 292-465(1), which provided that on the taxpayer’s application, ‘the Commissioner may make a written determination’ to disregard or re-allocate all or part of the taxpayer’s contributions.  The Tribunal suggested (at [36]) that since the grounds for the objection provided for in s 292-465(8)(a) were dissatisfaction with a determination, there may be no right of objection in the case of a negative decision by the Commissioner, because there would be no ‘determination’ to disregard or re-allocate – only an absence of a determination.

The Tribunal’s reasons pick up an ambiguity in the language of s 292-465.  The concept of a ‘determination’ might be thought to refer to the process of decision-making or the product of that process, or both.  With respect, the permissive construction is to be preferred.  It would seem a perverse outcome if a taxpayer who had failed in their application under s 292-465 had no objection rights whilst a taxpayer who had succeeded in part could object if they remained dissatisfied.  The result suggested by the Tribunal’s dicta would give s 292-465 a construction which frustrates the obvious intent of the amending provisions, namely to confer objection rights upon taxpayers.

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