Practice Statement Law Administration

PS LA 2004/10

Tax laws claimed to be invalid

• This document has changed over time. View its history.

This Practice Statement provides guidance on how to deal with correspondence from taxpayers who claim that they will not comply with tax laws because the laws are invalid or do not apply to them.

1. What this Practice Statement is about

Australia's taxation and superannuation systems are a community asset and we all have a role to play in maintaining them. By complying with your tax obligations, you join millions of Australians who do their part to support the Australian community.

We occasionally receive correspondence from taxpayers arguing they are exempt from fulfilling their taxation obligations because:

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the entire taxation system is invalid, or

•

the tax system does not apply to them for a particular reason.

The correspondence may take a variety of forms, including requests for proof that laws are valid, requests for information, personal enquiries and objection letters.

This type of correspondence will often include:

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complex constitutional arguments based on the notion that Australia's entire legal and political systems are invalid, thus all laws are invalid

•

arguments that the particular individual's legal status is such that they are not subject to Australian laws, or

•

replicated letters and documents, often erroneously purporting to be legal notices, which may demand that ATO staff produce documents, recognise a particular fact, make payments or perform other tasks.

These letters may threaten legal action against the ATO or specified officers.

This Practice Statement provides guidance on how we will treat such correspondence.

2. Taxation law and the ATO

The operation of the Australian taxation system is established by statute, as follows:

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the Australian Constitution establishes the Commonwealth of Australia^[1] and empowers its Parliament to enact laws in respect of taxation^[2]

•

the ATO is a statutory agency of the Commonwealth of Australia, established to assist the Commissioner of Taxation, who is the head of that statutory agency^[3]

•

the Commissioner administers the Taxation Administration Act 1953 (TAA)^[4] and is legally entitled to institute, and appear in, legal proceedings in their official name^[5]

•

the TAA and other taxation laws are valid^[6] and apply to the entirety of the land mass of Australia, as well as its coastal seas and external territories^[7]; a person within these geographic boundaries cannot exempt themselves from taxation laws^[8]

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the Commissioner is required by law to make assessments of the taxable income and tax payable by taxpayers^[9], and

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taxation liabilities must be paid in Australian currency.^[10]

3. Our response to correspondence claiming tax laws are invalid or do not apply

We will not respond to correspondence where taxpayers claim tax laws are invalid or do not apply. Given that many claims of this type have been rejected by the Courts, we do not consider it an appropriate use of ATO resources to do so.

Any correspondence of this type which is not part of an ongoing matter should be filed in accordance with the published Constitutional correspondence procedures (link available internally only).

In accordance with the Attorney-General Department's Legal Services Directions 2017, the ATO may provide legal assistance to defend ATO staff who have acted reasonably and responsibly in carrying out their duties from a claim brought by a person and based on one of these unsupportable arguments.

It is important for ATO staff to note the following:

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It is not the function of ATO staff to enter into debate or give advice about Constitutional or other issues not related to the administration of the taxation system.

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Submissions raising arguments of this type have already been dismissed as being unarguable by various courts, including the High Court of Australia.^[11]

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The correspondences, and any responses, do not alter any obligations the authors may have under the laws administered by the Commissioner, and refusal to comply with these obligations may result in prosecution and the imposition of penalties and interest.

Taxpayers may wish to seek the advice of an appropriately registered taxation professional or a legal practitioner prior to taking legal action. The Courts have often found raising these types of arguments to be an abuse of process and have imposed punitive costs orders on litigants who raise them.

4. More information

For more information, see:

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ATO Charter

•

the Constitution

•

TAA

Amendment history

Date of Issue: 6 September 2004

Date of Effect: 6 September 2004

File NO 99/6282-4; NO 98/11481-6

Other References:
ATO Charter
Legal Services Directions 2017

Legislative References:
TAA 1953 2(1)
TAA 1953 3A
TAA 1953 4A
TAA 1953 8
TAA 1953 15
TAA 1953 Sch 1 255-5
ITAA 1936 166
ITAA 1936 960-505
Taxation Administration Regulations 2017 21
Commonwealth of Australia Constitution Act 1901 covering clause 3
Commonwealth of Australia Constitution Act 1901 covering clause 5
Commonwealth of Australia Constitution Act 1901 covering clause 6
Commonwealth of Australia Constitution Act 1901 51(ii)
Public Service Act 1999 7

Case References:

Deputy Commissioner of Taxation v Levick
[1999] FCA 1580
43 ATR 621
168 ALR 383

Dooney v Henry
[2000] HCA 44
45 ATR 113
174 ALR 41
74 ALJR 1289

Joosse v Australian Securities and Investment Commissioner
[1998] HCA 77
159 ALR 260
73 ALJR 232

Lamont v Deputy Commissioner of Taxation
[2019] NSWCA 221

Moeliker v Chapman
[2000] HCATrans 242

O'Reilly v Commissioner of State Bank of Victoria
[1983] HCA 47
153 CLR 1
82 ATC 4671
13 ATR 706
44 ALR 27

Business Line:  SD

ISSN: 2651-9526