CUSACK v FC of T

Members:
KL Beddoe SM

Tribunal:
Administrative Appeals Tribunal

MEDIA NEUTRAL CITATION: [2001] AATA 198

Decision date: 16 March 2001

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KL Beddoe (Senior Member)

The respondent assessed the applicant for income tax. In making those assessments the respondent quantified the taxable income in Australian dollars and assessed tax, Medicare levy and additional tax in Australian dollars.

2. The applicant objected to these assessments. The grounds of objection are detailed and complex in their statement. However the essence of the applicant's objections is to the use of Australian dollars as the basis for quantifying the assessments when the Australian dollar is not a sum certain in money and which does not represent a determinable exchange value. The applicant's contentions revolve around Australian dollar gold coins which the applicant says must be accepted at their face value as legal tender whereas, the applicant asserts, the respondent treats the gold coins as having a value different (greater) than their face value.

3. Much of the notice of objection refers to matters which are extraneous to the making and notification of the assessments. However the applicant has, in my view, satisfied the requirements of section 142U of the Taxation Administration Act 1953 so as to make a valid objection against each of the assessments in issue here.

4. Section 48 of the Income Tax Assessment Act 1936 (``the Act'') provides that in calculating the taxable income of a taxpayer, the total assessable income derived by the taxpayer during the year of income shall be taken as a basis, and from it there shall be deducted all allowable deductions.

5. ``Assessable income'' is defined in section 6(1) of the Act to mean all the amounts which under the provisions of the Act are included in the assessable income. In particular section 25(1) of the Act provides that the assessable income of the taxpayer shall include, where the taxpayer is a resident, the gross income derived directly or indirectly from all sources, whether in or out of Australia, which is not exempt income etc.

6. Section 20 of the Act provides that for all the purposes of the Act, income wherever derived and any expenses wherever incurred shall be expressed in terms of Australian currency.

7. Section 169 of the Act provides that where a person is liable to pay tax, the Commissioner may make an assessment of the amount of such tax.

8. At the hearing the applicant conducted his own case and an officer of the Australian Taxation Office represented the respondent. The documents lodged in the Tribunal pursuant to section 37 of the Administrative Appeals Tribunal Act 1975 were before the Tribunal as the T documents. No other material was put before the Tribunal.

The applicant's submissions

9. The monetary unit, or unit of currency, is the dollar (s 8(1) Currency Act 1965).

10. The issue is the conflict between quantum of currency and value of currency which can be two different things as evidenced by the $100 gold coins.

11. That coins may be issued at a value which is not the same as the quantum or face value is made clear by section 14A(1) of the Currency Act. That subsection provides that coins of a denomination of $5 or more, or coins

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ATC 2064

the composition of which consists of or includes gold, silver or platinum shall be issued at prices determined in writing by the Treasurer or on a method determined by the Treasurer.

12. Section 9 of the Currency Act provides for transactions to be in Australian currency but is silent as to what value may be adopted for the Australian currency. It would be open under section 9 to use high value Australian currency gold coins to settle payment or liability within the terms of section 9.

13. The Reserve Bank Act 1959 provides that the Bank is responsible to maintain stability of the currency of Australia (s 10), the issue of Note Issue (ss 32 and 34), with denominations of the Australian notes to be $1, $2, $5, $10 or $50 or in any other denomination determined by the Treasurer. Australian notes are legal tender throughout Australia (s 36).

The respondent's submissions

14. Section 20(1) of the Act is determinative of this issue. See
DFC of T v Conley & Ors 98 ATC 5090. The Australian dollar is the relevant unit of currency and the value of precious metal coins is not relevant to the assessments in issue.

Consideration

15. It seems to be clear enough that section 20 of the Act is predicated on the basis that the Australian currency required to be used under the Act is to be a sum certain and not an uncertain value. The provisions of the Act would be unworkable if the amounts of money were to be expressed otherwise than in Australian currency and as a sum certain. As was made clear in Conley the Act must operate on the basis that liability for taxation is determined under the Act as a sum certain and not as an amount of money that may fluctuate in value from day to day.

16. The amounts of income derived are to be expressed in terms of Australian currency to determine the quantum of the income - not the value of the income. The quantum of the income may be determined by the value of the consideration received but that figure, once determined, is the amount, in Australian currency terms to be included in the assessable income.

17. To use the illustration put forward by the applicant, if a person is paid wages in $100 gold coins the amount of the assessable income derived is the value of the consideration, but once that value is determined the assessable income must be in Australian currency terms as to the quantum of wages paid - not the value of the wages paid.

18. Liability to tax is assessed in Australian currency terms on a quantum basis (Conley). Section 169 of the Act refers to the assessment of the amount of tax a person is liable to pay. The ``amount of tax'' must be construed as the quantum of tax to be paid and does not suggest that any concept of value would be relevant in the determination of the amount of tax.

19. The objection decisions under review will be affirmed.