Higgs v. Federal Commissioner of Taxation.

Judges:
Sweeney J

Court:
Federal Court

Judgment date: Judgment handed down 17 September 1984.

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Sweeney J.

By application dated 7 June 1984 Robert Edward Higgs (the applicant) sought a review under the Administrative Decisions (Judicial Review) Act 1977 (the Act) of what he described as the decision of the Commissioner of Taxation (the respondent) ``that objection lodged by the applicant against income tax assessments for the years ended 30 June 1975 and 1976 have been withdrawn''.

The application read as follows:

``Application to review the decision of the Respondent that objection lodged by the Applicant against income tax assessments for the years ended 30 June, 1975 and 1976 have been withdrawn.

The Applicant is aggrieved by the decision because the Respondent refuses to consider and give a decision on the said objections.

The grounds of the application are -

• 1. The said decision was not authorised by the Income Tax Assessment Act.
• 2. The Income Tax Assessment Act does not authorise the Commissioner of Taxation to treat an objection as having been withdrawn.
• 3. The said decision involved an error of law.

The Applicant claims a declaration that the Commissioner of Taxation is required to give consideration to and a decision on the said objections.''

The applicant was assessed for income tax in the amount of $8,933.73 upon income derived by him during the year ended 30 June 1975 pursuant to a notice of assessment issued on 9 April 1979. An amount of $4.24 was shown in this notice as payable for late lodgment of return

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and the total amount of income tax owed by the applicant for that year was shown as $8,937.97.

He was assessed for income tax in respect of the year ended 30 June 1976 pursuant to a notice of assessment issued on 23 May 1977, in which the amount of income tax owed by the applicant for that year was shown as $8,403.45.

These notices of assessment were served upon the applicant by posting them to his recorded address for service c/o W.J. Osmond Crowl & Co. (the accountants).

By letter dated 6 June 1979 the accountants lodged the following notice of objection on behalf of the applicant against the 1975 assessment:

``We wish to object against the assessment issued to the above taxpayer under the above reference for the year ended 30 June 1975 on the grounds that a claim for the loss from the Yarrabee Partnership amounting to $49,750 should be allowed as an allowable deduction against the income derived by the taxpayer.

Yarrabee Partnership comprised three partners who carried on a dental practice in Wagga Wagga and at the same time contend that they carried on a business of share trading.

The loss of $49,750 is Mr. Higgs' share of the share trading loss and is considered to be a deduction under sec. 51(1).''

Notice of objection to the 1976 assessment was lodged by the accountants on behalf of the applicant by letter dated 24 June 1977:

``We wish to object against the 1976 Assessment issued to the above Taxpayer on the grounds that the sec. 80 loss incurred by the taxpayer during the year ended 30 June 1975 has not been allowed as a carried forward deduction and this loss would exceed the taxable [income] for the year ended 30 June 1976.

Would you please treat this as a formal notice of objection.''

By letter dated 12 February 1980 the accountants wrote to the respondent as follows on behalf of the applicant:

``We wish to withdraw our objection against the assessment issued to the above taxpayer for the year ended 30 June 1975 and we also wish to withdraw our objection against the assessment issued in respect of the year ended 1976 in respect of the carry forward of the losses incurred in the year ended 30 June 1975.''

By letter dated 21 February 1980 the respondent replied as follows:

``Receipt is acknowledged of your letter of 12 February 1980 withdrawing your objections against the assessments for years ended 30 June 1975 and 1976.''

On 17 October 1983 the solicitors for the applicant wrote the following letter to the respondent:

``We are instructed that the taxpayer wishes to proceed with his objection to the assessment for the years ended 1975 and 1976 and that you are therefore required to ignore the purported withdrawal of objection dated 12 February 1980.

Please confirm that all is in order, that you will ignore the purported withdrawal of objection and that you will proceed to reassess the income in accordance with the objection raised.''

By letter dated 8 February 1984 the respondent replied:

``Receipt is acknowledged of your letter dated 17 October 1983.

The withdrawal of the objections lodged against your Income Tax Assessments for the years ended 30 June 1975 and 1976, by letter dated 12 February 1980, remains effective.

Your recent request cannot be treated as a valid objection or application for amendments of the assessments as it was lodged outside the time limits set by the provisions of the Income Tax Assessment Act; the original objections having been withdrawn.

Accordingly, your correspondence of 17 October 1983 will not give rise to a review of the assessments for the years ended 30 June 1975 and 1976.

We trust this explanation satisfies your enquiry.''

On 6 April 1984 the applicant's solicitors wrote to the respondent as follows:

``Re: Robert Edward Higgs

File No.: 128 604 982

Assessment No: 247515/01B - 1975

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Would you please be good enough pursuant to sec. 13(1) of the Administrative Decisions (Judicial Review) Act to furnish to our client, the abovenamed, a statement in writing giving the reasons for the decision embodied in your letter of date 8 February 1984.''

On 29 May 1984 the respondent replied:

``I refer to your letter of 6 April 1984 in which you requested a statement in writing, in accordance with subsec. 13(1) of the Administrative Decisions (Judicial Review) Act, of the reasons for the decision in my letter of 8 February 1984.

Paragraph 13(5)(a) of that Act requires that such a request shall be made on or before the twenty-eighth day after the day on which the decision was furnished. As the date of your request exceeded the statutory period allowed no such statement in writing will be furnished to you.

Nevertheless, the basis for the decision not to accede to your request to reinstate objections withdrawn some years prior to your request, is that it is considered that once an objection has been withdrawn rights under that objection are extinguished.''

By Notice of Objection to Competency dated 2 July 1984 the respondent stated:

``The Respondent objects to the jurisdiction of this Court to try this application for an order of review under the Administrative Decisions (Judicial Review) Act 1977 on the grounds that:

1. The decision which is the subject of the application is not a decision to which the Act applies in that it is not a decision made under an enactment being merely advice or confirmation of an existing position.

2. Any operative and substantive act (whether or not a decision) relating to the Applicant's objections against his assessment for income tax was performed on or about 21 February 1980, that is prior to the commencement of the Act on 1 October 1980.

3. The decision is not a decision to which the Act applies in that it is included in the classes of decisions set out in Schedule 1 to the Act, namely in paragraph (e) thereof.

4. The application was not lodged within the prescribed period and the Court has not allowed an extension of time.''

The applicant contended that an objection once lodged could not be withdrawn by the applicant and that the respondent was obliged by the terms of sec. 186 of the Assessment Act to consider the objection and deal with it under that section. In my opinion this contention is not well founded.

While there is no express provision in the Assessment Act dealing with the withdrawal of objections, it would be absurd to read sec. 186 as requiring the respondent to consider an objection, and either disallow it, or allow it wholly or in part, and serve the taxpayer with written notice of his decision, when the taxpayer had communicated to him that the objection was withdrawn (see
Dymock's Book Arcade Ltd. v. F.C. of T. (1936) 3 A.T.D. 373 at pp. 373-374 per McTiernan J.).

In my opinion, the applicant was at liberty to withdraw his objections and communicate that withdrawal to the respondent (see
Boal Quay Wharfingers Ltd. v. King's Lynn Conservancy Board (1971) 3 All E.R. 597).

When he did so, there was no occasion for the respondent to make any decision, because there were then no objections on foot. His acknowledgement of receipt of the letter of withdrawal did not amount to a decision of any kind. In any event, the Act did not come into operation until 1 October 1980, and if any decision had been made prior to this time, it would not have been reviewable under the Act.

In his application, the applicant sought to identify the decision to be reviewed as being ``the decision of the respondent that objection lodged against income tax assessments for the years ended 30 June 1975 and 1976 have been withdrawn'', and to rely upon the respondent's letter of 8 February 1984. In the course of argument the applicant described the decision as a decision not to allow his objections to be reinstated. In my opinion, the respondent made no such decision. His letter merely stated the effect of the 1980 withdrawal of the objections.

It is not necessary to consider the remaining grounds of the objection to competency or the applicant's notice of motion, dated 28 August 1984, seeking an order extending the time for lodgment of his application to the Court.

In my opinion the objection to competency of the appeal is well-founded.

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THE COURT ORDERS THAT:

1. The objection to competency of the application be upheld, with costs.

2. The application be dismissed, with costs.