Case X89

Members:
IR Thompson DP

Tribunal:
Administrative Appeals Tribunal

Decision date: 2 November 1990.

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I.R. Thompson (Deputy President)

Six objection decisions made by the respondent in respect of amended assessments of the taxpayer's income tax liability for the taxation years 1977 to 1982 inclusive were referred by the respondent to Taxation Board of Review No. 2. That Board did not review them. The question has now been raised whether the Administrative Appeals Tribunal has power to do so. A preliminary hearing was held by the Tribunal to enable it to make findings on the question and to give an appropriate direction. This statement sets out the reasons for the findings made and the direction given.

2. At that preliminary hearing the taxpayer was represented by Mr A. Ingram, of counsel, and the respondent by a departmental officer. No oral evidence was given but certain facts were stated by the departmental officer representing the respondent and the Tribunal had before it documents which had been sent by the respondent to the Taxation Board of Review; two other documents were tendered at the hearing, copies of them having been lodged with the Tribunal a few weeks before the hearing.

3. For each of the six taxation years the taxpayer made a return of income and his income tax liability was initially assessed in accordance with that return. However, following an audit carried out in 1984, amended assessments were issued for all six years on the ground that he had omitted income from his returns. The result of those amended assessments was that he was required to pay additional amounts of income tax totalling $10,400.90. That total included $4,910 of additional tax imposed because of the incorrect returns. Notices of the amended assessments were issued on 16 March 1984.

4. On 29 March 1984 an undated typewritten letter signed by the taxpayer was received in the Australian Taxation Office. Its content was as follows:

``$10,400.90 extra tax is the result of heated argument with your representatives.

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I said, I will not pay it.

I cannot find the $50,000 profit, neither have I $10,400.00 for extra tax, even paying the rent gives me terrible hardship.

Where is the profit you are talking about?

Your demand is the justice of the wild-west, or it is a joke?''

5. The respondent treated that letter as an objection to the amended assessments in respect of all six years. On 3 July 1984 it sent to the taxpayer a separate written notice in respect of each year informing him that the objection in respect of that year had been disallowed. Each notice also set out the provisions of sec. 187 of the Income Tax Assessment Act 1936 (``the Act'') which provided that a taxpayer dissatisfied with an objection decision might request the respondent to refer the objection decision to a Board of Review or to treat his objection as an appeal and forward it to a Supreme Court. Reference was made in the letter to the fact that any such request must be accompanied by a fee of $2 and lodged within 60 days after service of the notice of the objection decision.

6. On 24 July 1984 an undated typewritten letter, signed by the taxpayer and accompanied by the notice of the objection decision in respect of the 1978 taxation year and a currency note for $2, was received by the Australian Taxation Office. That date was within 60 days after the notices of the objection decisions were sent to the taxpayer.

7. The content of that letter was as follows:

``I still do not understand, where my taxable income and profit is, which was taxed $10,400.90 by you.

I will never have that much money in my life, unless I sell everything, including the house I bought for $14,000.00.

I drew $10-12,000.00 from the shop in the last 26 years and $3-4,000.00 in January 1984, which allthogether [sic] made up the price of the house.

You must deny, I ever had any income, paid any taxes and drew money for a house, otherwise you would leave in peace.

You do not count my scores, you count only yours and the result is a silly number of $10,400.90.

It could be a million just as well.

You do not need nationalisation to confiscate, you invent means and excuses to reach the same result.

I bought the cheapest house in Melbourne and not the Buckinham [sic] Palace.

If I had never paid any taxes, on my assets the house, the stock wort [sic] $10,000.00, the tax would not be ten thousand dollar at all.

As a single man I trew [sic] the profit away, this is what you say.

You are holding your gun against my temple.

I do not know, which way will your desire, push and pull me in the future, therefore I am selling the shop and make myself ready for gaol or hard labour for the rest of my life.

I have nothing else to add to my defence, I can only repeat it over and over again.

I wish you explained me fully, all your accusation one day.

Or??

You do not have to.?????????

What a justice.!''

8. The Tribunal was informed that at the time when that letter was received a very large number of requests for referral of objection decisions to Boards of Review had accumulated in the Australian Taxation Office; as a result it was not able to process as quickly as it should have done newly received requests for such referral. The officer who received the taxpayer's letter with the accompanying notice of the objection decision and the $2 currency note treated it as a request for referral and placed it, together with the notice of the objection decision and the $2 note, on the file relating to the assessment of the taxpayer's 1978 income. There it remained, apparently without any further action being taken, until March 1986 when a letter was sent to the taxpayer by the Australian Taxation Office asking him to come in and discuss his tax affairs. He did so and there is a note on the Australian Taxation Office's file that they were discussed and that in the course of the discussion the taxpayer was told that he should have paid fees totalling $12, $2 for each of the

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six years, and not only the $2 which he had sent. There is a note also that at that interview he paid an additional $12, i.e. $2 more than he was told he should pay. The respondent then referred to the Taxation Board of Review on 25 June 1986 the taxpayer's objections to the assessments in respect of all six years.

9. The respondent has now changed his mind about the characterisation of the taxpayer's letters. He says that the letter which he received on 29 March 1984 and treated as an objection to the amended assessments in respect of the six years was not a valid objection and that the second letter which he treated as a request for referral of the objection decisions to a Board of Review was not such a request. He asserts also that, if the second letter was such a request, it related only to the 1978 year and not to all six years.

10. At the time when the letters were received sec. 185, 186, 187 and 188 of the Act provided, so far as is relevant, as follows:

``185(1) A taxpayer dissatisfied with any assessment under this Act may, within 60 days after service of the notice of assessment, post to or lodge with the Commissioner an objection in writing against the assessment stating fully and in detail the grounds on which he relies.

...

186 The Commissioner shall consider the objection, and may either disallow it, or allow it either wholly or in part, and shall serve the taxpayer by post or otherwise with written notice of his decision.

187(1) A taxpayer dissatisfied with the decision may, within 60 days after such service, in writing request the Commissioner either -

• (a) to refer the decision to a Board of Review for review; or
• (b) to treat his objection as an appeal and to forward it to a specified Supreme Court.

...

188(1) If the request is accompanied by a fee of $2, the Commissioner shall refer the decision or forward the objection to a Board or Court in accordance with the request.

...''

11. In
H.R. Lancey Shipping Co. Pty. Ltd. v. F.C. of T. (1951) 9 A.T.D. 267 at pp. 272-273 Williams J. said:

``Section 185 provides that an objection shall state fully and in detail the grounds on which the taxpayer relies. Section 190 provides that on every reference to a board of review or on an appeal the taxpayer shall be limited to the grounds stated in his objection. This is `an imperative direction to the Court, not... a provision merely for the benefit of the Commissioner which he is in a position to waive. The provision is made for the purpose of protecting public revenue, and the Court is bound to give effect to it';
Molloy v. Federal Commissioner of Land Tax (1937) 59 C.L.R. 608 at p. 610; 4 A.T.D. 570 at p. 571... [the taxpayer] must comply with the Act. The grounds of objection need not be stated in legal form, they can be expressed in ordinary language, but they should be sufficiently explicit to direct the attention of the respondent to the particular respects in which the taxpayer contends that the assessment is erroneous and his reasons for this contention. In each case the sufficiency of the grounds is a matter for the Court. Vague grounds such as that the assessment is excessive are not, in my opinion, a compliance with the Act.''

Throughout 1984 sec. 190 continued to provide that upon every reference to a Board of Review the taxpayer was to be limited to the grounds stated in his objection.

12. Therefore, for the letter which the Australian Taxation Office received on 29 March 1984 to constitute an objection in writing against the six amended assessments for the purposes of sec. 185 of the Act, it was essential that it should be sufficiently explicit to direct the respondent's attention to the particular respects in which the taxpayer contended that the assessments were erroneous. The letter is not expressed in terms of being an objection made under sec. 185 against the amended assessments; however, it is clearly a protest against them made to the respondent by the taxpayer. They had been issued after an investigation during which quite obviously the investigator had told the taxpayer that he had understated the income from his shop business, that is to say in layman's terms that he had made a greater profit than he had revealed in his

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income tax returns. It is in that context that the letter must be read.

13. In the letter the taxpayer stated, in effect, that his business did not make as large a profit as the respondent alleged it had done when he issued the amended assessments. Nothing in the Act requires a taxpayer to deal with the respondent through an agent familiar with its provisions. On the contrary the Act refers to the taxpayer being dissatisfied with an assessment. The Australian community today contains many persons for whom English is not their mother tongue and also many who have a limited education and lack experience in drafting business letters. It would be quite wrong in those circumstances for the respondent to reject a letter written by a taxpayer as not constituting a valid objection to an assessment simply because of its poor form or poor expression. If it shows that the taxpayer is dissatisfied with the assessment and reveals with sufficient particularity the grounds of his dissatisfaction, that is sufficient.

14. I am satisfied, therefore, that the respondent was correct when he treated the taxpayer's letter received on 29 March 1984 as an objection against all six assessments. The amount of $10,400.90 referred to in it was the total additional amount of tax assessed; when the circumstances of the reassessment are taken into account, the ground on which the taxpayer relied is also quite clear, that is to say that the income of his business was not greater than he had declared in his income tax returns.

15. That being so, the objection decisions were themselves validly made. If, therefore, a valid request for referral of them to a Board of Review was made under sec. 187 and accompanied by the requisite fees, the respondent was obliged by sec. 188 to refer them to the Board of Review, as he did. The Board of Review had not carried out the review by the time that it was abolished on 30 June 1986. Consequently, if the objection decisions were validly referred to the Board, the referrals are, by virtue of sec. 223 of the Taxation Boards of Review (Transfer of Jurisdiction) Act 1986, to be deemed to be applications to the Administrative Appeals Tribunal and the Tribunal has power under sec. 25 of the Administrative Appeals Tribunal Act 1975 to hear and determine them.

16. I turn, therefore, to consider whether the taxpayer's second letter constituted a request in writing to the respondent to refer the objection decisions to a Board of Review for review. It does not by its terms expressly do so. However, it was accompanied by the notice of the objection decision in respect of the 1978 year and by a $2 currency note. The officer in the Australian Taxation Office who received it treated it as a request under sec. 187. The officers who discussed the taxpayer's tax affairs with him in 1986 did the same; otherwise they would not have told him that he had to pay a total of $12 in fees. However, the difficulty which I find standing in the way of its constituting a request made under sec. 187 is that that section required a choice to be made, and stated, between referral to a Board of Review for review and treatment of the taxpayer's objection as an appeal to a Supreme Court.

17. The notice of each objection decision which was sent to the applicant set out the provisions of sec. 187; even to a person without legal training and with only a knowledge of the English language such as is displayed by the taxpayer's letters, the need to make a choice should have been quite clear. Mr Ingram referred to the fact that the officers of the Australian Taxation Office did not draw to the taxpayer's attention the fact that the letter did not state what his choice was. It is my view that the officer who received it should have informed him forthwith that, because it did not state what request he was making, it did not comply with sec. 187; the taxpayer would then have had an opportunity to make a proper request within the time limit imposed by sec. 187. However, that officer's failure to do that could not, and did not, convert the taxpayer's letter, which clearly did not constitute a request made under sec. 187, into one which did so.

18. It is unfortunate that the conduct of the officers who called the taxpayer in to discuss his tax affairs with them in 1986 led him to believe that the letter constituted a request under sec. 187; however, it did not prejudice him as by then the time for making such a request had expired. It is even more unfortunate that the objection decisions were then referred to the Board of Review; that has resulted in the taxpayer incurring the cost of representation in these proceedings. But the fundamental reason why the taxpayer did not make a request which

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complied with sec. 187 was his own failure to pay heed to what was written in the notices of the objection decisions. If, contrary to the impression given by his letters, his command of the English language was so poor that he could not understand what was written in those notices, he should have obtained the assistance of someone with a better command of the language to enable him to do so; it is reasonable to expect taxpayers to take such simple steps to look after their own interests.

19. Having come to the conclusion that no request was made under sec. 187 of the Act for the referral of the objection decisions to the Board of Review, I find that their referral was not validly made under sec. 188 and that the Administrative Appeals Tribunal, therefore, has no power to review them. I have made those findings with some regret as it is clear from the taxpayer's letters that at all times since receiving the amended assessments he has remained totally dissatisfied with them and the respondent has been aware of that. However, the provisions of the Act enabling a dissatisfied taxpayer to object to an assessment, to have an objection decision reviewed or to appeal to a Supreme Court against the assessment were in 1984 both clear and rigid. They left no room for any discretion to be exercised by the respondent or by the Tribunal, even where the result was, as in the present case, that a taxpayer dissatisfied with an assessment and with the objection decision in respect of it was unable to have them reviewed because he had not complied with those rigid provisions. The present sec. 188, introduced into the Act in 1986, does not in this case provide any way of overcoming the problem.

20. Having come to the conclusion that the Tribunal has no power to review the objection decisions, I can only direct that the deemed applications, being invalid, are to be removed from the hearing list.