McGRORY v FC of T

Members:
PJ Lindsay SM

Tribunal:
Administrative Appeals Tribunal

MEDIA NEUTRAL CITATION: [2004] AATA 609

Decision date: 11 June 2004

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PJ Lindsay (Senior Member)

On 2 May 2000 John McGrory (the applicant) lodged his income tax return for the year ended 30 June 1999. The return had been prepared by a registered tax agent and included $89,562 at Item 18: Other Income. This amount represented the discount he received in respect of a grant of certain employee share options. It was included in assessable income because the applicant had elected under s. 139E of the Income Tax Assessment Act 1936 (ITAA 1936) that s. 139B(2) apply to all the qualifying options (rights) that he acquired under an employee share acquisition scheme in the 1999 year of income. The Commissioner of Taxation (the respondent) issued an assessment on 10 May 2000 that was based on the information in the return. Subsequently, Mr McGrory has taken steps to revoke the election.

2. In brief, Mr McGrory has applied to the tribunal for review of the Commissioner's decison refusing to amend the assessment following his attempt to revoke the election. At the hearing Mr I Young of counsel appeared for Mr McGrory. The Commissioner was represented by Mr SW Gibb, Senior Counsel. The tribunal had before it the documents (T documents) prepared in accordance with section 37 of the Administrative Appeals Tribunal Act 1975 (the AAT Act) and the exhibits tendered at the hearing. No witnesses were called to give evidence.

Background

3. Mr McGrory's tax agents contacted the Australian Tax Office on 16 May 2001. Their electronic message read as follows (T5):

``My client had received independant [sic] advice on how to treat employee share options. Regarding the election under section 139E, once the legislation was finalised, it became apparent that the 12mth holding period would apply from the date of exercise of the option and that the share would then have to be held for 12 mths to be eligible for the CGT reduction. If this information had been known to my client, he would not have made the election as it achieves nothing. The other important factor is that in order to exercise this option my client would have to be an employee of Cisco Systems. As I write this note Cisco are conducting major restructer-ing [sic] and many of the positions are being made redundant. There is no guarantee that my client will be in a position to exercise these

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options. Consequently I request a re- assessment of the 1999 return.''

4. On 9 July 2001 the Australian Taxation Office informed the agent that the message was being treated as a request for an amendment. However, a response could not be provided until both the agent and the taxpayer signed the message. In the event, a delegate for the Commissioner by letter dated 16 July 2001 (T7) informed Mr McGrory that his request for an amendment was denied. The reasons for the decision stated:

``We consider your objection raises particular question(s). These question(s) are set out below.

Can a section 139E Income Tax Assessment Act 1936 (ITAA 36) election once made be revoked? If yes, can the 1998/99 return be amended?

We consider these to be the relevant facts:

• - You received options in an employee share scheme
• - A section 139E election was made in the 1998/99 income year

...

As outlined above the election is made for a year of income and for all qualifying shares or rights acquired in that year. This section does not give the Commissioner the discretion to revoke an election once it has been made....

The Commissioner only has discretion in relation to accepting a late 139E election as stated above.

In your situation should you be unable to exercise the options due to them being lost because of the company restructure you would refer to section 139DD of the ITAA 1936 for guidance. Section 139DD of the ITAA 1936 provides that your return can be amended if the following is satisfied:

• • For the purposes of this Division, a right to acquire a share in a company is never acquired by a taxpayer if the following 2 requirements are satisfied.
• • The first requirement is that the taxpayer loses the right without having exercised it.
• • The second requirement is that the company is the employer of the taxpayer or the holding company of the employer of the taxpayer.''

5. The delegate's letter accompanying the reasons for decision informed Mr McGrory that to have his 1999 income year assessment reviewed ``you need to lodge an objection... If you remain dissatisfied with the decision made on your objection, you may appeal against this decision ot [sic] a Body that is independent of the Australian Taxation Office.''

6. Mr McGrory's accountants provided the respondent with a document dated 10 September 2001 headed ``Objection: Disallowing Amendment Request for 1999 year'' (T9). Again the absence of a signature was to hold up the respondent's deliberations. The respondent informed the accountants on 24 September 2001 that the objection was invalid because it had not been signed by Mr McGrory. Additional information about the employee share option scheme was requested. In response an objection dated 8 November 2001, signed by the applicant, was sent to the respondent stating as follows (T11):

``I refer to your letter of 16 July 2001 disallowing an amendment request made on my behalf.

I now request that my 1998/99 income tax assessment be amended to exclude assessable income of $89,562 previously included at item 18: Other Income for the following reasons.

• 1. No election under section 139E(1) of the Income Tax Assessment Act 1936 (`the 1936 Act') was made in the 1998/99 year of income.
• 2. Any purported election under section 139E was invalid.
• 3. The amount of assessable income included at Item 18 was included incorrectly.
• 4. In any event there has been a genuine mistake of fact and the assessment should be amended.

On the above grounds I respectfully request the commissioner to allow my request for an amendment to my 1998/99 income tax return.''

7. On 9 November 2001 Mr McGrory's accountants provided the additional information by explaining the calculation of the amount of discount included in item 18 of the return. Their

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letter was headed ``Objection to disallowance of amendment request for 1999 Income Tax Year'' and it repeated the claim that the election was invalid due to its not complying with the requisite form released by the respondent in Taxation Determination 97/23 ``Income tax: what is the approved form of an election under s. 139E(1) of the Income Tax Assessment Act 1936 so that it applies to all shares or rights acquired in an income year under a qualifying employee share acquisition scheme?'' As a final point, the accountants asserted (T12-24):

``Other Matters

We advise that there is nothing in the Australian Income Tax Law that precludes the revocation of a purported election under Division 13A of the 1936 Act. Section 170 of the 1936 Act provides the Commissioner with a general four year time frame to amend the assessment. We request that the Commissioner exercises his discretion to amend the assessment within this period.''

8. Further correspondence ensued in subsequent months regarding the relevant market value of the underlying shares, the calculation of the sum $89,562 being the amount of discount and other details of the employee share option scheme. The accountants continued to maintain their stance that the election was invalid.

9. By notice dated 23 August 2002 the respondent issued a decision on objection, the notice incorrectly referring to the objection as being dated 8 September 2001 instead of 8 November 2001. The objection was disallowed and the respondent noted the following (T30-73 & 74):

``We consider your objection raised a particular question... Will the discount of $89,562 be reduced to nil because of an invalid section 139E Income Tax Assessment Act 1936 (ITAA 1936) election?

...

Taxpayers contention

You believe the election was fundamentally flawed and therefore did not amount to an election, as

• • The typed date on the election is 17 April 2000, whereas the actual return was not signed until 28 April 2000.
• • Paragraph 2 of the election contains the words `... employee share acquisition scheme in terms of Division 13A...' This wording does not match that required by TD 97/23 which provides `... employee share acquisition scheme(s) in terms of Division 13A...'

Taxpayers contention

• • You believe that the amount of discount of $89,562 was incorrectly calculated. It was calculated using the ATO average exchange rates for the months of November 1998 and April 1999. The calculation was not done in accordance with section 139FM of the ITAA 1936.

Taxpayers contention

• • You believe that there is nothing in the Australian Income Tax law that precludes the revocation of an election under Division 13A of the ITAA 1936. You provide [sic] that `section 170 of the 1936 Act provides the Commissioner with a general four year time frame to amend the assessment.'''

10. Answering each of these contentions, the respondent noted that Mr McGrory had signed the election on 17 April 2000 (T12-28), well before his 1999 income tax return was lodged on 2 May 2000. The discrepancy between the election and the wording in Taxation Determination 97/23 was due to his participation in only one employee share scheme. It was clear from the return that, by including the discount in assessable income, Mr McGrory intended to make the s. 139E election. The respondent's decision, therefore, was that the election was validly made under s. 139E of the ITAA 1936. In relation to the revocation of the election, the respondent stated (T30-75):

``Although section 170 provides the Commissioner with a general four year time frame to amend an assessment, Division 13A does not provide for a section 139E election once made, to be revoked. The Commissioner's only discretion in section 139E is in relation to accepting a late section 139E election. Additionally, to accept an amendment made within the four year time frame, the request must first be allowable under the relevant legislative provision. As Division 13A does not allow for the revokation [sic] of a section 139E election, your assessment cannot be amended to remove the discount included.

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Section 139E does not give the Commissioner the discretion to revoke an election once it has been made... The Commissioner only has discretion to accepting a late 139 election as stated.''

11. An amended assessment of the amount of assessable discount was issued to take into account the appropriate market values, leading to an increase in the amount of discount from $89,562 to $91,120.

12. Mr McGrory applied to the tribunal for a review of the Commissioner's decision dated 23 August 2002. Prior to the hearing, Mr McGrory abandoned the argument that the election under s. 139E was not valid. It was contended, however, that he was entitled, by objection to the assessment, to revoke, amend or modify the election.

Applicable legislation

The relevant sections from the ITAA 1936 are as follows:

``Section 139E: Taxpayer may make election

(1) A taxpayer may make an election under this section that subsection 139B(2) applies for a year of income. The election covers each qualifying share or qualifying right acquired in that year by the taxpayer.

(2) How and when election must be made. The election must be in writing in a form approved by the Commissioner and be made before the taxpayer lodges his or her return of income for the year of income, or within such further time as the Commissioner allows.

Section 139B: Discount to be included in assessable income

(1) If a taxpayer has acquired a share or right under an employee share scheme, the assessable income of the taxpayer includes the discount given in relation to the share or right.

Note: Employee share scheme is defined in section 139C.

(2) When the discount is to be included. Unless subsection (3) applies, the discount is included in the taxpayer's assessable income of the year of income in which the share or right is acquired.

(3) If the share or right is a qualifying share or right and the taxpayer has not made an election under section 139E for the year of income in which the share or right is acquired, the discount is included in the taxpayer's assessable income of the year of income in which the cessation time (see sections 139CA and 139CB) occurs.

Section 139DD: No benefit where rights lost

(1) For the purposes of this Division, a right to acquire a share in a company is never acquired by a taxpayer if the following 2 requirements are satisfied.

(2) The first requirement is that the taxpayer loses the right without having exercised it.

(3) The second requirement is that the company is the employer of the taxpayer or a holding company of the employer of the taxpayer.

(4) Section 170 does not prevent the amendment of an assessment at any time for the purpose of giving effect to this section.

Section 170: Amendment of assessments

(1) The Commissioner may, subject to this section, at any time amend any assessment by making such alterations therein or additions thereto as he thinks necessary, notwithstanding that tax may have been paid in respect of the assessment.

...

(3) An amendment effecting a reduction in a taxpayer's liability under an assessment is not to be made:

• (a) if the taxpayer is a relevant entity within the meaning of Division 1B of Part VI and the assessment is taken by section 166A to have been made - after the end of 4 years after the day on which the assessment is so taken to have been made; or
• (b) if paragraph (a) does not apply and the taxpayer is not a SPOR taxpayer for the year of income to which the assessment relates - after the end of 4 years after the day on which tax became due and payable under the assessment; or
• (c) if paragraph (a) does not apply and the taxpayer is a SPOR taxpayer for the year of income to which the assessment relates - after the end of 2 years after

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  the day on which tax became due and payable under the assessment.

...

(6) If:

• (a) a taxpayer applies for an amendment of his or her assessment; and
• (b) either of the following subparagraphs applies:
  • (i) if the taxpayer is not a SPOR taxpayer for the year of income to which the assessment relates - the application is made within 4 years after the day on which tax became due and payable under the assessment;
  • (ii) if the taxpayer is a SPOR taxpayer for the year of income to which the assessment relates - the application is made within 2 years after the day on which tax became due and payable under the assessment; and
• (c) the taxpayer has supplied to the Commissioner within the period applicable under subparagraph (b)(i) or (ii), as the case may be, all information needed by the Commissioner for the purpose of deciding the application;

the Commissioner may amend the assessment when he or she decides the application even though that period has elapsed.

...''

Consideration and findings

13. It was not in dispute at the hearing that the election under s. 139E ITAA 1936 signed by Mr McGrory and dated 17 April 2000 had been validly made. The applicant submitted that he was entitled by objection to his assessment, to revoke, amend or modify an election validly made under s. 139E. There was no evidence given as to Mr McGrory's reasons for wishing to undo his election. It was submitted that his reasons are not relevant to deciding whether he has the power to revoke the election.

14. Since the applicant had abandoned the ground of objection that the election was not valid, it was the Commissioner's submission that neither the objection dated 8 November 2001 nor the letter from Mr McGrory's accountants dated 9 November 2001 stated fully or in detail any other ground of objection. Consequently, the Commissioner informed Mr McGrory that the tribunal did not have jurisdiction to review the objection decision of 23 August 2002. The applicant's response was that his objection letters of 10 September 2001 and 8 November 2001 sought to excise $89,562 from his assessable income. He contended that the letter from his accountants dated 9 November 2001, headed ``Objection to disallowance of amendment request for 1999 Income Tax Year'', included the additional ground that claimed that a s. 139E election was revocable and the Commissioner was requested to exercise the discretion in s. 170 ITAA 1936 to amend the assessment. It was argued that the Commissioner had understood the import of the objection as amended by the letter of 9 November 2001, because the Commissioner's reasons for the decision of 23 August 2002 acknowledged that the applicant had sought to revoke the election.

15. While maintaining that his objection complied with the requirement in s. 14ZU Taxation Administration Act 1953 (TAA) that it ``state fully and in detail'' the grounds relied on, at the hearing the applicant sought leave to add a ground to the objection pursuant to s. 14ZZK TAA. The respondent opposed the granting of leave on the basis that the election cannot be revoked and any ground of objection seeking to revoke it would not be a valid ground. In the absence of any other valid ground of objection, it would be futile to allow the objection to be amended.

16. It is convenient here to set out the relevant parts of ss.14ZU and 14ZZK of the TAA.

``Section 14ZU: How taxation objections are to be made

A person making a taxation objection must:

• (a) make it in the approved form; and
• (b) lodge it with the Commissioner within the period set out in section 14ZW; and
• (c) state in it, fully and in detail, the grounds that the person relies on.

Section 14ZZK: Grounds of objection and burden of proof

On an application for review of a reviewable objection decision:

• (a) the applicant is, unless the Tribunal orders otherwise, limited to the grounds

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  stated in the taxation objection to which the decision relates;...''

17. The issue I must decide is whether the election can be revoked. I find that the applicant's objection comprises the document he signed on 8 November 2001 and the letter by his accountant headed ``Objection'' dated 9 November 2001. So that there could be no doubt that, in substance as well as form, the issue of revocation or purported revocation was before me, I made an order pursuant to s. 14ZZK(a) TAA allowing the applicant to add a ground to his objection as follows: ``I, John McGrory, as part of this my objection to my assessment for the 1999 year, hereby revoke and set aside the election I made on 17 April 2000.'' In doing so I was mindful of the following passage from the Full Federal Court's judgment in
Lighthouse Philatelics Pty Limited v FC of T 91 ATC 4942; (1991) 32 FCR 148

``The decision whether to allow an amendment ought to be made on the same considerations of justice upon which such decisions are regularly made in litigation. It was in the past a reproach to the law that the real issues in taxation appeals could be refused a hearing for a defective objection, and Parliament has legislated to remove that reproach; an amendment under s. 190 should not be considered with reluctance, but on its merits.''

(at ATC 4949; FCR 156)

18. The applicant submitted that the right to revoke the s. 139E election was to be found in either s. 33(3) of the Acts Interpretation Act 1901 (AIA) or that the power to make the election carried with it the implied power to revoke it.

Implied power of revocation

19. Under the general law, an election between alternative and inconsistent courses of action is binding. The law was stated in
The Commonwealth of Australia v Verwayen (1990) Aust Torts Reports ¶81-036; (1990) 170 CLR 394 as follows ``Election consists in a choice between rights which the person making the election knows he possesses and which are alternative and inconsistent rights... This doctrine precludes a person who has exercised a right from exercising another right which is alternative to and inconsistent with the right he has exercised...'' (per Brennan J, at Torts 67,967; CLR 421). The ITAA 1936 does not make express provision for the election in s. 139E to be revoked. I must therefore determine whether a power of revocation can be implied.

20. For the Commissioner it was submitted that, since Division 13A ITAA 1936 ``Employee share schemes'' contains specific provision for relief from the consequences of an election under s. 139E, then it should be implied that the election is otherwise irrevocable. That provision, s. 139DD in Division 13A, does not operate by way of revocation or amendment of the election. In certain circumstances (neither counsel addressed the scope of those circumstances) s. 139DD operates to deem rights granted under certain employee share schemes never to have been acquired. A taxpayer who has been assessed under Division 13A on the discount on such rights, would be entitled to have the relevant assessment amended. The Commissioner submitted that s. 139DD assumes that an election under s. 139E is irrevocable, at least in the circumstances in which it deals, and the provision would be otiose if the election could be revoked by objection. The applicant submitted that, since s. 139DD is self executing and does not require the taxpayer to act through revoking their election and thus engage an implied power, the section is not otiose. I do not accept the applicant's submission because it does not explain why the legislature would address disadvantage to a taxpayer arising from a particular set of circumstances by way of s. 139DD, yet allow taxpayers in other circumstances to address their concerns by exercising an implied power and so revoking the election.

21. Both Counsel pointed to anomalies that would arise if their arguments were rejected. The respondent acknowledged that if the s. 139E election is irrevocable, the taxpayer who conscientiously makes an election might possibly be disadvantaged in comparison with the taxpayer who at the time of return lodgment either deliberately chooses not to make the election or through ignorance fails to make the election, but later requests the Commissioner to exercise his discretion to allow a late election. The Comissioner of course would not be bound to exercise the discretion in favour of such a taxpayer since its exercise would depend upon the application of principles of administrative law. The conscientious elector might also be disadvantaged compared with taxpayers who

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lodged their returns late. The deliberate late lodger could sit and wait to see what happens to the value of the shares or rights or to other variables, prior to lodging their return. If it was to their advantage, the deliberate late lodger could make the election immediately before lodgment and be exposed only to penalties for failing to lodge the income tax return by the required date. The chronic late lodging taxpayer would be similarly advantaged. However, the respondent submitted, and I agree, that a right to revoke an election ought not be implied merely upon the strength of perceptions of possible comparative disadvantage as between classes of conscientious electors, one of whom complies with the law as to timely lodgment of returns and the other, the deliberate late lodger, who does not.

22. The Board of Review decision in Case G55
(1956) 7 TBRD 314 was referred to by the Commissioner since the contention that an election could be amended by objection fell for consideration by a Board of three members and was unanimously repudiated. In that case the taxpayer exercised the option then available in s. 31 ITAA 1936, to value trading stock at cost. After the assessment had issued and trading conditions having deteriorated, the taxpayer sought by objection to have the trading stock valued at replacement price. The applicant submitted that I should distinguish the case because it did not consider the import of s. 33(3) AIA. I did not find the decision to be of much assistance as the reasoning stressed the taxpayer's failure at the hearing to discharge the onus of establishing that the assessment, raised in accordance with a validly exercised trading stock valuation option, was excessive. It did not examine whether there is power available to a taxpayer to change an election by way of objection.

23. The ITAA 1936 and the Income Tax Assessment Act 1997 (ITAA 1997) have made provision for a number of elections to be withdrawn or varied. I was referred to the election under s. 221YHR(5) ITAA 1936 for a higher rate of withholding to be made from prescribed payments. The election under s. 30-247 ITAA 1997 permits a deduction for making certain gifts to be spread over five years. Other elections were noted as being subject to cancellation or amendment, but counsel for the respondent could not identify any elections that were able to be withdrawn or varied retrospectively. The applicant submitted that each such election was an example of an override of the implied power of revocation. Mr Gibb submitted that an implied power of revocation to ``wipe the slate clean'', possibly some years after assessment, would be an extraordinary outcome and one would expect to see some reference to such a right in the legislation, the explanatory memorandum or the second reading speech. The election brings forward a liability to tax. For certain shares or rights subject to the election, an exemption of up to $1,000 may be available. But it also affords a means by which the taxpayer may pay a lesser amount of tax now, rather than a possibly greater liability at the cessation time. The election is made in the knowledge that it anticipates future events and circumstances which may or may not happen or turn out to be favourable. To allow revocation by objection at some point in the future would permit an elector to enjoy the benefit of hindsight. It would be inconsistent with the notion of an election being a choice between alternative courses of action. I accept the submission that if such an outcome were intended, there would be express provision for it in the legislation.

Subsection 33(3) Acts Interpretation Act 1901

24. The applicant's alternative argument was that s. 33(3) AIA gives him the power to revoke or amend the election. The subsection reads:

``(3) Where an Act confers a power to make, grant or issue any instrument (including rules, regulations or by-laws) the power shall unless the contrary intention appears, be construed as including a power exercisable in the like manner and subject to the like conditions (if any) to repeal, rescind, revoked, amend, or vary any such instrument.''

25. For guidance on interpreting the subsection, both parties referred to the decision of Brennan J, sitting as the President of the Administrative Appeals Tribunal, in
Re Brian Lawlor Automotive Pty Ltd and Collector of Customs (New South Wales) (1978) 1 ALD 167. That case concerned an application to the tribunal for review of a purported revocation of a warehouse licence issued under powers delegated to the Collector. The applicant maintained that there was no power of revocation conferred by the relevant statute. The contrary argument was that s. 33(3) AIA required that the statutory power to grant the

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licence be construed in an extended sense, in that the power to grant included a power to revoke. Tracing the history of s. 33(3) Brennan J stated:

``When s. 33(3) was first enacted, it was expressed to apply only to a power `to make any rules, regulations or by-laws'. A power to make rules regulations or by-laws is a power to bring subordinate legislation into existence - it is not an administrative power.... There is much to be said for the view that s. 33(3), as it was first enacted, was limited in its application to the power to create subordinate legislation. The applicant submits that it is now so limited.

By s. 6 of the Acts Interpretation Act 1941 (No. 7 of 1941) s. 33(3) was amended to its present form. The words `any rules, regulations or by-laws' were omitted and in their stead were inserted the words: `grant or issue any instruments (including rules, regulations or by-laws)'. The instruments to which s. 33(3) now relates are instruments which are not necessarily rules, regulations or by-laws, and they are instruments which might be `granted' or `issued' rather than `made'. Where, pursuant to a statutory power, an authority grants or issues an instrument other than a rule, regulation or by-law, the exercise of the power may well be an executive or administrative act rather than a legislative act. At all events, the granting or issuing of an instrument other than a rule, regulation or by-law is not necessarily an act of a legislative kind, and the granting or making of an executive or administrative instrument falls within the natural ambit of s. 33(3).

An effect of the 1941 amendment is to extend the power of repeal, rescission, revocation, amendment and variation to statutory powers for the creation of instruments when the power is of an executive or administrative rather than a legislative character.''

(at 171-172)

26. It appears that the more generally accepted view is that the expression ``any instrument (including rules, regulations or by- laws)'' in s. 33(3) covers not only legislative instruments but also executive or adminstrative instruments (
Re Brian Lawlor, Edenmead v Commonwealth (1984) ATPR ¶40-470; (1984) 3 FCR 95,
Heslehurst v Government of New Zealand (2002) 189 ALR 99, sed contra
Australian Capital Equity Pty Ltd v Beale (1993) 41 FCR 242). The main purpose of s. 33(3) is to obviate the need in each instrument to refer to the additional powers of repeal, revocation, rescission, amendment or variation (see DC Pearce and RS Geddes Statutory Interpretation in Australia, Butterworths, 5th edition, 2001 at par 6.54). The important point to note for present purposes in my view is that s. 33(3) deals with a particular type of power. In Re Brian Lawlor Brennan J held that

``Section 33(3) applies to `a power', not to `any instrument'. It operates to add powers of repeal, etc, to the power to which it applies, that is, to a power to make, grant or issue an instrument: a power which may be exercised without making, granting or issuing an instrument is not a power to which s. 33(3) applies.''

(at 172)

More recently, and in the same vein, is the following passage from the judgment of Emmett J in Heslehurst v Government of New Zealand, a case about a warrant issued by a magistrate of the Local Court of New South Wales under the Extradition Act 1988 (Cth)

``Section 33(3) speaks in terms of the construction of the relevant power. It provides that, where an Act confers a particular power, the power is to be construed as including a power exercisable in the like manner and subject to the like conditions to repeal, amend and so on.''

(at 107)

27. In the present application it was submitted that s. 139E was the source of the applicant's power to make an instrument, being the written election dated 17 April 2000. Section 139E(2) requires the election to be in writing and in a form mandated by the Commissioner, and thus is a formal document drawn up and executed in a manner designed to have a particular consequence. In developing the submission based on s. 33(3), Mr Young emphasised that the provision is expressed in general terms and applies to a power and its use, but does not refer to the identity or capacity of the person using or exercising the power. Mr Young submitted that where the AIA intended to refer to the identity or capacity of the person using or exercising power, it did so in express terms. He illustrated the point by referring to a number of provisions in the AIA that identify

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the relevant person whose act, function or power is the subject of interpretation:

``- s. 25B(2)(d) states that altered names or constitutions of bodies does not affect investigations by `any tribunal, authority or person';

- where a person makes a periodic report to a Minister, s. 34C provides that `person includes a body corporate, office, commission, authority, committee, tribunal, board, institute, organization or other body however described';

- s. 33(2) specifically refers to `Where an Act confers a power or imposes a duty on the holder of an office as such' and s. 33(2AA) defines the holder of an office to include an Australian Public Service employee.

- s. 33(4) refers to the power to make appointments to an office or place being conferred `upon any person or authority.'

- by s. 46(1) where an Act `confers upon any authority power to make, grant or issue any instrument (including rules, regulations or by-laws)' expressions in the instrument have the meaning in the Act and the instrument is construed as not to be beyond power.''

In his submission s. 33(3) should not be read down so as to apply only to ``an authority'' because it is silent as to the identity of the repository of the power.

28. It was significant in the respondent's view, that s. 33(3) is in Part VII 'Powers conferred and duties imposed by Acts' of the AIA. In Mr Gibb's submission, a taxpayer who makes an election under s. 139E is not exercising legislative or administrative power, but merely effecting a personal choice between alternative courses of action. Further it was submitted that the election was not an a formal legal document and did not create or confirm a legal right. It was merely a written declaration that expressly confirmed a choice conferred by the ITAA 1936, the choice being apparent in any event from the data provided in the income tax return. Moreover, the respondent had ruled in Taxation Determination 97/23 that it did not have to be furnished to the Australian Taxation Office until a request was made to do so. Thus it was argued that the election was not an instrument because the election could be given effect without it first having to be furnished to the respondent.

29. I was not referred to any authority that has applied s. 33(3) in a context involving instruments that have been made by citizens to create or affect their personal or private rights. I accept the submission that s. 33(3) has no application to an instrument made by a taxpayer in the exercise of a choice offered by Division 13A ITAA between alternative courses of action having different taxation consequences, because s. 139E is not concerned with an exercise of power by a taxpayer. Mr McGrory has resorted to s. 139B(2) ITAA to bring the discount to tax in the year that he acquired his options, rather than in a later year of income when the cessation time occurs. That is a choice available to him. The written form of election is the means by which his choice is recorded discretely from the income tax return, the inclusion of the discount in assesable income per the return already reflecting that choice.

30. That there are taxation consequences that follow from the making of the election does not mean that the taxpayer has exercised a power having a legislative or executive or administrative character. I accept the respondent's submission that s.33(3) is concerned with powers conferred by legislation that substantially relate to governmental action. I come to this conclusion after noting that Brennan J in Re Brian Lawlor considered that s. 33(3) referred to the situation where ``an authority'' grants or issues an instrument (at 172). On appeal, Smithers J also understood that s. 33(3) is concerned with power given to government agents, stating:

``Section 33(3) is designed to confer a power of revocation of an instrument made, granted or issued by an authority pursuant to a power already conferred upon it to make, grant or issue that instrument in circumstances where the power of revocation may not otherwise have been conferred upon that authority. The subsection is clearly concerned with instruments which, when made, granted or issued by an authority, achieve some legal result becausethey were made, granted or issued pursuant to the power conferred upon the authority to make, grant or issue them. (
Collector of Customs (New South Wales) v Brian Lawlor Automotive Pty Ltd (1979) 2 ALD 1 at 12).''

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ATC 2126

In this instance the only authority that could have been given power having administrative or executive character would be the Commissioner, but s. 139E does not confer power on the Commissioner, whether to make, grant or issue an instrument. I am satisfied that s. 33(3) is of no assistance to the taxpayer.

31. Where a contrary intention is evident, s. 33(3) will not apply. Even if I had found that s. 33(3) could have applied to s. 139E, I would be satisfied that Division 13A, which contains the comprehensive set of rules for among other things valuing and assessing rights and shares acquired through employee share schemes, evinces a contrary intention. Section 139DD specifically deals with amendments to assessments where a taxpayer loses rights without having exercised them. I infer that, by making provision for this circumstance, an amendment to an assessment could not otherwise have been effected, for instance by revoking the election for taxation ``up front'' on acquiring the rights.

Decision

32. An amendment to the objection was allowed during the hearing out of an abundance of caution. I remain satisfied that the objection that was considered by the Commissioner did raise the issue whether the applicant could, by his objection, amend or revoke the election. Although the applicant has not succeeded, I will not dismiss the application under s. 42B of the AAT Act, which deals with matters found to be frivolous or vexatious, as urged by Mr Gibb. That power of summary dismissal is to be exercised ``cautiously and sparingly''; this was not a matter commenced without reasonable cause (
Re Williams and Australian Electoral Commission (1995) 21 AAR 467 at 473) The tribunal's decision is to exercise its power under s. 43 of the AAT Act to affirm the respondent's decision to disallow the objection.