STOKES v FC of T
Judges:Davies J
Court:
Federal Court
Davies J
These proceedings have been remitted by the High Court of Australia to this Court, by order of Toohey J made on 16 August 1995. At the hearing, Mr D.H. Bloom QC, with him Mr A. Robertson SC and Mr T.R. Norton, appeared for the applicant, Kerry Matthew Stokes, and Mr B.J. Shaw QC, with him Mr G.T. Pagone, appeared for the respondent, the Federal Commissioner of Taxation (``the Commissioner'').
The applicant seeks orders in the nature of judicial review with respect to three notices of amended assessment which were issued and dated 3 June 1994 and were served upon the applicant shortly thereafter. The notices purported to be amended assessments in respect of the applicant's taxable income for the year ended 30 June 1987. The applicant seeks declarations that the purported amended assessments were not assessments or amended assessments for the purposes of the Income Tax Assessment Act 1936 (Cth), (``the Act''), that the notices and purported assessments were void and that certain documents purporting to be determinations under sub-ss. 177F(1) and 177F(2) of the Act were not valid determinations for the purposes of s. 177F. The applicant also seeks an injunction restraining the respondent, the Commissioner of Taxation, from taking any step to enforce the purported amended assessments.
A view was formed by a Deputy Commissioner of Taxation, Mr B.F. Power (``the Deputy Commissioner''), that the applicant had received a tax benefit under Part IVA of the Act which should be included in the applicant's assessable income in respect of the year ended 30 June 1987. Section 177F of the Act provides, inter alia:
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``177F(1) Where a tax benefit has been obtained, or would but for this section be obtained, by a taxpayer in connection with a scheme to which this Part applies, the Commissioner may-
- (a) in the case of a tax benefit that is referable to an amount not being included in the assessable income of the taxpayer of a year of income - determine that the whole or a part of that amount shall be included in the assessable income of the taxpayer of that year of income; or
- (b) in the case of a tax benefit that is referable to a deduction or a part of a deduction being allowable to the taxpayer in relation to a year of income - determine that the whole or a part of the deduction or of the part of the deduction, as the case may be, shall not be allowable to the taxpayer in relation to that year of income,
and, where the Commissioner makes such a determination, he shall take such action as he considers necessary to give effect to that determination.
177F(2) Where the Commissioner determines under paragraph (1)(a) that an amount is to be included in the assessable income of a taxpayer of a year of income, that amount shall be deemed to be included in that assessable income by virtue of such provision of this Act as the Commissioner determines.''
Relevant powers to make assessments and amended assessments were as follows:-
``166 From the returns, and from any other information in his possession, or from any one or more of these sources, the Commissioner shall make an assessment of the amount of the taxable income of any taxpayer, and of the tax payable thereon.
...
170(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.
...
170(2) Where a taxpayer has not made to the Commissioner a full and true disclosure of all the material facts necessary for his assessment, and there has been an avoidance of tax, the Commissioner may-
- (a) where he is of opinion that the avoidance of tax is due to fraud or evasion - at any time; and
- (b) in any other case - within 6 years from the date upon which the tax became due and payable under the assessment,
amend the assessment by making such alterations therein or additions thereto as he thinks necessary to correct the assessment.''
The purported notices of amended assessment with which we are concerned were issued shortly before the expiration of the period of six years from the date upon which tax became due and payable under the applicant's original assessment for the 1987 year.
The present issue arose because the Deputy Commissioner was uncertain as to what was the correct tax benefit to bring to account. Although no oral or affidavit evidence has been adduced dealing with this point, it can safely be inferred from the determinations and notices of amended assessment which are in evidence that the Deputy Commissioner considered that there were at least three ways of looking at and of calculating the relevant tax benefit.
One determination signed by the Deputy Commissioner read as follows:
``I, Brian F. Power, in the exercise of the powers and functions conferred upon me as Deputy Commissioner of Taxation, by delegation from the Commissioner of Taxation pursuant to section 8 of the Taxation Administration Act 1953, DO HEREBY DETERMINE for the purposes of paragraph 177F(1)(a) of the Income Tax Assessment Act 1936 (`the Act');
IN RESPECT of Kerry Matthew Stokes (`the taxpayer') who in the year of income ended 30 June 1987 has obtained, or would but for the operation of section 177F obtain, a tax benefit in connection with a scheme to which Part IVA of the Act applies, namely an amount of TWENTY NINE MILLION AND SEVEN HUNDRED AND NINETY EIGHT THOUSAND SEVEN HUNDRED AND FIFTY DOLLARS ($29,798,750) not being included in the assessable income of the taxpayer in the year of income ended 30
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June 1987 where the whole of that amount would have been included, or might reasonably be expected to have been included in the assessable income of the taxpayer in the year of income ended 30 June 1987 if the scheme had not been entered into or carried out;That the whole of the amount of TWENTY NINE MILLION AND SEVEN HUNDRED AND NINETY EIGHT THOUSAND SEVEN HUNDRED AND FIFTY DOLLARS ($29,798,750) shall be included in the assessable income of the taxpayer for the year of income ended 30 June 1987.
In accordance with the provisions of subsection 177F(2) of the Act, I HEREBY DETERMINE that the amount of TWENTY NINE MILLION AND SEVEN HUNDRED AND NINETY EIGHT THOUSAND SEVEN HUNDRED AND FIFTY DOLLARS ($29,798,750) shall be deemed to be included in the assessable income of the taxpayer by virtue of subsection 26AAA(2A) of the Act.''
A second determination determined the tax benefit at the sum of $18,327,278, which was deemed to be included in the assessment of the taxpayer by virtue of sub-s. 160ZO(1) of the Act. A third determination specified a tax benefit of $29,701,382, which was also deemed to be included in assessable income for the taxpayer by virtue of sub-s. 160ZO(1) of the Act.
I have referred to these determinations as first, second and third. However, it was accepted for the purposes of these proceedings that the determinations should be treated as having been signed at the same time. No evidence was given as to the order in which the determinations were executed.
It can be inferred from the notices of amended assessment which were subsequently issued that it was not intended by the Deputy Commissioner that the three tax benefits should be aggregated. Rather, the determinations were made as alternative methods of ascertaining and calculating the tax benefit to be brought to account under the provisions of Part IVA of the Act in the 1987 tax year.
It will be immediately apparent that, because the Deputy Commissioner regarded the three different tax benefits as alternatives, he could not have determined the amount of a tax benefit, the whole or the part of which should be included in the assessable income of the taxpayer for the year of income, as sub-s. 177F(1)(a) required. Moreover, the Deputy Commissioner did not determine the provision of the Act under which that amount should be deemed to be included in the assessable income, as sub-s. 177F(2) required, for, by specifying two provisions of the Act as alternatives, he made no choice or determination.
I do not say that a determination under sub- ss. 177F(1) and (2) may not refer to more than one relevant provision of the Act. It is not necessary to decide that point. But three separate pieces of paper specifying different tax benefits and different sections of the Act by virtue of which they were deemed to be included in the assessable income cannot constitute a determination. Read together as alternatives, as they must be, having regard to their intended operation as alternatives, they do not determine anything.
The three notices of amended assessment were each dated 3 June 1994. Each was expressed to be a notice of amended assessment for the year ended 30 June 1987. Each was addressed to the applicant and served upon the applicant by post. One notice of amended assessment assessed the amended taxable income at $29,989,463 and the tax on that taxable income at $17,108,961. The accompanying adjustment sheet read, inter alia:-
Another notice of amended assessment specified the amended taxable income to be $18,517,991 and the tax on the taxable income to be $10,561,045. The accompanying adjustment sheet referred to a net capital gain arising from the sale of West Coast Telecasters Ltd shares and mentioned sub-s. 25(1) and sub- s. 160ZO(1) and Part IVA of the Act. The third notice of assessment specified the amended taxable income as $29,892,095 and the tax on the taxable income as $17,053,384. The accompanying adjustment sheet referred to a net capital gain arising from the sale of West Coast Telecasters Ltd shares and sub-s. 25(1), sub-s. 160ZO(1) and Part IVA of the Act.
I do not need to refer to the additional sums which were included in the amended assessments by way of penalty tax.
It should be noted that not only did the notices of assessment purport to be notices of amended assessment for the tax year ended 30 June 1987, but in addition to including a tax benefit calculated by reference to the sale of West Coast Telecasters Ltd shares, they also included the amount of $1,048, being interest income received from Civic Advance Bank, in the applicant's assessable income for the year.
Mr Brian Shaw QC, senior counsel for the Commissioner, referred in his submissions to those provisions of the Act which enable special assessments to be made, such as ss. 167, 168 and 169 of the Act. However, the subject notices of assessment purported to be notices of amended assessment of the taxable income of the applicant and of the tax payable thereon in respect of the year ended 30 June 1987. There is no reason to look beyond the ordinary powers conferred upon the Commissioner by ss. 166 and 170 of the Act which conferred relevant powers upon the Commissioner to achieve that end. I do not say, however, that an assessment made in pursuance of s. 177F, which empowers the Commissioner to ``take such action as he considers necessary'', would necessarily result in an assessment under s. 166 or in an amended assessment to which s. 170 would apply. That issue is not raised in these proceedings.
No evidence was called as to which notice of amended assessment was issued first or which was issued last. Mr Shaw did not contend for validity by reason of the order of issue of the notices of amended assessment and did not contend that the notice which specified the highest sum was a valid assessment which incorporated the other notices of assessment within it.
On 8 June 1994, an Audit Case Manager of the Australian Taxation Office wrote to the applicant as follows, inter alia:
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``I refer to the three amended assessments issued to you on 3 June 1994 in respect of the year ended 30 June 1987. Under each of the amended assessments an amount is included in your assessable income in respect of the sale of your shares in West Coast Telecasters Limited (WCT). The provisions of the Income Tax Assessment Act (the Act) upon which the assessments are based are subsection 26AAA(2A), section 160ZO and Part IVA.
2 In a meeting on 31 May 1994 between your representatives Messrs R Waters, P Gammell, R Norton and Ms K Bohn and our Mesdames L Fairfield and R Petrucci, and Mr H Fernando and myself, it was advised that it would be necessary to issue more than one amended assessment for the 1987 year of income. The multiple amended assessments are necessary because of the three determinations that have been made under Part IVA of the Act.
3 You are assured that under no circumstances will action be taken to collect the tax due and payable under more than one of the amended assessments...''
A fundamental requirement of an assessment under s. 166 and of an amended assessment under s. 170 of the Act is that it assesses both the taxable income of the taxpayer and the tax payable thereon. The notice of assessment must specify both those amounts, otherwise it will not give notice of the assessment as the Act requires. An assessment under s. 170 of the Act is in no way different in this respect from an original assessment: see s. 173 of the Act.
In
Cadbury-Fry-Pascall Pty Ltd v FC of T (1944) 7 ATD 471; (1944) 70 CLR 362, Latham CJ said at ATD 482; CLR 381:-
``Section 166 is the section which applies to the ordinary case of assessment. It provides:-
`From the returns, and from any other information in his possession, or from any one or more of these sources, the Commissioner shall make an assessment of the amount of the taxable income of any taxpayer, and of the tax payable thereon.'
One assessment only can be made under this provision, all the relevant terms of the Act which determine the taxable income or tax payable being taken into account by the Commissioner. An amendment of such assessment is not a new assessment: See
Federal Commissioner of Taxation v. S. Hoffnung & Co. Ltd. (1928) 42 C.L.R. 39 at p. 54; 1 ATD 310.''(emphasis added)
In the case there cited, Federal Commissioner of Taxation v Hoffnung & Co Ltd, it was held that assessments made tentatively or ``subject to revision'' or ``to be finalised'' were not assessments within the meaning of the War-Time Profits Tax Assessment Act 1917-1918 (Cth). At ATD 318; CLR 54-5, Isaacs J said:-
``In the first place, the notice itself does not on its face bear out those requirements. It describes the matter as `tentative'. The `assessment' and the notice of assessment required by the Act to fix the taxpayer with liability for a Crown debt carrying interest and penalties must be definite and certain, or, as it has been described throughout the argument, `definitive,' as opposed to `provisional.'''
At ATD 321; CLR 58-9, Higgins J said:-
``The Act contemplates an assessment which is definitive, so as to bind the taxpayer subject to the power of the Commissioner to make all such alterations in or additions to any assessment as he thinks necessary (s. 23). Here, the notice of the original assessment itself (exhibit E), is accompanied by a paper giving details, but headed thus:- Tentative - War-Time Profits Tax - Assessment. If the notice is `tentative' merely, how can the taxpayer be expected to lodge an objection within thirty days, or be for ever silent (see s. 28)? The course which the Commissioner has adopted, that of a `tentative' or experimental assessment or alteration of assessment may be convenient in certain circumstances; but it does not put the taxpayer under an obligation to pay within thirty days after notice of the assessment (ss. 32 and 34), or within thirty days after notice of the amended assessment.''
To the same effect, Hill J, with whom Burchett and von Doussa JJ agreed, said in
FC of T v Jackson 90 ATC 4990 at 4999; (1990) 27 FCR 1 at 12:-
``To decide this question, it is necessary to analyse the structure of the Act. Relevantly for present purposes, the Commissioner is
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authorised to make an assessment by sec 166 of the Act of a taxpayer's taxable income and the tax payable thereon. The determination of taxable income requires the Commissioner to calculate the assessable income of the taxpayer in accordance with the provisions of the Act and subtract therefrom the allowable deductions to which he is entitled, except in a case to which sec 167, not presently relevant, applies: sec 17. As soon as conveniently may be after making the assessment, the Commissioner is required to serve notice of the assessment upon the taxpayer: sec 174. It is the service of the notice that subjects the taxpayer to the liability to pay the tax assessed: sec 204.Assessment is thus, as Kitto J observed in
Batagol v FC of T (1963) 109 CLR 243 at p 252:`... the process by which the provisions of the Act relating to liability to tax are given concrete application in a particular case with the consequence that a specified amount of money will become due and payable as the proper tax in that case .'
Earlier in his Honour's judgment, in a passage referred to with approval by Mason and Wilson JJ in F J Bloemen Pty Ltd v FC of T (supra) at pp 371-372, his Honour commented (at pp 251-252):
`Assessment in the sense of mere calculation produces no legal effect. No step that the Commissioner may take, even to the point of satisfying himself of the amount of the taxable income and of the tax thereon, has under the Act any legal significance. But if the Commissioner, having gone through the process of calculation, serves on the taxpayer a notice that he has assessed the taxable income and the tax at specified amounts, the tax becomes by force of the Act due and payable on the date specified in the notice or (if no date is specified) on the thirtieth day after the service of the notice: s 204. Thus, and thus only, there is brought about an ``ascertainment'' of the taxable income and of the tax, in the sense that thereafter it is possible to say what could not have been said before: that amounts have been fixed so that they are to be taken for all purposes (except those of appeal: see s 177) to be the result flowing from the application of the Act in the particular case. The respective amounts of the taxable income and the tax have been rendered certain .'''
(emphasis added)
More recently, in
DFC of T v Richard Walter Pty Ltd 95 ATC 4067; (1995) 183 CLR 168, McHugh J said at ATC 4103; CLR 237:-
``An assessment made tentatively or subject to revision is not an assessment for the purposes of the Act (FC of T v S Hoffnung & Co Ltd (1928) 42 CLR 39). Unless the notice served on the taxpayer is definitive of the taxpayer's liability, it is not an assessment for the purposes of ss 175 and 177 of the Act. It will be definitive if `it assumes that, so far as can there be seen, a fixed and certain sum is definitely due, neither more nor less' (S Hoffnung & Co (1928) 42 CLR 39 at 55, per Isaacs J). If the notice does specify that a fixed sum is definitely and not provisionally payable by a particular person, it will be an assessment for the purposes of the Act. In F J Bloemen v FC of T 81 ATC at 4289; (1980-1981) 147 CLR 360 at 378, Mason and Wilson JJ said that `a notice in proper form of an assessment necessarily compels the conclusion that there was an assessment made in fact'.''
Because the making of an assessment involves the determination and fixing of the taxpayer's liability to tax, subject to the taxpayer's right to object and to seek administrative review or to appeal to this Court, a process which fails to specify what is the amount of the taxable income which has been assessed and what is the tax payable thereon is not an assessment for the purposes of s. 166 or of s. 170 of the Act.
A notice of assessment which specifies three possible taxable incomes and three possible amounts of tax payable thereon and puts those sums forward as alternatives to be worked out will necessarily not constitute a valid notice of assessment for the purposes of the Act. An assessment must fix the liability of the taxpayer. That is its function. A process which does not fix the taxpayer's liability but merely puts forward alternative proposals for that liability is no more than a tentative or incomplete process which, not being definitive of either the assessable income for the year or the tax
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payable thereon, is not relevantly a valid process of assessment.What cannot be done directly cannot be done indirectly. In the present case, the Deputy Commissioner specified three amounts of taxable income, $29,989,463, $18,517,991 and $29,892,095. He specified three amounts of tax on the taxable income, $17,108,961, $10,561,045 and $17,053,384 respectively. For the reasons I have given, an assessment which included these alternatives in one assessment would be invalid as being merely tentative. The tentative nature of the process remains notwithstanding and indeed is apparent from the issue of three conflicting notices of amended assessment. The process of assessment did not assess and definitively determine the amount of the applicant's taxable income and liability to tax for the year ended 30 June 1987.
Mr Shaw submitted that
Lever Bros Pty Ltd v FC of T (1948) 8 ATD 388; (1948) 77 CLR 78 and Cadbury-Fry-Pascall Pty Ltd v FC of T are authorities for the proposition that the Commissioner is empowered by the Act to direct assessments on alternative bases to the one taxpayer. It does not appear to me that that proposition can be derived from those cases, which were dealing with different issues.
The Commissioner may make an assessment against a taxpayer on one basis and another assessment on a different basis, provided that the nature of the assessments is not the same, as Lever Bros and Cadbury-Fry-Pascall demonstrate. But when the subject matter is the same, as it was in this present case being the taxable income of the taxpayer for the year ended 30 June 1987 and the tax payable thereon, there could be only one assessment, whether it be the original assessment or an amended assessment.
This approach is inherent in the decision of the High Court of Australia in
FC of T v Australia and New Zealand Savings Bank Ltd 94 ATC 4844; (1994) 181 CLR 466 in which it was held that, because there is an onus placed upon an objecting taxpayer by s. 190(b) of the Act, now s. 14ZZK of the Taxation Administration Act 1953 (Cth), to prove that the challenged assessment was excessive, the Commissioner may be permitted to support the sums arrived at in the assessment by reference to bases other than those which were adopted therein. It is perhaps a fact of interest that the subject amended assessments were issued after the judgment below of the Federal Court,
ANZ Savings Bank Ltd v FC of T 93 ATC 4370; (1993) 42 FCR 535, which had taken a contrary view, and before the High Court had handed down its decision reversing that judgment. One may speculate that the Deputy Commissioner may have acted otherwise than he did had he not been influenced by the judgment of the Federal Court.
I am therefore satisfied that the notices of assessment did not reflect a valid and complete assessment process and that the notices were void.
Mr Shaw relied, however, upon the provisions of ss. 175 and 177(1) of the Act which provide:
``175 The validity of any assessment shall not be affected by reason that any of the provisions of this Act have not been complied with.
...
177(1) The production of a notice of assessment, or of a document under the hand of the Commissioner, a Second Commissioner, or a Deputy Commissioner, purporting to be a copy of a notice of assessment, shall be conclusive evidence of the due making of the assessment and, except in proceedings under Part IVC of the Taxation Administration Act 1953 on a review or appeal relating to the assessment, that the amount and all the particulars of the assessment are correct.''
In support of this contention, Mr Shaw put into evidence documents purporting to be copies of the subject notices of amended assessment, each document being under the hand of a Deputy Commissioner of Taxation.
In Richard Walter, it was held that s. 177(1) of the Act did not override the jurisdiction granted to the High Court of Australia by s. 75(iii) and (v) of the Constitution or the power vested in the Federal Court by s. 39B(1) of the Judiciary Act 1901 (Cth). Nevertheless, the section was a privative clause which was to be given effect in accordance with the principle enunciated by Dixon J in
R V Hickman; Ex parte Fox & Clinton (1945) 70 CLR 598, where his Honour said, at 615:-
``Such a clause is interpreted as meaning that no decision which is in fact given by the body concerned shall be invalidated on the ground that it has not conformed to the
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requirements governing its proceedings or the exercise of its authority or has not confined its acts within the limits laid down by the instrument giving it authority, provided always that its decision is a bona fide attempt to exercise its power, that it relates to the subject matter of the legislation, and that it is reasonably capable of reference to the power given to the body.''
At 616, Dixon J went on to say:-
``... where the legislature confers authority subject to limitations, and at the same time enacts such a clause as is contained in reg. 17, it becomes a question of interpretation of the whole legislative instrument whether transgression of the limits, so long as done bona fide and bearing on its face every appearance of an attempt to pursue the power, necessarily spells invalidity.''
This principle was referred to and adopted in Richard Walter by Mason CJ at ATC 4071; CLR 179-80, by Brennan J at ATC 4078-4079; CLR 193-5, by Deane and Gaudron JJ at ATC 4088; CLR 210-211, by Dawson J at ATC 4094; CLR 222, by Toohey J at ATC 4100; CLR 233 and by McHugh J at ATC 4104; CLR 240.
It was further held in Richard Walter that the issue of conflicting notices of assessment to different taxpayers in respect of the same income did not imply that the assessments were issued in bad faith or for an improper purpose or mean that the earlier of such assessments was tentative or not definitive. As Brennan J said at ATC 4083; CLR 201-2:
``The raising of concurrent assessments of two or more taxpayers to tax in respect of the same item of income has not hitherto been regarded as beyond the powers of the Commissioner (
Richardson v FC of T (1932) 2 ATD 19 at 23-24; (1932) 48 CLR 192 at 205-207;
Booth v FC of T 86 ATC 4049 at 4077; (1986) 81 FLR 346 at 359;
Winter v DFC of T 87 ATC 4065 at 4659-4660; (1987) 19 ATR 244 at 248;
Hoare v DFC of T 88 ATC 4042 at 4048-4049; (1987) 19 ATR 661 at 668-669; cf
DFC of T (Qld) v Truhold Benefit Pty Ltd 84 ATC 4912; (1984) 73 FLR 283; 15 ATR 1227). The appropriateness of alternative assessments to tax of two taxpayers in respect of the same item of income was recognized in a dictum of this Court in
DFC of T v Moorebank Pty Ltd 88 ATC 4443 at 4448; (1988) 165 CLR 55 at 67. And the courts, if not the Commissioner, can diminish the difficulty of concurrent assessments by ensuring that there is no double recovery of tax (
DFC of T v Faint [1988] 2 Qd R 494 at 497-498).''
In the present case, however, there has not been produced to the Court one notice of assessment under the hand of the Deputy Commissioner but three, all dated the same and all specifying different amounts of taxable income and tax payable. In my opinion, the matter falls within the Hickman principle for, on their face, the notices were not a bona fide attempt to exercise the power of assessment and were not reasonably capable of reference to the power of assessment given to the Commissioner and the Deputy Commissioners. In Richard Walter, all judges accepted that a notice of assessment must crystallize the taxpayer's liability under the Act and make the tax assessed due and payable. See Mason CJ at ATC 4072; CLR 182, Brennan J at ATC 4078; CLR 192, Deane & Gaudron JJ at ATC 4088; CLR 211, Dawson J at ATC 4090; CLR 216, Toohey J at ATC 4098; CLR 229 and McHugh J at ATC 4103; CLR 237.
The approach to be adopted is that enunciated by Brennan J in Richard Walter where his Honour, after referring to the Hickman principle, said, at ATC 4080; CLR 197:-
``The scope and operation of each of s 175 and s 177(1) must be congruent, for the Parliament is not to be taken to have intended by s 175 to validate a purported assessment that does not comply with the general provisions of the Act to an extent that falls short of the evidentiary protection afforded by s 177(1). Equally there is no reason to suppose that Parliament intended the evidentiary protection afforded by s 177(1) to fall short of the validity of an assessment determined by reference to the provisions of s 175. In my respectful opinion, the operation of s 177(1) corresponds with the operation of s 175 and the disconformity in operation between ss 175 and 177(1), which was accepted in F J Bloemen Pty Ltd v FC of T 81 ATC 4280 at 4285, 4288; (1980-1981) 147 CLR 360 at 371, 375 in reliance on the judgment of Taylor J in McAndrew (1956) 11 ATD at 140-141; (1956) 98 CLR 263 at 281-282, is
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erroneous. Unless the operation of s 177(1) corresponds with the operation of s 175, the conclusive evidence provision in s 177(1) would attempt to shut out judicial review of a purported exercise of the power of assessment that does not satisfy the Hickman principle. And that would be inconsistent with s 75 of the Constitution.''
In the present case, the notices of amended assessment were not a bona fide exercise of the Commissioner's function of assessment and the notices were void, no assessment having been made. The notices, on their face, disclose that the Deputy Commissioner had not made up his mind what was the taxable income of the applicant for the year ended 30 June 1987 and what was the tax payable thereon. Because he had not made up his mind, he issued three notices of assessment, thereby purporting to place the onus upon the applicant of proving that each of the purported amended assessments was excessive and of proving what his taxable income and tax liability actually was. See s. 14ZZK of the Taxation Administration Act. As to the effect of this onus, see
George v FC of T (1952) 9 ATD 421; (1952) 86 CLR 183,
McAndrew v FC of T (1956) 11 ATD 131; (1956) 98 CLR 263;
F.J. Bloemen Pty Ltd v FC of T 81 ATC 4280; (1980-1981) 147 CLR 360;
FC of T v Dalco 90 ATC 4088; (1990) 168 CLR 614; FC of T v ANZ Savings Bank Ltd.
But before that onus is placed upon a taxpayer, the Act requires that there be an assessment and that the taxpayer's liability has been crystallized thereby. Thus, by acting in a manner calculated to gain an advantage from sub-s. 177(1) and s. 190(b) of the Act, when he had not made an assessment, the Deputy Commissioner did not act bona fide. And, by issuing the notices of assessment, when no assessment had been made, his acts were not reasonably referable to the power conferred upon him by ss. 166 and 170 of the Act.
For these reasons, I accept the substance of the submissions which were put by Mr David Bloom QC, senior counsel for the applicant. I am therefore of the view that orders should be made as sought by the applicant.
Mr Shaw did not submit that I should refuse an order on any discretionary ground. For example, it was not submitted that, by reason of the expiration of the six year period described by sub-s. 170(2), I should make orders directed to only two of the notices of assessment, leaving one to be fought out through the objection, review and appeal procedures.
I shall therefore declare that the three determinations made by the Deputy Commissioner under s. 177F of the Act and that the three notices of amended assessment dated 3 June 1994 were void. I shall reserve leave to the applicant to apply for an injunction should the Commissioner seek to enforce or to give effect to the notices of assessment. The respondent should pay the applicant's costs of the proceedings, including reserved costs.
THE COURT DECLARES THAT:
1. The three determinations made by the Deputy Commissioner of Taxation and the three notices of amended assessment dated 3 June 1994 were void ab initio.
THE COURT ORDERS THAT:
2. Leave be reserved to the applicant to apply for an injunction should the Commissioner of Taxation seek to enforce or to give effect to the notices of assessment.
3. The respondent pay the applicant's costs of the proceedings, including reserved costs.
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