The AAT has held that it did not have jurisdiction to review certain 2004 and 2005 ‘nil assessments’ of various applicant’s who were all members of a group of companies (Group) involved in the broadcasting industry.
This application for review was part of a much larger dispute, that the Group had, with the Commissioner, going back to 2002, that it should have been assessed as a ‘consolidated group’ for tax purposes (Consolidated Group). If they were ‘consolidated’ for tax purposes (under Part 3-90 of the ITAA97), the ‘head company’ would be assessed on the consolidated income of the whole group (under the ‘single entity rule’). And, the corrollary to this, is that all the other members, of the group, would have no taxable income or tax to pay. The taxpayer applicants said that some of the companies, with nil assessments should pay more tax, while some group companies, should pay less tax. They say that the affairs of all the companies must be considered together.The Commissioner, on the other hand, said that the taxation affairs, of each company, should be treated in isolation.
But come what may, on that issue, the Commissioner contended that the AAT had no jurisdiction to review decisions by the Commissioner, that do not relate, to what are not, technically, ‘assessments’ for the purposes of s175A of the ITAA36. That is because the AAT’s jurisdiction depends on there being another Commonwealth enactment, that allows a decision to be referred to the AAT, and s175A allows taxpayers to ‘object’, to an ‘assessment’ under Part IVC of the TAA, which, in turn, gives a taxpayer, dissatisfied with the Commissioner’s objection decision, the right to have it reviewed in the AAT.
This issue about what is an ‘assessment’, for income tax purposes, in turn, taps into a line of authority (Batagol and Ryan), that held that a ‘nil assessment’ is not, relevantly, an ‘assessment’ for income tax purposes. Not, at least, until the 2005 amendments that made a ‘nil assessment’ and ‘assessment. These amendments were made by the Tax Laws Amendment (Improvements to Self-Assessment) Act (No2) 2005, and took effect for 2004-05 and subsequent years of income.
One of those changes (from 2005 years forward) was that s175A was amended, to insert a ss(2) & (3). Even though ‘nil assessments’ had become ‘assessments’, ss(2) precluded a taxpayer objecting to a ‘nil assessment’ unless (under ss(3)) the taxpayer seeks to increase their tax liability.
On the basis of these authorities, and these amendments, the AAT found:
- That it did not have jurisdiction to review the decisions about their 2004 nil assessments, on the authority of the Batagol and Ryan cases, which held that a ‘nil assessment’ was not an assessment.
- Neither did it have jurisdiction to review the Commissioner’s decisions about their 2005 nil assessments, because of the, then, new s175A(2)&(3), which precluded an objection to a nil assessment, unless it was to increase the tax payable. The taxpayers acknowledged they are not currently able to say with certainty whether any particular applicant with a nil assessment is seeking to increase its liability (even though, they contended, the position of individual taxpayers will not become clear until all of the evidence, in relation to all of the other companies, in the corporate group, or groups, is analysed).
(WLQC and FCT  AATA 14, AAT, File Nos: 2011/3563-6 & Ors, McCabe DP, 15 January 2018.)
[FJM; LTN 12, 18/1/18; Tax Month January 2018]
22 January 2018.
Study questions (*answers below)
- Did the AAT conclude that it had jurisdiction to review the Commissioner’s decisions relating the the taxpayer’s ‘nil assessments’?
- Were the taxpayers objecting to ‘nil assessments’ as part of a wider dispute about the Group being consolidated, for tax purposes?
- Was it s175A of the ITAA36 that held the key as to whether the AAT had jurisdiction or not?
- Were the 2005 ‘nil assessment’ amendments back dated to apply to the 2004 year?
- Would the new s175A(2)&(3) have given the Tribunal jurisdiction, in respect of ‘nil assessments’ if the taxpayers wanted to pay more tax?
- Could the taxpayers be sure they all wanted to pay higher tax?