The Federal Court has granted a company’s request to be granted leave to file an amended originating application in relation to the Commissioner’s decision to withdraw 3 product rulings that had been issued to the company. The rulings were withdrawn on the grounds that there was a “material difference” in the way in which the managed investment scheme was implemented from that which the Commissioner ruled on. The Commissioner contended that the company’s original application contesting the decision to withdraw the rulings disclosed no relevant grounds under ss 5 or 11 of the Administrative Decisions (Judicial Review) Act 1977 in that the taxpayer had not identified the “material differences” in issue as required. The Commissioner also claimed that the application was otherwise vexatious and an abuse of process.
However, in allowing the company’s application, the Court held that it could not rule on whether the Commissioner had complied with the rules of natural justice in terms of sending a relevantly worded notice to the company giving it an opportunity to be heard on the matter as the notice was not before the Court. It also dismissed the Commissioner’s claim that he could withdraw the Product Ruling without giving notice because, similarly, the Product Ruling was not before the Court and, even if the Commissioner had the power to do so, he had not proceeded in that manner. Instead, the Court found that these issues should be determined at trial.
Nevertheless, the Court confirmed that the Commissioner was entitled to withdraw a product ruling where “it was reasonably open on the basis of the material before him, that the ruling could no longer be safely relied upon because of differences between the arrangement implemented and that ruled upon” – particularly as it related to tax outcomes.
(Barossa Vines Limited v FCT [2012] FCA 579, Federal Court, Lander J, 7 June 2012.)
[LTN 112, 13/6]