The NSW Court of Appeal has unanimously allowed a taxpayer’s appeal from a decision of the District Court in which judgment was entered for the Deputy Commissioner against the taxpayer for a Running Balance Account (RBA) debit of some $500,000, and has ordered a new trial in respect of the matter.
Before the Court of Appeal, the taxpayer essentially argued that the Commissioner had mistakenly made entries into his RBA in respect of his GST liability and that the NSW District Court at first instance had not properly dealt with this matter of the incorrect entries.
In allowing the taxpayer’s appeal, the Court of Appeal first noted that debit balances in an RBA are debts payable to Commonwealth under the Taxation Administration Act 1953 (TAA) and that a taxpayer’s right to contest certain matters pertaining to a tax liability can only be pursued under the appeals and review process under Pt IVC of the TAA. In this case, this included the taxpayer’s claim that he was entitled to GST input tax credits in relation to certain transactions and the cancellation of his registration for GST purposes.
However, the Court found that the taxpayer’s allegations that the Commissioner had made incorrect RBA entries were not subject to the right of objection and appeal, and instead were state court matters. Moreover, it found that the NSW District Court at first instance, in entering judgment for the Commissioner, did not properly deal with the detailed arguments of the taxpayer that the entries made in the RBA were wrong. As a result, the Court of Appeal ruled that a new trial should be ordered.
(Evans v DCT [2012] NSWCA 396, Court of Appeal, NSW Supreme Court, Macfarlan JA, Tobias AJA and Gzell J, 30 November 2012.)
[LTN 219, 12/11]