The Full Court of the Family Court has ruled that the Court at first instance in FCT & Darling and Anor [2013] FamCA 118 wrongly applied its discretion to prevent the Commissioner from using certain documents filed in the Court for the purposes of an audit of one of the parties to the proceedings (and related entities) in relation to the 1991 to 2010 income years. At first instance, the Family Court concluded there were no “special circumstances” to justify the Commissioner’s release from his implied obligation under the common law not to use the information for a purpose unrelated to the litigation before the Court.
However, the Full Court in allowing the Commissioner’s appeal, and in setting aside the original decision, ordered that the Commissioner be released from the implied obligation not to make use of the documents – but only in so far as it was necessary to enable him to carry out his duty to administer the tax law in relation to the relevant party to the proceedings, and in respect of the determination of any objections to assessments of tax, penalties or interest issued to or referable to that party for any of the income years in question.
In finding that the discretion should have been exercised in favour of the Commissioner for a range of reasons, the Full Court noted that the Commissioner was performing an important public duty, access to the documents would assist in the conduct of the audit, the public interest was advanced by ensuring all taxpayers pay their fair share of tax and that the Commissioner was engaged in a substantial, targeted audit at the time.
(FCT & Darling and Anor [2014] FamCAFC 59, Family Court of Australia, Thackray, Strickland and Murphy JJ, 4 April 2014.)
[LTN 78, 28/4/14]