In a decision handed down Thur 13.6.2013, the Federal Court has held that the AAT fell into jurisdictional error when it made orders in relation to an application before it against a disallowed objection that (i) the proceedings be held in private, (ii) that the AAT not disclose or publish any of the evidence given before it or matters contained in lodged documents, and (iii) that the names of the taxpayers or any of their witnesses not be published by the AAT. The AAT originally arrived at its decision on the basis that if the orders were not given, it would prejudice the taxpayers’ ability to properly defend themselves in related criminal proceedings.
The husband and wife taxpayers had been audited and issued with amended assessments for understating their income in relation to a clothing manufacturing business for 4 financial years. They unsuccessfully objected to the assessment and sought a review of the decision before the AAT. At the same time, they were charged with obtaining a financial advantage by deception (contrary to s 134.2(1) of the Criminal Code 1995 (Cth)) arising from their alleged involvement in a money laundering scheme (which allegedly involved defrauding the Commissioner of more than $2.2m in tax). Before the applications for review came on for hearing by the AAT, the taxpayers had been committed to stand trial in the NSW District Court.
The taxpayers were originally successful before the AAT in obtaining the above “privacy” orders. However, the Commissioner challenged the second of the “privacy” orders [that no evidence be published] claiming it was “infected by jurisdictional error”.
In deciding the matter, the Court held that the AAT “fell into jurisdictional error in failing to take into account that [the taxpayers] were not compelled to answer questions or produce documents in the Pt IVC proceedings that could incriminate them, but could invoke the privilege against self-incrimination”.
The Court also held that the AAT fell into jurisdictional error by finding, in the absence of any evidence, that aspects of the taxpayers’ defence would be compromised unless a non-publication order were made.
Accordingly, the Court held that for these reasons, the second order made by the AAT should be quashed and the matter remitted to it for determination according to law.
(FCT v Pham [2013] FCA 579, Federal Court Katzmann J, 13 June 2013.)
[LTN 112, 13/6/13]