The Federal Court has allowed a taxpayer’s application for judicial review in relation to an AAT decision to refuse his application, pursuant to s37(2) of the Administrative Appeals Tribunal Act 1975 (AAT Act), that required the Commissioner to lodge certain documents.
The substantive matter related to default assessments issued to the taxpayer for the 2001 and 2002 income tax years by the Commissioner following an audit. The default assessments amended the tax payable to around $8m for the years concerned and shortfall penalties of around $7.1m were also imposed.
The taxpayer lodged an application for review and sought orders pursuant to s37(2) of the AAT Act that the Tribunal require the Commissioner to lodge certain specified documents or classes of documents which was dismissed. The taxpayer then lodged the current proceedings in the Federal Court which largely contended the AAT had erred in applying the incorrect test.
The Court agreed with the taxpayer and said the Tribunal had applied the incorrect test with respect to the application of s 37(2) of the AAT Act and made orders to remit the matter back to the Tribunal for reconsideration.
(Hawkins v FCT [2017] FCA 1247, Federal Court, Wigney J, 24 October 2017.)
[Austlii – report; LTN 204, 25/10/17; TM Oct 2017]
Extracts from Judgement
WIGNEY J:
- The subject-matter of this application for judicial review is an unfortunate interlocutory dispute in the Administrative Appeals Tribunal. The applicant, Mr Garrick Hawkins, applied to the Tribunal pursuant to s 14ZZ of the Taxation Administration Act 1953 (Cth) for a review of objection decisions made by the Commissioner of Taxation. At a relatively early stage of the review proceedings, Mr Hawkins sought orders which included an order pursuant to s 37(2) of the Administrative Appeals Tribunal Act 1975 (Cth) (AAT Act), as modified by s 14ZZF of the Administration Act, that the Tribunal require the Commissioner to lodge with the Tribunal certain specified documents or classes of documents. That application was opposed by the Commissioner and dismissed by the Tribunal. The issue for resolution on this application is whether, in dismissing Mr Hawkins’ application pursuant to s 37(2) of the AAT Act, the Tribunal erred in law in the exercise of its jurisdiction because it either applied the wrong test, or failed to have regard to evidence relied on by Mr Hawkins in support of his application.
- In 1996, Matrix Group entered into a contract with the Western Australian government which involved arranging and managing a leasing transaction for its fleet of cars. It was also awarded a mandate in 1999 to pursue a private funding package for the acquisition of the government’s bus fleet. Ultimately, the leasing transaction was terminated early and the funding package for the acquisition of the bus fleet did not proceed. As a result of the termination or cessation of the agreements with Matrix, the Western Australian Government made certain settlement payments to Matrix Group. Those payments were: $2,517,980 made on 18 May 2001; $4,250,000 made on 15 June 2001; $4,286,248.93 made on 23 August 2001; and $6,500,000 made on 30 November 2001.
- Critically, the Commissioner found Mr Hawkins and Mr Tyne directed those four payments be deposited into an offshore back account in Singapore in the name of FSA International Inc. FSA International was a company incorporated in the Cayman Islands. Mr Hawkins and Mr Tyne were its directors and ultimate shareholders. They were also signatories to FSA International’s Singaporean bank account. The Commissioner concluded that Mr Hawkins and Mr Tyne applied the money that was payable to Matrix for their own benefit. The Commissioner also believed that Mr Hawkins “set-up an offshore structure and opened an offshore bank account in order to divert funds that were due and payable to Matrix, to [himself] (and Mr Tyne) and to also conceal these funds and the income tax payable on these funds from the Commissioner”. The Commissioner also found that Mr Hawkins did not declare the assets he held offshore in his income tax returns for the 2001 and 2002 income years.
The nature of the documents sort and ordered was documents footnoted in the position paper and reports from accountants about unwinding the overseas structure (see para 19).