The Federal Court has dismissed a taxpayer’s application seeking orders that second amended assessments issued to him were invalid. These assessments were issued following the taxpayer being partially successful in his objection to the original amended assessments.
In seeking the orders that the second amended assessments were invalid, the taxpayer argued that while the original amended assessments had been raised by the Commissioner on the basis there had been “fraud or evasion”, the Commissioner had failed, when determining the taxpayer’s objections to the original amended assessments, to form an opinion as to whether there had been an “avoidance of tax due to fraud or evasion” that justified issuing several of the original amended assessments out of time.
However, in dismissing the taxpayer’s application, the Court found that as the second amended assessments were neither tentative nor provisional assessments, nor attended by any conscious maladministration on the part of the Commissioner, it was not open to the taxpayer to seek a declaration they were invalid under the Judiciary Act (1903).
In doing so, the Court noted that the production of notices of assessments is conclusive evidence of their correctness, subject to any appeal proceeding under Pt IVC of the TAA – and that such proceedings were on foot in this case, and that this was the correct approach for the taxpayer to take.
The Court also found it was not a necessary precondition of the exercise of the Commissioner’s power to further amend the second amended assessments that the Commissioner positively form a view concerning whether the taxpayer’s conduct constituted avoidance of tax due to fraud or evasion. In this regard, the Court found that the failure of the Commissioner to form the relevant opinion at the time of the objection decision did not make that decision or the second amended assessments invalid.
At the same time, the Court dismissed the taxpayer’s application that the second amended assessments also be declared invalid on the basis that the Commissioner had no reasonable prospect of successfully defending the taxpayer’s appeal against them.
Instead, the Court found that the complexity of the case, on the basis of the material before it, was such that it was not one where the Court could easily reach the conclusion that the Commissioner lacked reasonable prospects of defending the appeal.
(Hii v FCT [2015] FCA 375, Federal Court, Collier J, 23 April 2015.)
[LTN 78, 27/4/15]