The Full Federal Court has rejected a taxpayer’s appeal against the decision of Jessup J in January 2015 concerning amended assessments.
The Federal Court (in Kocharyan v FCT [2015] FCA 13) had rejected all 3 of the taxpayer’s grounds of appeal. The Commissioner had originally denied the taxpayer deductions of close to $1m for the 2006 and 2007 years concerning partnership losses claimed in relation to his investment in a forestry managed investment scheme.
At first instance, among other things, the AAT had found (1) the returns had been lodged by his tax agent with his authority (contrary to the taxpayer’s claim) and (2) that he had failed to discharge the onus of showing that the scheme had not been entered into or carried out for the sole or dominant purpose of the individual obtaining a “scheme benefit”.
In his appeal to the Full Federal Court, the taxpayer stated 3 grounds of appeal, namely that the primary judge was in error in:
- rejecting the taxpayer’s contention that the former s164 of the ITAA 1936 (deeming returns to be duly made until the contrary is proved) did not apply to his 2007 tax return, lodged by his tax agent, as the return was not in the approved form within the meaning of s161A(1);
- concluding that there was no error of law in the way the Tribunal disposed of the taxpayer’s case (which was that that the amended assessments had not been served on him). The taxpayer argued before the primary judge and on his appeal that the post office box to which the notices of amended assessment were addressed was not his preferred address for service and that, consequently, the Commissioner had not complied with the service requirement, for Notices of Assessment, under s174(1) of the ITAA 1936;
- concluding that the Tribunal made no error of law in finding that qualification (e) to item 1 of the table in s 170(1) of the ITAA 1936 applied to enable the Commissioner to amend the assessments for the 2006 and 2007 income years within the relevant 4-year period.
The Court said that even if it accepted that the taxpayer did not sign the declaration, on the return, delivered to him by his tax agent, that said nothing about the return lodged on his behalf with the Commissioner by his tax agent.
In the result, the Full Federal Court rejected all 3 grounds and dismissed the taxpayer’s appeal.
(Kocharyan v FCT [2015] FCAFC 196, Gilmour, Murphy and Mortimer JJ, 23 December 2015.)
[LTN 1, 5/1/16]
The Tax Vine Report
The Full Federal Court has dismissed a taxpayer’s appeal from the decision in Kocharyan v FCT [2015] FCA 13 (Federal Court, Jessup J, 27 January 2015, reported at TaxVine Issue 3 of 2015) concerning amended assessments in relation to losses arising from investments made in a managed investment scheme.
Background – The Federal Court (Jessup J) dismissed the taxpayer’s appeal from the decision of the AAT in Confidential v FCT [2014] AATA 32.
The taxpayer’s 3 grounds of appeal were based on whether the primary judge was in error in:
- rejecting the taxpayer’s contention that s 164 of the ITAA 1936 does not apply to the 2007 income tax return lodged on his behalf by his tax agent as it was not in the approved form within the meaning of s 161A(1);
- concluding that there was no error of law in the way the Tribunal disposed of the taxpayer’s case that the amended assessments had not been served on him: s 174;
- concluding that the Tribunal made no error of law in finding that qualification (e) to item 1 of the table in s 170 applied to enable the Commissioner to amend the assessments for the 2006 and 2007 income years within the relevant 4-year period.
Decision – The Full Federal Court rejected all 3 grounds and dismissed the taxpayer’s appeal.
The court rejected the argument that to be in the “approved form”, the electronic return must contain a declaration that the agent is authorised by the taxpayer to give the return to the Commissioner. The court held that even if it be accepted that the appellant did not sign the declaration on the return delivered to him by his tax agent, this says nothing about the return lodged on his behalf with the Commissioner by his tax agent. The taxpayer did not contend before the Tribunal that the return did not purport to have been made on his behalf and failed to prove to the contrary to the Tribunal’s satisfaction.
The court rejected the taxpayer’s argument that the Commissioner had served the assessments to a post office box rather than his “preferred” address as communicated to the Commissioner. The court said, the Commissioner was required to serve the amended assessments on the applicant, but this could be done “by post or otherwise”: s 174. The legally relevant question was, therefore, not whether the amended assessments had been sent to the applicant’s preferred address, but whether they were served on him by post or otherwise.
The court rejected the argument that the amended assessments were out of time and found that the Tribunal’s finding was that qualification (e) had been established on the evidence before it. Against that finding of fact the Tribunal made no error in concluding, in respect of the 2006 amended assessment and the 2007 amended assessment, that these were each made within the 4-year time limit prescribed by item 4 of the table in s 170(1) and which applied to them.
[Vine 1, 22/1/16]