The Federal Court has refused 2 companies in the Macquarie Bank group their application for the Court to review a decision of Commissioner and his delegate to refuse to apply his view of the law on the allocation of Offshore Banking Unit (OBU) expenses solely on a prospective basis.
The taxpayers sought the jurisdiction of the Court pursuant to s 5 of the Administrative Decisions (Judicial Review) Act 1977 and under s 39B of the Judiciary Act 1903 to review the Commissioner’s decision. The Commissioner expressed his view that PS LA 2011/27 (which outlines procedures to be followed and the factors to be considered by tax officers in relation to any circumstance in which the ATO is considering applying its view of the law) did not have application to apply the ATO view as expressed in the Draft Position Paper given to the taxpayers only on a prospective basis.
The taxpayers claimed the Commissioner indicated the ATO planned to issue amended assessments based on a retrospective application of the Commissioner’s view of the law on the allocation of OBU expenses, which would lead to a tax liability greater than it would be if the assessments were issued on a prospective basis only.
On the hearing of the interlocutory application, one of the taxpayers sought to restrain, until further order, the Commissioner from issuing amended assessments. That interlocutory application was dismissed: Macquarie Bank Limited v FCT [2013] FCA 96 (Griffiths J, 12 February 2013). Following that decision, the Commissioner filed a notice objecting to the competency of the originating application and also filed an interlocutory application for summary judgment to be entered against the taxpayers, on the ground that they had no reasonable prospect of successfully prosecuting the proceeding.
The Federal Court was of the view that a decision by the Commissioner refusing to apply his view of the law on the allocation of OBU expenses solely on a prospective basis was “not one which has to be made or, in the circumstances, is appropriate to make, before the actual process of assessment can begin”.
After a review of the facts, the tax law surrounding OBUs and PS LA 2011/27, the Court said that “insofar as the [taxpayers’] amended originating application depends on the Court’s jurisdiction under the ADJR Act, the application is incompetent”. The Court said it was also satisfied that the taxpayers had “no reasonable prospect of obtaining the final relief” they sought, and it dismissed the proceeding.
(Macquarie Bank Limited & Anor v FCT & Anor [2013] FCA 887, Federal Court, Edmonds J, 3 September 2013.)
[LTN 171, 4/9/13]
Taxpayer appeals to Full Federal Court
The taxpayers have applied for leave to appeal to the Full Federal Court against the decision of the Federal Court in Macquarie Bank Limited & Anor v FCT & Anor [2013] FCA 887. In that case, the Federal Court refused to review a decision of the Commissioner and his delegate refusing to apply his view of the law on the allocation of Offshore Banking Unit (OBU) expenses solely on a prospective basis.
[LTN 181, 18/9/13]