The Full Federal Court has refused Macquarie Bank Ltd leave to appeal against the decision of Edmonds J in Macquarie Bank Limited & Anor v FCT [2013] FCA 887. Edmonds J refused 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 Full Federal Court said the taxpayers had confined their proposed appeal, and their application for leave to appeal, to the question of whether the primary judge had erred in holding they had no reasonable prospect of obtaining a declaration that the Commissioner had not made a decision in accordance with Law Administration Practice Statement PS LA 2011/27 (which is about when the Commissioner will only apply his view of the law prospectively, because he has just changed his mind about that view of the law – a so called ‘U-turn’). Despite this Edmonds J held, “such relief does not lie or has no utility”.
The Full Court noted that the present dispute between Macquarie and the Commissioner arose in the context of an extensive audit by the Commissioner into Macquarie’s affairs in respect of the 2006, 2007 and 2008 income years.
According to the Full Federal Court, Macquarie’s case in the proceeding was not that its legal liability was not as the Commissioner now proposes to assess, nor that Macquarie had binding private rulings or could rely upon binding public rulings in its favour (which the Court noted Macquarie could rely upon in Pt IVC proceedings under the TAA if that were the case). Rather, the Court said Macquarie’s case was that the Commissioner was now not permitted (or by statute not required) to proceed to assess Macquarie in a way that is contrary to a view he may previously have held unless, and until, the practice statement has first been applied.
The Full Federal Court said that in its view, Macquarie’s case was “bound to fail and, or alternatively, has no utility”. It must fail, the Court said, because there was no basis upon which Macquarie could seek to enforce any adherence to the practice statement.
(Macquarie Bank Limited & Anor v FCT [2013] FCAFC 119, Full Federal Court, Middleton, Pagone and Davies JJ, 24 October 2013.)
[LTN 210, 30/10/13]