The Federal Court has varied interlocutory orders made to the effect that the time for filing the applicants’ affidavit evidence in their tax appeals be extended until 28 days after the conclusion of the criminal trial or further order. The Court ordered that interim suppression orders made under s 37AI of the Federal Court of Australia Act 1976 on 17 October 2013 in respect of the confidential exhibits have effect until, and including, 5 February 2014. It also ordered that the appeals in question appeals are stood over for directions at 9:30am on 5 February 2014.

One of the applicants, a Mr McCarthy, sought relief that his tax appeals in the Federal Court be stayed pending the final outcome of certain Supreme Court proceedings, including any appeal. The proceedings in the Supreme Court are criminal proceedings. He also sought an ancillary order that orders for the service of evidence by him in his tax appeals be vacated or varied to the extent necessary. The other applicant Mr Seller sought similar orders by his interlocutory application filed on 18 April 2013. He has tax appeals on foot and criminal proceedings in the Supreme Court against him.

The Federal Court said each applicant had entered a plea of not guilty to a charge of conspiracy to dishonestly influence a Commonwealth official. The amended indictment states that between about 24 May 2001 and about 30 December 2002 at Sydney and elsewhere, the applicants did conspire with each other and divers other persons with the intention of dishonestly influencing a Commonwealth public official, namely the Commissioner of Taxation, in the exercise of his duties as a public official. According to the Federal Court: “The gist of the Crown case as conveyed by an ‘Outline of the case the Crown will present at trial’ concerns an agreement to make false representations to tax officers in the course of an audit by the Australian Taxation Office (ATO), the false representations being to officers of the ATO with the intention of dishonestly influencing them to approve and accept deductions claimed in the 1999, 2000 and 2001 income tax returns of taxpayers who had participated in whisky schemes in those years. The representations were to convey false and misleading information regarding: the association of the accused with and relationship between the entities involved in the whisky schemes of 1999, 2000 and 2001; Chambers Finance Limited; and Grant McKenzie Hong Kong Limited.”

The Federal Court said that, in practical terms, the difference between the parties turned on whether or not the applicants should be required to file their affidavit evidence in support of their tax appeals. The Court’s view was that it would be artificial to seek to separate out any of these matters because the dealings and transactions would need to be dealt with as a whole in the applicants’ evidence in the tax appeals. Robertson J said given that the onus of proof is on the applicants, for them to not give evidence in their tax appeals “would almost inevitably lead to their appeals being dismissed and the assessments against them being confirmed”.

While the Court took into account that related to the tax appeals were proceedings pending in the Federal Court under s 39B of the Judiciary Act 1903, it held that the interlocutory orders which have been made requiring the applicants to file and serve their affidavits in the tax appeals “should be varied to a date shortly after the conclusion of the trial of the criminal proceedings”. The Court varied the interlocutory orders made to the effect that the time for filing the applicants’ affidavit evidence in their tax appeals be extended until 28 days after the conclusion of the criminal trial or further order. The Court stood stand each matter over to 9:30am on 5 February 2014 for directions and extended the interlocutory suppression orders in relation to the confidential exhibits up to and including 5 February 2014.

(Seller & Anor v FCT [2013] FCA 1373, Federal Court, Robertson J, 18 December 2013.)

[LTN 247, 20/12/13]

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