The Full Federal Court has, by majority (Pagone J dissenting), dismissed a husband and wife taxpayers’ appeal from the 7 April 2015 decision of Buchanan J (in FCT v Seymour [2015] FCA 320) that had set aside an order made by the AAT, which had granted leave to them to give their evidence, by video link, at the hearing of their appeal under Pt IVC of the TAA.
The couple had been issued with assessments and amended assessments in excess of $7 million. They had previously lived in Australia where they conducted a manufacturing business but have no continuing ties with Australia and left Australia to live in Mauritius in January 2013, shortly after the Commissioner commenced an audit of their tax affairs. The couple did not wish to come to Australia to give oral evidence because, amongst other concerns, they feared that if they did so, they may then be prohibited from leaving Australia, if the Commissioner were to decide to issue departure prohibition orders (DPOs) pursuant to s 14S of the TAA. The Commissioner declined to give any undertakings to them that he would not issue DPOs.
The case involved assessments against the couple for the 2001 to 2009 income years concerning:
- whether the couple had an interest in a fund;
- whether the fund was a super fund;
- whether the fund was maintained for the benefit of employees;
- whether the couple were employees and had an interest in the fund;
- whether amounts in certain bank accounts constituted income of the husband and whether the Commissioner could issue assessments at any time on the basis he formed an opinion there had been fraud or evasion.
The AAT had allowed the couple to give their oral evidence by video. The Federal Court came to the view that the AAT fell into jurisdictional error and reversed the AAT’s decision. The taxpayers appealed.
The Full Federal Court by majority dismissed the appeals. Siopis J was of the view that the making of orders permitting the couple to give evidence from abroad had a tendency to undermine the operation of the TAA, and that was a consideration the AAT should have taken into account.
(Seymour v FCT [2016] FCAFC 18, Full Federal Court, Siopis, Griffiths and Pagone JJ, 2 March 2016) [LTN 43, 4/3/16]
[FJM note: As anyone, who has practiced in the AAT, knows, the AAT regularly allows evidence to be given by telephone, which is much less probative than video evidence (that is much less easy to test by cross-examination and for the Tribunal Member to assess the reliability of). The AAT regularly says that the mode of giving evidence is just a matter of the weight to be given to the evidence. With the greatest respect to their Honours, it surprises me that a contrary decision could be reached by these two courts – particularly for video evidence, which is markedly more probative than telephone evidence. Added to this, these taxpayers bore an onus to show that their assessments were excessive and by how much. If their evidence, given in this way, were not probative enough, they would fail to discharge that onus and thus lose the appeal. It would serve the purposes of justice better (and would not undermine the AAT any more than has happened for years already) if the excessiveness of these assessments were actually tested, rather than not at all.]