On 3 Nov 2021, the Federal Court has upheld an AAT decision rejecting the taxpayer’s contention that he was required to prove only that discrete amounts of additional assessable income included in amended assessments were not assessable. The taxpayer sought judicial review of the AAT’s decision, contending that the AAT had no jurisdiction to consider any particulars of the amended assessments other than the additions of the discrete amounts of assessable income.  He lost.

The case concerned amended assessments for 2012 and 2013 which had added discrete amounts of assessable income. Before the AAT hearing was due to commence in December 2019, the AAT agreed to vacate the hearing so the taxpayer could articulate his arguments more clearly in an amended statement of facts, issues and contentions. The amended statement was filed in April 2020, just before the deadline set by the AAT. However, the taxpayer did not seek leave to amend his grounds of objection.

Once the review hearing started, the taxpayer applied for leave to amend his grounds of objection (and also to file a further amended statement of facts, issues and contentions), but the AAT refused to grant leave (see KPTT and FCT [2020] AATA 5309). In doing so, the AAT (i) rejected an argument that particulars of the original assessments that were not the subject of amendment must be taken as settled; and (ii) confirmed that the onus was on the taxpayer to prove the amended assessments were excessive.

The Federal Court held that this case was simply a dispute about what the taxpayer had to prove to succeed before the AAT, an issue the AAT had jurisdiction to determine. Section 14ZZK of the TAA imposed on the taxpayer the burden of proving that the amended assessments – ie the ascertained amounts of taxable income, tax payable on that taxable income and total of tax offset refunds – were excessive or otherwise incorrect, and what amounts should have been ascertained. “On no view are these ascertained amounts confined to the particular additions of discrete amounts of assessable income.”

The Court added that the relevant forensic choice before the AAT is that of the ATO, not the taxpayer. The ATO “is constrained in that forensic choice only by considerations of procedural fairness and case management, both of which are regulated by the AAT”.

The Court also held that, by not disputing in the objection decisions aspects of the returns and information provided by the taxpayer, the ATO had not impliedly agreed not to require the taxpayer to prove all relevant facts.

Sibai v CofT [2021] FCA 1353 (Federal Court, Jagot J, 3 November 2021) [LTN 215, 8/11/21]


This might be standard ‘onus of proof’ law – particularly as the relevant TAA provision calls for the taxpayer to not only prove that the assessment is ‘excessive’ but also ‘by what amount’. This doesn’t mean that it is satisfactory. And, I note that 26.10.21, the House of Representatives Standing Committee on Tax and Revenue issued a report recommending, amongst other things: to move the onus of proof back to the Commissioner (albeit only where he alleges ‘fraud or evasion’) – Recommendation 12 (see related TT article). In this writer’s mind, there is clear good sense to confine the taxpayer’s onus of proof to just the matters which are the subject of the dispute. There is no doubt that the reverse onus of proof, as it stands, causes taxpayers to ‘chaff’. There are some substantive reasons for taxpayers having some onus, but in my opinion, it goes too far, leads to mischief, allows laziness (or worse) in the ATO and can be oppressive to taxpayers. In my opinion, serious thought needs too be given, to well crafted changes, to this onus, that leave taxpayers some onus reflective of the information only they have, but which doesn’t leave them exposed to the perils of having to disprove everything. So, this could be a candidate. The Administration Act could be changed, so that the onus was on the taxpayer to establish that that certain elements of the assessment were wrong by at least some minimum amount. Similarly, Courts and Tribunals could be given the power to shift the onus of proof back to the ATO, when the interests of justice would be served. There are no doubt other worthy refinements, to an onus, which, in my opinion, was well intentioned but has become bloated and unfair.

If readers had any other suggestions, for constructive changes to the Taxpayer onus, I would love to hear – via email, LinkedIn comment, or call. We could be putting this to the House of Rep’s Committee, Board of Tax, IGTO or Assistant Treasurer (though, it seems, he might have other things on his mind, right now).

[Tax Month – November 2021Previous 2021] 8.11.21

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