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08 Oct 08 Commissioner's power to amend under s 170(10AA) not unlimited - Metlife

The Full Federal Court (Spender ACJ, Jessup and Middleton JJ) has upheld the taxpayer's appeal from the decision of Emmett J, who held that s 170(10AA) ITAA 1936 allowed the Commissioner to amend the taxpayer's assessment more than 4 year's after the original assessment, merely because the assessment relied on s 104-10(3) ITAA 1997 (time of CGT Event determined by date of contract, not settlement). In the Full Federal Court's view, such a construction did not give sufficient weight to the words "for the purpose of giving effect to" in s 170(10AA). The Court said, at para 25:

"In our view, the provisions set out in the table to s 170(10AA) reinforce our interpretation of the proper construction of s 170(10AA). In each of the examples, power is given to the Commissioner to amend at any time an original assessment where a new fact occurs after that assessment and where certain provisions of the tax legislation would be frustrated if the Commissioner were not able to take the new facts into account by so amending the original assessment."

In the present case, no new fact had occurred. All the Commissioner was seeking to do was correct an error in the original assessment. However, because the 4 year period had expired, the Commissioner had no further avenue for amendment. The taxpayer's appeal was upheld: Metlife Insurance Ltd v Commissioner of Taxation [2008] FCAFC 167 (Full Federal Court; Spender ACJ, Jessup and Middleton JJ; 3 October 2008).

For a copy of the decision, go here.

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