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21 Sep 06 Court refuses particulars in Div 13 case - W R Carpenter

The Federal Court (Lindgren J) has refused the taxpayer's application for particulars of the matters taken into account by the Commissioner in making 3 determinations under ss 136AD(1), 136AD(2) and 136AD(4) of ITAA 1936, against which the taxpayer had objected and appealed.

In his introductory remarks, his Honour said, at paras 39-40:

"...the Commissioner relies on the fact that he made the various determinations, copies of which he has provided to the Taxpayers. Section 136AD does not make the antecedent procedure of the making of the determinations an element of liability to tax: it makes only the actual making of them an element of that liability, and, accordingly, the Commissioner relies only on the fact, not the process, of the making of them.

The question is whether the Commissioner must provide particulars, not of something on which he relies, but with a view to equipping the Taxpayers with information on the basis of which they may be able to bring down the determinations and thereby establish that the assessments are excessive. This would be an unusual role for particulars, akin to discovery or interrogatories in relation to an issue raised by the party seeking such procedural aid. (It is asserted by the Commissioner in submissions that the Taxpayers have, in substance, already had discovery of the documents that were before the Commissioner, pursuant to the Freedom of Information Act 1982 (Cth).)"

After examining all the authorities, his Honour concluded, at para 153:

"The first reason why the Commissioner should not be required to supply the particulars sought relates to the Commissioner’s primary and more general submission. I hold, in accordance with Peabody, Sleight and Syngenta, that the Commissioner should not be required to supply the particulars sought because, under the statutory provisions mentioned, it is not open to the Taxpayers to make the Commissioner’s state of mind and reasoning processes leading to the making of the determinations under s 136AD an issue in the appeals."

His Honour concluded further at para 157:

"The second reason why the Commissioner should not be required to supply the particulars sought is that he has not asserted, and does not propose to assert, a positive case as to his state of mind or reasoning processes, of which, in accordance with the general principles governing the supply of particulars, particularisation might be appropriate (cf George, (Kitto J), discussed at [46] above). In the light of ss 136AD and 177(1) of the ITAA [1936] and 14ZZO of the [Taxation Administration Act], the Commissioner is entitled not to assert any particular state of mind or reasoning process, and simply to rely on his assessment."

W R Carpenter Holdings Pty Ltd v FCT [2006] FCA 1252 (Federal Court, Lindgren J, 20 September 2006).

For a copy of the decision, go here

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