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29 May 077 No ADJR review of Commissioner's refusal to compromise debt - Bilborough

The Federal Court (Kiefel J) has held that a taxpayer was not entitled to a review of the Commissioner's decision not to compromise a tax debt pursuant to the Administrative Decisions (Judicial Review) Act 1977 (Cth) (‘the AD(JR) Act’), because it was not made "under" an enactment in the sense that it did not affect legal rights and obligations.

The Court said, referring to the High Court decision in Griffith University v Tang (2005) 221 CLR 99, at paras 18-19 as follows:

"The majority in Tang 221 CLR at [89] concluded that the determination of whether a decision is ‘made ... under an enactment’ involves two criteria, both of which must be met: the ‘decision must be expressly or impliedly required or authorised by the enactment’ and ‘the decision must itself confer, alter or otherwise affect legal rights or obligations, and in that sense the decision must derive from the enactment’.

In a case such as this, the general power given by the ITAA and TAA, to recover unpaid taxes, carries with it a power to compromise the debt sued for, or which could be sued for or otherwise recovered. The exercise of this power might be subject to, or conditioned by, a duty of good faith, but no such issue arises in the present case. Although the grounds for review refer to an ‘improper’ exercise of power they do not impute a wrong motive. The applicant’s complaint is concerned with the respondent’s consideration of the facts pertaining to the applicant’s case. Importantly, the power is one to enter into a consensual arrangement with a taxpayer, one which may bind the Commissioner. The exercise of it may bring an agreement into effect, but any rights or obligations arising from it owe their existence to the recognition which the general law would give. A decision, to accept a compromise, does not unilaterally confer any such right, as the second criterion in Tang 221 CLR 99 requires. The decision does not derive its potential capacity to bind from statute, but from the general law."

The Court also held that there was no basis for an order under s 39B of the Judiciary Act 1903 (Cth): Bilborough v FCT [2007] FCA 773 (Federal Court, Kiefel J, 23 May 2007).

For a copy of the decision, go here

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