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03 Nov 11 Commissioner's refusal to defer recovery action and time for payment of tax upheld - Rawson

The Federal Court (Foster J) has dismissed the applications of the taxpayers (Rawson Finances Pty Limited and BCI Finances Pty Limited) seeking judicial review of several decisions made by the Commissioner.

In those decisions, the Commissioner refused to defer recovery action in respect of outstanding tax and refused to exercise the power contained in s 255-10 of the Taxation Administration Act 1953 (TAA) to defer the time for payment of that tax. The assessments under which the tax had been levied were the subject of objections or proceedings before the AAT which had not been determined at the time of making the applications to the Federal Court.

Some of the challenged decisions were sought to be reviewed under s 5 of the Administrative Decisions (Judicial Review) Act 1977 (the ADJR Act) and others under s 39B of the Judiciary Act 1903 while, in respect of others, only s 39B was relied upon.

Foster J held that the weight of authority supported the conclusion that a decision taken by the Commissioner to commence proceedings to recover assessed income tax is not reviewable under the ADJR Act. Foster J held that those challenges made in reliance upon s 39B also failed. Finally, the challenges brought by the taxpayers to the relevant s 255-10 decisions made by the Commissioner also fail

In relation to s 255-10, the taxpayers submitted that the Commissioner had failed to take relevant matters into account. Foster J said, at para 82, as follows:

"[The] authorities make clear that none of the matters which Rawson contended should have been taken into account (but were not) were expressly required by the TAA or the ITAA to be taken into account nor were any of them mandated implicitly by reference to the subject matter, scope and purpose of the TAA or the ITAA. At bottom, subject to paying due regard to the principles expounded in [Elias v FCT [2002] FCA 845; (2002) 123 FCR 499], it was for the Commissioner to decide what was relevant to his s 255-10 decision. In particular, there is ample authority for the proposition that the fact that an objection has been lodged or that an appeal from a disallowance of an objection has been lodged does not mean that recovery action should be deferred or that these matters should be taken into account in exercising the s 255-10 discretion. Counsel for Rawson went so far as to submit that the Commissioner ought not take steps to recover outstanding tax where an objection is on foot unless he or she is satisfied that the objection was not bona fide. This submission seeks to engraft a gloss on the clear words of the legislation and on the principles explained in such cases as FCT v Broadbeach Properties Pty Ltd [2008] HCA 41; (2008) 237 CLR 473. The submission cannot be sustained and must be rejected."

Rawson Finances Pty Limited v FCT [2011] FCA 1231 (Federal Court, Foster J, 31 October 2011).


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