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The Full Court of the Federal Court has held, unanimously, that a taxpayer who has given the Commissioner a notice under s 14ZYA of the Taxation Administration Act 1953 (Cth) (TAA) requiring the Commissioner to make an objection decision may withdraw that notice before its deemed operation comes into effect.

Section 14ZYA enables a taxpayer who has lodged a taxation objection to give the Commissioner a notice requiring the Commissioner to make a decision on the objection. If the Commissioner has not made an objection decision by the end of the period of 60 days after being given the notice, then, at the end of that period, the Commissioner is taken to have made a decision to disallow the taxation objection.

In this case, the taxpayers had given the Commissioner written notices requiring him to make an objection decision on their objections. The notices were given two days after the Commissioner had served the first taxpayer with a notice under s 264 of the Income Tax Assessment Act 1936 (Cth) requiring him to attend an examination to assist the Commissioner in making a decision on the objections. The taxpayers “withdrew” their notices before the end of the 60 day period referred to in s 14ZYA(3) as a condition of the Commissioner agreeing to adjourn the examination of the first taxpayer until after the hearing and determination of judicial review proceedings in which the first taxpayer was seeking orders to prevent the Commissioner from conducting the examination.

Notwithstanding that they had withdrawn their notices, when the 60 day period expired, the taxpayers commenced an appeal under Pt IVC of the TAA against the disallowance of their objections. The Commissioner applied to have the taxpayers’ appeal struck out or dismissed on the basis that there was no objection decision against which an appeal could be made. The taxpayers contended that once an election has been made by a taxpayer to give a notice given under s 14ZYA(2), the notice cannot be withdrawn by the taxpayer and, accordingly, that their objections were deemed to have been disallowed by operation of s 14ZYA(3).

At first instance, the Federal Court accepted the taxpayers’ argument that it is not possible for a taxpayer to withdraw a s 14ZYA(2) notice, once given, and dismissed the Commissioner’s application: McGrouther v FCT [2014] FCA 1102. The Commissioner appealed to the Full Court of the Federal Court.

The Full Court unanimously granted the Commissioner leave to appeal, and allowed the appeal.

The court relied on a principle of statutory construction expressed in the maxim quilibet potest renunciare juri pro se introducto, which means that any person can waive a statutory provision that is entirely for his or her own benefit. To put it in another way: statutory rights that are not jurisdictional can be waived, unless the provision was enacted for some public interest wider than that of the private parties. The principle applies to s 14ZYA because the section confers statutory rights of a kind on a taxpayer that are not jurisdictional and do not have a wider public interest purpose, but which are personal to the taxpayer exercising them: namely, the right to require the Commissioner to make an objection decision on the taxpayer’s objection within 60 days from the giving of the notice and the right to a deemed objection decision under s 14ZYA(3) in the event that no objection decision is made within that time.

In a joint judgment, Pagone and Davies JJ said, at [25]:

“The power conferred upon a taxpayer by s 14ZYA(2) to give the Commissioner a notice is purely permissive and entirely at the discretion of the taxpayer. The power is conferred upon the taxpayer purely for the taxpayer’s benefit in any individual case and may be exercised or not at will. A notice given under s 14ZYA(2) is not a notice that in 60 days’ time the Commissioner will be deemed to have disallowed an objection decision, but rather is a notice ‘requiring the Commissioner to make an objection decision’. The primary purpose of s 14ZYA, and the primary object of a notice being given, is to progress the Commissioner’s decision-making function. That is a benefit which exists only for the taxpayer able to give a notice. As a matter of construction, moreover, there is nothing within the terms of s 14ZYA that would prevent a taxpayer from subsequently withdrawing a notice, given at the taxpayer’s election, thereby waiving or abandoning the right to a deemed objection decision on the taxpayer’s objection, as the deeming provision in s 14ZYA(3) only operates where a taxpayer elects to give a notice requiring the Commissioner to make a decision on the taxpayer’s objection.”

FCT v McGrouther [2015] FCAFC 34 (Allsop CJ, Pagone and Davies JJ, 16 March 2015).

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