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07 Jul 08 Taxpayer unsuccessful in procedural attack on AAT - Kennedy

The Full Federal Court (French, Tamberlin and Mansfield JJ) has dismissed the taxpayer's appeal from the decision of a Presidential Member of the AAT who had decided:

- that the challenge by the taxpayer to the validity of the assessments on the ground they were made in bad faith could not be raised in review proceedings commenced in the AAT, or in appeal proceedings commenced in the Federal Court, pursuant to Part IVC of the Tax Administration Act 1953 (the TAA); and

- that it would not exercise the power under s 37(2) of the Administrative Appeals Tribunal Act 1975, as modified by s 14ZZF(1)(b) of the TAA, to require the Commissioner to lodge with the AAT additional documents which the taxpayer believed (but the Commissioner did not) were relevant to the assessments under consideration. (The documents included a transcript of examination of the taxpayer in Switzerland, a transcript of examination of another person and a number of letters.)

In relation to the first issue, the Full Federal Court said, at para 22:

"[The taxpayer's] challenge in the Tribunal to the validity of the Commissioner’s assessments, based on the contentions that they were made in bad faith or the Commissioner’s view as to fraud and evasion was incorrect, must fail. The Tribunal has jurisdiction to hear and determine the present review under Part IVC of the TAA because each assessment purports to have been made in exercise of powers conferred by that enactment. Whether or not the assessments were, as a matter of law, validly made does not attenuate this finding. There is a long line of authorities which supports this proposition, starting with Collector of Customs (NSW) v Brian Lawlor Automotive Pty Ltd (1979) 24 ALR 307. More recently, in Minister for Immigration v Ahmed (2005) 143 FCR 314 at 323, the Full Federal Court observed that the judgment as to the validity of a Minister’s actions is for the courts, not for an administrative body such as a Tribunal: see also Zubair v Minister for Immigration and Multicultural and Indigenous Affairs (2004) 139 FCR 344."

In relation to the second issue, the Full Federal Court said, at para 28:

"The Presidential Member was correct to hold that no process of reasoning had been forthcoming which supported the claim as to the relevance of the additional documents sought, and on the face of their description no such relevance is apparent. The submission by [the taxpayer] that his Honour failed to consider whether the documents may be relevant lacks cogency because, to substantiate such an assertion of error, [the taxpayer] must show how a particular document or category of documents may be relevant to specific issues of fact relating to the excessiveness of the assessments issued to him. That has not been shown. The intent of s 14ZZF of the TAA was clearly to narrow the class of documents which the Commissioner must produce to the Tribunal, and in the absence of a demonstration by [the taxpayer] of the relevance of any additional documents, it is not appropriate to widen the class of documents which the Commissioner has already provided in this case."

Kennedy v Administrative Appeals Tribunal [2008] FCAFC 124 (Full Federal Court; French, Tamberlin and Mansfield JJ; 4 July 2008).

For a copy of the decision, go here

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