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17 Apr 12 Time for compliance with s 264 notice extended – Binetter

The Federal Court has made an order requiring the Commissioner to extend time for compliance with a notice issued to the taxpayer under s 264 ITAA 1936.

The taxpayer had objected to assessments issued against her by the Commissioner for several years of income. The Commissioner had sent her a notice under s 264, seeking detailed information about her tax affairs. The taxpayer applied to the court for interim relief in respect of the s 264 notice. She objected to the notice on a number of grounds, including that the terms of the notice were misleading or confusing in respect of certain categories of information.

The taxpayer succeeded in respect of one of those categories. The court held that, where a notice requires a person to provide information in exercise of a compulsory power to do so, and a failure to comply with it creates an offence, it is incumbent upon the drafter to specify with sufficient clarity precisely what information is sought. In this case, it was arguable that one category of information, as described in the s 264 notice, lacked sufficient clarity to be a valid exercise of the power to require the addressee to furnish information under s 264(1)(a). This was enough to establish a prima facie case for relief.

On the question of the appropriate relief, Rares J observed:

“I am satisfied that the Court has power to order the Commissioner to amend a notice issued under s 264 by extending the time for compliance with that notice to any time the Court considers appropriate. The Court must have such a power for the purposes of it being able effectively to exercise its jurisdiction to determine the validity of the notice, without exposing the recipient of the notice to the consequence that he or she may have committed a criminal offence before the Court is able to come to a final decision. The more is this so where, as in this case, the Commissioner has delayed in providing the addressee with reasons that may have been available to inform him or her of their course of action ...”.

Binetter v DCT [2012] FCA 377 (Federal Court, Rares J, 20 March 2012).

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