Ward vs Federal Commissioner of Taxation

The Administrative Appeals Tribunal (AAT) added additional words to the ordinary meaning of the term "determination", in order to make a determination in favour of a taxpayer seeking objection rights in Ward vs the Federal Commissioner of Taxation (FCT).

Section 292-465 of the Income Tax Assessment Act 1997 (ITAA 1997) allows the Commissioner to waive any penalties lodged against a taxpayer if they breach the limit one is allowed to contribute to superannuation in a financial year.  The same section also provides that a taxpayer can object to a determination made by the Commissioner under that section.  Such an objection could be lodged in the AAT or Federal Court, where a judge would decide whether or not it was reasonable for the Commissioner to act in the way he did.

Section 292-465 is constructed in a way that allows the Commissioner to make a determination to waive a penalty for over-contributing to superannuation, but it fails to mention how the Commissioner might reject such a request and determine that a taxpayer is still required to pay the penalties levied against them.  The latter scenario is hardly a "determination" under the ordinary meaning of that term.  A hardline textualist would argue that the Commissioner is simply ignoring a taxpayer's plea, no determination occurs.

A broader thinking individual would argue however, that a decision not to make a determination, is itself a determination.  A football referee determining that a player has dived in the penalty box has no need to blow his whistle.  In fact it is the act of not awarding a penalty that makes his decision clear to both teams.  This is where the AAT stand on the issue (regarding s 292-465).

An explanatory memorandum of the bill introducing the provisions in question clearly states that the legislature was intended to give taxpayers a right to object "on the grounds that they are dissatisfied with the Commissioner's determination or the Commissioner's decision not to make a determination".

The tribunal members note that the alternate view (a strict textualist approach to the provision) leads to a conclusion where only taxpayers who have received a favorable determination from the Commissioner can object to his decision!  Such a conclusion is "manifestly absurd" in the eyes of the AAT.  An absurd provision can be clarified by the judiciary under the Acts Interpretation Act 1901, to give the word "determination" a meaning that offers s 292-465 a sensible construction.

The Commissioner's argument was sneaky at best, against the interests of his fellow citizens at worst.  That is why it is welcoming news that the AAT has affirmed the rights of taxpayers to object to a tax office "non determination" in regard to a superannuation over-contribution.

The Case [2015] AATA 138: http://www.austlii.edu.au/au/cases/cth/AATA/2015/138.html