Article:


LexisNexis Australian Tax Law Bulletin
"Patchy Evidence and the Part IVC Objection Process" (October 2015).

Introduction
:

"Broadly, after an in-time assessment or amended assessment has been issued by the Commissioner, absent conscious maladministration, the taxpayer’s only remaining review and appeal path is by way of the Pt IVC process as outlined in the Taxation Administration Act 1953 (Cth) (the TAA). In the first instance this generally requires that a taxpayer, or his tax agent or legal representative acting on his behalf, file an objection against assessment (Objection) with the Commissioner outlining the grounds as to why the taxpayer believes the assessment or amended assessment to be excessive.  Such an Objection must be lodged within prescribed limits or otherwise the Commissioner’s discretion must be sought for an extension of time.  If the Commissioner disallows an Objection in an Objection decision the taxpayer then may apply for a review or appeal the Objection decision to either the Administrative Appeals Tribunal (the Tribunal) or the Federal Court of Australia respectively.  Generally, the contents of the notice of objection on any review or appeal take a statutory form of a pleading and as such should be initially drafted with this in mind.  In any subsequent appeals process under Pt IVC the burden of demonstrating that the assessment or amended assessment is excessive rests upon the taxpayer.  As such, the burden in the subsequent review or appeals process arguably guides the Commissioner in the Objection process. It is the author’s contention that this need not require that the taxpayer adduce perfect evidence but merely evidence that meets the preponderance of evidence burden."

Applicable to the following situations:
  • Taxpayer is under audit or has had an audit completed;
  • Taxpayer has received an amended assessment or a default assessment;
  • Taxpayer disputes, objects to or does not agree with the Commissioner's proposed or final position.

What can be done to address the situation?
  • If taxpayer has not yet had amended assessments or default assessments issued, taxpayer can engage with the Commissioner to tender evidence, including through his or her solicitor and or counsel, which will meet the requisite burden of proof and negotiate an agreed outcome.
  • If taxpayer has had an amended assessment or default assessment issued, taxpayer can object against the assessment within prescribed time limits (or if exceptional circumstances arise, seek an extension for the time to object).  The notice of objection is a legal document and should be drafted with foresight that it may become the originating process for the appeal.  Once the objection process is underway, taxpayer can engage with the Commissioner, including through his or her solicitor and or counsel, to tender appropriate evidence and negotiate an agreed outcome.
  • If objection has been denied, taxpayer can appeal to the Administrative Appeals Tribunal (AAT) or the Federal Court of Australia within prescribed time limits (or if exceptional circumstances arise, seek an extension for the time).  The AAT and Federal Court processes allow a further stage for the taxpayer to engage, through his or her solicitor and counsel, to tender appropriate evidence and negotiate an agreed outcome.  If an agreed outcome cannot be agreed the matter can proceed to judgment.  An AAT or Federal Court decision can be appealed (although it is important to note that an AAT decision is limited to appeal on an error of law and or jurisdictional error).
How is the situation addressed?
  • If the taxpayer has not yet had amended or default assessments issued, the taxpayer can engage with the Commissioner, including through his solicitor and or counsel.
  • If the taxpayer has had amended or default assessments issued, the taxpayer can engage with the Commissioner, including through his solicitor and or counsel through objecting within prescribed time limits (or if exceptional circumstances arise, seek an extension for the time to object)
  • If the taxpayer has had an objection denied, the taxpayer can appeal to the AAT or the Federal Court of Australia within prescribed time limits (or if exceptional circumstances arise, seek an extension for the time to appeal), including through his solicitor and or counsel.  
It is important to note that there are approximately only 100 taxation appeals filed in the Federal Court of Australia each year - as such any taxpayer seeking to appeal an objection on a cost efficient basis should seek specialist counsel who have specific experience in running tax appeals and resolving tax disputes, early in the process. 
      Read more or contact: