Case: Madden v Madden (1996) 65 FCR 354
Outcome: considered
That the Commissioner's use of the garnishee process to prevent the return of the money to the applicant does not demonstrate the absence of a bona fide attempt is supported by the Full Court's decision in Madden v Madden (1996) 65 FCR 354. In that case the taxpayer was arrested and charged with conspiracy to supply heroin. Thereupon the Commissioner assessed him to income tax on the sale value of the heroin. The sale value had been notified to the Commissioner by the police. The taxpayer's application to have the assessment set aside on the ground that it was not made bona fide was dismissed. Foster J, with whom Sheppard J agreed, said at 395: "The only significant question, in my view, is whether it could be argued that he made no assessment at all, in that he acted in bad faith and for the ulterior purpose of using his powers under s 218 of the Tax Act to require payment to him of the amount of money held by the police." (I interpolate that s 218 is the predecessor of s 260-5). Foster J continued: "The material adduced shows that the Commissioner was minded to take possession of this money in circumstances of urgency in that, if swift action were not taken, the money would pass from the possession of the police and would, in all probability, become irrecoverable. It may be said, then, that evidence has been adduced showing that the Commissioner was motivated, in raising the assessment, by a desire to take possession of the money. ... As I see it, the appellant's contention amounts really to this. He alleges that the assessment was invalid because it was issued by the Commissioner in abuse of his power to assess under s 167, in that it was not a bona fide attempt to assess the amount upon which tax should be levied but was a mere device to enable the issue of the s 218 notice .... In the first place, I am unable to attribute any significance to the fact that the assessment was issued in conjunction with and motivated by a desire to take advantage of s 218. There is sufficient indication of urgency in the situation to warrant the steps that were taken. In my opinion, the s 218 connection is a purely neutral fact in the determination of whether the assessment itself was invalid." 37 Other cases that have found a lack of a bona fide attempt are in marked contrast to the present. In Darrell Lea Chocolate Shops Pty Ltd v Federal Commissioner of Taxation (1996) 72 FCR 175 at 188 the Full Court said: "Not only did the Commissioner not make any genuine attempt to ascertain the sale value of particular goods under each of the relevant Assessment Acts, but he also determined a sale value and purported to create a liability for sales tax upon facts which he knew were wrong. ... An assessment on facts known by the Commissioner to be untrue is of its nature unfair and oppressive." In the present case the Commissioner did not act upon any facts which he knew to be wrong. It is true that he did not know all the facts but, doing the best he could on the facts he did know, he made assessments. That they did not wholly survive review by the Tribunal does not establish the lack of a bona fide attempt: Madden at 396 and Briglia at [9].