Case: Secretary, Department of Social Security v Hodgson (1992) 37 FCR 32
Outcome: applied
The Commissioner submitted that the present appeal was one where the remission of penalty by the Tribunal could not have been for the purpose of reviewing the decision. It was not relevant to the making of the decision because the parameters of that decision had already been set by the taxpayer's objection. It could not have been properly raised by the taxpayer before the Tribunal unless and until an order was obtained by the taxpayer under s 14ZZK(a) of the Administration Act which did not occur. As such, there could not be 'an association' between the power exercised by the Tribunal and the decision under review. If an objection had been made to the assessment of penalty and an objection decision had been made in relation to that matter, there may have been (subject to the operation of s 14ZS of the Administration Act) some basis for saying that the exercise of a power to remit by the Tribunal was in the words of Hill J in Secretary, Department of Social Security v Hodgson (1992) 37 FCR 32 'relevant to the making of the decision under review'. There would be present 'an association' between any exercise of discretion by the Tribunal to remit penalty and the objection decision. 19 In my view, this misconceives the matter and puts an impermissible gloss upon s 43. 20 While the taxpayer did not include in his objection a ground putting in issue the imposition of additional tax; and while the Commissioner's objection decision disallowing the taxpayer's objection did not, in consequence, deal with that issue; and while the taxpayer had no right to agitate the issue before the Tribunal unless the Tribunal otherwise ordered (s 14ZZK(a) of the Administration Act), which the Tribunal did not, nevertheless, in deciding the taxpayer's objection, the Commissioner could have further remitted the additional tax imposed at label D of the notice of amended assessment, pursuant to the discretion vested in him by subs 227(3) of the ITAA 36. The fact that he had already exercised this discretion, at the time of assessment to remit the additional tax to $586,858.75 was no bar or impediment to his further remission of the additional tax at the time of making his objection decision. 21 If this be right, then it is difficult to see why subs 43(1) of the AAT Act did not give the Tribunal jurisdiction to make that part of the decision against which this appeal is brought, namely, remission of the penalty matter to the Commissioner with the direction that the assessment for the year ended 30 June 1988 be amended by remitting additional tax in full. Subsection 43(1) of the AAT Act has been construed as not requiring the power or discretion to be exercised by the Tribunal as being necessarily involved in the making of the decision under review: Secretary, Department of Social Security v Hodgson supra at 39 40. In Commonwealth Bank Officers Superannuation Corporation Pty Ltd v Commissioner of Taxation [2005] FCAFC 244 (30 November 2005, unreported) the Full Court of this Court observed at [29] [30]: '...Section 43 empowers the Tribunal to exercise all the powers and discretions conferred upon the original decision-maker, provided it does so for the purpose of reviewing a decision. Provided the necessary purpose is present, the power conferred upon the Tribunal is not otherwise limited. It is neither necessary nor permissible to put a gloss upon s 43 that would permit the Tribunal to exercise the discretion maker's powers and discretions only when those powers or discretions are necessarily interdependent with the decision under review, or where the power or discretion to be exercised by the Tribunal is necessarily involved in the making of the decision under review see Secretary, Department of Social Security v Hodgson [supra]. Thus, so long as the exercise of powers and discretions by the Tribunal is for the purpose of reviewing a decision, all of the powers and discretions conferred by any relevant enactment on the decision-maker who made the decision, can be exercised by the Tribunal' (Emphasis) 22 In making this observation, the Full Court was adopting the views expressed by Hill J in Hodgson . In particular, what his Honour went on to say in that case at 40: 'Of course there must be an association between the power to be exercised by the Tribunal and the decision under review, but that association is to be found in the restriction of the grant of power in s 43(1) to the purpose of the Tribunal's review. The test is one of relevance rather than dependence . Where the exercise of a power or discretion is relevant to the making of the decision under review then, if requested, the Tribunal may exercise the discretion.' (Emphasis) 23 There can be no doubt, in the present case, that the exercise by the Tribunal of the discretion to remit the matter of the additional tax to the Commissioner with a direction that the additional tax be remitted in full is relevant to the making of the objection decision, if not dependent upon it. In that sense, the Tribunal exercised the discretion for the purpose of reviewing the objection decision and any argument that it did not must be rejected. 24 For the foregoing reasons, the appeal must be dismissed with costs. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds. Associate: Dated: 20 January 2006 Counsel for the Appellant: Mr R S Quinn Solicitor for the Appellant: Australian Government Solicitor Counsel for the Respondent: Mr D K L Raphael Solicitor for the Respondent: Northside Law Solicitors Date of Hearing: 13 December 2005 Date of Judgment: 20 January 2006 AustLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback URL: http://www.austlii.edu.au/au/cases/cth/FCA/2006/9.html