mdroth/huggingface-course_section-5_zst huggingface dataset:
Case: Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1
Outcome: followed
is possible, I suppose, that work as purportedly invoiced was indeed undertaken and that the omission of Vanuatu client income might be referable to an innocent mistake as to a requirement to declare the same in New Zealand. In the absence of corroboration, I am not though prepared to find these facts proved. In so concluding I accept that Mr Russell is not at all obliged to prove to demonstration that Ancath undertook such work, only on the balance of probabilities that it did so. Nor is it the law that an appellant taxpayer can only discharge the onus of proof, even on the balance of probabilities, by the tendering of corroborated evidence: Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation [1983] 1 NSWLR 1. It is just that, recalling on whom the onus lies and applying that standard of proof, I did not regard Mr Russell's uncorroborated evidence on the subject as sufficiently reliable to admit of a conclusion that these facts were proved. I have reached these conclusions without taking into account Mr Russell's New Zealand criminal history, an official copy of which was tendered by the Commissioner in the course of Mr Russell's cross examination. Mr Russell has been convicted in that country of numerous offences of dishonesty including using a document with intent to defraud and forgery. He was, I thought, reluctant to acknowledge his criminal past in cross examination although his statement that it concerned an era in his life that he had sought to put behind him and forget was understandable enough. He also voiced disagreement with his having been truly guilty of some at least of the offences in respect of which convictions were recorded. Mr Russell's criminal history in its own right does give pause for thought about his credibility. However, the divergence in accounts as between evidence in the Industrial Commission and this Court with regard to his control over Ancath engendered in any event my disposition not to act on his uncorroborated testimony as to Ancath's undertaking work for Vanuatu based clients. For completeness, I should record that Mr Russell exhibited to one of his affidavits a letter dated 11 January 2008 addressed to Ancath (by its new name, Juan International) marked for Mr Miedema's attention from the National Bank of New Zealand which stated that a debit card issued on 24 November 2004 for use by Mr Russell had never been used. The letter says nothing as to the position in relation to the use of such a debit card during the period of interest in the appeals. Further, the letter is addressed not to any New Zealand address associated with Ancath or Mr Miedema but rather to the company in Australia at a post office box at Sarina. I did not therefore regard the letter as offering any corroboration with respect to the account Mr Russell gave concerning Ancath's affairs and the role he played.
Case: Commissioner of Taxation v ANZ Savings Bank Ltd [1994] HCA 58 ; (1994) 181 CLR 466
Outcome: considered
the institution of an appeal against an objection decision by the Commissioner, the Court is "seized of the decision in its entirety": Commissioner of Taxation v ANZ Savings Bank Ltd [1994] HCA 58 ; (1994) 181 CLR 466 at 476 (ANZ Savings Bank Case). In that same case (ibid) it was said of a statutory predecessor of s 14ZZP of the TAA, s 199 of the ITAA 1936 that: This power is expressed in the widest terms. An appeal relates to the objection decision made by the Commissioner albeit a taxpayer is dissatisfied with only part of that decision. A power to make such order as the Court thinks fit is clearly not unconstrained but there is nothing in s 199 to suggest that the Federal Court may not make such order in relation to the objection decision as is appropriate in all the circumstances once the subject matter of the taxpayer's dissatisfaction with the assessment has been resolved. At the time those remarks were made, the language of s 199 of the ITAA 1936 was in materially identical terms to those of s 14ZZP of the TAA. Section 199 came to be in that form following amendments made to that section by s 88 of the Taxation Boards of Review (Transfer of Jurisdiction) Act 1986 (Cth). In the ANZ Savings Bank Case (at 479) it was further observed: The question for the Court hearing an appeal is not whether the grounds of objection have been made out but whether the taxpayer has satisfied the burden cast by s.190(b) of proving that the assessment is excessive. ... Since the Court is concerned to determine whether the amounts assessed as taxable income are excessive , the Commissioner must be able to raise for the Court's determination the deductions properly to be allowed in the light of the Court's decision as to assessable income. [Emphasis added] The burden once cast on an appellant by s 190(b) of the ITAA 1936 is now the subject of like provision by s 14ZZO(b) of the TAA. Here, I have resolved, adversely to him as it transpires, the subject matter of Mr Russell's dissatisfaction with the 2001 year income tax assessment and I have determined that that assessment is not excessive. What then becomes the appropriate order to make in all of the circumstances bearing in mind that the power, though expressed in the widest terms, is not unconstrained?
Case: Commissioner of Taxation v Wade [1951] HCA 66 ; (1951) 84 CLR 105
Outcome: applied
Russell also alleged that the Commissioner's staff had not given him notice that an income tax audit in respect of his personal, as opposed to the partnership's taxation affairs was being conducted, that this was a breach of the "Taxpayer's Charter" and that, accordingly, the Commissioner was "estopped" from issuing amended assessments. It is not necessary to explore the merits of the factual substratum of this allegation. Even if true, no conduct on the part of the Commissioner can affect the operation of a taxing statute in respect of facts the occurrence of which gives rise to a taxation liability: Commissioner of Taxation v Wade [1951] HCA 66 ; (1951) 84 CLR 105 at 117 per Kitto J. Mr Russell further advanced in his written submissions that there was no lawful ability to "reopen", ie issue amended assessments in respect of the 2001 and 2002 income years. This was not raised as a ground of objection in respect of the assessments. He is confined to those grounds in the absence of a grant of leave to amend. I decline to grant any such leave. So to do after the close of evidence would not be fair to the Commissioner who did not as the objection stood choose or need to lead evidence in respect of the formation of an opinion that in these income years there had been an avoidance of tax due to fraud or evasion. The Court's powers on the hearing of a taxation appeal are set out in s 14ZZP of the TAA. It is there provided that: "the Court may make such order in relation to the decision as it thinks fit, including an order confirming or varying the decision". The "decision" referred to in this section is the Commissioner's objection decision.
Case: Comptroller-General of Customs v Woodlands Enterprises Pty Ltd [1996] 1 Qd R 589
Outcome: cited
is nothing in the judgements delivered in the Full Court which would call into question the correctness of her Honour's conception of what constitutes "intentional disregard". I respectfully agree with her Honour's observations. They serve to confirm what a reading in context of "results from intentional disregard" would otherwise suggest. Within s 290-40 of Schedule 1 to the TAA, Parliament has specified gradations of increasing severity in terms of conduct by a taxpayer or his, her or its agent which has resulted in a tax shortfall. Of these, "intentional disregard" is the most serious in terms of the infliction of a base penalty. It is intended to be qualitatively different to and more severe than "recklessness". That suggests that wilful blindness of a kind which in other contexts has been regarded as sufficient to supply the mental element in adverbial qualifications such as "knowingly" or "wilfully", q.v. Iannella v. French [1968] HCA 14 ; (1968) 119 CLR 84 at 95-96 per Barwick CJ and Comptroller-General of Customs v Woodlands Enterprises Pty Ltd [1996] 1 Qd R 589 at 602-603 per Pincus JA, McPherson JA agreeing, is insufficient to supply the mental element in "intentional disregard". Rather, conduct of that wilfully blind kind would fall under the rubric of "recklessness" for base penalty purposes.
Case: Cornell v Deputy Commissioner of Taxation [1920] HCA 65 ; (1920) 29 CLR 39
Outcome: considered
Cornell v Deputy Commissioner of Taxation [1920] HCA 65 ; (1920) 29 CLR 39 and at a time when s 38(1) of the Income Tax Assessment Act 1915 (Cth) (ITAA 1915) was in a form not materially distinguishable from s 199(1) of the ITAA 1936 as it stood prior to its amendment in 1986, i.e. the words "increase or vary" were employed in relation to the assessment, it was opined (at 48) in a joint judgement of six judges that "the fact that an assessment is for too small an amount is [not] any reason for setting aside the assessment at the instance of the person assessed". That judgement is silent as to whether the assessment might have been increased at the instance of the Deputy Commissioner, had positions been reversed, although the express conferral of a power to increase the assessment suggests that such an order could lawfully then have been made.
Case: Ferguson v Commissioner of Taxation [1979] FCA 29 ; (1979) 37 FLR 310
Outcome: cited
observations made by Bowen CJ and Franki J on the subject in Ferguson v Commissioner of Taxation [1979] FCA 29 ; (1979) 37 FLR 310 at 314 are of general assistance: There are many elements to be considered. The nature of the activities, particularly whether they have the purpose of profit-making, may be important. However, an immediate purpose of profit-making in a particular income year does not appear to be essential. Certainly it may be held a person is carrying on business notwithstanding his profit is small or even where he is making a loss. Repetition and regularity of the activities is also important. However, every business has to begin, and even isolated activities may in the circumstances he held to be the commencement of carrying on business. Again, organization of activities in a business-like manner, the keeping of books, records and the use of system may all serve to indicate that a business is being carried on. The fact that, concurrently with the activities in question, the taxpayer carries on the practice of a profession or another business, does not preclude a finding that his additional activities constitute the carrying on of a business. The volume of his operations and the amount of capital employed by him may be significant. However, if what he is doing is more properly described as the pursuit of a hobby or recreation or an addiction to a sport, he will not be held to be carrying on a business, even though his operations are fairly substantial.
Case: Iannella v French [1968] HCA 14 ; (1968) 119 CLR 84
Outcome: cited
is nothing in the judgements delivered in the Full Court which would call into question the correctness of her Honour's conception of what constitutes "intentional disregard". I respectfully agree with her Honour's observations. They serve to confirm what a reading in context of "results from intentional disregard" would otherwise suggest. Within s 290-40 of Schedule 1 to the TAA, Parliament has specified gradations of increasing severity in terms of conduct by a taxpayer or his, her or its agent which has resulted in a tax shortfall. Of these, "intentional disregard" is the most serious in terms of the infliction of a base penalty. It is intended to be qualitatively different to and more severe than "recklessness". That suggests that wilful blindness of a kind which in other contexts has been regarded as sufficient to supply the mental element in adverbial qualifications such as "knowingly" or "wilfully", q.v. Iannella v. French [1968] HCA 14 ; (1968) 119 CLR 84 at 95-96 per Barwick CJ and Comptroller-General of Customs v Woodlands Enterprises Pty Ltd [1996] 1 Qd R 589 at 602-603 per Pincus JA, McPherson JA agreeing, is insufficient to supply the mental element in "intentional disregard". Rather, conduct of that wilfully blind kind would fall under the rubric of "recklessness" for base penalty purposes.
Case: IRG Technical Services Pty Ltd v Commissioner of Taxation [2007] FCA 1867 ; (2007) 165 FCR 57
Outcome: considered
being so, the "results test" then falls to be answered. That test is found in s 87 - 18 of the ITAA 1997. In IRG Technical Services Pty Ltd v Commissioner of Taxation [2007] FCA 1867 ; (2007) 165 FCR 57 at 70, [36] , Allsop J (as his Honour then was) observed of that section that its elements "were to be understood against the background of the jurisprudence concerning independent contractors". In so doing, his Honour referred with approval to an earlier observation made by Lindgren J in Commissioner of Taxation v Metaskills Pty Ltd [2003] FCA 766 ; (2003) 130 FCR 248 at 254, [28] , that, "Broadly speaking, an individual or entity, who or which is an 'independent contractor' under traditional concepts should meet the results test.". Their Honours were not in these cases promoting the use of the common law as a substitute for the language of the statute, for that would clearly be erroneous. It is just that, for example, the phrase "the income is for producing a result" in s 87 - 1 (a) and s 87 - 18 (3)(a) of the ITAA 1997 obviously draws upon one of the traditional touchstones for distinguishing between a contract for service and a contract of service. Thus guidance offered by cases decided at common law as to whether a payment is or is not for the production of a result is relevant. That this is what Parliament intended is confirmed by recourse to secondary materials, as Allsop and Lindgren JJ note in their respective judgements. Approaching the matter this way, I respectfully agree with their Honours observations in relation to s 87 - 18 .
Case: Kolotex Hosiery (Australia) Pty Ltd v Commissioner of Taxation (1975) 132 CLR 535
Outcome: followed
remains the question of whether the Commissioner was in error not to remit any penalty? As to this, either by concession or by virtue of the conclusions which I have reached in respect of applicable base penalty category, the Commissioner's decision is exposed as one founded on premises which were wrong in law. It thus falls to the Court to reach its own conclusion as to how the Commissioner ought to have exercised his remission discretion: see, by analogy, Kolotex Hosiery (Australia) Pty Ltd v Commissioner of Taxation (1975) 132 CLR 535 at 567-568 and 578-579. That art 7 of the NZ Double Taxation Agreement looks to enterprise, not profit per se, is, as the French decision I have noted in respect of this type of OECD Model Agreement, underscores a subject of some controversy and, in domestic law, hitherto novelty. Further, Mr Russell was patently not seeking to conceal Ancath's income from Tradecorp from revenue officers on both sides of the Tasman Sea. He was careless, but these two factors, in my opinion, tell in favour of the remission of the whole of the penalty on this occasion. Goods and Services Tax Assessment I have already concluded that the partnership hitherto constituted by Mr Russell and his then wife was dissolved on 23 February 2004. It necessarily follows from this conclusion that, on and from this date, there was no partnership "entity" entitled to claim input tax credits under the GST Act. To this extent, the appeal against the GST assessment must fail.
Case: McDermott Industries (Aust) Pty Ltd v Commissioner of Taxation [2005] FCAFC 67 ; (2005) 142 FCR 134
Outcome: cited
NZ Double Taxation Agreement generally follows the OECD Model Double Taxation Agreement (OECD Model). It is settled that, in construing such an agreement, a court may have regard to, inter alia, the OECD Commentary on its model agreement: Thiel v Commissioner of Taxation [1990] HCA 37 ; (1990) 171 CLR 338 at 344, 356-357. The interpretative use of that type of extrinsic material is a manifestation of the recognition that a double taxation agreement is but a particular example of an international treaty. The Full Court has sounded a cautionary note in relation to the use for the purpose of interpretation of commentary published after the ratification of a double taxation agreement: McDermott Industries (Aust) Pty Ltd v Commissioner of Taxation [2005] FCAFC 67 ; (2005) 142 FCR 134 at 144, [42] .
Case: Mercantile Credits Ltd v Commissioner of Taxation [1971] HCA 1 ; (1971) 123 CLR 476
Outcome: considered
in respect of an appeal determined when the Court's powers, including that of reducing the assessment, were as set out in the former s 199(1) of the ITAA 1936, and notwithstanding that he did not adopt the method of calculation promoted by the taxpayer on objection and before him on appeal, Windeyer J in Mercantile Credits Ltd v Commissioner of Taxation [1971] HCA 1 ; (1971) 123 CLR 476 at 489 had no difficulty in concluding that the assessments concerned should be varied by order so as to reduce the amounts of the tax payable.
Case: National Mutual Life Association of Australasia Ltd v Grosvenor Hill (Qld) [2001] FCA 237 ; (2001) 183 ALR 700
Outcome: applied
appears that Mr Russell instituted proceedings against Tradecorp in the Industrial Commission in the "unfair contracts" jurisdiction conferred upon it by s 276 of the Industrial Relations Act 1999 (Qld). It further appears that Tradecorp sought to have those proceedings dismissed. The outcome of those proceedings and especially any conclusions reached by the Industrial Commission as to Mr Russell's credibility, his status vis-&agrave;-vis Tradecorp, whether Ancath had a contract for service with Tradecorp or whether Mr Russell ought properly to be regarded an employee of Tradecorp are not relevant in either the income tax or GST appeals: s 91(1) Evidence Act 1995 (Cth) (Commonwealth Evidence Act ); National Mutual Life Association of Australasia Ltd v Grosvenor Hill (Qld) [2001] FCA 237 ; (2001) 183 ALR 700 at 715, [46] . Mr Russell's prior statements and submissions are though in a different category. That Mr Russell performed accounting and managerial work for Tradecorp at its Mackay business premises for about four years between August 2000 and August 2004 is clear. His title when performing that work was that of Tradecorp's "financial controller". He was appointed to undertake that work by Tradecorp's managing director, Mr Tony Zarb. That followed an interview with Mr Zarb and Tradecorp's outgoing financial controller, Ms Gillian Sandhoff. It is also clear that Mr Russell ceased undertaking this work following a breakdown in relations between him and Mr Zarb. It is not necessary in these proceedings to explore the rights, wrongs and responsibilities for that breakdown in relations. Relations between Tradecorp and Ancath were at least purportedly regulated by a written agreement made between those companies made on 4 August 2000 (the Tradecorp Agreement). Mr Russell, I note, has signed the agreement on behalf of Ancath underneath the common seal of that company. Mr Zarb has apparently signed on behalf of Tradecorp.
Case: Price Street Professional Centre Pty Ltd v Commissioner of Taxation [2007] FCA 345 ; (2007) 66 ATR 1
Outcome: followed
as to what constitutes "intentional disregard" for the purposes of determining a base penalty amount was offered by Collier J in Price Street Professional Centre Pty Ltd v Commissioner of Taxation [2007] FCA 345 ; (2007) 66 ATR 1 at [43] when considering a materially analogous predecessor provision, s 226J of the ITAA 1936: [43] As made clear by the Explanatory Memorandum to the Taxation Laws Amendment (Self Assessment) Bill 1992 which introduced s 226J, s 226J requires knowledge by the taxpayer that, for example, it has claimed a deduction knowing that it is not allowable. Accordingly, "intentional disregard" of the ITAA 1936 or regulations requires, inter alia, an understanding by the taxpayer of the effect of the relevant legislation or regulations, an appreciation by the taxpayer of how that legislation or regulation applies to the circumstances of the taxpayer, and finally, deliberate conduct of the taxpayer so as to flout the ITAA 1936 or regulations. The legislation treats "intentional disregard" differently from, and more seriously than, negligence to comply with the Act (cf s 226G) or recklessness with regard to the correct operation of the Act (cf s 226H).
Case: Price Street Professional Centre Pty Ltd v Commissioner of Taxation [2007] FCAFC 154 ; (2007) 243 ALR 728
Outcome: cited
appeal from her Honour's decision in that case, including so much of it as related to penalty, was later dismissed by the Full Court: Price Street Professional Centre Pty Ltd v Commissioner of Taxation [2007] FCAFC 154 ; (2007) 243 ALR 728.
Case: Re A Oyi Abp (2002) 4 ITLR 1009
Outcome: considered
these, the case from which I have derived particular assistance is a decision of Finland's Supreme Administrative Court in relation to whether an inconsistency existed between the attribution rules in that country's controlled foreign company (CFC) regime in its domestic revenue law and art 7 of its double taxation agreement with Belgium, which was in conformity with the OECD Model: Re A Oyi Abp (2002) 4 ITLR 1009 (Re A Oyi Apb). In that case, the Supreme Administrative Court observed (at 1064): Tax treaties are therefore concerned with judicial double taxation which means that the same taxable person is taxed on the same income in two different countries. Tax treaties do not generally concern economic double taxation, that is, where the same income is taxed in the hands of several taxable persons. Unless otherwise provided in a tax treaty, the removal of economic double taxation is a task which remains the responsibility of the national legislation. The tax treaty between Finland and Belgium does not contain provisions on the removal of economic double taxation. The actual decision in that case was that that the French CFC regime was in conflict with and was overridden by the relevant tax treaty. However, on closer analysis, the tax treaty concerned contained, apart from an OECD Model art 7 provision, another provision (art 25(A)(1)), which expressly exempted from the relevant French tax "income ... where such income is liable to taxation in Switzerland". Against that background, where the treaty itself authorised a focus on income per se, rather than enterprise, the seeming incongruence of result with that in Re A Oyi Abp is explicable. There is no equivalent of art 25(A)(1) of the Franco-Swiss Double Taxation Agreement in the NZ Double Taxation Agreement. Assistance in the resolution of any doubt about the focus of art 7, cl 1 is gained by having regard to the commentary concerning the OECD Model. I refer to the commentary as published in OECD Model Tax Convention on Income and Capital, Condensed Version - 2008 and Key Tax Features of Member countries 2008 published by IBFD (Copyright as to the Convention, OECD and as to the Key Features, IBFD "OECD Commentary"). Article 7, cl 1 of the NZ Double Taxation Agreement replicates art 7, cl 1 of the OECD Model Convention.