Case: Bailey v The Commissioner of Taxation of the Commonwealth of Australia [1977] HCA 11 ; (1977) 136 CLR 214
Outcome: considered
Subsequently, however, the High Court has held that despite having the burden of proof, the taxpayer is entitled to know the basis on which the Commissioner has made an assessment. In Bailey v The Commissioner of Taxation of the Commonwealth of Australia [1977] HCA 11 ; (1977) 136 CLR 214, the High Court discussed the Commissioner's obligation to provide particulars in the context of s 260 of the ITAA. Barwick CJ observed, at 217 - 218: The taxpayer should be told the taxable facts. This inevitably, in my opinion, requires the Commissioner to inform the taxpayer of the operation of s 260 which has warranted the adoption of his view of the taxable facts. This involves the identification and disclosure of the contract, agreement or arrangement which has been treated as avoided by s 260 .... [T]he Commissioner must, in my opinion, be specific in his identification of the contract, agreement or arrangement ... which justifies the amount of the assessment. 14 In the same case Aicken J commented at 227: The purpose of particulars is to assist in the defining of issues and there is in my opinion no reason why in appropriate cases the Commissioner should not give particulars where they are necessary in order that both the appellant and the court may understand the basis upon which the assessment has been made. ... It is not in the interests of the proper administration of justice that, when the matter comes before the court, the appellant should have to speculate about, and adduce evidence to negate, every possible kind of agreement ... 15 In Bailey, the High Court did not regard the obligation to provide particulars as inconsistent with, or in any way compromising, the taxpayer's burden of proof. Rather their view was to the contrary. Gibbs J commented at 219 that: The fact that the taxpayer bears the onus of proving that the assessment is excessive makes it all the more necessary that he should be given particulars of the basis of the assessment. At 221 Mason J said that because the taxpayer has to prove that the Commissioner's assessment is excessive: ... the relevant facts in the appeal include the view of the facts on which the Commissioner has based his assessment, the manner in which he arrived at his assessment. These facts are not within the knowledge of the taxpayer; they are within the knowledge of the Commissioner. More recently, Greenwood J expressed a similar view in Clark v Commissioner of Taxation [2007] FCA 1426 at [37] . Jacobs J acknowledged in Bailey that particulars are essentially factual rather than legal, however his Honour recognised that for a request for particulars to be appropriately directed to the matter in dispute the issues must be sufficiently defined. At 221-2, his Honour made the following comment: ... when there are no sufficiently defined issues it is not always possible to obtain particulars of facts without first ascertaining whether those facts will be relevant to questions which may be raised. In the present case it is therefore necessary for the taxpayer and the Court to know the basis of the assessments.