ATO ID 2006/216: Licensing: application for licence under section 39A of the Excise Act
Date of decision: 20 April 2006
Year of income: Year ended 30 June 2004
Business line: Indirect Tax

Issue
Is it necessary for a natural person to satisfy at least one of the conditions in section 39B of the Excise Act 1901 before they can be held to be 'not a fit and proper person' for the purposes of paragraph 39A(2)(a) of the Excise Act?

Decision
Yes. A natural person can only be regarded as 'not a fit and proper person' for the purposes of paragraph 39A(2)(a) of the Excise Act if they satisfy at least one of the conditions in section 39B of the Excise Act.

Facts
A natural person lodged an application for a licence under section 39 of the Excise Act. The applicant has an extensive history of non-compliance with taxation laws. The applicant lodged several returns late (after receiving final notices from the Tax Office) and the returns contained material errors in the form of understatements of income. The applicant's assessments were amended following audit action. The applicant has also accumulated wealth from sources that are not reflected in their income tax returns. The applicant has also received overpayments of benefits from another Commonwealth department. The applicant has not, within the year preceding their application, been charged with any offences detailed in paragraph 39B(a) of the Excise Act. The applicant has not, within the 10 years preceding their application, been convicted of any offences detailed in paragraph 39B(b) of the Excise Act. The applicant has not had a licence cancelled, or participated in the management and control of a company that has had its licence cancelled. The applicant is not an undischarged bankrupt. The applicant has not made any misleading statements in their application. The applicant has not knowingly made any false statements in their application.

Reasons for decision
Summary: Subsection 39A(1) of the Excise Act provides the Collector with a broad power to grant, or refuse to grant, a licence. Subsection 39A(2) of the Excise Act provides that: Section 39B of the Excise Act provides that: The Collector may, in considering whether a natural person is a fit and proper person, have regard to: The applicant does not satisfy any of the criteria in paragraphs 39B(a) to 39B(f) of the Excise Act. Therefore, we must determine whether the Collector may have regard to other factors in determining whether the applicant is fit and proper to hold a licence. The use of the word 'may' in section 39B of the Excise Act indicates the Collector does not have to have regard to the factors in paragraphs 39B(a) to 39B(f) of the Excise Act. This conclusion is clear from the wording of subsection 33(2A) of the Acts Interpretation Act 1901 which states: Where an Act assented to after the commencement of this subsection provides that a person, court or body may do a particular act or thing and the word "may" is used, the act or thing may be done at the discretion of the person, court or body. However, the fact the Collector may choose whether or not to take into account any or all of the factors listed in paragraphs 39B(a) to 39B(f) of the Excise Act does not necessarily empower the Collector to take into account other factors that are not listed within the provision. Support for this view can be found by contrasting the wording of section 39B of the Excise Act with that in section 39A of the Excise Act. Subsection 39A(1) of the Excise Act states that the Collector may grant, or refuse to grant, a licence. Subsection 39A(2) of the Excise Act provides that; Without limiting subsection (1) but subject to subsection (3), the Collector may refuse to grant a licence if, in the Collector's opinion: ... The subsection proceeds to list a number of factors that warrant refusal to grant a licence. The use of the words 'without limiting' within subsection 39A(2) of the Excise Act demonstrates a deliberate intent by Parliament to enable the Collector to consider any factors whatsoever in determining whether a licence should be granted or refused. Therefore, regardless of whether any of the factors justifying refusal contained in subsection 39A(2) are triggered, the Collector retains the ability to grant, or refuse to grant, a licence. However, in section 39B of the Excise Act there is no similar wording. Section 39B provides a finite list of factors that the Collector can take into account in determining that an applicant is not fit and proper. The absence of the term 'without limiting' or similar terminology supports the view that the Collector cannot find that an applicant is not fit and proper unless the applicant satisfies at least one of those factors within section 39B. Therefore, despite the fact that the applicant in this case has a history of poor compliance, such matters cannot be taken into account for the purposes of determining whether or not they are 'fit and proper' for the purposes of paragraph 39A(2)(a) of the Excise Act as they have not satisfied at least one of the conditions in section 39B of the Excise Act.

Legislative references: Excise Act 1901 paragraph 39A(2)(a) subsection 39A(1) subsection 39A(2) subsection 39A(3) section 39A section 39B
Subject references: Excise Excise collections Tobacco Tobacco producer Tobacco producer licence