Jones and Commissioner of Taxation
Document type: Decision Impact Statement
Venue: Administrative Appeals Tribunal (2007/5166-5168;2007/5197-5199)
Judgment date: 25 June 2008
Date published: 14 October 2009
Decision outcome: Adverse

Summary of decision:
Outlines the Tax Office's response to these cases which concerned whether the extensions of time sought by the applicants to lodge objections in respect of their 1996-1998 income tax assessments should be granted.

Overview of facts:
Mr Jones' 1996-1998 income tax affairs were the subject of an audit. Mr and Mrs Jones had lodged tax returns on the basis that they were in partnership together, providing consulting engineering services. | As a result of the audit, the Commissioner issued assessments to Mr Jones on the basis that the income of the partnership for the 1996-1998 income years was income derived by him from his personal services, and was not partnership income. | Decisions disallowing objections to those assessments were referred to the AAT. Based on an agreement between the parties, the AAT decided in [2003] AATA 84 that the income was his personal services income, but that he was entitled to deductions for reasonable wages paid to Mrs Jones. The applicants were to lodge amended returns to reflect the AAT decision but this didn't occur. The Commissioner issued amended assessments in October 2003 and February 2005 to reflect the AAT decision. | The applicants sought to object to the amended assessments on the basis that they should be allowed deductions for additional business establishment expenses, being matters that were not the subject of the amended assessments. The Commissioner maintained the view that the applicants could not object to the amendments, but should request extensions of time to object against the original assessments. The AAT confirmed this position in a decision delivered on 2 February 2007. | On 30 June 2007, the applicants sought extensions of time to lodge objections to the original assessments. The Commissioner denied the extensions of time on the bases that the applicants had failed to provide an acceptable explanation for the delay (5 months) in seeking the extensions, and did not have an arguable case for any business establishment costs to be wholly or partially allowed as deductions. | Issues decided by the AAT | The Tribunal found that extensions of time to lodge objections should be granted to the applicants, as they had provided an acceptable explanation for the delay in objecting against the original assessments, and, although the case for claiming additional deductions was not strong, nevertheless it was reasonably arguable in the circumstances of the case (paragraphs 31, 36 & 37).

Issues decided:
The Tribunal found that extensions of time to lodge objections should be granted to the applicants, as they had provided an acceptable explanation for the delay in objecting against the original assessments, and, although the case for claiming additional deductions was not strong, nevertheless it was reasonably arguable in the circumstances of the case (paragraphs 31, 36 & 37).

ATO view of decision:
The Tax Office accepts that the decision of the Tribunal was open to it on the particular evidence and the facts as found by the Tribunal.

Administrative treatment:
None | Implications on current Public Rulings & Determinations | None

Legislative references: Taxation Administration Act 1953 14ZW 14ZX
Case references: FCT v Brown [1999] FCA 1198 99 ATC 4852 2008 ATC 10-034
Subject references: Extension of time to lodge objections to income tax assessments