Binetter v Deputy Commissioner of Taxation
Document type: Decision Impact Statement
Venue: High Court (S269 of 2012 (High Court of Australia))
Judgment date: 15 February 2013
Date published: 11 April 2013

Summary of decision:
Outlines the ATO's response to a case which concerned whether the taxpayer is required to comply with a notice for information served on her by the Commissioner, so that a proper assessment could be made.

Overview of facts:
In 2010, the taxpayer became the subject of an audit which identified several bank deposits made into a joint account belonging to the taxpayer and her late husband. The majority of the deposits came from entities of which the taxpayer and her late husband were directors. Throughout the audit requests for information were unanswered other than requests for extensions of time within which to provide the information. | The Commissioner included 50% of the unexplained deposits in the assessable income (director's fees, salary, wages or more generally unexplained income) of the taxpayer. The relevant income years were 1993-94 and 2000-2001. The taxpayer subsequently objected to the inclusion of the amounts in her income, explaining that the amounts received were repayments of unspecified, unsubstantiated loans from companies associated with her and her late husband. As the taxpayer had made no reference to these amounts being loan amounts during the audit, in 2011 the Commissioner made information requests seeking documents to substantiate the loans and characterise the payments. The taxpayer provided six hand written extracts from the accounts of the associated entities, relating to various periods throughout 1993 to 2001. | The Commissioner issued a s264 notice early in 2012 to obtain more information in order to determine the objection, however the taxpayer did not provide any information. The taxpayer sought several extensions of time to respond to the s.264 notice and then ultimately commenced proceedings to set aside the notice. | On 20 March 2012, the Federal Court (Rares J) granted an extension of time to the taxpayer in respect of compliance with the notice. His Honour made directions for the progression of the matter and ordered that the taxpayer have 14 days after the making of final orders to comply with the notice:[2012] FCA 377. | On 6 July 2012, the Federal Court (Robertson J) dismissed the taxpayer's application for judicial review of the Commissioner's decision to issue the notice Binetter v Deputy Commissioner of Taxation (No 3) [2012] FCA 704 (6 July 2012). In her application, the taxpayer had submitted that she was entitled to refuse to comply with the s.264 notice on the basis that to do so would require her to "...provide information that would tend to self-incriminate her..." . It was the taxpayer's submission that this asserted fact, of which there was no direct evidence, meant that the decision of the Full Federal Court in Deputy Commissioner of Taxation v De Vonk (1995) 61 FCR 564 no longer applied because the decision of the High Court in Daniels Corporation International Pty Ltd and Another v ACCC [2002] HCA 49 meant that absent express words of abrogation in s.264, s.264 did not expressly abrogate the privilege against self-incrimination. Finally, the taxpayer submitted the s.264 notice issued for the purpose of anticipated litigation which was an improper purpose | Robertson J did not accept any of the taxpayer's submission. His reasoning was that given he was sitting as a single judge, he was bound to follow the Full Federal Court decision of De Vonk's case ; that in any event, the evidence of the taxpayer did not support any of their submissions, and that the Commissioner was not engaging in an improper purpose by issuing the s264 notice to the taxpayer in order to decide the taxpayer's objection. | The taxpayer's appeal to the Full Federal Court (Edmonds, Jagot and Perram JJ) was heard on 17 August 2012. The Court stated per curiam at [30]: "In our view, the decision in De Vonk should be followed because it is a unanimous decision of this Court which is not clearly or plainly wrong. It has stood for 17 years and despite subsequent amendments to ss 8C and 8D of the TAA, none of those amendments have sought to interfere with the position for which it stand as authority. More importantly for present purposes, we agree with the learned primary judge at R[23] that De Vonk has not been overruled either in Daniels or elsewhere." | On 6 September 2012, the Court dismissed the taxpayer's appeal with costs and ordered that the time for compliance with the s264 notice be extended until 20 September 2012, or until such further time and date as the Commissioner may allow. | The taxpayer sought leave of the High Court of Australia to file an application for special leave to appeal, which was refused on 15 February 2013. | Issues decided by the court | In view of the High Court's decision that the Full Federal Court decision, in respect of Deputy Commissioner of Taxation v De Vonk (1995) 61 FCR 564 was "plainly correct", the Full Federal Court's decision applies. | The Full Federal Court decision clarifies that taxpayers cannot claim the privilege of self-incrimination to refuse to comply with, or to apply to have set aside, a section 264(1)(a) notice for information.

Issues decided:
In view of the High Court's decision that the Full Federal Court decision, in respect of Deputy Commissioner of Taxation v De Vonk (1995) 61 FCR 564 was "plainly correct", the Full Federal Court's decision applies. The Full Federal Court decision clarifies that taxpayers cannot claim the privilege of self-incrimination to refuse to comply with, or to apply to have set aside, a section 264(1)(a) notice for information.

ATO view of decision:
The ATO has been applying the law in the manner in which the Full Court found. There are no negative implications arising from this decision.

Administrative treatment:
Nil | Implications for ATO precedential documents (Public Rulings & Determinations etc) | Nil | Implications for Law Administration Practice Statements | Nil

Legislative references: Income Tax Assessment Act 1936 Section 264
Case references: Deputy Commissioner of Taxation v De Vonk (1995) 61 FCR 564 (1995) 31 ATR 481 95 ATC 4820 Dyson v Attorney General [1911] 1 KB 410 [1912] 1 Ch 158 Edwards v Santos Ltd & Others [2011] HCA 8 (2011) 242 CLR 421 Coco v The Queen (1994) 179 CLR 427 Pyneboard Pty Ltd v Trade Practices Commission (1983) 152 CLR 328 [1983] HCA 9 Stergis v Boucher (1989) 20 ATR 591 (1989) 89 ATC 4442 Donovan v Commissioner of Taxation (1992) 34 FCR 355 (1992) 23 ATR 129 92 ATC 4114 Daniels Corporation International Pty Ltd and Another v ACCC [2002] HCA 49 (2002) 213 CLR 543
Subject references: Self-incrimination Notice to produce documents