Law Administration Practice Statement PS LA 2004/10
Tax laws claimed to be invalid
Date of issue: 6 September 2004
Date of effect: 6 September 2004
Draft: False
Withdrawn: False

1. What this Practice Statement is about: Australia's taxation and superannuation systems are a community asset and we all have a role to play in maintaining them. By complying with your tax obligations, you join millions of Australians who do their part to support the Australian community. We occasionally receive correspondence from taxpayers arguing they are exempt from fulfilling their taxation obligations because: • the entire taxation system is invalid, or • the tax system does not apply to them for a particular reason. • the entire taxation system is invalid, or • the tax system does not apply to them for a particular reason. The correspondence may take a variety of forms, including requests for proof that laws are valid, requests for information, personal enquiries and objection letters. This type of correspondence will often include: • complex constitutional arguments based on the notion that Australia's entire legal and political systems are invalid, thus all laws are invalid • arguments that the particular individual's legal status is such that they are not subject to Australian laws, or • replicated letters and documents, often erroneously purporting to be legal notices, which may demand that ATO staff produce documents, recognise a particular fact, make payments or perform other tasks. • complex constitutional arguments based on the notion that Australia's entire legal and political systems are invalid, thus all laws are invalid • arguments that the particular individual's legal status is such that they are not subject to Australian laws, or • replicated letters and documents, often erroneously purporting to be legal notices, which may demand that ATO staff produce documents, recognise a particular fact, make payments or perform other tasks. These letters may threaten legal action against the ATO or specified officers. This Practice Statement provides guidance on how we will treat such correspondence. | 2. Taxation law and the ATO: The operation of the Australian taxation system is established by statute, as follows: • the Australian Constitution establishes the Commonwealth of Australia [1] and empowers its Parliament to enact laws in respect of taxation [2] • the ATO is a statutory agency of the Commonwealth of Australia, established to assist the Commissioner of Taxation, who is the head of that statutory agency [3] • the Commissioner administers the Taxation Administration Act 1953 (TAA) [4] and is legally entitled to institute, and appear in, legal proceedings in their official name [5] • the TAA and other taxation laws are valid [6] and apply to the entirety of the land mass of Australia, as well as its coastal seas and external territories [7] ; a person within these geographic boundaries cannot exempt themselves from taxation laws [8] • the Commissioner is required by law to make assessments of the taxable income and tax payable by taxpayers [9] , and • taxation liabilities must be paid in Australian currency. [10] • the Australian Constitution establishes the Commonwealth of Australia [1] and empowers its Parliament to enact laws in respect of taxation [2] • the ATO is a statutory agency of the Commonwealth of Australia, established to assist the Commissioner of Taxation, who is the head of that statutory agency [3] • the Commissioner administers the Taxation Administration Act 1953 (TAA) [4] and is legally entitled to institute, and appear in, legal proceedings in their official name [5] • the TAA and other taxation laws are valid [6] and apply to the entirety of the land mass of Australia, as well as its coastal seas and external territories [7] ; a person within these geographic boundaries cannot exempt themselves from taxation laws [8] • the Commissioner is required by law to make assessments of the taxable income and tax payable by taxpayers [9] , and • taxation liabilities must be paid in Australian currency. [10] | 3. Our response to correspondence claiming tax laws are invalid or do not apply: We will not respond to correspondence where taxpayers claim tax laws are invalid or do not apply. Given that many claims of this type have been rejected by the Courts, we do not consider it an appropriate use of ATO resources to do so. Any correspondence of this type which is not part of an ongoing matter should be filed in accordance with the published Constitutional correspondence procedures (link available internally only). In accordance with the Attorney-General Department's Legal Services Directions 2017, the ATO may provide legal assistance to defend ATO staff who have acted reasonably and responsibly in carrying out their duties from a claim brought by a person and based on one of these unsupportable arguments. It is important for ATO staff to note the following: • It is not the function of ATO staff to enter into debate or give advice about Constitutional or other issues not related to the administration of the taxation system. • Submissions raising arguments of this type have already been dismissed as being unarguable by various courts, including the High Court of Australia. [11] • The correspondences, and any responses, do not alter any obligations the authors may have under the laws administered by the Commissioner, and refusal to comply with these obligations may result in prosecution and the imposition of penalties and interest. • It is not the function of ATO staff to enter into debate or give advice about Constitutional or other issues not related to the administration of the taxation system. • Submissions raising arguments of this type have already been dismissed as being unarguable by various courts, including the High Court of Australia. [11] • The correspondences, and any responses, do not alter any obligations the authors may have under the laws administered by the Commissioner, and refusal to comply with these obligations may result in prosecution and the imposition of penalties and interest. Taxpayers may wish to seek the advice of an appropriately registered taxation professional or a legal practitioner prior to taking legal action. The Courts have often found raising these types of arguments to be an abuse of process and have imposed punitive costs orders on litigants who raise them. | 4. More information: For more information, see: • ATO Charter • the Constitution • TAA • ATO Charter • the Constitution • TAA

Legislative references: TAA 1953 2(1) | TAA 1953 3A | TAA 1953 4A | TAA 1953 8 | TAA 1953 15 | TAA 1953 Sch 1 255-5 | ITAA 1936 166 | ITAA 1936 960-505 | Taxation Administration Regulations 2017 21 | Commonwealth of Australia Constitution Act 1901 covering clause 3 | Commonwealth of Australia Constitution Act 1901 covering clause 5 | Commonwealth of Australia Constitution Act 1901 covering clause 6 | Commonwealth of Australia Constitution Act 1901 51(ii) | Public Service Act 1999 7
Other references: ATO Charter Legal Services Directions 2017

Additional content:
Updated to inform change in business processes (ATO staff will not be responding to correspondence where taxpayers claim tax laws are invalid or do not apply). | Updated in line with current ATO style and accessibility requirements. | New paragraph 2 added, along with form amendments to the remaining paragraphs and addition of further references. | Updated to current LAPS format and style. | Corrected 'changes' to 'correspondence'. | Deleted as it is no longer current | Minor grammatical corrections | Contact details & general style update | Updated contact officer & changed reference to Tax Office to ATO. | Updated to reflect current wording | Replace referral point with linked escalation procedures | Deleted as it is no longer required | Alternate contact updated | [1] Covering clause 3 of the Commonwealth of Australia Constitution Act 1901 (the Constitution). Covering clause 5 provides that the Constitution and all laws made by Parliament are binding on the people of every State and part of the Commonwealth of Australia. | [2] Subsection 51(ii) of the Constitution in Part V of the Constitution. | [3] Section 4A of the Taxation Administration Act 1953 (TAA) and section 7 of the Public Service Act 1999 . Note that the ATO does not have (or need) legal personality to sue under that name - this is given to the Commissioner and Deputy Commissioners instead; see also Moeliker v Chapman [2000] HCATrans 242 and Dooney v Henry [2000] HCA 44 at [7]. | [4] Section 3A of the TAA; the Commissioner may also delegate their duties to Deputy Commissioners and other ATO officers per section 8 of the TAA; O'Reilly v Commissioners of State Bank of Victoria [1983] HCA 47. | [5] Section 15 of the TAA and section 255-5 of Schedule 1 to the TAA. | [6] Joosse v Australian Securities and Investment Commissioner [1998] HCA 77 at [20]. | [7] Section 960-505 of the Income Tax Assessment Act 1997 , subsection 2(1) of the TAA and covering clause 6 of the Constitution. | [8] Lamont v Deputy Commissioner of Taxation [2019] NSWCA 221 ( Lamont ) at [9]. | [9] Section 166 of the Income Tax Assessment Act 1936 . | [10] Section 21 of the Taxation Administration Regulations 2017 and Lamont at [10]. | [11] For example, see Deputy Commissioner of Taxation v Levick [1999] FCA 1580, Moeliker v Chapman [2000] HCATrans 242, Dooney v Henry [2000] HCA 44 at [7] and Lamont at [10]. | File NO 99/6282-4; NO 98/11481-6 | Deputy Commissioner of Taxation v Levick [1999] FCA 1580 43 ATR 621 168 ALR 383 | Dooney v Henry [2000] HCA 44 45 ATR 113 174 ALR 41 74 ALJR 1289 | Joosse v Australian Securities and Investment Commissioner [1998] HCA 77 159 ALR 260 73 ALJR 232 | Lamont v Deputy Commissioner of Taxation [2019] NSWCA 221 | Moeliker v Chapman [2000] HCATrans 242 | O'Reilly v Commissioner of State Bank of Victoria [1983] HCA 47 153 CLR 1 82 ATC 4671 13 ATR 706 44 ALR 27 | This Practice Statement was originally published on 6 September 2004. Versions published from 8 January 2009 are available electronically - refer to the online version of the practice statement. Versions published prior to this date are not available electronically. If needed, these can be requested by emailing TCNLawPublishingandPolicy@ato.gov.au .