Taxation Ruling IT 2298 - Income Tax : applications by taxpayers for adjournments of proceedings before administrative tribunals

What this ruling is about: In a recent decision the Federal Court of Australia considered, on appeal, a decision of a Taxation Board of Review following a refusal by the Board to grant to a taxpayer, on its request, an adjournment of the hearing of a review. The Federal Court's decision is reported as New York Properties Pty Ltd v. F.C. of T. 85 ATC 4503; (1985) 16 ATR 811. 2. The conduct of reviews by Taxation Boards of Review of references under Part V of the Income Tax Assessment Act ("ITAA") is governed by that Part of the Act and by Part V of the Income Tax Regulations. Sub-regulation 38(1) provides that reviews by a Board shall be conducted as the Chairman from time to time directs while sub-regulation 38(5) provides that the Chairman of a Board may adjourn any review from time to time as he thinks fit. FACTS 3. During the year ended 30 June 1974, the taxpayer participated in a tax avoidance scheme involving certain transfers of land allegedly as trading stock and a claim for a deduction of a bad debt. Deductions claimed by the taxpayer under the scheme were disallowed. In June 1978, the taxpayer lodged a notice of objection against its assessment. The objection was disallowed in July 1978 and the taxpayer requested the Commissioner's decision be referred to a Board of Review for review. On 11 March 1983 the taxpayer was notified that the Board would hear the matter on 3 May 1983. 4. At the commencement of the hearing, senior counsel for the taxpayer sought an adjournment of the hearing for approximately three weeks on the ground that it had been unable to obtain all necessary evidence, especially documentary evidence, required in order to adequately present its case. An affidavit tendered in support of the request deposed that certain enquiries had been made and that further enquiries in Australia and overseas may locate other documents that might advance the taxpayer's case. The affidavit further deposed that while some documentation was held by the taxpayer, it was incomplete and mainly comprised copies of unexecuted documents. 5. The Commissioner opposed the application for the adjournment asserting that there was nothing in the affidavit to support the view that the documents necessary for the taxpayer's case would be found or be relevant. The taxpayer argued that applications for adjournment should be determined by applying a general principle that adjournments will be granted if they are sought bona fide on reasonable grounds and if the other party would not be prejudiced. 6. The Board adjourned briefly, and on reconvening, the Chairman advised the taxpayer that he had decided not to grant the adjournment. He said that the Board could proceed without original documents, that there was nothing in the affidavit to suggest that co-operation necessary to obtain documents and records could be expected, that overseas enquiries to date had been totally unproductive and that the prospect of further relevant information emerging was very uncertain and nebulous. When the taxpayer advised that it was unable to proceed with the review because the material then available was insufficient, the Board confirmed the assessment on the ground that the taxpayer had not discharged the onus of proof placed on it by paragraph 190(b), ITAA. 7. The taxpayer appealed from the Board's decision confirming the assessment to the Supreme Court of Queensland. His Honour, Ryan J., in a decision reported as New York Properties Pty Ltd v. F..C. of T. 84 ATC 4542; (1984) 15 ATR 782, dismissed the appeal by holding that the Board's decision did not involve a question of law as required by sub-section 196(1), ITAA. The taxpayer then appealed, by leave, to the Federal Court. 8. The Federal Court (Northrop, Lockhart and Beaumont JJ) noted that by sub-section 196(1), ITAA, a taxpayer may only appeal to a Supreme Court from any decision of a Board of Review that involves a question of law. The decision of the Board confirming the assessment was the only decision from which an appeal could be taken under sub-section 196(1). The taxpayer's attack on the Board's decision confirming the assessment was mounted solely on the basis that refusal of the adjournment involved a question of law. The Federal Court held that no question of law was involved in the decision refusing the adjournment and, consequently, the Board's decision did not involve a question of law and no appeal lay from the decision under sub-section 196(1). 9. In reaching their conclusion the Federal Court judges made the following observations :-


Ruling: 10. The Federal Court's decision makes it clear that a decision made by a Chairman of a Board of Review to refuse a taxpayer's application for an adjournment can never, of itself, be the subject of an appeal to a Supreme Court under sub-section 196(1), ITAA. This is not to say, however, that it can never be the subject of judicial scrutiny e.g. by the High Court under jurisdiction conferred by section 75(v) of the Constitution or by the Federal Court under jurisdiction conferred by section 39B of the Judiciary Act (or possibly by the Administrative Decisions (Judicial Review) Act). 11. In proceedings before administrative tribunals such as the Administrative Appeals Tribunal or a Taxation Board of Review, the Commissioner's representative may be asked to give a reaction to a taxpayer's application for adjournment. In the light of the Federal Court decision, the opportunity is taken to formulate some guidelines. 12. The Commissioner's attitude towards an application by a taxpayer for an adjournment, when sought by a Tribunal, depends on the merits of each individual request. However, as a general guide, the request is not normally opposed by the Commissioner's representative, although it is rarely supported. If there are compelling reasons (e.g. taxpayer is involved in court proceedings on the same day as the hearing date, sudden illness of the taxpayer, taxpayer is involved in an accident, sudden illness of taxpayer's counsel late in the preparation of a complex matter) the Commissioner's representative should not oppose a request for an adjournment for a reasonable period. Essentially, of course, the matter is one for the tribunal to decide (Income Tax sub-regulation 38(5), paragraph 40(1)(c) of Administrative Appeals Tribunal Act). 13. Special circumstances may, however, justify the Commissioner's representative vigorously opposing the granting of an adjournment. The following circumstances would not ordinarily be regarded as compelling reasons for an adjournment and where they constitute the basis of an application, opposition would usually be appropriate: 14. Short-term adjournments during the conduct of a hearing, for example, for an hour to seek further advice or instructions are a different matter. The Commissioner would not seek to oppose requests for such short-term adjournments but, again, they are matters for the tribunal to decide. COMMISSIONER OF TAXATION 23 April 1986




Date of effect: Immediate


Legislative references: REG 38 ADMINISTRATIVE APPEALS TRIBUNAL ACT; s.40
Case references: New York Properties Pty Ltd v. F.C. of T 85 ATC 4503 (1985) 16 ATR 811
Subject references: BOARD OF REVIEW CONDUCT OF REVIEW BOARD OF REVIEW ADJOURNMENTS ADMINISTRATIVE APPEALS TRIBUNAL