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PROCEDURAL FAIRNESS AND NON- ASSESSING DECISIONS OF THE FEDERAL COMMISSIONER OF TAXATION
By Michael Blissenden[∗]
The Commissioner of Taxation has the general administrative responsibility of the income tax system as evidenced by s 8 of the Income Tax Assessment Act 1936 (Cth). Many decisions made in the course of exercising that administrative power are of a non-assessing nature. This article focuses on the nature and form of the administrative law concept of procedural fairness as it applies to judicial reviewability of those decisions. The appropriate review mechanism is the Administrative Decisions (Judicial Review) Act 1977 (Cth), with a breach of Procedural Fairness a ground of review under that Act. The author examines the current judicial thinking in this area and concludes that in many instances, actions by ATO officers and guidelines issued by the Commissioner do generate a need to accord procedural fairness to affected taxpayers when administrative decisions are made.
This article aims to evaluate, from an administrative law dimension,[1] the effect and application of the concept of procedural fairness as it relates to the Federal Commissioner of Taxation (“Commissioner”). An analysis of that concept will be undertaken so as to determine whether there is any scope for judicial review in relation to the non-assessing actions and conduct of the Commissioner. The emphasis will be on the reviewability of decision-making of the Commissioner that relates to the general administration of the Income Tax Assessment Act 1936 (Cth) (“ITAA36”).
The analysis in this article will not focus on those decisions by the Commissioner that form an integral part of the assessment process, nor form part of that process dealing with an objection or an appeal against an assessment. The mechanics of that merit review process is covered under Pt IVC of the Taxation Administration Act 1953 (Cth) (“TAA”) and excluded from review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (“ADJR Act”) by virtue of Sch 1 para (e) of that Act. Instead the focus of this article will be on those administrative decisions that may fall within the ambit of the ADJR Act.
The Commissioner has a general administrative power, which is derived from s 8 of the ITAA36. The Commissioner accepts that the Australian Taxation Office (“ATO”) has been “given the important responsibility of administering the taxation system in order to collect the correct amount of tax payable under the law”.[2] Furthermore the Commissioner has acknowledged that “we [ATO] are committed to exercising these powers, fairly and professionally and, as far as possible, in an open manner”.[3] Indeed one of the central planks of the Taxpayers’ Charter, which came into effect from 1 July 1997, is that a taxpayer can expect the ATO to treat taxpayers fairly and reasonably. The use of terms such as “fairly” and “reasonably” is reflective of current good tax administration. However it is also reflective of the extension of the branch of administrative law entitled procedural fairness into tax administration.
The ADJR Act provides a mechanism for taxpayers to challenge administrative decisions made by administrators in the Federal Court. The ADJR Act provides a review process for an aggrieved person affected by an administrative decision. Where the ADJR Act applies an affected person is able to obtain a statement of reasons from the decision maker. It is a judicial review process and is not an appeal on the merits as would be the case under the Administrative Appeals Tribunal (“AAT”). It is also quite different from the review process available under s 39B of the Judiciary Act 1903 (Cth) whereby judicial review may be sought in relation to the decision making process by a Commonwealth officer. Where the jurisdiction applies the aggrieved person is able to apply for a review of the decision. One possible ground of review is a breach of procedural fairness by the administrator in making the administrative decision.[4] The threshold jurisdiction question relates to whether there has been an administrative decision under an enactment. It will then be necessary to evaluate what is meant by procedural fairness in the context of tax decision-making by the Commissioner.
The relevant threshold issue is whether an exercise of the general administrative power will itself be a “decision” for ADJR Act purposes. For instance, the giving of verbal advice by ATO officers would normally be of a general nature and not designed to be determinative in application such as to determine one’s tax liability. Such an approach would seem to coincide with the views by Loughlin J in Pegasus Leasing Ltd v FC of T[5] that a verbal expression of opinion by an ATO officer was not a “decision” for the
purposes of the ADJR Act as it was of a general nature and “did not refer to the specific taxation affairs of the addressee taxpayer”.[6]
In Hutchins v FC of T[7] Black CJ concluded that s 8 of the ITAA36, standing on its own, was far too general to provide a foundation for a decision of the Deputy Commissioner to cast a vote against a motion for a special resolution relating to a meeting of creditors under Pt X of the Bankruptcy Act 1966 (Cth). The taxpayer had argued that the decision on how to vote was a decision of an administrative character made under an enactment and so subject to judicial review. Black CJ rejected the position that s 8 provided the base upon which a decision, for ADJR Act purposes, had been made. His Honour concluded that s 8 was “too frail a branch to support the proposition that the decision was made ‘under’ the ITAA”.[8]
Black CJ also held that s 8, in combination with s 208, impliedly authorised the Commissioner to do what is reasonably necessary to recover the income tax that is a debt due to the Commonwealth. However, the combination of the sections did not make provision for the decision.[9] A basis for this specific reasoning could be that s 208 is a provision that states that tax due and payable is a debt to the Commonwealth and nothing more.
The situation will be different where the Commissioner seeks to utilise the information gathering powers of ss 263 and 264 of the ITAA36. In that instance, the sections themselves make provision for the decision to be made and would be a decision reviewable under the ADJR Act. In essence what this means is that the legislature has provided the Commissioner with the respective powers relating to information gathering for the purposes of the ITAA36. On that basis when the Commissioner actually exercises those powers then an administrative decision under an enactment has been made. Accordingly the jurisdictional threshold is satisfied and the application can proceed.[10]
The question now arises: what is the administrative law concept of procedural fairness and how does it link in with tax administration?
Procedural fairness is concerned with ensuring that administrators follow particular processes so that their decision making process is fair. It is a concept that has evolved in the context of administrative law and it is thus necessary to evaluate the case law that has developed over the years.[11]
Lord Denning developed the concept of legitimate expectation in Schmidt v Secretary of State for Home Affairs[12] in direct response to the rigid approach by the courts that procedural fairness was recognized only where property or legal rights had been affected. His Lordship determined that the principles of procedural fairness could be extended to those interests that were not classified as legal rights. This emerged through the development of the concept of legitimate expectation whereby an individual had an expectation that a legal right would not be interfered with. This itself was not a legal right. On the facts of that particular case a student had a legitimate expectation of his/her temporary student entry permit being allowed to run for its term.
The concept of legitimate expectation was approved by the High Court in Heatley v Tasmanian Racing and Gaming Commission[13] with the Court determining that an individual who had been warned off a racecourse without a hearing had been denied procedural fairness. A legitimate expectation arose from the manner in which horseracing was run in Australia, with racecourses open to the public. Accordingly any member of the public, upon payment of the requisite entrance fee, had a legitimate expectation of admission to the racecourse.
A landmark case for the application of the notion of procedural fairness is Kioa v West (“Kioa”).[14] In that case the High Court dealt with the case of a Tongan couple who had outstayed their temporary entry permits. The Court held that procedural fairness had been denied when renewal of the permits had been refused. Mason J stated[15] that:
the law has now developed to a point where it may be accepted that there is a common law duty to act fairly, in the sense of according procedural fairness, in the making of administrative decisions which affect rights, interests and legitimate expectations, subject only to the clear manifestation of a contrary intention.
The importance of the decision in Kioa is that the emphasis is now on the question of what does the duty to act fairly require in the circumstances of the particular case. On that basis, the identification of a legitimate expectation in the circumstances of an individual case may operate as a signal that the rules of procedural fairness should apply.
For instance in Haoucher v Immigration and Ethnic Affairs (“Haoucher”)[16] the High Court held that a legitimate expectation arose from a criminal deportation policy. That policy stated that the Minister in exceptional circumstances would only overturn an AAT recommendation. The Court concluded that the deportee had a legitimate expectation that the policy would not be departed from before providing that deportee an opportunity to be heard. On that basis, a published statement of government policy created an interest in an individual affected by the policy that it will not be departed from before the individual is afforded an opportunity to be heard.
Furthermore in Minister for Immigration and Ethnic Affairs v Teoh[17] the High Court determined that an administrative decision-maker was required to acknowledge a ratified international convention to the extent that there would be no departure from that convention without giving an individual a hearing.
These administrative law cases provide guidance as to the application of the doctrine of procedural fairness to the decisions made by administrators. As the Commissioner is an administrator whose decision making impacts directly on individual taxpayers on a daily basis it is critical to determine whether and to what extent the doctrine applies.
There is no indication in the ITAA36 that the Commissioner is not bound by the rules of procedural fairness. Deane J in Haoucher[18] stated that the requirements of “procedural fairness must be observed by reference to the particular statutory framework”. On that basis, it is necessary to evaluate the nature of the powers vested in the Commissioner by the ITAA and the manner in which those powers affect the rights, interests or legitimate expectations of taxpayers.
For instance the statutory framework of ss 263 and 264 of the ITAA36 makes no reference expressly or impliedly to the possible application of the concept of procedural fairness. It is thus necessary to evaluate the manner in which those extensive powers, when exercised, may affect relevant individuals and whether the circumstances of the case at hand will require conformity with the concept of procedural fairness. This may particularly be the case where the power has been exercised by the Commissioner although broad based guidelines issued by the Commissioner suggest that the power should not have been exercised in that particular case at that particular time.
In David Jones Finance v FC of T[19] the taxpayer argued that the Commissioner’s decision to depart from a long-standing practice without any warning and with retrospective effect, was unfair. The taxpayer companies had acquired the beneficial ownership of shares in certain companies using nominee companies as the registered legal owners of the shares. Dividends were paid but the Commissioner assessed the taxpayers on the basis that the intercorporate dividend rebate was not allowable. The Commissioner relied on High Court authority[20] to disallow the rebate and entitlement. The difficulty was that, in the period leading up to the assessment being raised, the Commissioner had chosen not to follow the decision. The taxpayers argued that they had a legitimate expectation that the Commissioner would not, without notice, depart from the long-standing practice of allowing the rebate in these circumstances. In the context of administrative law if the taxpayers had a legitimate expectation then this signalled that the principles of procedural fairness applied. It seemed that the practice was at odds with the High Court decision in that the rebate provisions were taken to be satisfied by the Commissioner where corporate taxpayers were the beneficial owners of shares registered in the name of corporate nominees.
O’Loughlin J was of the view that it was arguable that the mandate of s 8 of the ITAA36, directing the Commissioner to attend to the general administration of the Act, required the Commissioner to exercise his statutory powers with procedural fairness. His Honour however considered that he was not required to make a definitive decision on this issue as it was concluded that the objection and review provisions controlled the rights of a taxpayer who seeks to challenge an assessment.[21]
His Honour’s approach to the application of procedural fairness to the Commissioner does not include a detailed analysis of the administrative law cases determined up to that point of time. Rather his Honour accepts from Haoucher that the principles would apply to the Commissioner as an administrator. It would seem that His Honour is indicating that where the Commissioner departs from a long standing practice without notice then the rules of procedural fairness apply. This is the case regardless of the fact that the Commissioner has altered the practice to bring it into line with case law. This conclusion has significant consequences for the manner in which the general administration of the ITAA36 is undertaken. Where a long-standing practice, approach or conduct is changed without warning by the Commissioner then an affected person will be entitled to assert that the principles of procedural fairness apply. This could be particularly relevant in the situation where the Commissioner is asserting that the change will apply in a retrospective manner and apply to years of income before and after the change.
In Consolidated Press Holdings Ltd v FC of T (“CPH”)[22] the Commissioner decided, without informing the taxpayers involved, to refer certain financial information to a non ATO employee (independent accounting expert). This approach was taken so as to provide information to assist the Commissioner to determine a request to extend the time to pay outstanding tax. The taxpayers, members of a group of companies and a person involved with those companies, had provided financial information to the ATO to support an application for an extension of time to pay the tax under s 206 of the ITAA36. The nature of the information and the financial position of the taxpayers necessitated, according to the ATO, the use of an outside expert to analyse the implications as to the granting or refusal of the application. His Honour held that this action did not breach the secrecy provisions of s 16 of the ITAA36. However, in relation to the principles of procedural fairness, his Honour was of the view that the taxpayers had a legitimate and reasonable expectation that the material would not be communicated to persons outside the ATO without the taxpayer first being consulted.
This conclusion was reached by evaluating the manner in which the dealings had taken place between the ATO and the taxpayers. His Honour stated that:
the course of dealings between the ATO and the Australian Government Solicitor (“AGS”) led the taxpayers to believe that the applications were being examined solely by the Commissioner and his own officers with the assistance of the AGS.[23]
The course of conduct taken by the ATO was not advised to the taxpayers, which were under the impression that the matter was being dealt with within the two government departments, namely the ATO and the AGS. The Court held that the taxpayers should have been given an opportunity to consider why such information should be released to an outside expert, the identity of the outside expert, to limit the material to be made available, or to withdraw the application altogether. His Honour concluded that, before there was any subsequent appointment of an outside expert, it would be necessary for appropriate discussions to be held between the ATO and the taxpayers.
There have been a number of subsequent cases dealing with whether the Commissioner should have afforded a taxpayer procedural fairness in relation to decisions made and affecting that taxpayer.
In Deloitte Touche Tohmatsu v DFC of T (“Deloitte”)[24] the Commissioner issued notices, pursuant to s 264 of the ITAA36, requesting certain information relating to New Zealand non-complying superannuation funds. In the course of issuing such notices the ATO considered that the information sought was classified as “source documents” and falling within the Commissioner’s Access and Information Gathering Guidelines (“Access Guidelines”). The affected applicant argued that the ATO had failed to have adequate regard to the guidelines and had misunderstood them. Goldberg J accepted, without needing to decide, that the Access Guidelines did create a legitimate expectation to taxpayers and their advisers that such guidelines would be taken into account. His Honour did not pursue the matter as the ATO accepted that the Access Guidelines were a relevant consideration to be taken into account when contemplating the issue of a s 264 notice. In the end the Court concluded that the Access Guidelines had been properly taken into account.
In May v DFC of T[25] the full Federal Court confirmed the view that the obligation of procedural fairness did not apply in the context of a s 264 notice. In particular the Court held that a right to be warned of the exercise of the s 264 power, so that the affected person could take appropriate steps, was not capable of falling within the obligation of procedural fairness. The Court was more concerned to determine whether the Commissioner had taken relevant considerations into account in coming to a decision to issue the s 264 notice. Furthermore, the Court did not wish to merge the notion of procedural fairness into the context of whether a relevant consideration had been taken into account.
In One.Tel Ltd v DFC of T (“One.Tel”)[26] the Commissioner issued notices under the Sales Tax legislation requesting the taxpayer to provide certain information. The notices were issued by reference to the ATO Access Guidelines relating to external accountants’ papers. The taxpayer argued that the guidelines created a legitimate expectation that the ATO would follow them and that the taxpayer would be given an opportunity to be heard as to whether a notice should be issued. Burchett J was of the view that the formality and detail of the guidelines favoured the conclusion that the guidelines did give rise to a legitimate expectation that the ATO would follow such procedures. However, his Honour pointed out that the taxpayer was in a position to know what the issues were in relation to the issued notice. This was itself sufficient to satisfy any requisite procedural fairness. There was no need for a full hearing to determine whether special circumstances existed for the notice to be issued. Dealings between the parties and the issues concerned were sufficient to satisfy any legitimate expectation arising from the implementation of the guidelines.
In Ruddy v FC of T[27] the director of a company entered into an agreement with the ATO as to the payment of outstanding group tax. The company failed to pay the amount as due and the ATO commenced recovery proceedings. The applicant sought an extension of time to seek review of the recovery decision, based on the fact that the ATO had stated that the applicant would not be personally liable. Kiefel J rejected any suggestion that the views of the ATO as to the legal liability of the applicant could have generated a legitimate expectation and consequently an opportunity to be heard as to whether the recovery proceedings should be undertaken.
The above case law is illustrative of a trend by taxpayers to raise the concept of procedural fairness and apply such principles to day-to-day tax decision making by the ATO. In relation to CPH, the ATO responded by releasing guidelines for obtaining assistance from external advisers. These guidelines, designed for use by ATO officers, provide an insight into the views of the ATO on the impact of administrative law to everyday decision making.
In Guidelines for Obtaining Assistance from External Advisers (“Guidelines”),[28] the ATO outlines its position in the situation where it contemplates seeking assistance from an external adviser on matters that do not involve the interpretation of taxation or related laws. The guidelines deal specifically with the notion of legitimate expectation leading to an application of procedural fairness in circumstances where external advisers are sought to assist ATO officers. An evaluation of the judgment by Lockhart J in CPH is made with the assertion[29] that the Court had held that:
the ATO is subject to the rules of natural justice and that highly sensitive and important information should not be revealed to external advisers without the ATO considering whether the taxpayer should be advised. Dealings between taxpayers and the ATO can give rise to a reasonable and legitimate expectation that the Commissioner will not furnish information to people outside the ATO.
In addition, at para 20, the Guidelines refer to the High Court decision in Minister for Immigration and Ethnic Affairs v Teoh[30] as being authority for the proposition that the doctrine of legitimate expectation extends to matters where the person affected has no knowledge of the basis for the existence of the expectation. Applying that to the situation of the use of external advisers, the Guidelines state[31] that:
procedural fairness is required even when the taxpayer is unaware that the ATO uses the services of external experts for advice and that the information provided may be passed on to that expert.
This seems consistent with the authorities dealing with procedural fairness in as much as the conduct of the administrator rather than the knowledge on the part of the individual that will determine whether the rules are attracted. The Guidelines then consider the circumstances where it is necessary to consult with the taxpayer for the use of an external adviser.
At para 22, the Guidelines state that it is not necessary, provided the ATO has not given any contrary assurances, to consult with taxpayers for proposals to appoint a forensic expert or proposals to engage a translator. In addition, the ATO considers that it is not necessary to inform the taxpayer where the identity of the taxpayer cannot be reasonably ascertained, or where information is not sensitive financial and commercial information or where advice to the taxpayer would limit the successful conduct of a matter such as prosecution action.
Paragraph 22 suggests that the ATO is aware that “contrary assurances” can lead to a situation where a legitimate expectation may arise. This is also reflected in para 34 of the Guidelines, where it is stated that “express or implied assurances by the ATO can create expectations that are legitimate or reasonable in the circumstances.”
Although no case law authority is quoted for this proposition, it would be consistent with authorities in administrative law.[32]
In CPH Lockhart J stated that “there may be occasions when appointments of this kind [engaging external experts] do not require prior consultation with or notice to taxpayers”.[33] His Honour does not elaborate on those “kinds of appointments” but considering the general tenor of the judgment in CPH it would appear that where non-sensitive financial, personal or commercial information of the taxpayer is to be evaluated or communicated to an external adviser then the ATO considers it is unnecessary to consult with the taxpayer involved. The ATO considers that in these circumstances no legitimate or reasonable expectation exists that the taxpayer will be consulted prior to the engagement of the external adviser. It should be noted that the Guidelines are only a considered view of the ATO and do not have the status of law.[34]
However, although the Guidelines do provide assistance to ATO officers as to the exercise of the general administration powers of s 8 of the ITAA36 in relation to external advisers, each case needs to be evaluated on its merits. For instance, the case involving information that is provided to an external expert where the identity of the taxpayer will not be provided and where the identity of the taxpayer cannot be reasonably ascertained by the external expert. How does one determine “reasonably ascertained”? Should the test be that the identity of the taxpayer is unable to be ascertained from the information provided to the outside expert? This was an essential aspect considered by the court in CPH in the context of the identity of the taxpayers and their tax file numbers being disclosed to the external consultant. Furthermore, the assertion by the ATO that where the information is not sensitive and important then an expert may be engaged without prior advice to the taxpayer[35] assumes that less sensitive material is not important to taxpayers.[36] It may be that, in certain circumstances, sensitive (but not highly sensitive) material is important to the taxpayer and there is an expectation that the ATO would not, without consultation, disclose it to external advisers.
The Guidelines represent a published considered statement of ATO policy. As such it would be expected that the ATO would follow the principles set out in the statement and only depart from them in a prospective manner.[37] The underlying rationale though is premised on the understanding by the ATO that the Guidelines are essentially ground rules that can be altered when further clarification is needed.
However, it should also be noted that the Guidelines create an interest in an individual affected by the policy that the policy would not be departed from without procedural fairness being provided.[38] Accordingly, the Guidelines themselves provide a basis for an affected taxpayer to claim procedural fairness and that the policy would not be departed from before allowing that individual an opportunity to be heard or a course of action that is appropriate in the circumstances of the case. Such a conclusion is consistent with the decision in One.Tel.
The decisions in Deloitte and One.Tel also deal specifically with published ATO Access Guidelines and the interplay with legitimate expectation and procedural fairness. The ATO acknowledged in those cases the need to consider and follow the guidelines as part of the decision making process. As to the status of the guidelines the Commissioner submitted in Deloitte that the Access Guidelines were not a source of rights. In the One.Tel case the Commissioner contended that exceptional circumstances, in accordance with the Guidelines, were established by reference to the anti-avoidance provisions and that an opportunity was given to the taxpayer to make a submission prior to the decision to issue the notices. It seems that the Commissioner is becoming more sensitive to the impact of the published ATO guidelines and expectations created by such guidelines.
Taxpayers and their advisers deal with the ATO on a daily basis. Dealings can range from a phone call, an email or a letter requesting information to a formal letter demanding payment of outstanding taxes or to attend and produce documentation relating to tax affairs for a particular year. The ATO does provide a wealth of information relating to the tax system on its web site and other written publications. This information is designed to assist taxpayers and their advisers in conforming to their obligations under the taxation laws. The ATO acknowledges that taxpayers are able to rely on that information to protect them from penalties under the law if that information turns out to be incorrect. For instance in Tax Pack the Commissioner states as part of the Commissioner’s guarantee that “if something is misleading and you make a mistake as a result, we will not charge you a penalty or general interest charge on any missing tax”.[39]
There is no similar public guidance in relation to the Access Guidelines or the Guidelines. Accordingly taxpayers and their advisers are required to have an understanding of the possible application of administrative law concepts that may impact on the general decision making processes of an administrator such as the Commissioner. If that knowledge is lacking then the taxpayer and their adviser may be at a disadvantage with regards to the manner in the Commissioner could deal with the affairs of the taxpayer.
Taxpayers and their advisers should be aware of the potential application of administrative law principles to the decision-making processes of the Commissioner. At the very least the matter should be raised with the relevant tax officer, whom may have an influence on the manner and process in which the relevant powers of the Commissioner may be utilised. Where the situation arises there may be a need to investigate possible judicial review processes under the ADJR Act as explained above.
The developments in administrative law have had a direct impact on tax administration. The Commissioner, as an administrator, is required to act in accordance with the rules of procedural fairness. This is the case unless the legislative framework either expressly or impliedly excludes the operation of this concept. In the situation where the Commissioner is acting under the general administration power of s 8 of the ITAA36, there is no indication that there has been any legislative exclusion of the principle of procedural fairness. There appears to be no provision in the income tax legislation that excludes the principle of procedural fairness with respect to the administrative function of the Commissioner. In fact it would appear that the legislature is not aware of the growing importance of this area of the law.
Accordingly there will be situations where the Commissioner, through the actions of his officers, necessitates the need to observe the requirements of procedural fairness. This may arise due to the fact that actions by those officers has generated a legitimate expectation in the affected taxpayer that certain responses will not be implemented until the taxpayer has been able to respond. That response will vary from case to case but may include the taxpayer being given an opportunity to be heard as to the appropriate course of action. This is not to suggest that the Commissioner does not have the power to carry out the relevant actions. Instead the approach is that where the procedural fairness principle has not been observed the taxpayer will be able to seek relief which in the end may mean a more considered approach to the exercise of the powers as they affect the relevant taxpayer. However, the taxpayer will need to be clear as to the appropriate avenue of review as not all actions by the Commissioner constitute decisions under an enactment for ADJR Act purposes.
The Guidelines accepts the position that the Commissioner is bound by the rules of procedural fairness but is more focussed on outlining the situations where it considers that it is not required to consult with taxpayers prior to engaging the external adviser. This is a direct response to the decision in CPH and really provides little guidance to taxpayers as to the manner in which administrative law operates in tax administration. In relation to the Access Guidelines judicial opinion has provided guidance that a legitimate expectation has been created by the publication and release to the public of such guidelines. As to the appropriate response this will vary from case to case.
This leaves taxpayers and their advisers with a mixed picture as to the avenues of review where the general principles of administrative law operate in the tax arena. Where the matter relates to an assessment, objection or appeal, most advisers are well informed as to the correct procedures to be followed under the TAA. However, where proposed tax actions by officers of the Commissioner relates to day to day matters which will eventually lead to decisions dealing with matters outside that framework, such as extension of time to pay outstanding tax, then the avenues of recourse are limited. On the other hand where a decision is made to use powers such as ss 263 and 264 of the ITAA36, which is reviewable under the ADJR Act, then it will be imperative that the Commissioner act in accordance with his published access guidelines. Failure to provide an opportunity to respond to the manner in which the guidelines operate may be a breach of procedural fairness. This will then provide a ground for review for the ADJR action.
[∗] Senior Lecturer, School of Law, University of Western Sydney.
[1] The interaction between administrative law and tax law has not been fully developed in the literature but see M Blissenden, “The Review Processes Under the Administrative Decisions (Judicial Review) Act 1977 − Jurisdictional Issues in the Income Tax Arena” [2000] JlATax 3; (2000) 3 Journal of Australian Taxation 22. In that article the author examined a jurisdictional issue, namely what is meant by a decision under an enactment, for purposes of review under the Administrative Decisions (Judicial Review) Act 1977 (Cth) (“ADJR Act”) in the context of tax decision making under tax legislation. This article focuses on the application of procedural fairness, which is one of the grounds for that review process under the ADJR Act.
[2] “A Market-based Approach to Tax Administration” Commissioner’s address to the Corporate Tax Association, 21 May 1996.
[3] “Fair Use of Our Access and Information Gathering Powers”, Taxpayer’s Charter Explanatory Booklet (1997) 2.
[4] ADJR Act. s 5.
[5] 91 ATC 4972.
[6] RH Woellner. TJ Vella, L Burns and S Barkoczy, Australian Taxation Law 1999 (8th ed. 1999) 205.
[7] 96 ATC 4372.
[8] Ibid 4376.
[9] Subsequent court decisions have followed this line of reasoning: see Robinswood v FC of T 98 ATC 4442; and Golden City Car and Truck Centre v DFC of T 99 ATC 4131.
[10] FC of T v Citibank (1989) 20 ATR 292; Allen, Allen and Hemsley v DCT (NSW) [1989] FCA 125; (1989) 20 ATR 321; and Industrial Equity Ltd v Crawley and DCT (1990) 21 ATR 934.
[11] Procedural fairness can be excluded expressly or impliedly by statute.
[13] [1977] HCA 39; (1977) 137 CLR 487.
[14] [1985] HCA 81; (1985) 159 CLR 550.
[15] Ibid 585.
[16] [1990] HCA 22; (1990) 169 CLR 648.
[17] [1995] HCA 20; (1993) 183 CLR 273.
[18] [1990] HCA 22; (1990) 169 CLR 648. 652.
[19] 90 ATC 4730.
[20] Patcorp Investments Ltd v FC of T [1976] HCA 67; (1976) 140 CLR 247.
[21] This issue has now been dealt with by the High Court in Richard Walter v DFC of T [1995] HCA 23; (1995) 183 CLR 168. In that case the High Court held that unless the assessment process was undermined by allegations of bad faith the only available option for a taxpayer was to seek review under the objection and appeal process.
[22] [1994] FCA 1367; (1995) 57 FCR 348.
[23] Ibid 358.
[24] 98 ATC 5192.
[25] 99 ATC 4587.
[26] 2000 ATC 4229.
[27] 98 ATC 4369.
[28] Released in August 1995.
[29] At para 18.
[30] [1995] HCA 20; (1995) 183 CLR 273. The High Court utilised the concept of legitimate expectation to hold that administrative decision-makers would act in conformity with a ratified convention. Where a decision maker proposes to make a decision inconsistent with that expectation, procedural fairness requires that those affected be given notice and be provided with an opportunity to present a case that such action not be taken.
[31] Guidelines, above n 28, para 20.
[32] Attorney-General of Hong Kong v Ng Yuen Shiu [1983] 2 AC 629; and Century Metals and Mining NL v Yeomans [1989] FCA 273; (1989) 100 ALR 383.
[33] CPH [1994] FCA 1367; (1995) 57 FCR 348, 358.
[34] The status of the Guidelines is discussed below.
[35] See also para 29 of the Guidelines.
[36] See para 30 of the Guidelines.
[37] In accordance with the Taxpayers’ Charter, effective from 1 July 1997.
[38] Haoucher [1990] HCA 22; (1990) 169 CLR 648.
[39] Tax Pack 2002 Commissioner’s guarantee (inside front cover).
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