Federal Court of Australia

Maguire v Commissioner of Taxation [2024] FCA 761

ORDERS

THE COURT NOTES THAT:

The Court notes the agreement between the parties:

1.    The Applicant does not put in issue his challenge to the validity of s 14ZZO of the Taxation Administration Act 1953 (Cth).

THE COURT ORDERS THAT:

In respect of the taxation appeal being proceeding number WAD 264 of 2022, being an appeal against the objection decisions dated 31 October 2022 (Objection Decisions) pursuant to which the Respondent upheld in part and otherwise disallowed the Applicant’s objections dated 30 October 2020, 2 November 2020 and 4 February 2021 (collectively, Objections) against:

(a)    The amended assessment of income tax for the income years ended 30 June 2016, 30 June 2017 and 30 June 2018 (Relevant Years) which was dated 1 September 2020;

(b)    The determinations purportedly made under paragraph 177EA(5)(b) of the Income Tax Assessment Act 1936 (Cth) (1936 Act) in respect of imputation benefits that arose in respect of franked distributions received by the Applicant in the Relevant Years (Determinations) and upon which the amended assessments rely;

(c)    The imposition of additional tax by way of penalty under Division 284 of Schedule 1 of the Taxation Administration Act 1953 (Cth) in respect of the Relevant Years; and

(d)    The decision not to remit penalties and reduce shortfall interest charges in respect of the Relevant Years;

1.    The appeal be allowed;

2.    The Respondent’s objection decision be set aside;

3.    In lieu thereof, it be ordered that the Objections of the Applicant concerned be allowed in full;

4.    The matter be remitted to the Respondent for the issuing, pursuant to s 14ZZQ of the Taxation Administration Act 1953 (Cth), of such amended assessments as are necessary to give effect to this order; and

5.    Each party to bear their own costs of the proceeding.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

(REVISED FROM TRANSCRIPT)

LOGAN J:

1    Mr Bradley Maguire’s appeals against objection decisions dated 31 October 2022, in respect of his objections dated 30 October 2020, 2 November 2020 and 4 February 2021, commenced their hearing today.

2    The hearing reached a point where particular evidence to be relied upon by Mr Maguire was tendered. A controversy emerged in relation to matters the subject of notices to produce and admit, which saw the case stood down in deference to a need for procedural fairness vis-à-vis Mr Maguire with respect to certain issues raised by the Commissioner concerning these notices and, also, in the expectation it may see some or all of that particular practice and procedure controversy resolve itself.

3    As it transpired, standing the case down and, with that, the opportunity for the parties further to conduct discussions has resulted in the parties jointly promoting the following orders to the Court:

THE COURT NOTES THAT:

The Court notes the agreement between the parties:

1.    The Applicant does not put in issue his challenge to the validity of s 14ZZO of the Taxation Administration Act 1953 (Cth).

THE COURT ORDERS THAT:

In respect of the taxation appeal being proceeding number WAD 264 of 2022, being an appeal against the objection decisions dated 31 October 2022 (Objection Decisions) pursuant to which the Respondent upheld in part and otherwise disallowed the Applicant’s objections dated 30 October 2020, 2 November 2020 and 4 February 2021 (collectively, Objections) against:

(a)    The amended assessment of income tax for the income years ended 30 June 2016, 30 June 2017 and 30 June 2018 (Relevant Years) which was dated 1 September 2020;

(b)    The determinations purportedly made under paragraph 177EA(5)(b) of the Income Tax Assessment Act 1936 (Cth) (1936 Act) in respect of imputation benefits that arose in respect of franked distributions received by the Applicant in the Relevant Years (Determinations) and upon which the amended assessments rely;

(c)    The imposition of additional tax by way of penalty under Division 284 of Schedule 1 of the Taxation Administration Act 1953 (Cth) in respect of the Relevant Years; and

(d)    The decision not to remit penalties and reduce shortfall interest charges in respect of the Relevant Years;

1.    The appeal be allowed;

2.    The Respondent’s objection decision be set aside;

3.    In lieu thereof, it be ordered that the Objections of the Applicant concerned be allowed in full;

4.    The matter be remitted to the Respondent for the issuing, pursuant to s 14ZZQ of the Taxation Administration Act 1953 (Cth), of such amended assessments as are necessary to give effect to this order; and

5.    Each party to bear their own costs of the proceeding.

4    The situation, therefore, is very similar to that of Ierna Beneficiary Pty Ltd v Commissioner of Taxation [2023] FCA 725 (Ierna Beneficiary). I have been informed by senior counsel for the Commissioner that the Commissioner accepts that the objection should be allowed in full on the grounds specified in the notice of objection. The view I have of that admission is the same recorded in Ierna Beneficiary, at [8]. The admission is admissible: see s 81 and s 87 of the Evidence Act 1995 (Cth).

5    That admission carries with it, necessarily in my view, the consequence that Mr Maguire has discharged his onus of proving the assessments to be excessive (by demonstrating by admission of fact and law that s 177EA of the Income Tax Assessment Act 1936 (Cth) had no application). In turn, it provides an appropriate foundation for the exercise of judicial power to make the orders as jointly promoted by the parties. It also provides a sufficiently precise foundation for the Commissioner, as a sequel to that exercise of judicial power, further to amend the assessments accordingly. For these reasons, I make the orders as promoted by the parties.

6    It behoves me to conclude the proceedings by voicing sentiments similar to those which I voiced as recently as last Friday in a non-taxation case, Brooks v Operator, National Redress Scheme for Institutional Child Sexual Abuse [2024] FCA 725. In that case, as I do in the present case, I respectfully commend the Commissioner in respect of the course taken in this proceeding.

7    I do that because the Commissioner, doubtless on advice, has come to a settled view in fact and in law that the assessments, even as confirmed by the objection decision, were excessive. Having reached that settled view, the Commissioner has promoted, along with Mr Maguire, the disposal of the taxation appeal in the way set out in the orders that I have made. That approach to litigation is entirely in keeping with the approach of a model litigant.

8    One might, of course, in Mr Maguire’s circumstance, have hoped for an earlier concession, but the point is, having come to a view that the assessments are excessive, the Commissioner has promptly acted on that. In that sense, all of the time and trouble to which Mr Maguire has gone in charting out a factual foundation has not been wasted. It has had a particular sequel.

Associate:    

Dated:    11 July 2024