FEDERAL COURT OF AUSTRALIA

Sunna v Commissioner of Taxation [2025] FCA 1499

ORDERS

THE COURT ORDERS THAT:

1.    The appeal in relation to the Amended 2019 Assessment be dismissed.

2.    The appeal in relation to the Amended 2020 Assessment be allowed.

3.    The parties are to be heard on the question of costs.

4.    By 4:00 pm AEST on 10 December 2025, the respondent is to file and serve a written outline of submissions (limited to five pages) on the question of costs.

5.    By 4:00 pm AEST on 17 December 2025, the applicant is to file and serve a written outline of submissions (limited to five pages) on the question of costs.

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

REASONS FOR JUDGMENT

DERRINGTON J:

Introduction

1    This appeal turns on the construction of s 170(10AA) of the Income Tax Assessment Act 1936 (Cth) (s 170(10AA) and the ITAA36, respectively) and whether it empowered the respondent (the Commissioner) to amend two notices of assessment more than two years after they were issued to the applicant, Mr Edward Sunna, for the 2019 and 2020 income years (the Original 2019 Assessment and the Original 2020 Assessment, respectively; the Original Assessments).

2    The substratum of the dispute that underlies such issue concerns the Capital Gains Tax (CGT) liability which is sought to be imposed upon Mr Sunna in relation to the sale of certain property. There is no dispute between the parties as to the quantum of the CGT liability payable on that transaction; nor is it controversial that, under the provisions of the relevant taxation legislation, that liability should have been (but was not) assessed in the 2019 income year. It is also agreed that Mr Sunna erroneously declared, in an income tax return that was lodged in the 2020 income year, a liability for CGT (ostensibly in relation to the sale of the property, albeit in a partial and reduced amount) which, in turn, became the basis of the Original 2020 Assessment.

3    The need to amend the Original Assessments came to light following the settling of the contract for the property’s sale in the 2023 income year, at which time the applicant sought to lodge an income tax return which declared the remainder of the CGT liability in that year’s return. He was incorrect in doing so as, by s 104-10(3) of the Income Tax Assessment Act 1997 (Cth) (s 104-10(3)), upon settlement of the relevant contract of sale, the CGT liability became payable from the date on which that contract had been entered into – here, that date was 28 June 2019.

4    By the issuance of notices of amended assessment in relation to both the 2019 and 2020 income years (the Amended 2019 Assessment and the Amended 2020 Assessment, respectively; the Amended Assessments), the Commissioner sought to regularise Mr Sunna’s taxation position by, first, including the entirety of the CGT liability in its assessment for the 2019 income year and, second, removing the erroneous assessment of the CGT liability in the 2020 income year.

5    The difficulty with such proposal is that, pursuant to s 170(1) of the ITAA36, the Commissioner is, generally, unable to amend assessments any time after two years from the date upon which they gave notice of the assessment to the relevant taxpayer. There are some exceptions to this general proposition however, and they include, for instance, where the amendment is made “for the purpose of giving effect to” the operation of s 104-10(3).

6    Again, it is agreed that, in the ordinary course of events, the Commissioner could have amended the Original 2019 Assessment to include the CGT liability pursuant to the operation of those sections. However, Mr Sunna says that the Commissioner has no similar power to amend the Original 2020 Assessment (for the reasons identified at infra [39(3)] – [39(4)]) and, therefore, cannot amend the Original 2019 Assessment because, to do so, would create an assessment that is inconsistent with the conclusively correct Original 2020 Assessment and would impose upon Mr Sunna a CGT liability in respect of the same transaction, albeit in two different years.

7    In this respect, both of the Amended Assessments are in issue. With respect to the Amended 2019 Assessment, it is alleged that the assessment is “excessive” to the extent that it imposes a CGT liability arising from the sale of the property in question. With respect to the Amended 2020 Assessment, it is alleged that it too is “excessive” because, although it purports to remove any CGT liability incurred in the 2020 income year, the Commissioner has no power to do so.

8    The general recitation above gives rise to three central questions. First, can the Commissioner amend the Original Assessments pursuant to s 170(10AA)? Second, does the existence of the Original 2020 Assessment prevent the Commissioner from amending the Original 2019 Assessment because to do so would give rise to an inconsistency (i.e., the Amended 2019 Assessment being based upon true, known taxable facts that are inconsistent with the incorrect taxable facts which undergird the Original 2020 Assessment)? Third, is the Commissioner able to assess the same taxpayer twice in respect of the same income in different income years?

9    These reasons follow, in a general way, the manner in which the submissions were presented, although, as will be seen, the second and third issues are fundamentally antecedent to the first.

The issues in dispute in context

The agreed substratum of fact

10    In April 2025, the applicant filed a Statement of Agreed Facts. That document offers a concise survey of the relevant dealings of the parties and can be summarised in the following terms.

11    On or about 6 March 2002, Mr Sunna acquired unit 17/58 Pitt Street, Sydney (the CGT Asset).

Entry into the Contract of Sale (June 2019)

12    On 28 June 2019, Mr Sunna entered into a contract for the sale of the CGT Asset (the Contract of Sale). The total sale price was $5,516,500. Shortly thereafter, in the 2020 income year, Mr Sunna received payment of a deposit of $2,596,000 under the terms of the Contract of Sale.

Issuance of the Original 2019 Assessment

13    On 8 May 2020, Mr Sunna lodged his income tax return for the year ended 30 June 2019 (the 2019 Year). That return did not report a net capital gain.

14    On 15 May 2020, the Commissioner issued the Original 2019 Assessment to Mr Sunna. That assessment reflected the amounts reported in Mr Sunna’s return for the 2019 Year.

Issuance of the Original 2020 Assessment

15    On 16 October 2020, Mr Sunna lodged his income tax return for the year ended 30 June 2020 (the 2020 Year). That return:

(1)    reported a total capital gain of $492,807 (referrable to the deposit paid to Mr Sunna);

(2)    applied capital losses from prior years of $138,129; and

(3)    reported a net capital gain (of $354,678).

16    On 23 October 2020, the Commissioner issued the Original 2020 Assessment to Mr Sunna. That assessment reflected the amounts reported in Mr Sunna’s return for the 2020 Year.

Settlement of the Contract of Sale and disposal of the CGT Asset (August 2022)

17    On 2 August 2022, the Contract of Sale settled. Mr Sunna transferred ownership of the CGT Asset to the purchaser. Mr Sunna received the balance of the sale price, less a foreign resident capital gains withholding amount (which was withheld and remitted to the Commissioner).

The Audit and issuance of the Amended Assessments

18    On 3 July 2023, Mr Sunna lodged his income tax return for the year ended 30 June 2023 (the 2023 Year). That return:

(1)    reported a net capital gain (of $893,652); and

(2)    claimed the foreign resident capital gain withholding credit.

19    Sometime thereafter, the Commissioner commenced a review of Mr Sunna’s income tax return for the 2023 Year and his treatment of the sale of the CGT Asset (the Audit).

20    In the course of the Audit, Mr Sunna:

(1)    acknowledged that his calculations of his total capital gains in both the 2020 Year and the 2023 Year were incorrect;

(2)    provided the Commissioner with corrected calculations for the:

(a)    total capital gain made on the sale of the CGT Asset ($3,531,621); and

(b)    net capital gain for the 2019 Year ($2,390,625); and

(3)    asserted that the Commissioner was out of time to amend the Original 2020 Assessment and, consequently, without power to amend the Original 2019 Assessment.

21    Upon finalising the Audit, the Commissioner issued to Mr Sunna:

(1)    on 20 December 2023:

(a)    the Amended 2019 Assessment, which included a net capital gain of $2,390,624 (including the capital gain on the sale of the CGT Asset); and

(b)    a notice of assessment for the 2023 Year, which included no net capital gain.

(2)    on 5 January 2024, the Amended 2020 Assessment, which included no net capital gain.

22    The variations between the Original Assessments and Amendment Assessments are as follows:

23    In the course of the hearing, it became clear the Commissioner was not desirous of imposing, upon Mr Sunna, a CGT liability for more than was due. Indeed, both parties suggested they were involved in an attempt to find a “solution” to the problem that has arisen as a consequence of the asserted limit upon the Commissioner’s power to amend the Original 2020 Assessment. Some suggestions were made by the Commissioner that it was possible to administratively ensure that only the correct amount of CGT liability was paid by, as one example, not requiring payment from Mr Sunna of the full amount identified in the Amended 2019 Assessment by, in effect, giving him a credit for that which he had already been paid. Whether that is within the scope of the Commissioner’s power was not in issue; there is no reason to pause to contemplate such suggestion further. Nevertheless, the “solution” which the parties seek must be one which accords with the correct identification of the Commissioner’s powers in relation to amendments and their application: see, eg, W & A McArthur Ltd v Federal Commissioner of Taxation (1930) 45 CLR 1, 10. In this context, it is appropriate to turn to the relevant legislative regime.

The statutory framework in question

24    In general terms, s 170 of the ITAA36 sets out the circumstances in which the Commissioner may amend an assessment: see, eg, Brownsville Nominees Pty Ltd v Commissioner of Taxation (Cth) (1988) 19 FCR 169, 173. As Colvin J noted in South Seas Holdings Pty Ltd (Trustee) v Commissioner of Taxation [2025] FCA 848, there are, in the ordinary course, time limits on how far back the Commissioner can go in doing so (at [641]). Here, it is not disputed that the Commissioner purported to amend the Original Assessments, by the issuance of the Amended Assessments, outside the standard period permitted (see s 170(1), Item 1). Nevertheless, those time limits are subject to the operation of, amongst other things, s 170(10AA), which permits the Commissioner to amend an income tax assessment “at any time … for the purpose of giving effect to any of the provisions of the Income Tax Assessment Act 1997 set out in this table …”.

25    One such provision is s 104-10(3). The aforementioned table attributes it the following “Brief description”: “The time of a CGT event is decided by there being a contract entered into”. In context, s 104-10(3) provides:

Subdivision 104-A –– Disposals

104-10    Disposal of a CGT asset: CGT event A1

(1)     CGT event A1 happens if you *dispose of a *CGT asset.

(2)     You dispose of a *CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law. However, a change of ownership does not occur if you stop being the legal owner of the asset but continue to be its beneficial owner.

Note:    A change in the trustee of a trust does not constitute a change in the entity that is the trustee of the trust (see subsection 960-100(2)). This means that CGT event A1 will not happen merely because of a change in the trustee.

(3)     The time of the event is:

(a)     when you enter into the contract for the *disposal; or

(b)     if there is no contract –– when the change of ownership occurs.

Example:    In June 1999 you enter into a contract to sell land. The contract is settled in October 1999. You make a capital gain of $50,000.

The gain is made in the 1998-99 income year (the year you entered into the contract) and not the 1999-2000 income year (the year that settlement takes place).

Note 1:    If the contract falls through before completion, this event does not happen because no change in ownership occurs.

Note 2:     If the asset was compulsorily acquired from you: see subsection (6).

(4)    You make a capital gain if the *capital proceeds from the disposal are more than the asset’s *cost base. You make a capital loss if those capital proceeds are less than the asset’s *reduced cost base.

…

(Emphasis in original).

26    It can be immediately seen that the framework of s 104-10(3) operates to retrospectively impose a CGT liability in circumstances where the settlement of a contract for the disposition of a CGT asset occurs in an income year that is subsequent to the year in which the contract was entered into: see, eg, BBlood Enterprises Pty Ltd v Commissioner of Taxation [2022] FCA 1112 [63].

The decision of the Full Court in Metlife

27    In the course of argument, both parties referred the Court to, and relied on, the decision of the Full Court in Metlife Insurance Ltd v Federal Commissioner of Taxation (2008) 170 FCR 584 (Metlife) and its conclusions as to the operation of s 170(10AA) and s 104-10(3). The salient facts of that case are not dissimilar from those at hand (at 585 – 586 [1] – [3]; see also Metlife Insurance Ltd v Commissioner of Taxation (2008) 70 ATR 125, 130 – 131 [13] – [17]) and provide useful guidance in framing the dispute in the context of the relevant legislative regime.

28    Briefly stated, Metlife Insurance Ltd (the taxpayer) carried on a life insurance business. On 19 July 2000, it entered into a contract for the sale of its business (i.e., in the 2001 income year). Settlement of that agreement occurred in January 2001 (i.e., in the 2002 income year). The capital proceeds from the disposal of the taxpayer’s business included, inter alia, $12,491,602 (for the disposal of “policy rights”) and $28,869,482 (for the disposal of “goodwill”). On 16 July 2001, the taxpayer lodged its income tax return for the 2001 income year. It did so on the basis that, on the disposal of the business, it had derived a taxable capital gain of $28,869,482. By the force of the ITAA36, the Commissioner made an assessment of the taxpayer’s taxable income, and the tax payable on that income, equal to the amount specified in the return, on that day. Some four years later, in July 2005, the Commissioner sought to amend the taxpayer’s assessment for the 2001 income year on the basis it owed an additional amount in respect of its CGT liability on the sale of its business. The taxpayer objected to that course.

29    The Full Court identified the “important aspects of these facts” to be as follows (at 591 [17]):

•    the original assessment included a calculation of the capital gains arising from the Agreement, and was made at a time after the actual disposal occurred;

•    the original assessment did not include any tax arising from the policy proceeds but did include tax arising from the disposal of the goodwill; and

•    the amended assessment raised the issue of assessable income (and stated that the capital gain upon the sale of the policy rights was not exempt under Div 118) more than four years after the original assessment.

30    In that context, the Full Court considered the parties’ dispute to “turn[] on the meaning of the phrase “for the purpose of giving effect to” [in s 170(10AA)]” (at 591 [18]). It then noted that:

(1)    it is the happening of a CGT event that “gives rise to a capital gain, and an amendment may be necessary or activated by the need to give effect to a deeming which occurs by operation of law” (at 591 [19]);

(2)    notwithstanding observation (1), an amendment that merely takes account of a CGT event or relates to the consequences of the event is not one which is necessarily an amendment of an assessment “for the purpose of giving effect to” a provision set out in the table in s 170(10AA) (at 591 [20]); and

(3)    the mischief to be corrected by the table to s 170(10AA) is “that where a subsequent event “retrospectively” alters the taxable income of an earlier year, for example by deeming a CGT event to have occurred … in a past year, the Commissioner may be prevented by the ordinary scheme of s 170 from amending the assessment to give effect to [that] retrospective operation …” (at 592 [23]). In this way, s 170(10AA) operates to afford the Commissioner additional, appropriate power to amend an assessment where any new fact(s) occurs after that assessment, and where certain provisions would be frustrated if the Commissioner were unable to take the new fact(s) into account.

31    On the basis of the foregoing, the Court held (at 592 – 593 [27]):

[27]    … The words “for the purpose of giving effect to” were, in our view, chosen deliberately to distinguish between a provision which would give indefinite power to amend an assessment where the entering into, and settling of, a contract for the disposal of a CGT asset occurred at different times, and a provision which was necessary in order simply to effect a “backdating” provision which would otherwise be entirely frustrated. If Parliament intended to create a provision which did the former, it could quite easily have done so. It would not, in our view, have used the term “for the purpose of giving effect” to, but could have drafted laws which gave indefinite power to amend assessments which “concerned” or “related to” or “included” the assessments set out in the table to s 170(10AA). “Giving effect to” a provision cannot mean imbuing that provision with more power that it otherwise would have.

32    It followed, the Full Court reasoned, that it was logical to construe s 170(10AA) as a deliberate attempt to prevent s 104-10(3) being left “entirely impotent” where the settlement of a contract to dispose of a CGT asset occurs after the period in which the Commissioner might otherwise amend its original assessment under s 170(1) (at 593 [28]). The Court concluded (at 593 [29]):

[29]    … s 170(10AA) was not designed to allow for oversight by the Commissioner, but was designed to address new facts after the original assessment, and which could occur at any time, enlivening the operation of s 104-10(3). In situations where the settlement occurs before the making of the assessment, s 170(10AA) will generally have no work to do; this is because s 104-10(3) will already have been taken into account by the Commissioner in his assessment. In other words, where an assessment is made at a time when all relevant events have occurred, no mischief arises and no amendment under s 170(10AA) is needed to “give effect to” the retrospective consequences of the subsequent event.

(Emphasis added).

33    It was, therefore, significant that, at the time the original assessment was made on 16 July 2001, the Commissioner had already taken into account the operation of the provision in s 104-10(3); that is, the Commissioner’s assessment for the 2001 income year had accounted for the capital gain that the taxpayer had made on the sale of its business which completed in the 2002 income year (albeit, upon the Commissioner’s submission, in an erroneous amount). In substance, any work which s 104-10(3) had to do in “backdating” the disposal of the relevant CGT asset to the time of entry into the contract had been performed by 16 July 2001. As such, to “seek to amend the assessment so as to include as income the policy proceeds would be doing more than giving effect to the operation of s 104-10(3)” (at 591 [21]). In the result, the Court was not satisfied that the proposed amendment was one that was, within the meaning of s 170(10AA), “for the purpose of giving effect to” s 104-10(3) (at 594 [33]).

34    Three observations can be made as to the applicability of such conclusions to the present case.

35    First, the facts which underlie Metlife are distinguishable, in at least one fundamental respect, from those presently before the Court. Here, the Original Assessments were made before the disposal of the CGT Asset whereas, in Metlife, the relevant, original assessment was made after and, indeed, accounted (albeit, erroneously) for such disposal (i.e., it had been “made at a time when all relevant events [had] occurred”: Metlife at 593 [29]).

36    Second, the Full Court’s reasons do not explicitly limit the power of the Commissioner under Item 30 of the table in s 170(10AA) to the amendment of the original assessment that was made for the specific year of income in which entry into the relevant contract (for the disposal of the CGT asset in question) occurred. That is, there is nothing in the reasoning developed in Metlife which identifies that the occurrence of new fact “X” – here, the disposal of the CGT Asset in 2022 (and attendant effect of s 104-10(3)) – can only be used as a basis upon which to amend an original assessment for one income year; indeed, no such issue arose at all.

37    Third, applying their Honours’ reasoning to the present case, it follows that the Commissioner was, prima facie, authorised, by Item 30 of the table in s 170(10AA), to amend the Original 2019 Assessment in order to give effect to the “retrospective” force of s 104-10(3) upon the settling of the Contract of Sale. That effect, being to deem the disposal of the CGT Asset to have occurred at the date on which the Contract of Sale was entered into (28 June 2019), would be thwarted if the Commissioner were prevented from amending the Original 2019 Assessment to assess Mr Sunna’s CGT liability in that year. So much appeared to be accepted inter partes.

A relevant framework

38    From the foregoing, the following can be accepted:

(1)    Mr Sunna made a net capital gain on the sale of the CGT Asset.

(2)    upon transfer of the ownership in the CGT Asset in 2022, that capital gain was deemed to have been made in the 2019 Year (per s 104-10(3)).

(3)    accordingly:

(a)    the Original 2019 Assessment was erroneous because it relied upon information that was, as of 2 August 2022, incorrect (namely, that Mr Sunna did not make a net capital gain on the sale of the CGT Asset in the 2019 Year); and

(b)    the Original 2020 Assessment was erroneous because it relied upon information that was inherently incorrect (namely, that Mr Sunna made a net capital gain on the sale of the CGT Asset in the 2020 Year).

(4)    the Commissioner now wishes to re-assess the taxation liability of Mr Sunna vis-à-vis the CGT Asset in order to ameliorate such errors. It proposes to do so by amending the Original Assessments in the manner identified at supra [21] – [22].

39    Mr Sunna claims that the Commissioner’s proposal is inappropriate for various reasons. Whilst those reasons are traversed below, they can be understood to rely upon the following formula:

(1)    s 104-10(3) deems CGT event A1 to have occurred in the 2019 Year.

(2)    the Original 2020 Assessment:

(a)    was issued on 23 October 2020;

(b)    concerned the 2020 Year; and

(c)    erroneously involved, in part, an assessment of the capital gain made on the sale of the CGT Asset (and thus, over-claimed a tax debt due to the Commonwealth).

(3)    the Amended 2020 Assessment is beyond the ambit of s 170(10AA) because it:

(a)    does not relate to the income year in which the relevant CGT event A1 is deemed to have occurred; and, in turn,

(b)    serves only to correct an error which arose independently of the retrospective operation of s 104-10(3) – properly understood, it cannot be said to have been made “for the purpose of giving effect” to that section.

(4)    in the premises of considerations (2)(a) and (3), the time in which the Commissioner might amend the Original 2020 Assessment has lapsed.

(5)    therefore, the Original 2020 Assessment remains in force and conclusively correct. As that assessment assesses and taxes CGT event A1, the Commissioner has no power to amend the Original 2019 Assessment because any such amendment would:

(a)    rely upon taxable facts that are inconsistent with those that underlie the Original 2020 Assessment; and

(b)    assess and tax the same CGT event as the Original 2020 Assessment.

(6)    therefore, because of the continuing conclusive force of the Original 2020 Assessment, the Commissioner cannot issue the Amended 2019 Assessment.

40    The above recitation is instructive insofar as it reveals that Mr Sunna’s case relies, at its core, upon the correctness of the submissions in sub-paragraphs (3) and (5) (recall, also, supra [8]). Against those assertions, the Commissioner submits (in its written outline of submissions) that:

(1)    “by virtue of the fact that item 30 of s 170(10AA) authorised the issue of the 2019 Amended Assessment to give effect to the operation of s 104-10(3), it must follow that the issue of the 2020 Amended Assessment was also “for the purposes of giving effect to” that provision in so far as it was necessary to relieve the Applicant from the potential consequences of their erroneous income tax return lodged in the 2020 year”; and

(2)    even “if there was no power in the Commissioner to amend the Original 2020 Assessment, the subsistence of the Original 2020 Assessment did not affect the Respondent’s power to issue the 2019 Amended Assessment”.

41    The following analysis will address these assertions in turn.

Issue (1): does s 170(10AA) authorise the issuance of the Amended 2020 Assessment?

42    A central question for resolution is whether the Commissioner’s amendment of the Original 2020 Assessment can be said to be “for the purpose of giving effect” to the deeming effect of s 104-10(3) (supra [39](3)). In this respect, it is important to bear in mind several nuances to the present circumstances. For example, and unlike Metlife, the assessments now sought to be amended by the Commissioner were issued prior to the taxpayer’s disposal of the CGT Asset.

43    That is, the “backdating” of the disposal of the CGT Asset to the date of Mr Sunna’s entry into the Contract of Sale had not occurred as at the time of the making of the Original Assessments (cf Metlife at 591 [21]) and, in that respect, the disposal changed the facts on which the CGT Liability of Mr Sunna was to be assessed. In turn, those altered facts were inconsistent with the factual assumptions that underlay the Original 2020 Assessment.

44    It must also be kept steadily in mind that the facts extant prior to the settlement of Contract of Sale were not merely that no CGT liability had accrued in the 2019 Year. An additional fact was that Mr Sunna had lodged an incorrect income tax return in respect of the 2020 Year which asserted that he had become liable for a CGT liability (in respect of the deposit he had received under the Contract of Sale); that error, in turn, became part of the Original 2020 Assessment.

45    What then is the scope of the power in s 170(10AA) in the circumstances of the present case?

46    As the parties agreed, the Commissioner’s amendment of the Original 2019 Assessment was, prima facie, permissible; although more than two years had lapsed following the issuance of the original assessment in May 2020, the amendment would be “for the purpose of giving effect” to s 104-10(3). Indeed, such an amendment would plainly “give effect to” that section.

47    That being so, Mr Sunna submits, in the first instance, that s 170(10AA) does not permit the amendment of any other assessment. To quote from the submissions developed orally by Mr Robertson KC at the hearing on 23 September 2025:

MR ROBERTSON: Now, the critical point in MetLife is that the section [s 170(10AA)] is directed only at the assessment in which the contract – in the year – for the year in which the contract occurred. … And the Full Court held that the taxpayer succeeded, but what was abundantly clear is that it doesn’t authorise an amendment of another year’s assessment, and that’s what the commissioner is trying to do here. Section 170(10AA) authorises an amendment to the 2019 year’s assessment because that was the year of the contract. It doesn’t authorise the commissioner to amend the 2020 assessment. It has got nothing to do with section 104-30 – 104-10(3). It’s irrelevant. The 2020 assessment was simply an error that was made in the assessment of that year, and that could have been corrected immediately by the commissioner.

(Emphases added).

48    The two integers of that submission were said to render the result that any amendment of the Original 2020 Assessment would not be “for the purpose of giving effect to” s 104-10(3). This conclusion, it was said, had the consequence of enjoining any amendment to the Original 2019 Assessment because, inter alia, the Commissioner cannot undertake an amendment on the basis of taxable facts which are inconsistent with those that underlie the Original 2020 Assessment.

49    Pausing there, if it is true that the Commissioner (a) was authorised to make the Amended 2019 Assessment under s 170(10AA) (see supra [46]); and (b) cannot make assessments in different income years based upon inconsistent taxable facts (cf infra [96]), it is, at least on that premise, difficult to understand how the making of an amended assessment for the 2020 Year would not be “for the purpose of giving effect to” s 104-10(3). If the only way of “giving effect to” that section – being the retrospective imposition of a liability for the disposal of a CGT asset in the year in which the relevant contract of sale was entered into – is to amend the Original 2019 Assessment (see supra [46]), then any attendant amendment of the Original 2020 Assessment that serves to preserve consistency between it and the Amended 2019 Assessment would, on first blush, seem to be “for the purpose of” giving effect to s 104-10(3).

The first limb of the submission: scope of s 170(10AA) vis-à-vis different income years

50    Returning to the first element of Mr Sunna’s submission – namely, that the ITAA36 does not authorise any amendment to the assessment made vis-à-vis the 2020 Year because that was not the year of the Contract of Sale – it is appropriate to start with, and pay close attention to, the language of the chapeau to s 170(10AA). Adopted in 1997 (see the Income Tax (Consequential Amendments) Act 1997 (Cth), Schedule 1, s 247), it provides, in part, that an amendment may be made “for the purpose of giving effect to [e.g., s 104-10(3)]”. Quite plainly, that language affords the Commissioner a broader power of amendment than merely the power to amend an assessment where it has the direct result of effectuating the backdating of the relevant CGT liability to the year in which the relevant contract of sale was entered into; given its plain and ordinary meaning, s 170(10AA) empowers the Commissioner to amend an assessment in order to realise that result and preserve the effect of a “backdating” provision which would otherwise be frustrated: Metlife 592 – 593 [27] – [28]. Thus, while it may well be that amendment of the Original 2020 Assessment could not be regarded as “giving effect to” s 104-10(3) (though that is not certainly so), s 170(10AA) is not so limited and its terms must all be given work to do.

51    The distinction identified above is important and should not be conflated nor overlooked: the power to make an amendment of an assessment which gives “effect to” the retrospectivity of s 104-10(3) – that is, an amendment that assesses the liability of a taxpayer for CGT event A1 in the income year defined by s 104-10(3) – is, on any view, narrower than the power to amend an assessment “for the purpose of giving effect to” the retrospectivity of s 104-10(3).

52    Moreover, as s 170(10AA) is a “remedial” provision, being one which permits the amendment of prior assessments at any time in order to accommodate the deeming effect of s 104-10(3), it is appropriate not to give it any limited or constrained operation: see, eg, Herzfeld P and Prince T, Interpretation (3rd ed, 2024, Thomson Reuters) 315 – 316 [10.300]; IW v City of Perth (1997) 191 CLR 1, 12, 27, 39. Objectively understood, the combined operation of such provisions conveys an intention, on the behalf of the legislature, to empower the Commissioner to amend “an assessment” in circumstances where the settling of the contract for the disposal of the relevant CGT Asset alters the taxable circumstances pertaining to the prior assessment. Here, settlement of the Contract of Sale had the consequence that the CGT liability pertaining to the CGT Asset was retrospectively imposed in the 2019 Year – and that year alone – and the taxation liability of the taxpayer for that year was increased accordingly. If, as Mr Sunna says, the erroneous original assessment for the 2020 Year impedes the imposition of liability in the 2019 Year (that is, it impedes the “effect of” s 104-10(3)), an amendment to it would fall within a reasonable meaning of the words “for the purpose of giving effect to” s 104-10(3).

53    On the assumptions undergirding Mr Sunna’s arguments, it may be that s 170(10AA) might be denied much of its effect. The table to which the section is referable contains numerous sections, divisions and subdivisions in respect of which the broadened power of amendment applies, and it is likely that there will be other instances where the retrospective operation of those sections affects both the immediate income year in which they operate, as well as the following year(s). Indeed, it would be surprising if the making of an amendment in relation to one income year did not have consequential ramifications for assessments made in relation to the following years which have built upon then-accepted underlying facts. If, as has been submitted, those subsequent assessments could not be amended due to the effluxion of time as might often be the case and, as is submitted on behalf of Mr Sunna, that has the consequence that assessment in the more immediately affected year cannot be amended, the operative scope of s 170(10AA) might be substantially reduced.

54    All of the above tends to lead to the conclusion that s 170(10AA) empowers the Commissioner to amend any assessment necessary to allow him to carry into effect the provisions enumerated within it. On Mr Sunna’s case, that would extend to permit the making of the Amended 2020 Assessment because “effect” cannot be given to the retrospectivity of s 104-10(3) without it.

55    There is support for this conclusion in some of the comments in Metlife, although care must be taken in applying the observations of the Full Court to circumstances which it did not then have specifically in mind. Nevertheless, as per the decision of that Court:

(1)    the amendment to the Original 2020 Assessment is, on the taxpayer’s case, “necessary” to give effect to the “backdating” consequences of s 104-10(3): see 591 [19].

(2)    the mischief at which the dual operation of s 170(10AA) and s 104-10(3) is directed, is to overcome the possible inability of the Commissioner to amend an assessment due to the passage of time when the latter section operates to retrospectively impose a CGT liability: at 592 [23].

(3)    the amendment of the Original 2020 Assessment falls within the following passage identifying the effect of s 170(10AA) (at 592 [25]):

… power is given to the Commissioner to amend at any time an original assessment where a new fact occurs after that assessment and where certain provisions of the tax legislation would be frustrated if the Commissioner were not able to take the new facts into account by so amending the original assessment.

That is because, first, “new facts” have occurred following the issuance of the Original Assessments: settlement of the Contract of Sale dispelled the impression conveyed by the Original Assessments (that Mr Sunna had made a capital gain on the CGT Asset in the 2020 Year). And second, on Mr Sunna’s case, s 104-10(3) would be frustrated if the Commissioner was not permitted to amend the Original 2020 Assessment.

(4)    similarly, at 593 [30], the Court observed that:

… we consider that the purpose of s 170(10AA) was very much to correct any assessment which does not give effect to, in this case, the date deeming provision in s 104-10(3).

(Emphasis added).

Again, in this case, the Original 2020 Assessment recorded the accruing of the CGT liability in the 2020 year whereas, by the operation of s 104-10(3) (and on the settling of the Contract of Sale), that liability accrued, in fact, in the 2019 Year. The amendment of the Original 2020 Assessment will give effect to the deeming effect of s 104-10(3).

(5)    at 594 [31], the Court also observed that, “what matters is whether the subject matter was, or could have been, dealt with in the original assessment.” In this case, where, at the time of the making of the Original 2020 Assessment, there had been no settlement of the Contract of Sale which retrospectively imposed the CGT liability to the 2019 Year, it is self-evident that that fact could not have been dealt with by the original assessment (see, in this respect, the effect of Note 1 of s 104-10(3)).

56    It must be noted that the Full Court also observed (at 594 [32]) that, “s 170(10AA) operates only to the extent necessary to backdate the transaction”. On one view, that might suggest a narrow understanding of the section; however, it must be borne in mind that the context of the Court’s observation was the submission that whenever backdating occurred by reason of s 104-10(3), any assessment in relation to the CGT liability could be amended regardless of whether the original assessment occurred before or after that backdating (see 592 – 593 [27]). It was in the rejection of that contention that the Court made these observations. Where, as in that case, the backdating effect had occurred and, thus, the Commissioner made an erroneous assessment, s 170(10AA) did not operate to provide unlimited time in which the Commissioner might amend any assessment in relation to the CGT liability. That is plainly correct, not least because the proposed amendments had nothing to do with carrying the section’s operation into effect because that consequence had already occurred.

The second limb of the submission: mere correction of an error

57    Turning to the second element of Mr Sunna’s submission – namely, that the Amended 2020 Assessment purported to resolve a mere “error” that arose independently of the force of s 104-10(3) and, therefore (and as per Metlife), could not be said to have been made “for the purpose of giving effect to” that section. It should not be doubted that some part of the Commissioner’s “purpose” in amending the Original 2020 Assessment was to correct an error. If that were the only purpose, and the status of the Original 2020 Assessment otherwise had no impact on the Commissioner’s ability to amend the Original 2019 Assessment, it might genuinely be asserted that s 170(10AA) had no application. The amendment would simply not be “for the purpose of giving effect to” the operation of s 104-10(3). Here, however, where the amendment is, on Mr Sunna’s case, necessary in order for effect to be given to the imposition of the CGT liability in the 2019 Year (supra [48]) – being a “new fact” that arose subsequent to the Commissioner’s making of the Original Assessments – the amendment falls within the scope of s 170(10AA).

58    The same logic would apply if, altering the facts of this case slightly, the taxpayer had lodged an income tax return for the 2019 Year which erroneously identified a CGT liability in relation to the payment of the deposit, and the Commissioner issued an assessment on the basis of that information. There would not appear to be any real difficulty in the making of an amendment to that assessment, in reliance upon s 170(10AA), to both correct the error and impose the full CGT liability which had arisen, albeit retrospectively. It follows that the fact that the power to amend for the purposes of giving effect to the operation of s 104-10(3) is not inhibited if it also serves to correct an erroneous assessment at the same time – correction of that error is necessary in order to give effect to the imposition of the actual CGT liability.

Conclusions upon the operation of s 170(10AA)

59    The central conclusions to be derived from the foregoing discussion are twofold. First, the Commissioner was, prima facie, able to amend the Original 2019 Assessment. Second, if existence of the Original 2020 Assessment operates to preclude the amendment of the Original 2019 Assessment as proposed (and, thereby, frustrate the effect of s 104-10(3)), amendment of the Original 2020 Assessment would fall within the scope of s 170(10AA) because it would be “for the purpose of giving effect to” the retrospective operation of s 104-10(3).

Issue (2): can existence of the Original 2020 Assessment preclude the Commissioner from amending the Original 2019 Assessment on the basis of the known “true facts”?

60    The above discussion reveals that any conclusion as to the applicability of s 170(10AA) in the present circumstances requires one to grapple with the following question: is the Commissioner enjoined from amending the Original 2019 Assessment by reference to known true facts (supra [20]) because of the existence of the Original 2020 Assessment and its foundation in facts that are erroneous and inconsistent with those now known to be true? Mr Sunna says the answer to that question is “yes”, for two reasons; au contraire, the Commissioner says the answer is “no”.

61    Although, on behalf of Mr Sunna, it was submitted on a number of occasions that no estoppel was being raised against the Commissioner: see generally Federal Commissioner of Taxation v Wade (1951) 84 CLR 105, 117 (Wade): the foundation of his arguments in this respect bears no other characterisation. At the heart of his submission is the assertion that the Commissioner is prevented from amending the Original 2019 Assessment to comport with taxable facts that are known to be true because of his conduct in having made the Original 2020 Assessment which has an inconsistent factual basis. In other words, Mr Sunna seeks to set up the Commissioner’s conduct in making the Original 2020 Assessment as preventing or estopping him from amending the Original 2019 Assessment. That is the first limb of his submission.

62    The second limb of Mr Sunna’s submission is that if the Commissioner was entitled to amend the Original 2019 Assessment, it would result in the imposition upon him of two CGT liabilities in relation to same transaction and that would infringe the free-standing principle that no person should be assessed for the payment of tax twice in relation to the same income.

The first limb of the submission: the limiting effect of the Original 2020 Assessment

63    In relation to Mr Sunna’s first point, it is to be immediately noted that the inconsistency relied upon concerns assessments in two different income years. That is central to his case. In short, it is said the issuance of an assessment in one income year creates a circumstance that prevents the Commissioner from performing his statutory duty in relation to another income year on the true facts as he finds them to be. Now, it is not controversial that this argument tends to elevate procedure over substance and, in doing so, conflicts with the well-established principle that the Commissioner’s obligation is to make an accurate assessment of a taxpayer’s liability, down to the last penny: see, eg, Lighthouse Philatelics Pty Ltd v Commissioner of Taxation (1991) 32 FCR 148, 155. As was observed by Gleeson CJ, Gummow and Hayne JJ in Commissioner of Taxation v Ryan (2000) 201 CLR 109 (at 124 [22]), when considering a submission that a taxpayer was required to pay an amount of tax well after the year in which it became due:

[22]    … This may well cause hardship, or at least inconvenience, to a taxpayer who has ordered his or her affairs on the basis of the Commissioner’s earlier statement that nothing was owed. But hardship or inconvenience is seldom, if ever, sufficient reason for not complying with a statutory obligation. Further, insofar as the argument seeks to suggest that the Commissioner should be precluded from assessing what is due, it is a proposition that encounters the serious difficulties that lie in the way of applying doctrines of estoppel in circumstances of this kind.

64    Their Honours’ comments, including the reference to estoppels, have a stark application here, for it is undoubted that the true facts require the imposition on Mr Sunna of the CGT liability arising from the sale of the CGT Asset in the 2019 Year. Despite that, Mr Sunna says that the Commissioner must not make an assessment in accordance with those true facts.

The deemed “conclusiveness” of the Original 2020 Assessment

65    Mr Sunna says that his submission is underpinned by various aspects of the Australian statutory taxation framework including, in particular, s 350-10 of Sch 1 of the Taxation Administration Act 1953 (Cth) (s 350-10 and the TAA53, respectively) which provides, inter alia, that the production of a notice of assessment under a taxation law “is conclusive evidence” that the assessment was properly made and “except in proceedings under Part IVC of this Act on a review or appeal relating to the assessment—the amounts and particulars of the assessment are correct”. In short, he says that this “conclusiveness” extends to, and is operative in relation to, proceedings relating to another assessment in respect of another income year. The basis of that submission was said to be found in the scope of the words of s 350-10. Tacitly, the submission appears to be that the conclusiveness of an assessment in relation to an income year extends to control the basis on which the Commissioner can make an assessment in another income year.

66    Therefore, whilst it should be acknowledged that it is the obligation of the Court to give effect to the exclusivity of the assessment as provided for by the legislature: Federal Commissioner of Taxation v Hipsley’s Ltd (1926) 38 CLR 219, 230: the question here is as to the scope of the exclusivity granted by s 350-10, and that is a matter of statutory construction.

67    The objective purpose of s 350-10 and other like provisions that render the production of a notice of assessment to be “conclusive evidence” of, generally speaking, a taxpayer’s liabilities in a given income year, is to preclude controversy in proceedings for the recovery of assessed taxation liabilities: see Federal Commissioner of Taxation v Mantle Traders Pty Ltd (1980) 33 ALR 276, 289 – 290; Federal Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146, 166 [64] (Futuris); McAndrew v Federal Commissioner of Taxation (1956) 98 CLR 263, 281 – 282 (McAndrew); F J Bloemen Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 360, 375 – 376; see also Richardson v Federal Commissioner of Taxation (1932) 48 CLR 192, 206 – 207 (Richardson); Tupicoff v Federal Commissioner of Taxation (1984) 4 FCR 505, 523 (Tupicoff). The notice of assessment creates a tax debt and, as between the Commissioner and taxpayer, puts the indebtedness of the latter in relation to the relevant income year beyond question (other than in proceedings under Part IVC of the TAA53 (“Taxation – Objections, Reviews and Appeals”) and, even when those proceedings are on foot, the effect of the production of the notice of assessment permits enforcement of the relevant debt in courts of competent jurisdiction): see generally Deputy Commissioner of Taxation v Broadbeach Properties Pty Ltd (2008) 237 CLR 473. In so doing, s 350-10 provides a robust mechanism by which the Commissioner may obtain judgment against the taxpayer and proceed to enforcement, unimpeded by assertions that the amount owed is other than that assessed or that the relevant notice is procedurally irregular.

68    This has long been held to be the object and purpose of s 350-10. For example, upon review of the operation of s 177(1) of the ITAA36 – being the progenitor to s 350-10 (and of “identical effect”: Anglo American Investments Pty Ltd v Deputy Commissioner of Taxation (2017) 347 ALR 134, 144 [40]) – the High Court (Dixon CJ, McTiernan and Webb JJ) has observed:

… The ground over which s 177(1) gives conclusiveness to the assessment is described as the due-making of the assessment and the correctness of the amount and all the particulars of the assessment. But that appears to us to comprise the whole ground. It is the manifest policy, one may now almost say the historical policy, of the legislation on the one hand to give to the taxpayer full opportunity on objecting to his assessment of contesting his liability in every respect before a court or before a board of review but on the other hand to require that in proceedings for the recovery of the tax the taxpayer will be concluded by the assessment and will not be entitled to go behind it for any purpose. …

(McAndrew 270).

69    Similar comment was made by Taylor J at page 281 of McAndrew:

There seems no doubt that s. 177 (1) was intended to make it impossible for a taxpayer, in proceedings other than appeal against it, to challenge an assessment on any ground …

70    This dominant purpose – being that the “conclusive” character afforded to an assessment by s 350-10 serves as an aid in the enforcement of a taxpayer’s obligations – was also recognised by the majority (Gummow, Hayne, Heydon and Crennan JJ) in Futuris (at 166 [64] – [65]):

[64]    The evident policy reflected in the terms of s 177(1) is the facilitation of proceedings for the recovery of tax which are instituted by the Commissioner under s 209 of the Act in a court of competent jurisdiction. Corresponding provision is made elsewhere in the Act for the recovery of other amounts. The action for recovery is facilitated by the ‘conclusive evidence’ provision in s 177(1). …

[65]    In recovery proceedings s 177(1) operates to change what otherwise would be the operation of the relevant laws of evidence. …

(Citations omitted).

71    So much is consistent with the observations of Mason CJ in Deputy Commissioner of Taxation v Richard Walter Pty Limited (1995) 183 CLR 168 (Richard Walter) (at 184) to the effect that the former s 177(1):

… gives conclusive evidentiary effect to a notice of assessment when produced in much the same way that parties by contract give conclusive effect to a certificate stating the amount of one party’s indebtedness to another.

(Citations omitted).

72    Relevantly, his Honour also noted (at 182) that the legal consequences of s 177(1) (as it then stood), appeared from s 204(1), which deemed any income tax assessed “to be due and payable “on the date” specified in the notice”. Both provisions were identified as constituent parts of the scheme pursuant to which assessed tax was able to be collected by the Commissioner.

73    The existence of this underlying purpose is supported by the location of s 350-10 in the TAA53. It is to be found within Schedule 1, Chapter 4, Part 4-90, Division 350, Subdivision 350-A of that Act. Those categories bear the headings “Collection and recovery of income tax and other liabilities”, “Generic assessment, collection and recovery rules”, “Evidence”, “Evidence” and “Evidence”, respectively (emphases added). Such headings assist in the section’s construction: see s 13(2)(d) of the Acts Interpretation Act 1901 (Cth).

74    Support may also be gleaned from the various extrinsic materials which refer to s 350-10. For example, in the context of discussing the applicability of certain “general rules” to the Mineral Resource Rent Tax (MRRT) under a proposed indirect tax assessment regime, Parliament made the following observations vis-à-vis provisions “consistent with” s 350-10:

Evidence

    The Commissioner issues an extraordinarily large number of documents to give force to decisions. As such, special evidentiary rules exist to protect the validity of those documents and decisions. These rules are consistent with section 177 of the ITAA 1936.

    The purpose of these rules is similar to that regarding the validity of an assessment; that is, these rules ensure that the focus of a dispute about MRRT payable focuses on the key question: has the relevant entity paid the appropriate amount of MRRT? These rules also ensure that where an entity has a tax debt, the Commissioner can have that debt enforced in a Court by producing the relevant assessment.

(Explanatory Memorandum to the Minerals Resource Rent Tax (Consequential Amendments and Transitional Provisions) Act 2012 (Cth), 350 – 351 [18.89] – [18.90]).

75    In a similar vein, s 350-1 (being the “Guide to Division 350”) relevantly provides:

350‑1 What this Division is about

The rules in this Division deal with the evidentiary effect of official tax documents for the purposes of taxation laws.

This Division also deals with procedural and evidentiary matters relating to proceedings to recover an amount of a tax‑related liability.

(Emphasis added).

76    All of these indicia render it difficult to regard s 350-10 as having effect beyond establishing that, in the year to which the relevant notice of assessment relates, the amount of the taxpayer’s taxable income and amount of tax payable are those stated in the notice. The objective purpose of s 350-10 is not advanced, in any way, by giving a notice of assessment the effect of confining or otherwise limiting the Commissioner, in performance of his duties, to undertake assessments in relation to the taxpayer in other income years in accordance with the taxable facts that underlie the relevant notice.

77    Moreover, given the annualised manner in which tax is assessed and paid, there is no reason for extending the operation of a notice of assessment in relation to one year, so as to impact the assessment of a taxpayer’s liability in others. If, in one year, an incorrect assessment is made based upon erroneous taxable facts, there is no apparent reason why either the Commissioner or the taxpayer should be bound to those misunderstood facts in relation to the assessment of the taxpayer’s income tax for subsequent years, when the true facts become known. On the contrary, the Commissioner’s obligation is to make a due assessment of the taxpayer’s liability in accordance with the facts as they are known; not on facts which are known to be wrong.

78    It follows that there is nothing within the object or purpose of s 350-10, as a mechanism that facilitates the collection and enforcement of taxation liability, that precludes the Commissioner from making a correct assessment of Mr Sunna’s taxation liability in relation to the 2019 Year.

79    Putting the object and purpose of s 305-10 to one side, it is to be noted that the question of the “scope” of such section is not one novel to the Australian judiciary. Indeed, it has been the subject of much consideration, and the Court was referred to various authorities on the topic throughout the hearing. However, as the precise issue under consideration – being the nature and extent of the “conclusiveness” conferred on the Original 2020 Assessment by s 350-10 – developed, it became necessary for the parties to provide further submissions following the hearing and, in particular, in relation to the decision of Oates v Commissioner of Taxation (1990) 27 FCR 289 (Oates). To a degree, the submissions filed tended to focus upon the meaning of the expression in s 350-10 of, “the amounts and particulars of the assessment”. Whilst an understanding of that language is, undoubtedly, of importance, it should be borne steadily in mind that it is directed to the nature of the matters in respect of which conclusiveness is provided by s 350-10; here, however, the more relevant issue concerns the period of time in respect of which any such conclusiveness applies. In other words, it was not directly in dispute that the “amounts and particulars” of the Original 2020 Assessment – whatever they might be – were not “conclusive” for the 2020 Year, but rather whether that “conclusiveness” could bear upon the making of an assessment for any other given income year (e.g., the 2019 Year).

80    With that in mind, it is appropriate to turn to several of the authorities commended to the Court vis-à-vis the matters which s 310-50 deems to be conclusive.

1.    McAndrew

81    The comments of Kitto J in McAndrew provide a useful introduction into earlier understandings of the expression “amounts and particulars of the assessment” and, in particular, the term “particulars”, in the provisions which s 350-10 now replicates. There, his Honour said (at 276):

… By the “particulars” of the assessment is meant, presumably, the ingredients or constituent elements in the ascertainment of the amount of tax to be paid; indeed that appears to be the sense in which the word is used elsewhere in this group of sections: see s. 170 (3), and the proviso to s. 185. To say of those ingredients that they are “correct” is to say that they are rightly treated as ingredients as well as that they are right in point of amount. …

(Citations omitted).

82    In the context of this case, the adoption of that meaning – being that “particulars” encompasses the elements which make up the Commissioner’s conclusion as to the taxpayer’s income and amount of tax payable – would have the effect that, as against Mr Sunna, the Original 2020 Assessment is “conclusive” as to, inter alia, the underlying facts upon which the CGT liability was assessed, including those circumstances giving rise to the liability in that year.

2.    Oates

83    A different approach to that identified above was adopted by Hill J in Oates and relied upon by the Commissioner to submit that the “conclusiveness” of an assessment is only limited to the outcome of the assessment process, being the amount of income and the tax payable, and not the underlying elements or components of the assessment. In that way, the Commissioner sought to avoid the fact that an assessment was made, for the 2020 Year, of a CGT liability in respect of the sale of the CGT Asset.

84    In Oates, the specific question before the Court was whether losses of $20,433, which were said to have been incurred by the taxpayer (Mr Oates) in the 1978- and 1979-income years, were available to be “carried forward” to the 1985 year. As Hill J explained (at 291):

… The losses of $20,433 arose as a result of an excess of deductions over assessable income in the 1979 year. Relevant, … is that in the three years of income, 1976 to 1978, the Commissioner made default assessments (no returns were lodged by Mr Oates for these years until May 1984) in which he assessed Mr Oates to tax on the basis that in each of those years he had a taxable income of $20,800.

85    In this context, the Commissioner contended that (at 293):

… it was not open to the taxpayer to carry forward the losses to the extent of $20,433 incurred in the 1978 year of income since the Commissioner had made assessments for the years 1976-1978 inclusive, showing a taxable income and tax payable thereon and not an excess of deductions over assessable income, which assessments were conclusive evidence … of their correctness and of the amount and all particulars of them having regard to the provisions of s 177(1) of the Act. …

86    That argument was rejected by Hill J (at 308):

… The Commissioner’s submission assumes that tender of the notice or copy is conclusive evidence of the assessable income and the allowable deductions of that year, these being the “particulars” to which s 177(1) refers. However, in my opinion, when s 177 speaks of the particulars of the assessment, it speaks of that which, on its face, is contained on the face of the notice, normally the taxable income and tax payable thereon. It does not encompass the ingredients which go to making up that taxable income.

87    After referring to “several decisions of the High Court”, his Honour concluded (at 309):

In my view, the purpose and effect of s 177 is to prevent challenge of an assessment, other than in accordance with Pt V proceedings and then only as to the issue of the excessiveness of the assessment. The notice of assessment is only conclusive of the particulars in it, (taxable income and tax payable thereon) in respect to the taxpayer whose assessment it is in the year of income to which the assessment relates. The section should be given no wider operation than this purpose and effect requires.

(Emphasis added).

88    In this way, his Honour found that the scope of s 177(1) was limited and did not extend to establishing those matters which underpinned the identification of the taxable income and tax payable. That proposition, however, has not been universally accepted by subsequent courts.

89    That aside, and importantly for present purposes, is his Honour’s reference to one limit of the “conclusiveness” being that it is restricted to the income and tax payable, “in the year of income to which the assessment relates” (at 309). This limitation was important in the circumstances of that case, where the issue was the correctness of assessments made in several years subsequent to 1978. It is clear (and, indeed, important) that his Honour was of the view that the conclusiveness of the assessment did not extend beyond the issue of the taxpayer’s liability in the year to which it related and did not affect the rights between the Commissioner and the taxpayer in subsequent years.

3.    Platypus Leasing Inc v Commissioner of Taxation (2005) 61 ATR 239 (Platypus)

90    The broader scope of the nature of particulars of a notice of assessment gains support from the decision of the Court of Appeal of New South Wales in Platypus at 247 [47] – [48]. That said, the Court’s observations as to the limited temporal effect of the notice of assessment are also important in the context of the present matter.

91    In general terms, the Court in Platypus depart from Hill J’s limited assessment of the nature of the “particulars” of a notice of assessment in Oates. McClellan CJ at common law, with whom Handley and Tobias JJA agreed, analysed (at 248 – 251 [50] – [59]) the relevant High Court authorities which had considered that issue and concluded (at 251 [60]), that the weight of authority was to the effect that the production of a notice of assessment had the result that the assessment was not contestable in any respect and that was not confined to the amount of income and tax payable. In other words, the Court accepted that neither the amount of tax stated in the assessment nor the underlying foundations on which the assessment was made could be contested, “other than in proceedings pursuant to Pt IVC of the [TAA53] or in the circumstances provided in [R v Hickman; Ex parte Fox (1945) 70 CLR 598]”, by the taxpayer.

92    There is no need here to re-consider the careful analysis of McClellan CJ, not in the least because no submission advanced upon the part of the Commissioner undermined his Honour’s conclusion. Therefore, it should be accepted that, to the extent to which a notice of assessment is deemed “conclusive” by s 350-10, it operates with respect to, inter alia, those matters which underpin the assessment, whether they be referred to as the “particulars” or the “ingredients”. Here, it would follow that, in the absence of a valid amendment, the Original 2020 Assessment is “conclusive” evidence in relation to (a) the amount of Mr Sunna’s taxation liability for the 2020 Year; and (b) the basis on which such liability was assessed (including that he was liable for CGT in relation to the sale of the CGT Assets in the amount of some $355,000).

93    Nevertheless, as noted, the Court of Appeal also addressed another aspect of the conclusiveness of the notice of assessment; being that period of time in respect of which it operated. In short, it emphasised the conclusiveness did not extend beyond the matters between the Commissioner and the taxpayer in the year to which it relates. At page 247, McClellan CJ noted that in Oates:

[47]    … The Commissioner responded by submitting that s 177(1) had the effect that an assessment having issued for the previous year, which showed a taxable income, the fact that in that year the taxpayer may have had allowable deductions greater than his assessable income could not be proved in the proceedings with respect to the taxpayer’s liability for tax in the later year.

[48]     Hill J rejected the submission and, with respect, was correct in so doing. In the penultimate paragraph of his reasons (at FCR 309; ATR 1183-1184; ATC 4076; ALR 188) his Honour determined that s 177(1) only operates to make the notice of assessment conclusive of the particulars in it in the year of income to which the assessment relates. This must be so. Accordingly, when considering the position with respect to the tax due in any later year any assessment issued for a previous year will not operate to preclude consideration of the true position, including any debts incurred in previous years, which may be relevant to the liability of the taxpayer in the later years.

(Emphasis added).

94    That latter observation is consistent with the previous discussion and, especially, the fact that the assessment of taxation occurs on an annualised basis, with each year constituting a separate and distinct process of the submission of a return and the making of an assessment. There is nothing in the taxation legislation, and the Court’s attention was not drawn to any authority (or otherwise), that suggests the Commissioner is bound by the circumstances inherent in prior erroneous assessments.

95    It is relevant that the conclusion of the Court of Appeal in this respect concerns the construction of national legislation by an intermediate appellate court and, therefore, it is one in respect of which I am bound: Farrah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89, 151 – 152 [135]. I do not perceive that the observations of McClellan CJ to be debateable in any respect. On the contrary, his Honour’s conclusions in that case, as in so many others, are plainly right.

96    That conclusion is also, a complete answer to Mr Sunna’s arguments. The conclusive effect of the Original 2020 Assessment applies in relation to the facts and circumstances of the assessment for that year. That fiction serves as an aid, to the Commissioner, in enforcing the tax debt of Mr Sunna for the 2020 Year. However, it does not, as per Platypus, preclude the consideration of the “true” position in other income years. That is, s 350-10 does not operate to prevent the making of the Amended 2019 Assessment in circumstances where it is premised upon taxable facts that are inconsistent with those that undergird the Original 2020 Assessment.

4.    A brief aside: other dicta vis-à-vis the nature of “particulars” in s 350-10

97    It follows from the above that the temporal limitation on the effect of a notice of assessment is dispositive of Mr Sunna’s appeal. Nevertheless, it should be observed that the scope of the nature of the “particulars” of a conclusive notice of assessment remains somewhat unclear.

98    For example, in Price v Commissioner of Taxation [2019] FCA 543, Thawley J, after reciting the observations of Hill J in Oates at 308 – 309, accepted that “[t]he most the section [s 305-10(1)] does is conclusively prove that Robert’s [the taxpayer] taxable income and tax payable were as identified in the notices of assessment” (at [179]). In other words, his Honour seemingly endorsed a reading of s 305-10 to the effect that a “conclusive” notice of assessment only proves a taxpayer’s taxable income and the tax payable thereon; it does not establish the “ingredients” which go to make up that income. It must, however, be immediately noted that his Honour did not make reference to the reasoning in Platypus and it is not apparent that it was cited to him.

99    The issue also arose, albeit tangentially, in Chemical Trustee Ltd v Deputy Commissioner of Taxation (2014) 96 ATR 32 (Chemical Trustee), though again, the Court was not referred to the decision in Platypus (nor, for that matter, the decision in Oates). That decision concerned, in part, the conclusiveness of an assessment in circumstances where it had formed the basis of a subsequent judgment. Edmonds, Jagot and Pagone JJ observed (at 37 – 38 [15]):

[15]    … Nor does the conclusive evidence provision in s 177 of the ITAA 1936 assist the appellant. The provision does not go as far as the appellant would have it or requires to sustain its argument. The notice is conclusive evidence that the amount in and particulars of the notice are correct and nothing more. Section 177 does not say that a notice is conclusive proof that the amount is the entire amount of the tax liability or that the tax liability may never be amended.

100    In this latter respect, it is notable that the Court specifically identified that the conclusiveness of the notice of assessment was limited and the Court left it open for the Commissioner to assert that additional amounts were owing in the relevant tax year.

101    It follows that there are two conflicting intermediate appellate court decisions (Platypus and Chemical Trustee) as to the nature and extent of that which is rendered conclusive by a notice of assessment. As interesting as that may be, given that the conclusiveness is applicable only in relation to the income year in respect of which the assessment is given, there is no need to resolve that inconsistency in this matter. Here, the Original 2020 Assessment cannot inhibit the Commissioner’s obligation to correctly apply the taxation legislation in the making of amendments to the Original 2019 Assessment and, therefore, the width of the “particulars” in the Original 2020 Assessment does not have to be determined.

The second limb of the submission: inability to tax twice in relation to the same income

102    As has been noted, Mr Sunna also sought to found his case upon the following proposition: given the force of the Original 2020 Assessment, issuance of the Amended 2019 Assessment would be beyond the scope of the Commissioner’s power because it would involve the imposition of a taxation liability twice in relation to the same income. To quote Mr Robertson KC, “[t]he Commissioner cannot simply issue two assessments of the same income claiming double tax against – in relation to that income”. That proposition was not sought to be grounded in any particular provision(s) of the taxation legislation; rather, it was said to underlie the legislation. Certainly, the Court was not referred to any provision that was expressly to any such effect.

103    One difficulty with the use of the Original 2020 Assessment in this way is that it tends to conflict with the well-established and recognised obligation of the Commissioner to assess the taxation liability of a taxpayer in accordance with the law: see, eg, AGC (Investments) Ltd v Commissioner of Taxation (Cth) (1991) 21 ATR 1379, 1396 (and the authorities cited therein). Therefore, as Mr Sunna is, in theory, liable for the entirety of the CGT liability on the sale of the CGT Asset in the 2019 Year (by virtue of s 104-10(3)), that should be reflected in the Commissioner’s assessment, and his obligation to make an accurate assessment should not be derailed by an erroneous assessment in another income year.

104    Though it might be said that there exists some implicit assumption in the taxation legislation that a person will not be required to pay tax on the same income twice, it is not necessarily the case that they will not be assessed in relation to the same income more than once. In very broad terms, the taxation legislation works on the basis that liability is imposed on the taxpayer in relation to amounts actually received by way of income, capital gain or otherwise, in the relevant income year. As the same gain cannot be received twice, the proper application of the taxation legislation would suggest that, in the ordinary course of events, a taxpayer will not pay tax on the same income twice.

105    However, whilst that may be the intended result of the application of the processes of the taxation legislation, it does not necessarily follow that, in its administration, the Commissioner may not raise assessments against the same taxpayer in respect of which the same receipt is assessed. So much is referable to the administrative nature of the assessment process in which, from time-to-time, the Commissioner is required to act upon imperfect knowledge and is not obliged to make assessments on positive findings of facts: see, eg, R v Deputy Commissioner of Taxation (Cth); Ex parte Hooper (1926) 37 CLR 368, 373. Those considerations support the well-established proposition that the Commissioner may assess different persons in relation to the same income. For instance, in Richard Walter, Brennan J observed (at 200 – 201):

It must be remembered that the Commissioner’s function is administrative, not judicial. The power to assess is, as s 167 shows, not limited to cases where the Commissioner has enough information on which to make a positive finding of fact. The Commissioner is not required to determine on the balance of probabilities that one person rather than another is the person subject to the tax liability in respect of the particular income. Where the facts known to the Commissioner are such that he is unable to determine which of two or more persons is liable to tax on the same item of income in the same year, he may adopt the view in the case of any or all of those persons that there is a substantial possibility that the item of income is assessable income of that person. If that view is adopted in respect of two or more of those persons, he may validly assess each of them to tax. The making of an assessment on that view of the facts, provided it is not for the purpose of double recovery of the tax imposed by the relevant Taxing Act, is in my opinion a bona fide attempt to exercise the power to assess so that the assessment either is valid or is validated by s 175. And the notice of assessment attracts the protection of s 177(1).

106    One important aspect of those observations is that the Commissioner’s “administrative” function in the making of an assessment, does not require any final determination of the taxpayer’s obligations based upon the preponderance of evidence. Instead, the assessment can be made upon information supportive of the conclusions reached. Therefore, where the Commissioner is unsure, on the material, as to in which of two income years amounts were received by a taxpayer, he would be entitled to include the receipts in both years, until he could determine more clearly the year in which the amount should be assessed.

107    It is also important to keep in mind that the administrative assessment process can be impeded by the existence of imperfect information which, necessarily, results in errors infecting the making of assessments. The circumstances of the present case provide a good example. For the 2020 Year, Mr Sunna provided incorrect information to the Commissioner about the occurrence of a CGT Event A1 and the receipt of payment for the disposal of the CGT Asset in that year, with the result being that an incorrect assessment was made. Subsequently, the true state of affairs came to light, and the Commissioner has sought to act upon it by amending both of the Original Assessments to reflect that reality.

108    Often, the evolution towards “more correct” assessments by amendment consequent upon the improvement in the quality of information at the Commissioner’s disposal, does not cause great difficulty. However, the power to make amended assessments, either at the instance of the Commissioner or as a result of a taxpayer objection, and which can lead to more correct assessments, is not unfettered. Difficulties arise by reason of the time limitations imposed by the legislature on both the Commissioner’s power to amend and the taxpayer’s entitlement to object: see, eg, s 170(1) of the ITAA36; Part IVC of the TAA53. Necessarily, from time-to-time, this will result in erroneous assessments being beyond recall and that appears, quite plainly, to be an accepted aspect of the regime for assessment. Sometimes the error will be to the financial benefit of the taxpayer and, on other occasions, it will not.

109    Nevertheless, it does not follow from the existence of an assessment containing an irremediable error that the Commissioner is unable to amend assessments in other income years to conform with the true facts, even if it means that the new assessment will assess the same transaction that has been assessed in the unamendable assessment. There is no absolute principle that the Commissioner is obliged, in subsequent or other years of income to perpetuate that error by acting as if it were true. The approach which seems to be adopted is that, in each year, the Commissioner is obliged, in accordance with his statutory obligation, to make an assessment according to law on the basis of the information available to him, and the impact of erroneous prior assessments falls to be allocated by the limitations on the making of amendments.

110    In relation to this particular issue, both parties referred the Court to the decision of the Full High Court in Richardson. There, Mr Richardson, the taxpayer, failed to include certain assessable income (derived from a business carried on in a Melbourne hotel (the Business)) in the returns of his income over various financial years. That income had instead been returned by a “nominee or dummy” of his (Mr Collins), who had paid tax upon it, albeit a rate much lower than if it had been assessed to Mr Richardson. When such “fraud upon the revenue” was discovered, the Commissioner issued various amended assessments to the taxpayer. In so doing, the Commissioner did not purport to cancel or amend the assessments issued to Mr Collins nor refund the tax paid on his assessments. Indeed, the Commissioner did not take into account any of the payments made to him in respect of Mr Collins’ assessment in calculating the taxable income of the taxpayer, or in determining the amount of tax to be paid by the taxpayer, or in determining the amount of additional tax, or otherwise reducing the total amount payable by the taxpayer (at 193 – 195).

111    Starke J, at first instance, began by noting that “[j]ustice require[d]” some credit to be given to Mr Richardson for the amount of tax that had been received by the Commissioner from Mr Collins “or that the money should be refunded” (at 195). Notwithstanding that general expression, his Honour proceeded to determine the appropriate outcome “according to law”. At pages 196 – 197, his Honour concluded that the Commissioner, having treated the person conducting the Business from which the income arose as a “nominee or dummy” for the taxpayer, was bound to act consistently and treat all of their acts upon the same basis (including the payment of tax). As such, in determining the amount due to be paid by Mr Richardson, credit was to be given for the amount that had been paid by Mr Collins.

112    On appeal to the Full High Court, Mr Richardson contended, inter alia, that any assessment issued to him in respect of the profits of the Business was not authorised by the Income Tax Assessment Acts 1922-1930 (Cth) because the assessments issued against Mr Collins included such profits and stood unamended (at 212). The Commissioner also filed a cross-appeal, albeit only with respect to the question of the ability of a taxpayer to object under s 50(1) of the aforementioned legislation.

113    In relation to the taxpayer’s appeal, Dixon J addressed the claim that, unless and until the Commissioner reassessed and returned to Mr Collins the tax that had been collected in respect of the income which he sought to attribute to Mr Richardson, the Commissioner could not assess the latter in respect of the same income. His Honour first recognised (at 206 – 207) that the fact that Mr Collins had misled the Commissioner in order to incur “a liability upon his assessment of a larger debt to the Crown than he otherwise owed”, did not affect Mr Richardson as a taxpayer. That which did affect him was the withholding of the amounts of profits for which he should have been taxed. His Honour further observed that the circumstances could not be characterised as being of the kind where the Commissioner was put to an election between inconsistent rights. On the contrary, “[u]pon the state of facts which must be taken to be true the taxpayer alone was exposed to tax in respect of the income in question” (at 207). His Honour continued:

The nominee’s liability arose only upon a false state of facts. No doubt, when and if the Commissioner arrived at the clear conclusion that to ensure the completeness and accuracy of the nominee’s assessments the exclusion of the income he returned was requisite, it became his duty to exercise his power under sec. 37. But it was not unnatural that he should delay relieving one of two persons whom he considered culpable until the liability of the other was established. The questions which may arise out of such situations are no doubt attended with difficulty. For this reason it is not desirable to enter upon them more at large than is necessary for the decision of this appeal. It is enough to say that there is nothing in the character of the power given in sec. 37 or in the nature of the power of assessment which requires the formal alteration of the nominee’s assessments before the alteration of the assessment of the taxpayer.

(Emphases added).

114    In other words, the Commissioner was entitled to assess Mr Richardson upon the basis of the true facts, regardless if that was inconsistent with the basis upon which he had already assessed Mr Collins: see also Hyder v Commissioner of Taxation (No 2) (2023) 297 FCR 124, 135 [56], 135 – 136 [58] (Hyder (No 2)).

115    Evatt J was of the same opinion. His Honour held (at 212) that, though there was a “general principle” that the taxation legislation did not intend the same income to be assessed and taxed more than once”, the assessment of Collins and his rights against the Commissioner were irrelevant to the validity of the assessment of Mr Richardson. In that respect, the general principle that “tax can never be leviable against two separate individuals in respect of the same income” was not unqualified and the general scheme of “one income, one taxpayer, one tax” was not absolute in the circumstances. That was particularly so given that the assessment of Collins had been procured, at least on the judgment of Starke J, by a fraud upon the revenue.

116    McTiernan J agreed that both the appeal and cross-appeal should be dismissed (at 215).

117    It must be kept in mind that the Commissioner did not cross-appeal in relation to the issue under consideration. The substantive appeal brought by Mr Richardson was to the effect that the assessments against Collins had to be amended to remove consideration of the profits of the Business before they could be assessed against him. That was flatly rejected by the Court. However, it is apparent that, in the absence of any appeal by the Commissioner, the orders of Starke J stood, even though on the basis on which Dixon and Evatt JJ determined the matter, there was no justification for reducing the assessments as against Mr Richardson.

118    For Mr Sunna, it was submitted that the effect of Richardson was that there could not be any amended assessment in relation to the 2019 Year unless a credit was provided to him in relation to the 2020 Year. Because, the submission went, there is no “lawful power” to give such a credit, it followed that no amendment could be made of the Original 2019 Assessment.

119    However, for the reasons canvased above, that is not the effect of Richardson. On the contrary, it was that there was no requirement that the inconsistent assessment (as against Mr Collins) be amended before an assessment in relation to the same income could be made as against Mr Richardson; in other words, the Commissioner could include the income that been returned by Mr Collins within the amended assessments issued to Mr Richardson without first altering the assessment of Mr Collins. True it is that the orders of Starke J had substantially resulted in a similar outcome but, on the point of principle, the circumstances pertaining to the assessment of Mr Collins were not relevant to the assessment of Mr Richardson’s income. That being so, Richardson should be taken as an endorsement of the proposition that there is nothing improper about the Commissioner issuing inconsistent assessments against different persons in respect of the same income year (subject to the proviso at 207).

120    The Commissioner sought to rely on the decision in Richardson to the extent that it emphasised the Commissioner’s duty to accurately assess the tax payable by a taxpayer by reference to the true taxable facts and relevant legislation. Here, so it is said, that required the Commissioner to apply s 170(10AA) in order to give effect to s 104-10(3) and to amend the Original 2019 Assessment to accurately impose the full CGT liability on the taxpayer. It is further said that such an amended assessment can “coexist” with the Original 2020 Assessment which imposed a CGT liability in respect of the sale of the CGT Asset, albeit calculated upon a lesser amount.

121    Such submissions can be accepted, and it should be appreciated that an underlying rationale of Richardson appears to be that the administrative act of making an assessment does not create a state of affairs which immediately binds the Commissioner, either in relation to the particular taxpayer in relation to assessments in other years, or in relation to other taxpayers generally.

122    The Commissioner also relied upon the reasoning developed in Country Magazine Pty Ltd v Federal Commissioner of Taxation (1968) 117 CLR 162 (Country Magazine) as supporting the proposition that “the existence of the incorrect [Original 2020 Assessment] would not change the proper characterisation of the taxable facts on which the [Amended 2019 Assessment] was based”. In that case, the taxpayer (and magazine publisher), Country Magazine Pty Limited (CM), had adopted the course, in making up its profit and loss account (P&L Account), of deducting from its gross receipts for the relevant year of income “so much of the subscriptions received in the year as related to issues of magazines to be published in the next year or subsequent years” (at 163). That amount was dubbed “subscriptions in advance”. In making out its income tax return for the 1965 income year, CM treated the deduction which it had made in its P&L Account under the heading “subscriptions in advance” as “not being an allowable deduction, and accordingly added it to the profit shown by the [P&L Account] and showed the total, less the amount that had been similarly treated in the preceding year, as its assessable income” (at 163).

123    In November 1965, the High Court (Barwick CJ, Kitto and Taylor JJ) handed down judgment in Arthur Murray (NSW) Pty Ltd v Commissioner of Taxation (1965) 114 CLR 314. As explained by Kitto J in Country Magazine (at 164), that case relevantly decided that, in the case of a business selling goods, “amounts received in advance of the goods being delivered … are not regarded as income, and accordingly are not entered to the credit of any revenue account until the sale takes place or the services are rendered, but are credited in the meantime to a suspense account”. In reliance on that authority, CM lodged an income tax return for the 1966 income year which did not add, to the profit in the P&L Account, the amount of “subscriptions in advance”; however, it also claimed to be entitled to deduct, from the profit, the amount included in the 1965 return as “subscriptions in advance” on the basis that that amount had already been included in an amount of income upon which tax had been assessed and paid (at 164 – 165). So much was said to follow from the intention conveyed by the ITAA36 that any amount which is (even mistakenly) included in a taxpayer’s assessable income of one year of income, cannot then be included in their assessable income of another such year (at 165).

124    Kitto J declined to accept such logic on the basis that there was nothing in the relevant taxation legislation which “indicate[d] any such intention” (that is, an intention that an amount, properly treated as income in one year, ought to be excluded merely because it was wrongly treated as income in a previous year) (at 165). His Honour thereafter held that (at 166):

… But, further than this, the Commissioner, in my opinion, is right in the broad answer that he gives, namely that the taxpayer cannot turn what is assessable income of one year into assessable income of a different year by including it in the wrong year’s return. The Act requires that he include it in his return for the year of income in which he derived it as income, and he is not excused from doing so by the fact that, under a mistaken view as to when he derived it as income, he included it in his return for an earlier year. Likewise the Act obliges the Commissioner to assess tax in respect of all income which the taxpayer in fact derived in each year, and it gives him no discretion to leave any such income out of the assessment on the ground that the taxpayer mistakenly included that income in his return of the previous year and was taxed accordingly. If there is any remedy for the mistake it must be by means of an amendment of the previous year’s assessment. Whether that assessment may or should be amended is a question which must be answered by reference to the specific provisions of the Act relating to amendments; but in its application to the appellant it is not a question which arises on this appeal.

125    No suggestion was made that the structure or provisions of modern taxation legislation rendered those comments nugatory. On the contrary, the Commissioner’s obligation in relation to each assessment is to assess the correct amount tax payable, neither more nor less; that underlying obligation plainly supports Kitto J’s conclusions. Indeed, the general principle is that an erroneous assessment in one year does not impede the Commissioner from making an assessment on the basis of the taxable true facts in the following year. So much is clear from the observations of Gaudron, Gummow and Kirby JJ in Federal Commissioner of Taxation v Rowe (1997) 187 CLR 266, where their Honours (although in dissent, but not upon this point) observed (at 292) that:

An amount is not an allowable deduction merely because of an overstatement of income in a preceding year [citing Country Magazine Pty Ltd v Federal Commissioner of Taxation (1968) 117 CLR 162, 166]. Nor is a receipt income simply because of the previous allowance of a deduction, for which outgoing the receipt is recompense. The answer from the point of view of the revenue may be in amendment of the earlier assessment. But, in each case, the question whether such a course was open would have to be answered by reference to the specific provisions of the Act relating to amendments.

126    The authorities canvassed above establish that prior erroneous assessments do not impede the Commissioner from upholding his statutory duty to make any subsequent assessment according to law. No estoppel prevents the Commissioner assessing a taxpayer for the correct amount of tax on the true facts once they are known: Wade 117; see also Nilsen Development Laboratories Pty Ltd v Federal Commissioner of Taxation (1978) 8 ATR 760, 776. The extent to which the prior assessments can be rectified is, in short, to be determined by the scope of the provisions allowing for amendments.

Assessing different taxpayers with the same tax

127    The conclusion reached above in relation to the ability of the Commissioner to assess an individual despite the existence of a prior erroneous assessment imposing an overlapping tax liability is consistent with the Commissioner’s ability to assess the same tax liability as against different individuals in the alternative. Such a course is supported by a correct analysis of the decision in Richardson: see Hyder (No 2) 135 [58(1)], citing Richard Walter 188, 200 – 202, 216 – 217, 228 – 229, 237 – 238; see also Tupicoff 523. In that latter case, Beaumont J noted the limited effect of s 177; being that a notice of assessment in relation to one taxpayer had no relevance to the imposition of tax on another person. Instead, it was only concerned with the personal liability of the taxpayer to who it is issued (at 523).

128    The fact that the Commissioner is able to issue alternative assessments to different persons in relation to the same income, rather diminishes the suggestion that an assessment acts as a crystallisation of facts, the effect of which is to prevent the Commissioner from making an assessment based upon inconsistent facts.

A procedural difficulty?

129    It is appropriate for reference to be made, at this juncture, to the decision of the Full Court in B&F Investments Pty Ltd v Federal Commissioner of Taxation (2023) 298 FCR 449. There, the Commissioner had made (a) an assessment against a trustee (IP Trustee) of a trust on the basis of s 100A of the ITAA36; and, in the alternative, (b) an assessment against a corporate beneficiary (BE Co) of the trust on the basis of Part IVA of the ITAA36 (at 451 [6]). IP Trustee and BE Co appealed; however, only the latter was successful (at 474 [118] – [119]). In considering the appropriate orders to be made (given the relevant assessments were alternatives), the Court identified the difference between the circumstance where the Commissioner had made alternative assessments and where, on appeal, a court has determined, inter partes, where the “true state of affairs” lies. In this respect, the Court observed (at 466 [83]) that:

Whilst it is open to the Commissioner to issue alternative assessments which are necessarily inconsistent, once the true state of facts is determined and the liability of the correct taxpayer has been established, the alternative inconsistent assessment is necessarily excessive. …

130    A little later it noted (at 467 [85]) that, in the context of Part IVC appeals before the Court, the Court should not make orders which give effect to inconsistent alternative assessments:

In Deputy Commissioner of Taxation v Moorebank Pty Ltd (1988) 165 CLR 55, the High Court considered that a “case in which the Commissioner issues a number of assessments on an alternative basis to different taxpayers in respect of the same income provides an obvious example” of a situation in which it would be “oppressive for the Commissioner to seek to enforce payment of the full amount due under a notice of assessment or by way of additional tax before the final resolution of a genuine dispute about the correctness of the assessment” (at 67, emphasis added). Two inconsistent alternative assessments ought not be affirmed as correct by order of the Court. Where it is necessary in order to avoid such an outcome, leave to amend the grounds of objection ought to be granted.

(Emphasis in original).

131    Here, the Commissioner seeks to uphold the Amended Assessments which are not inconsistent with each other. If he has no power to amend the Original 2020 Assessment and the Amended 2020 Assessment is set aside, the Original 2020 Assessment will stand. However, the making of an order setting aside the Amended 2020 Assessment does not confer the Court’s imprimatur upon the veracity of the Original 2020 Assessment. All that can be said is that there was no power to make the amendment which the Commissioner did. There is no part of the Part IVC appeals which examines the correctness of the Original 2020 Assessment and there is no relevant determination of the taxable facts on which it is based, save to the extent that they are considered in relation to the veracity of the Amended Assessments.

132    In this context, reference was also made to the decision of Nettle J in Bosanac v Commissioner of Taxation (2019) 374 ALR 425, where consideration was afforded to the status of “amended assessments” and “further amended assessments” in circumstances where an appeal had been made against objections which resulted in the making of the amended assessments (but not against the making of the further amended assessments). It was submitted that the courts below had erred in not appreciating the substance of the Part IVC appeals before them were the further amended assessments. In relation to the status of the several amended assessments, Nettle J (at 432 [18]) observed:

[18]    It may be accepted that there can never be more than one assessment of income tax operative at any one time in respect of a year of income. In that sense, an amended assessment has no existence separate from the assessment whence it derives: it is an amended version of the original assessment, not a “new assessment”. But, as has been seen, a taxpayer’s statutory rights of objection and appeal are prescribed in terms that frame the objection and appeal process as if an original assessment and an amended assessment were two different assessments; thus limiting the taxpayer’s right of objection against the amended assessment to such particulars as have been amended vis-à-vis the original assessment and, on appeal, prohibiting the taxpayer from relying on grounds of objection to the amended assessment which have been or could have been taken as grounds of objection to the original assessment.

133    However, his Honour identified that a taxpayer’s appeal rights in relation to assessments and amended assessments were granted as if the original and the amended assessments were different and, for that reason, objections or appeals against the original assessments cannot be regarded as objections or appeals against the amended assessments.

134    The Commissioner, therefore, submits that any determination that the Court makes against an objection decision and the related amened assessment does not bear on the original assessment, it being one in respect of which there could be no objection now in any event. That should be accepted, subject to what is said below.

An absence of power to amend the Original 2020 Assessment?

135    Leaving to one side the question of whether s 170(10AA) permits amendment of the Original 2020 Assessment, it was argued that the Commissioner was otherwise out of time to make any consequential amendment to it, which it is said, would be required should the Amended 2019 Assessment stand. That appeared to be accepted as correct insofar as the Commissioner might, of his own initiative, pursue that course so as to remove the wrongly assessed CGT liability in the 2020 Year.

136    However, it does not follow that the Commissioner may not ameliorate the consequences of the fact that, as a result of the Amended 2019 Assessment, Mr Sunna will be liable for CGT on the sale of the CGT Asset in each of two different income years, even though the assessment in the 2020 Year was erroneous in substance and amount. Relevantly, s 14ZW(2) of the TAA53 provides that a taxpayer may request an extended period in which to lodge an objection:

(2)     If the period within which an objection by a person is required to be lodged has passed, the person may nevertheless lodge the objection with the Commissioner together with a written request asking the Commissioner to deal with the objection as if it had been lodged within that period.

137    By ss 14ZX(1) and (4), the Commissioner is required to consider the request for an extension of time and, if they decide to refuse the request, the taxpayer is entitled to apply to the Administrative Review Tribunal for a review of that decision.

138    It is impossible to predict how the Commissioner may exercise his discretion if an application were to be made by Mr Sunna for an extension of time in which to lodge an objection against the Original 2020 Assessment (if the Amended 2019 Assessment stands). Nevertheless, it is presently difficult to comprehend why the Commissioner would not accede to the request so as to regularise the assessment for the 2020 Year and put it into the form in which he has attempted to do by the Amended 2020 Assessment. To date, he has done everything to attempt to ensure that Mr Sunna pays only the correct amount of CGT in respect of the sale of the CGT Asset.

139    It follows that the process of amending assessments does make provision for ameliorating the effect of the Amended 2019 Assessment, to the extent it covers the same ground as the Original 2020 Assessment.

Conclusions

140    The taxpayer’s appeal in relation to the Amended 2019 Assessment must be dismissed. There was nothing arising from the Original 2020 Assessment which inhibited the force and operation of s 170(10AA) in relation to the Amended 2019 Assessment (see supra [96] and [126]).

141    That conclusion poses difficulties as to the Amended 2020 Assessment. As the Commissioner was empowered to amend the Original 2019 Assessment without having to amend the Original 2020 Assessment (cf supra [49]), it cannot be said that the making of the latter amendment was “for the purpose of giving effect to” s 104-10(3). Instead, in the circumstances it might be said, objectively, that its substantive purpose was only to correct the errors inherent in the Original 2020 Assessment. Although it is more than likely that the Amended 2020 Assessment will, one way or the other, be issued as against Mr Sunna at some later date (see supra [136] – [139]), for present purposes, the appeal against the Amended 2020 Assessment should be allowed.

142    For completeness, it is apparent from what has been said above that, if the Commissioner was, in any way, inhibited from amending the Original 2019 Assessment due to the existence of the Original 2020 Assessment, it would have followed that he would have been empowered, by s 170(10AA), to amend the Original Assessments in order to remove that obstacle (supra [59]).

143    In sum, the three “central” questions posed at supra [8] can be answered as follows:

(1)    Answer: Yes (the Original 2019 Assessment) and No (the Original 2020 Assessment).

(2)    Answer: No.

(3)    Answer: Yes.

144    The parties should be heard on the question of costs.

Associate:    

Dated:    3 December 2025