Federal Court of Australia

Lewis v Commissioner of Taxation (Amendment Application) [2026] FCA 1111

ORDERS

THE COURT ORDERS THAT:

1.    The applicants’ interlocutory application filed on 29 July 2026 be dismissed.

2.    The applicants pay the respondent’s costs of the interlocutory application.

3.    The final hearing of the appeal be listed at 9:30 am (AEST) on 12 October 2026 for 1 day.

4.    Within 7 days of the date of these orders, the applicants file and serve on the respondent an amended notice of appeal containing only appeal grounds 1, 2.5 and 6.

5.    By no later than 4.00pm on 9 September 2026, the applicants file and serve on the respondent an outline of submissions for the final hearing.

6.    By no later than 4.00pm on 30 September 2026, the respondent file and serve on the applicants an outline of submissions for the final hearing.

7.    By no later than 4.00pm on 7 October 2026, the applicants file and serve on the respondent any submissions in reply.

8.    By no later than 4.00pm on 9 October 2026, the parties file a joint list of authorities and legislation to which the parties intend to refer.

9.    Outlines of submissions for the final hearing are not to exceed 10 pages in length (5 pages for submissions in reply), including any annexures, and be easily legible using a font size of at least 12 points and one and a half line spacing throughout, including in any footnotes and annexures. Italics or underlining must be used for legislation and case citations and boldface or italics may be used for occasional emphasis.

10.    The joint list of authorities and legislation be provided to the Court in electronic form in accordance with Format 1 specified in paragraph 4.3 of the eBooks Practice Note (GPNeBOOKS).

11.    Liberty to apply on 3 business days’ notice.

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

REASONS FOR JUDGMENT

DOWNES J:

1    On 14 January 2026, the applicants (Mr and Mrs Lewis) filed a Notice of Appeal from a decision of the Administrative Review Tribunal (Tribunal) dated 9 December 2025 (Reasons). The Notice contained eight grounds of appeal, which relevantly included:

…

2. Evaluation of evidence / procedural fairness (self‑represented litigants)

…

[First Applicant only] The Tribunal acted legally unreasonably by rejecting the First Applicant’s sworn evidence regarding renovation costs incurred on the Mikado Street property (part of the statutory cost base), effectively treating the value of those improvements as “nil” or unproven merely due to the absence of historical receipts, thereby inflating the assessable capital gain (Decision at [159]–[160]).

…

5. Default assessment methodology (legal unreasonableness)

The Tribunal found fundamental errors in the Commissioner’s reconstruction, including double counting of income and mischaracterisation of the St George Bank refinancing as assessable income (Decision at [246]–[252]).

Notwithstanding those findings, the Tribunal otherwise treated the balance of the Commissioner’s reconstruction as reliably maintainable without examining whether the methodology remained rational in light of those acknowledged flaws (Decision at [246]–[252]).

…

8. Administrative penalties (intentional disregard)

The Tribunal treated the Applicants’ failure to call their former tax agents as a decisive basis for upholding the penalties (Decision at [280]–[281]).

The Tribunal failed to make a positive finding that the Applicants themselves had the requisite subjective knowledge of the tax law and chose to disregard it, and instead upheld the penalties based on an asserted absence of independent evidence (Decision at [280]–[281]).

The Tribunal failed to consider the Applicants’ status as self‑represented litigants when drawing inferences about “intentional disregard”, effectively treating forensic decisions flowing from a lack of representation as proof of subjective intent.

2    On 2 February 2026, the respondent filed a Notice of objection to competency, contending that all grounds (with certain exceptions) did not raise a question of law for the purposes of s 172(1) of the Administrative Review Tribunal Act 2024 (Cth).

3    On 21 July 2026, the appeal was dismissed as incompetent except for Question 1, 2 (as it related to paragraph 2.5) and Question 6. Mr and Mrs Lewis, who are self-represented, were given until 4:00 pm on 29 July 2026 to apply to amend to reformulate the incompetent questions as questions of law.

4    By way of interlocutory application dated 29 July 2026, Mr and Mrs Lewis sought leave to amend their Notice of Appeal to include the following “questions”:

…

2. Whether, in its treatment of the sworn and photographic evidence of the Mikado Street renovation costs (paragraph 2.4 of Ground 2), the Tribunal failed to address a material issue or reached a conclusion that lacked an evident and intelligible justification; and whether it denied the self-represented Applicants procedural fairness in the respect identified in paragraph 2.5. Paragraphs 2.1, 2.2 and 2.3 are not pressed.

[(Question 2, paragraph 2.4)]

…

5. Whether the Tribunal failed to address a material issue, or reached a conclusion lacking an evident and intelligible justification, by concluding at R[256] that the adjusted amounts were the amounts that should have been assessed – the reasons not disclosing the evaluative path by which the absence of proof of any further adjustment became that positive conclusion – having stated at R[153] that it was unnecessary to examine the individual transactions because even acceptance of all of the Applicants' explanations would leave it unable to be satisfied that their returned incomes were correct.

[(Question 5)]

…

8. Whether the criterion for intentional disregard under s 284-75(1) and item 1 of the table in s 284-90(1) of Schedule 1 to the Taxation Administration Act 1953 (Cth), which the Tribunal stated at R[278]–[279], was the criterion the Tribunal in fact applied at R[280]–[281], in circumstances where the Tribunal found there was nothing in the evidence to suggest the accountants intentionally disregarded the law (R[280]) and determined the penalty question by reference to the absence of independent evidence from the accountants (R[281]).

[(Question 8)]

5    The applicants had also applied for leave to amend ground 4 and had proposed a reformulated Question 4, but this amendment was not pressed.

6    At the hearing on 5 August 2026, I dismissed the amendment application. The following are my reasons for the dismissal.

Proposed Question 2

7    The reformulated Question 2 is framed in terms of the Tribunal’s “fail[ure] to address a material issue” and “reach[ing of] a conclusion that lacked an evident and intelligible justification”, in respect of its treatment of the “sworn” evidence and “photographic evidence” of the renovation costs of the Mikado property.

8    In the particulars to the proposed Question 2, at 2.4, it is stated that “[t]he [Tribunal’s] reasons treat the absence of historical receipts as determinative that no addition to the statutory cost base was established, without evaluating the sworn and photographic evidence of the works”.

9    The Reasons identify the applicants’ evidence, including the exhibits of evidence in which the photographic evidence and affidavit evidence was contained: Reasons at [35]. When considering the Mikado property renovation costs, the Tribunal accepted Mr Lewis’ evidence that the property was renovated: Reasons at [160]. This was a plain reference to the sworn evidence of Mr Lewis. The Tribunal also referred to “the evidence before the Tribunal”, the “state of the evidence” and the “evidence adduced” in its conclusions on this issue: Reasons at [163]. That “evidence” necessarily encompasses the sworn and photographic evidence referred to earlier in the Reasons.

10    The Tribunal also analysed the evidence adduced by Mr and Mrs Lewis, including the lack of certain evidence (such as receipts or other records of the cost of the renovation) and the lack of “any evidence of movements in house prices in Brisbane… or in the suburb in which the… Property is located…”: Reasons at [160]–[162].

11    The Tribunal then concluded at [163]:

In those circumstances, having regard to the state of the evidence, I am not persuaded that there is a satisfactory basis in the evidence before the Tribunal for concluding that there was no net capital gain on the sale of the M property. Again, I do not conclude that Mr Lewis was dishonest in his evidence, but I am not satisfied on the evidence adduced, having regard to the evidence that might have been put before the Tribunal, that I can accept there was no capital gain at all on the sale of a property in a prestigious inner suburb that Mr Lewis owned for over a decade.

12    The applicants submitted that the proposed reframed Question 2 (particular 2.4) does not challenge the weight of the evidence adduced to the Tribunal. They submitted that it now asks “whether… the Tribunal failed to address a material issue or reached a conclusion lacking an evident and intelligible justification”. The applicants also submitted that the Tribunal did not consider relevant evidence before it that renovations to the property had cost at least $1 million and that, therefore, the inquiries in Question 2 are questions of law, citing Minister for Immigration and Multicultural Affairs v Yusuf (2001) 206 CLR 323; [2001] HCA 30 at [82] and Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18 at [66]–[68], [76].

13    However, the use of legal formulary such as “evident and intelligible justification” masks the substance of the proposed question which is, in truth, a challenge to the merits of the Tribunal’s factual findings, including the weight given (or not given) by the Tribunal to the evidence adduced by Mr and Mrs Lewis. For this reason, proposed Question 2 is being used as a vehicle to invite the Court to impermissibly trespass into the merits of the decision.

14    Further, in light of the Tribunal’s references in the Reasons to the evidence considered by it and its analysis of that evidence, the posited complaint that the Tribunal failed to address a material issue or reached a conclusion that lacked an evident and intelligible justification has no merit, and the proposed amendment is therefore futile.

15    Finally, particular 2.4 mischaracterises the Tribunal’s reasons as the Tribunal did not treat the absence of historical receipts as determinative.

16    For these reasons, the amendment to Question 2 and particular 2.4 were not permitted.

Proposed Question 5

17    Proposed Question 5 is directed to the Tribunal’s conclusion at [256] of its Reasons which state:

It is only because of the unusual features of this matter I have mentioned that I am satisfied the applicants’ actual incomes would not have exceeded the adjusted amounts. Having reached that conclusion, it follows that the assessments are excessive. Once that conclusion is reached, the assessed amounts cannot be the amounts that “should have been assessed”. The applicants have proved their incomes did not exceed the adjusted amounts. The adjusted amounts are, in my view and on the evidence before the Tribunal, the amounts that should have been assessed in this case. There is no basis for a conclusion that any other amounts should have been assessed.

18    At the hearing, the applicants abandoned their initial redrafting of Question 5 and sought to reformulate Question 5 as:

[w]hether the tribunal erred in law by concluding at paragraph 256 that the adjusted amounts were the amounts that should have been assessed, when it had also stated that it could not actually assess the applicants’ actual incomes, and that it was unnecessary to detail the evidence concerning the individual transactions relied upon by the applicants.

19    The applicants referred to [153] and [246]–[253] of the Reasons.

20    Mr and Mrs Lewis submitted that there is a legal question as to whether the reasoning in these paragraphs, which preceded the Tribunal’s conclusion at [256], was legally capable of supporting that conclusion. The applicants also submitted that the matter should be remitted so that a legally sufficient determination could be made on the basis that they would be given the opportunity to adduce further evidence.

21    However, the proposed Question 5, as reformulated at the hearing, does not raise a question of law, and has no reasonable prospect of success in any event.

22    While the applicants proved their incomes did not exceed the adjusted amounts (as the Tribunal accepted), they bore the onus of establishing what the correct amount should have been: see s 14ZZK(b) Taxation Administration Act 1953 (Cth). The Reasons make plain that the Tribunal found that Mr and Mrs Lewis failed to discharge that onus due to the insufficiency of the evidence adduced by them. Indeed, as stated at [255] of the Reasons:

This reasoning should not be taken to suggest a taxpayer will succeed merely by proving a flaw in the Commissioner’s calculations that he undertook to arrive at a s 167 assessment. They will not. Without also proving the amount that should have been assessed, which will usually be achieved only by proving their actual income, the burden of proof will not be satisfied.

(Emphasis added.)

23    It follows that Question 5, as reformulated, is directed to the weight that the Tribunal gave to the evidence adduced by Mr and Mrs Lewis, and the manner in which it evaluated the sufficiency of the evidence before it, for the purposes of determining whether they had discharged their onus of establishing what the correct amount should have been. Whether they had done so was a different proposition to whether they had proved that their incomes did not exceed the adjusted amounts.

24    For these reasons, the amendment to Question 5 was not permitted.

Proposed Question 8

25    At [278]–[279] of the Reasons, the Tribunal stated the relevant legal principles on the administrative penalty regime:

The administrative penalty regime (for non-scheme penalties) has been summarised in this way:

4. By s 284-90 in Schedule 1 to the Taxation Administration Act 1953 (Cth) (‘TAA’), Parliament has prescribed penalties in what has been described as ‘gradations of increasing severity in terms of conduct by a taxpayer or his, her or its agent which has resulted in a tax shortfall’.

5. Thus, failure to take reasonable care, recklessness and intentional disregard of the law attract base penalty amounts of 25%, 50% and 75% respectively of the relevant tax shortfall. The applicable base penalty amount is increased by an uplift of 20% where, relevantly, a penalty has previously been applied.

6. The authorities establish that ‘intentional disregard’ requires:

inter alia, an understanding by the taxpayer of the effect of the relevant legislation or regulations, an appreciation by the taxpayer of how that legislation or regulation applies to the circumstances of the taxpayer, and finally, deliberate conduct of the taxpayer so as to flout the [Act or regulations].

7. The object of the administrative penalty legislation is stated to be to provide a uniform administrative penalty regime to apply to entities that fail to meet their obligations under taxation laws. Implicitly, it is to encourage voluntary compliance with taxation obligations.

8. Under s 298-20 in Schedule 1 of the TAA, the base penalty amount may be wholly or partly remitted where, having regard to all relevant circumstances, it is appropriate to do so.’

(Footnotes omitted.)

The applicants bear the burden of proving the penalty assessments are excessive. To do so, they would need to prove there was no intentional disregard of the law by the applicant in each case, or their external accountants as their agent, in respect of each income year.

(Emphasis original, footnotes omitted.)

26    By reference to the statutory test as outlined above and to the evidence before it, the Tribunal stated at [280]–[284]:

There is nothing in the evidence to suggest the accountants intentionally disregarded the law. As for the applicants, as already emphasised, they repeatedly asserted their reliance upon their professional advisers but adduced no evidence from the accountants who prepared their returns. I infer that it would have been a relatively simple matter to at least obtain a statement from Mazars setting out what information they relied upon to prepare the returns they prepared, appending copies of any records of advice to or communications with the applicants in that regard. The applicants made a deliberate choice not to do so.

That leaves the Tribunal in the position of having no independent evidence on which to determine whether the applicants have discharged the burden of proving the penalty assessments are excessive. As already noted, there is no requirement for applicants to corroborate their evidence with evidence from third parties. However, without such evidence in this case, for the reasons already given in relation to the primary tax assessments having regard to the contextual matters addressed earlier, I am not able to reach a state of satisfaction that the base penalty assessments are excessive (other than to the proportionate extent required by the adjustments to the primary tax assessments I have concluded are required).

The Commissioner, and the Tribunal on review, has a broad discretion to wholly or partly remit penalties. As Griffith J stated in Sanctuary Lakes v Federal Commissioner of Taxation:

the question [of the remission of penalty under s 298-20 of Sch 1 to the TAA] is ... whether the decision-maker is satisfied having regard to the taxpayer’s particular circumstances that it is appropriate to remit [the] penalty in whole or in part.

Aside from their primary case that they relied on professional advisers, or that any errors were inadvertent or the fault of the external accountants, the applicants have not adduced any evidence or made any submissions relevant to the remission of penalties. In those circumstances, there is, in my view, insufficient evidentiary foundation for the Tribunal to wholly or partly remit the penalties, for either applicant in respect of any relevant income year.

Accordingly, the applicants have not discharged the burden of proving the penalty assessments are excessive other than to the extent of the proportionate reductions required to reflect the adjustments to the primary tax assessments referred to above.

(Emphasis original, footnotes omitted.)

27    The particulars to the reformulated Question 8 state that “the complaint is that the reasons determine the penalty question by reference to the absence of independent evidence from the accountants, and do not disclose the application of the stated criterion – an evaluative assessment of intentional disregard by each applicant, or their agent, for each income year – to the position of either applicant. Whether the Tribunal applied the correct statutory test is a question of law …”. The applicants submit that this is their “strongest” proposed ground.

28    Once again, however, the proposed Question 8 does not raise a question of law.

29    The challenge to the Tribunal’s reliance on the absence of evidence to suggest that the accountants intentionally disregarded the law, and the absence of independent evidence from the accountants to corroborate the evidence of the applicants, are complaints about the Tribunal’s evaluation of the evidence before it. That is not a question of law.

30    To the extent that it might be said that the proposed Question 8 raises a question of whether the Tribunal applied the correct statutory test, it has no reasonable prospect of success.

31    The Tribunal set out the legal principles on “intentional disregard” and found that Mr and Mrs Lewis were required to “prove there was no intentional disregard of the law by the applicant in each case, or their external accountants as their agent…” at [279]. The Tribunal concluded that the accountants did not intentionally disregard the law (at [280]) before considering the issue “[a]s for the applicants” (at [280]). The Tribunal then weighed the evidence, including the “contextual matters” (such as those set out at [118], [127], [136], [156], [163], [172], [199], [220] and [245] of the Reasons), to conclude that the applicants failed to prove that the penalty assessments were excessive at [280]–[281].

32    For these reasons, the amendment to Question 8 was not permitted.

Conclusion

33    The application to amend the Notice of Appeal was dismissed, with costs to follow the event.

Associate:

Dated:    7 August 2026