McAuliffe and Commissioner of Taxation (Taxation) [2021] AATA 3235 (18 August 2021)

Division:	Taxation and Commercial Division
File Number(s):	2020/8169
Re:	 Brett McAuliffe
	APPLICANT
And	Commissioner of Taxation
	RESPONDENT
Decision

Tribunal:	Deputy President Bernard J McCabe 

Date:	18 August 2021
Place:	Perth

The application is dismissed. 
...................................SGD.....................................
Deputy President Bernard J McCabe 

Catchwords
TAXATION – Interlocutory application – jurisdiction – dismissal under section 42B AAT Act – alleged maladministration – model litigant – no reasonable prospect of success – objection already allowed in full – application dismissed.  
Legislation
Administrative Appeals Tribunal Act 1975 (Cth)
Income Tax Assessment Act 1936 (Cth)
Taxation Administration Act 1953 (Cth)
Cases
Vargiemezis and Commissioner of Taxation [2008] AATA 1152

REASONS FOR DECISION

Deputy President Bernard J McCabe 
1.	The taxpayer in this case disagrees with the way the Commissioner of Taxation has treated a lump sum compensation payment that was paid in settlement of a Comcare claim. The compensation payment was paid in the 2019 year of income but reflected three years of compensation lumped into one payment. The taxpayer says the compensation payment should effectively be attributed to and apportioned across the three different years of income, whereas the Commissioner says the whole amount was assessable in the year of income in which it was received. When the Commissioner issued an assessment to that effect, the taxpayer objected.
2.	The Commissioner allowed the objection in full, but not for the reasons suggested by the taxpayer. The Commissioner insists he cannot apportion the payments across several different years as the taxpayer contends, but concedes the taxpayer was entitled to the benefit of the rebate in Division 17 of the Income tax Assessment Act 1936 (Cth) (ITAA36). When the rebate was applied, the amount of tax the applicant was required to pay in the 2019 year of income was effectively the same as if the amounts had been attributed across the three income years. The Commissioner has since issued an amended assessment giving effect to that conclusion.
3.	The taxpayer is unhappy with this outcome. He sought review of the objection decision in the Tribunal under Part IVC of the Taxation Administration Act 1953 (Cth) (the TAA). The Commissioner asked for a jurisdiction hearing because he says the taxpayer cannot be dissatisfied with the decision under review in any meaningful sense since the objection was allowed in full. In those circumstances, the Commissioner says the matter should be dismissed under s 42A(4) of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act) for want of jurisdiction. 
4.	The parties both provided submissions on jurisdiction. The taxpayer’s submissions came in several tranches. The taxpayer’s submissions included a number of allegations about the Commissioner’s behaviour and ranged far beyond the question of jurisdiction. When the hearing of jurisdiction commenced, we asked whether the real issue before the Tribunal was one of jurisdiction. We asked the parties to consider whether we should additionally (or alternatively) have regard to the power to dismiss the proceedings under s 42B of the AAT Act. We decided to allow the parties an opportunity to make written submissions on this question and indicated we would adjourn to consider the material and provide a decision in due course.
5.	We will briefly outline the arguments in relation to jurisdiction before we explain why we have decided to deal with the matter under s 42B of the AAT Act.
A question of jurisdiction
6.	The Commissioner points out a taxpayer’s objection must state “fully and in detail… the grounds that the person relies upon” in making the objection when it is lodged with the Commissioner: s 14ZU(c) TAA. A taxpayer that is “dissatisfied” with a reviewable objection decision may seek review of the decision in the Tribunal or the Federal Court (s 14ZZ(1)) but in doing so the taxpayer is confined to the same grounds of objection set out in the application for an objection lodged with the Commissioner. Where the application for review is lodged with the Tribunal, the Tribunal has the power to grant leave to amend the grounds of objection. In the absence of leave, the taxpayer’s arguments must be founded on the grounds as stated: s 14ZZK(a). 
7.	Question 12 in the form which initiated the objection process asked the taxpayer to “clearly explain why you believe the decision is incorrect”. The taxpayer’s entry in answer to the question was not so much a statement of grounds as it was a request to achieve an outcome. It said:
REQUEST LUMP SUM E FIGURE ON MR McAULIFFE’S 2018/2019 PAYMENT SUMMARY TO BE ACCREDITED TO PRECIOUS FINANCIAL YEARS , 2015/2016, 2016/2017 AND 2017/2018 IN ACCORDANCE WITH COMMCARE ADVICE LETER DATED 02/07/2019
8.	We are not concerned with the typographical or spelling errors here. We are however concerned with the absence of any coherent explanation of a belief as to why or how the decision was incorrect. It is not enough to assert the assessment is wrong and request an alternative. The objection process requires that one explain how the assessment is wrong, and how and why it should be made differently. The taxpayer failed to do that in the objection form.
9.	The Commissioner did not reject the objection outright because of this defect. He reconsidered the assessment, albeit without the benefit of a coherent argument from the taxpayer in the grounds of objection. The Commissioner decided to allow the objection in full after considering the operation of the provisions in Div 17 of ITAA36. 
10.	Div 17 addresses the general rule derived from s 6-5(2) of the Income Tax Assessment Act 1997 (Cth) (ITAA97) that potentially disadvantages a person in the position of the taxpayer. Section 6-5(2) says:
(2) If you are an Australian resident, your assessable income includes the ordinary income you derived directly or indirectly from all sources, whether in or out of Australia, during the income year.
11.	That provision and its predecessors has been interpreted to mean that payments of the kind in question here would ordinarily be included in the assessable income of the taxpayer in the year in which they received, rather than in the year to which they related: see Vargiemezis and Commissioner of Taxation [2008] AATA 1152 at [12] per SM Pascoe where the relevant authorities are summarised. That would be an unfortunate outcome for a taxpayer – which is where Div 17 comes in.
12.	Two things can be said about all this:
•	First, while the Commissioner allowed the objection in full, the taxpayer has not provided cogent grounds upon which the assessment or the objection decision could be challenged; and
•	second, the taxpayer does not appear to be disadvantaged in any sense by the conclusion that was reached and, in any event, he achieved the most favourable outcome that was available on objection. Whilst the Tribunal understands the Applicant remains unhappy, that unhappiness is a product of the operation of the law.
13.	The Commissioner argued the Tribunal did not have jurisdiction to entertain the review in circumstances where the taxpayer was unable to establish he was dissatisfied in the relevant sense. The Commissioner referred us to discussion of that expression in several authorities.
14.	The taxpayer made detailed submissions and was unrestrained in his criticism of various decision-makers. The taxpayer refers to ‘maladministration’ at the hands of the Commissioner. He claims the Commissioner mislead him by claiming the objection was allowed in full. The taxpayer further states the Commissioner engaged in egregious behaviour and did not conduct himself as a model litigant.    
15.	We do not need to express a concluded view about the taxpayer’s allegations.  The Tribunal conducts a de novo review on the merits. Allegations of misbehaviour or other irregularities in the decision-making process are generally irrelevant to the Tribunal’s work. While it is obvious the taxpayer is unhappy with the way in which he perceives he was treated, we are not in a position to deal with those matters because we are not a complaints handling body.   Even if mistakes were made or bad behaviour occurred, we are focused on the decision. Our job is to get that decision right on review, and to model good decision-making behaviour as we go about doing so. Concerns about bias or misdeeds or systemic irregularities are best addressed to the Inspector-General of Taxation. Allegations of that kind are no substitute for properly articulated grounds of objection. 
16.	Even if there was something to the taxpayer’s allegations, they have not been adequately articulated in the grounds of objection in this case. The allegations cannot be used in these proceedings unless leave were given to amend the grounds of objection. The taxpayer has not sought leave to do so.
17.	We are not persuaded the taxpayer is a person who is dissatisfied with the objection in the sense intended by the legislation. 
Dismissal under s 42B
18.	The Tribunal’s review process is designed to establish and uphold norms that regulate decision-making behaviour. It does that by modelling good decision-making behaviour when (re) making the decisions before it. While the review mechanism is relatively costly in the handful of cases that make it to a hearing each year, the Tribunal’s decisions should provide guidance to primary decision-makers and citizens that will clarify the law and administrative practice. Our reviews are an efficient way of improving the quality of decisions and reducing disputation in the future. 
19.	While the Tribunal treats every dispute between the citizen and the state seriously, not every dispute is meritorious. In some cases, the applicant has a case that cannot succeed at law. The proceedings might be vexatious, or the applicant might be abusing the Tribunal’s processes. Other applicants might be well-intentioned but there is nothing the Tribunal can do to deliver a meaningful outcome. In such cases, the correct and preferable outcome may be to make an order under s 42B of the AAT Act.
20.	The power in s 42B of the AAT Act is effectively a summary dismissal power. After considering the submissions of the parties, we are satisfied the discretion to dismiss should be exercised in this case. We reach that view because the Tribunal is unable to provide the taxpayer with a different or more favourable outcome. The objection decision has already been allowed in full; the Tribunal cannot exercise a different, more generous power even if it were minded to do so. We would add we have no reason to doubt the correctness of the Commissioner’s conclusion: the Commissioner’s submissions carefully explained the operation of the relevant statutory provisions, and the taxpayer’s submissions failed to engage with those arguments in any meaningful way. It follows the taxpayer has already received due process, and further proceedings are misconceived, lacking in substance, and without reasonable prospect of success.
Conclusion
21.	The proceedings are dismissed pursuant to s 42B of the AAT Act. 
I certify that the preceding 21 (twenty-one) paragraphs are a true copy of the reasons for the decision herein of  	
.....................................SGD.................................
Associate
Dated: 18 August 2021

Date(s) of hearing:	23 April 2021	
Applicant:	Self – Represented 	
Solicitors for the Respondent:	HWL EBSWORTH LAWYERS