Commissioner of Taxation v Cancer and Bowel Research Association [2013] FCAFC 140
A decision by the AAT to send a matter back to the original decision-maker for reconsideration creates a dilemma for the aggrieved party: in the absence of a final ‘decision’, how can the right to appeal from a decision on a question of law (s 44 of the AAT Act) be engaged? The answer lies in s 39B relief.
The Commissioner of Taxation decided in 2012 to revoke the taxpayer’s endorsements for various charity tax concessions. The revocation was made effective retrospectively from 1 July 2000. The taxpayer objected and in due course sought review of the decision in the AAT.
The AAT’s critical finding was that, on a proper construction of the Commissioner’s power to revoke endorsement (s 426-55 of Sch 1 to the Taxation Administration Act 1953) the Commissioner first needed to assess the taxpayer’s entitlement to be endorsed at time the revocation was contemplated (ie, in 2012).
The AAT found there was not enough evidence before it about the taxpayer’s affairs in 2012 to enable it to decide whether the taxpayer was then entitled to be endorsed. So the AAT exercised a power (s 42D of the AAT Act) to remit the matter to the decision-maker for reconsideration of that issue.
The Commissioner disagreed with the AAT’s construction of the revocation power. He instituted proceedings in the Federal Court (sitting as a Full Court) to review the decision in two ways: first, by way of appeal on a question of law (s 44 of the AAT Act), and second, in the court’s prerogative (or ‘constitutional’) writ jurisdiction (s 39B of the Judiciary Act 1903).
Section 44 appeal on a question of law not available
Section 44(1) of the AAT Act enables an appeal on a question of law to be brought from a ‘decision’ of the AAT. The meaning of ‘decision‘ in this context was considered in cases early in the life of the AAT. It means the decision which constitutes the effective decision or determination of the application for review (that is, the final decision contemplated in s 43 of the AAT Act): Director-General of Social Services v Chaney (1980) 31 ALR 571 at 592-593 (Deane J).
The Full Court unanimously held that the AAT’s decision to remit the matter to the original decision-maker pursuant to s 42D was not a ‘decision’ within the meaning of s 44(1) of the AAT Act and there could be no appeal under that section. The language of s 42D makes it clear that the application to the AAT remains on foot (and its jurisdiction enlivened) while the original decision-maker reconsiders the decision.
Section 39B relief available, but no error of law found
The Commissioner’s proceeding therefore depended on his application for s 39B relief. The question was whether the discretion to grant s 39B relief should be exercised in circumstances where a statutory avenue of appeal existed (s 44 of the AAT Act)? There is ample authority that where appeal exists as an avenue to correct an error of law, this is a powerful discretionary reason not to grant s 39B relief: Kirk v Industrial Court (NSW) (2010) 239 CLR 531 FCT v Futuris Corporation Ltd (2008) 237 CLR 151.
The Full Court found that s 39B relief was available and should not be refused for discretionary reasons. No other avenue of appeal was available to challenge the exercise of the s 42D power.
Further, the Full Court found that the AAT’s construction of the revocation provision was right. The power of retrospective cancellation of an endorsement depended on a lack of entitlement to endorsement as at the date of the decision being made. This would not prevent the Commissioner (once the power was enlivened) from inquiring into the past to determine the period from which any revocation was to take effect. But it did prevented the Commissioner exercising the power of revocation at a time when corrective action had been taken and the taxpayer was compliant.
