Huy Kien Luu & Anor v Deputy Commissioner of Taxation [1997] FCA 402

CATCHWORDS TAXATION - amended assessments of taxation - relevant considerations - whether the conduct of officers of the Australian Taxation Office was a relevant issue for consideration by the trial judge in assessing amended assessments of taxation. Tax Administration Act 1953 (Cth), s 14ZZP Devries v Australian National Railways Commission (1992) 177 CLR 472 HUY KIEN LUU & ANOR v DEPUTY COMMISSIONER OF TAXATION SG 10 of 1997 SPENDER, SACKVILLE, and FINN JJ SYDNEY (heard in Adelaide) 23 MAY 1997

IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIAN DISTRICT REGISTRY No SG 10 of 1997 GENERAL DIVISION ON APPEAL FROM A JUDGE OF THIS COURT BETWEEN: HUY KIEN LUU and MO DUNG LUU Appellants AND: DEPUTY COMMISSIONER OF TAXATION Respondent CORAM: SPENDER, SACKVILLE and FINN JJ PLACE: SYDNEY (heard in Adelaide) DATE: 23 MAY 1997 MINUTES OF ORDER THE COURT ORDERS THAT: The appeal be dismissed with costs, to be taxed if not agreed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA SOUTH AUSTRALIAN DISTRICT REGISTRY No SG 10 of 1997 GENERAL DIVISION ON APPEAL FROM A JUDGE OF THIS COURT BETWEEN: HUY KIEN LUU and MO DUNG LUU Appellants AND: DEPUTY COMMISSIONER OF TAXATION Respondent CORAM: SPENDER, SACKVILLE and FINN JJ PLACE: SYDNEY (heard in Adelaide) DATE: 23 MAY 1997 REASONS FOR JUDGMENT This is an appeal from orders made by a judge of this Court (Mansfield J) on 24 January 1997 pursuant to s 14ZZP of the Tax Administration Act 1953 (Cth), confirming amended assessments of taxation issued by the respondent ('the Commissioner') on 24 October 1994 to Huy Kien Luu ('Mr Luu') for the taxation year ending 30 June 1994, and varying amended assessments of taxation each issued by the Commissioner on 11 November 1994 to Mo Dung Luu ('Ms Luu') for each of the taxation years ending 30 June 1989, 30 June 1991, and 30 June 1992, the assessments being amended by reducing the amounts of taxable income in each of those years. His Honour set aside amended assessments for the taxation years ending 30 June 1989 and 30 June 1990 issued to Mr Luu, and an amended assessment for the taxation year ending 30 June 1988 to Ms Luu, in each case on the basis that there was no income omitted by the relevant taxpayer in the taxation return submitted for each of those years. There is no cross appeal by the Commissioner from those orders setting aside those amended assessments. There is no dispute about the background facts, which are adopted from the trial judge's reasons for judgment. Mr Luu and Ms Luu are brother and sister. Mr Luu was born on or about 13 March 1967 and Ms Luu on 7 September 1952. They, as part of a larger family group including their parents, left Vietnam in late 1978 or early 1979 and arrived in Malaysia. They resided in a transit camp in Malaysia for some months. They applied to Australian authorities for, and were granted, refugee status. They arrived in Australia on 11 October 1979 and were immediately granted permanent residence. They have lived in Australia ever since. In Vietnam, the appellants' parents Mr Vinh Luu and Ms Ngoc Yen Phuong had a family business involving milling and food wholesaling. It was a successful and profitable enterprise, until about the mid 1970s when the South Vietnamese government collapsed. It had enabled their parents to accumulate some wealth, but the trial judge found that it was not possible on the evidence before him to decide to what extent. The victimisation of Mr Vinh Luu and the family by the new Vietnamese government led to their decision to come to Australia. Mr Luu from an early age worked casually as a cleaner in restaurants and as a gardener. From about 1985 he worked full time in restaurants, as a cleaner, kitchen hand and later as a chef. The Commissioner has a record of him first having lodged a taxation return for the year ending 30 June 1987. Ms Luu suffered quite severely from a childhood illness of polio. Her income from the time the family arrived in Australia until 1989 was from either sickness benefits, unemployment benefits or rehabilitation benefits, under the Social Security Act in force from time to time. She supplemented that income by casual dress designing and dress making for friends and acquaintances. She first lodged an income tax return for the year of income ended 30 June 1989. In about January 1989, Mr Luu and Ms Luu commenced to operate a restaurant business known as the Tandoor Shalimar Restaurant and continue to do so. Associated with that activity, they operated also an Asian food outlet in the University of Adelaide from 1989 to 1994. From 1983, Mr Luu and Ms Luu lived with their parents at 10 Hammond Road, Findon ('the Hammond Road property'), purchased for $83,000.00 said to be with funds from their parents' resources but at the time put into the names of two of their brothers Mr Dan Kien Luu and Mr Lac Kien Luu. Both the appellants' parents are now deceased, Mr Vinh Luu in February 1995 and Ms Ngoc Yen Phuong in September 1994. Mr Luu claimed he was earning more than was declared on group certificates issued to him for the 1987-89 tax years. There was a dramatic drop in profits for the 1990-91 tax year, although the declared gross revenue for each of 1990, 1991 and 1992 did not vary greatly. It was submitted on behalf of the Commissioner before the trial judge that: