National Speakers Association of Australia Inc v Commissioner of Taxation [1997] FCA 1371

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 755 of 1997

BETWEEN: NATIONAL SPEAKERS ASSOCIATION OF AUSTRALIA INC.

Applicant

AND: COMMISSIONER OF TAXATION

Respondent

JUDGE: EMMETT J

DATE: 25 NOVEMBER 1997

PLACE: SYDNEY

EX TEMPORE REASONS FOR JUDGMENT HIS HONOUR: There is before the Court an application by National Speakers Association of Australia Inc. ("the Association") which is expressed to be an appeal against an appealable objection decision made by the Commissioner of Taxation. The objection decision described in the application of 16 September 1997 is as follows:

The disallowance by the Respondent of the Applicant's Notice of Objection dated 10 December, 1996 against the Private Binding Ruling dated 14 November, 1996 for the income year ended 31 December 1996. When the matter was called on before me today, counsel for the Association indicated that he wished to make a submission that there had been no valid notice of private ruling in accordance with the legislation and that, in the circumstances, the matter should be remitted to the Commissioner. Counsel for the Commissioner then indicated that he wished to make a submission that in the circumstances there had been no valid application for a private ruling and sought a declaration to that effect. Both parties, as I understand the position, very much wanted to proceed with the hearing of the substantive matter which would have been raised by the appeal if there had been a valid application for a private ruling and a valid ruling. I have reluctantly come to the conclusion that it is not possible for me to give a ruling on the substantive issue. I will endeavour to explain the reasoning that leads me to that conclusion. Section 14ZAF of the Taxation Administration Act 1953 (Cth) ("the Act") provides that a person may apply to the Commissioner for a ruling on the way in which, in the Commissioner's opinion, a tax law or tax laws would apply to the person with respect to a year of income in relation to an arrangement. The term "arrangement" is defined in section 14ZAAA as including "a scheme, plan, action, proposal, course of action, course of conduct, transaction, agreement, understanding, promise or undertaking". By the operation of section 14ZAA(2) that definition is relevant for the purposes of section 14ZAF. Section 14ZAR provides that the Commissioner makes a private ruling by preparing a written notice of it and serving the notice on the applicant. Under section 14ZAS(1), a notice of private ruling must set out the matter ruled on and, in doing so, identify the person, tax law, year of income and arrangement to which the ruling relates. Section 14ZAS(3) provides that an arrangement may be identified in a private ruling by reference to matters set out in a document identified in the ruling and which, or a copy of which, is available to the "rulee". The word "rulee" is a term defined in the Act to describe the person who makes the application. On 1 October 1996, the solicitor for the Applicant wrote to the Commissioner. In that letter, the solicitor said that the Association sought a ruling as to whether or not the Association was exempt from income tax by reason of section 23(e) or alternatively section 23(g) of the Income Tax Assessment Act 1936 (Cth). Under section 23(e) and (g) the following income is exempt from income tax: