Brown v Commissioner of Taxation [2001] FCA 276

FEDERAL COURT OF AUSTRALIA

Brown v Commissioner of Taxation [2001] FCA 276 EVIDENCE – where Taxpayer failed to declare home unit as part of his income – where Taxpayer claimed he believed home unit was a gift– where Taxpayer brought proceeding in the Administrative Appeals Tribunal – where proceeding heard in private pursuant to s 14ZZE Taxation Administration Act 1953 (Cth) – where an appeal lodged to the Federal Court – whether questions relating to Administrative Appeals Tribunal proceeding admissible in current proceeding Taxation Administration Act 1953 (Cth) ss 8XB, 14ZZE Administrative Appeals Act 1975 (Cth) s35 Evidence Act ss 102, 103, 135 Federal Court of Australia Act 1976 (Cth) s 50 Income Tax Assessment Act 1997 (Cth) s 2 JOHN JOSEPH BROWN v COMMISSIONER OF TAXATION N 1480 OF 1999 EMMETT J 14 MARCH 2001 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N 1480 OF 1999

BETWEEN: JOHN JOSEPH BROWN

APPLICANT

AND: COMMISSIONER OF TAXATION

RESPONDENT

JUDGE: EMMETT J

DATE: 14 MARCH 2001

PLACE: SYDNEY

RULINGS ON EVIDENCE

ruling A 1 Counsel for the Commissioner seeks to put a series of questions to the Taxpayer designed to demonstrate that the Taxpayer failed to include certain income in his return for the year ended 30 June 1991. This income is derived from consulting services referred to in a letter of 8 August 1991. The income is also referred to in other documents originating from the Tourism Task Force Limited, a lobby group which retained the Taxpayer as a consultant, and of which he was Chairman. 2 It is conceded that such matters are not relevant to any fact in issue in the proceeding, and that such evidence would be relevant only to the Taxpayer's credibility. Accordingly, under s 102 of the Evidence Act 1995 (Cth) ("the Act"), which corresponds to the common law credibility rule, the evidence is not admissible. However, s 103(1) provides that the credibility rule does not apply to evidence adduced in cross-examination of a witness if the evidence has substantial probative value. 3 Under the Dictionary, which forms part of the Act, "probative value" of evidence means "the extent to which the evidence could rationally affect the assessment of the probability of the existence of a fact in issue". The Taxpayer has given evidence by way of affidavit and orally as to circumstances that led up to the transfer of the Unit, (as defined in my earlier ruling on evidence: Brown v Commissioner of Taxation [2001] FCA 240). 4 The Taxpayer's evidence in relation to those matters is challenged by the Commissioner. It is said that if the Taxpayer were to concede that there were a conscious omission of assessable income from his income tax return, that would have a bearing on the Taxpayer's credibility in relation to the matters about which he has given evidence. At present, I have no knowledge of what the answers would be to the proposed questions. I have been informed that there are concurrent proceedings in the Administrative Appeals Tribunal involving an appeal from an objection decision in relation to a further amended assessment issued by the Commissioner to the Taxpayer in relation to the consulting fees in question. 5 I have been informed that that appeal is being prosecuted but have no further information concerning the issues that will arise in that proceeding. In any event, while of course I must take a very dim view of the deliberate omission of income from a tax return, I am not persuaded that, even if that were accepted by the witness, that would have substantial probative value within the meaning of s 103(1) in relation to any fact in issue. Accordingly, I propose to reject the evidence at this stage.