FEDERAL COURT OF AUSTRALIA Commonwealth Bank Officers Superannuation Corporation Pty Limited v Commissioner of Taxation [2003] FCA 794 SUPERANNUATION – Section 8(5)(b) of the Superannuation Contributions (Assessment and Collection) Act 1997 (Cth) – whether a decision made under s 8(5)(b) forms part of the assessment of surcharge on a member's surchargeable contributions. ADMINISTRATIVE LAW – the extent of the powers of the Administrative Appeals Tribunal when exercising jurisdiction to review a decision of the Commissioner to disallow an objection to an assessment of surcharge on a member's surchargeable contributions under the Superannuation Contributions (Assessment and Collection) Act 1997 (Cth). Administrative Appeals Tribunal Act 1975 (Cth) s 43(1) Superannuation Contributions Tax (Assessment and Collection) Act 1997 (Cth) ss 8(5), 15(1), 24 Taxation Administration Act 1953 (Cth) Part IVC Comcare v Burton (1998) 50 ALD 846 followed Deputy Commissioner of Taxation of the Commonwealth of Australia v Richard Walter Pty Limited (1995) 183 CLR 168 distinguished Fletcher v Commissioner of Taxation (1988) 19 FCR 442 referred to COMMONWEALTH BANK OFFICERS SUPERANNUATION CORPORATION PTY LIMITED v COMMISSIONER OF TAXATION N 1328 of 2001 BRANSON J 31 JULY 2003 SYDNEY IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 1328 of 2001 BETWEEN: COMMONWEALTH BANK OFFICERS SUPERANNUATION CORPORATION PTY LIMITED APPLICANT AND: COMMISSIONER OF TAXATION RESPONDENT JUDGE: BRANSON J DATE OF ORDER: 31 JULY 2003 WHERE MADE: SYDNEY THE COURT ORDERS THAT: 1. The question: 'On review under section 14ZZ of Part IVC of the Taxation Administration Act 1953 ('the Administration Act') of a decision by the Respondent to disallow an objection against assessments issued under the Superannuation Contribution Tax (Assessment and Collection) Act 1997 to the Applicant as trustee of the Officers Superannuation Fund for the financial year ended 30 June 2001, does the Administrative Appeals Tribunal under sections 25 and 43 of the Administrative Appeals Tribunal Act 1975 or otherwise have power, pursuant to s 8(5)(b) of the Superannuation Contributions Tax (Assessment and Collection) Act 1997, to approve in writing another method of calculating the actuarial value of the benefits that accrued to, and the value of the administration expenses and risk benefits provided in respect of, the members in respect of whom the assessments are issued for the purpose of calculating surchargeable contributions for those members?' be decided 'No'. 2. The applicant pay the respondent's costs of the decision of the question decided in paragraph 1 hereof. IN THE FEDERAL COURT OF AUSTRALIA NEW SOUTH WALES DISTRICT REGISTRY N 1328 of 2001 BETWEEN: COMMONWEALTH BANK OFFICERS SUPERANNUATION CORPORATION PTY LIMITED APPLICANT AND: COMMISSIONER OF TAXATION RESPONDENT JUDGE: BRANSON J DATE: 31 JULY 2003 PLACE: SYDNEY REASONS FOR JUDGMENT introduction 1 The applicant is the trustee of the Officers' Superannuation Fund ('the OSF'). The OSF is a defined benefits superannuation scheme within the meaning of the Superannuation Contributions Tax (Assessment and Collection) Act 1997 (Cth) ('the SCTAC Act'). In its capacity as trustee of the OSF, the applicant has applied to the Court under s 5 of the Administrative Decisions (Judicial Review) Act 1977 (Cth) ('ADJR Act') for an order of review of a decision of the respondent dated 29 June 2001 ('the Decision'). The Decision, which concerned the method of calculation of the amount on which the applicant was required to pay the superannuation surcharge in the year ended 30 June 2001, was made under s 8(5) of the SCTAC Act. Section 8(5) provides: 'The actuarial value of the benefits that accrued to, and the value of the administration expenses and risk benefits provided in respect of, a member of a defined benefits superannuation scheme for the 1999-2000 financial year or a later financial year is an amount worked out using: (a) the method set out in the regulations, being a method that excludes contributions made by the member for which the member is not entitled to an income tax deduction under the Income Tax Assessment Act or under the Income Tax Assessment Act 1997; or (b) if the Commissioner approves in writing another method as being appropriate in relation to the member for the financial year, being a method that excludes contributions made by the member for which the member is not entitled to an income tax deduction under the Income Tax Assessment Act or under the Income Tax Assessment Act 1997—the method so approved. ' 2 The applicant applied to the respondent under s 8(5)(b) of the SCTAC Act for an approval in writing of 'another method' of calculation in relation to certain members ('the Members') of the OSF in the year ended 30 June 2001. The respondent did not give the approval in writing which the applicant sought. 3 The applicant has received notification of assessments of surcharge in respect of the Members. The applicant has objected to these assessments of surcharge. The respondent has not yet determined the applicant's objections. 4 The applicant contends that the decision of the respondent not to give the approval in writing under s 8(5)(b) of the SCTAC Act that the applicant sought was made as part of the process of making the assessments of surcharge on the Member's surchargeable contributions. For this reason, the applicant argues, the objections to the assessments of surcharge on the Member's surchargeable contributions raise for reconsideration by the respondent the decision previously made under s 8(5)(b). The respondent, on the other hand, contends that a decision of the respondent under s 8(5)(b) does not form part of the assessment process and thus does not arise for reconsideration on an objection to an assessment of surcharge. 5 On 28 November 2002, at the request of the parties, I directed, pursuant to O 29 r 2 of the Federal Court Rules, that there be heard and decided as a separate question before trial the question: 'On review under section 14ZZ of Part IVC of the Taxation Administration Act 1953 ('the Administration Act') of a decision by the Respondent to disallow an objection against assessments issued under the Superannuation Contribution Tax (Assessment and Collection) Act 1997 to the Applicant as trustee of the Officers Superannuation Fund for the financial year ended 30 June 2001, does the Administrative Appeals Tribunal under sections 25 and 43 of the Administrative Appeals Tribunal Act 1975 or otherwise have power, pursuant to s 8(5)(b) of the Superannuation Contributions Tax (Assessment and Collection) Act 1997, to approve in writing another method of calculating the actuarial value of the benefits that accrued to, and the value of the administration expenses and risk benefits provided in respect of, the members in respect of whom the assessments are issued for the purpose of calculating surchargeable contributions for those members?' 6 I was willing to accept that the above question ('the Question') arises in this proceeding as the relief available to the applicant under s 5 of the ADJR Act is discretionary relief. The availability of a more convenient remedy in the Tribunal could constitute a ground to refuse the relief sought by the applicant in this proceeding (s 10(2) of the ADJR Act). Further, the contention considered below that a decision under s 8(5)(b) of the SCTAC Act can be the subject of review by the respondent when considering an objection to the assessment of surcharge might be thought to raise an issue as to whether a decision under s 8(5)(b) remains an operative decision for the purposes of the ADJR Act following the lodging of a taxation objection concerning the assessment of surcharge. 7 For the reasons set out below, I have decided that the answer to the Question is 'No'. statutory provisions Administrative Appeals Tribunal Act 1975 (Cth) 8 As the Question is concerned with the powers of the Tribunal, it is necessary to give consideration to relevant provisions of the Administrative Appeals Tribunal Act 1975 (Cth) ('the AAT Act'). Section 25 of the AAT Act relevantly provides: '(1) An enactment may provide that applications may be made to the Tribunal: (a) for review of decisions made in the exercise of powers conferred by that enactment; or (b) for the review of decisions made in the exercise of powers conferred, or that may be conferred, by another enactment having effect under that enactment. … (3) Where an enactment makes provision in accordance with subsection (1), that enactment: (a) shall specify the person or persons to whose decisions the provision applies; (b) may be expressed to apply to all decisions of a person, or to a class of such decisions; and (c) may specify conditions subject to which applications may be made. … (4) The Tribunal has power to review any decision in respect of which application is made to it under any enactment.' 9 Section 27 of the AAT Act is concerned to identify the persons who may apply to the Tribunal. Section 27(1) provides: '(1) Where this Act or any other enactment (other than the Australian Security Intelligence Organisation Act 1979) provides that an application may be made to the Tribunal for a review of a decision, the application may be made by or on behalf of any person or persons (including the Commonwealth or an authority of the Commonwealth) whose interests are affected by the decision.' 10 The powers given to the Tribunal by s 43(1) of the AAT Act are of critical importance so far as the answer to the Question is concerned. Section 43(1) provides: '(1) For the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions that are conferred by any relevant enactment on the person who made the decision and shall make a decision in writing: (a) affirming the decision under review; (b) varying the decision under review; or (c) setting aside the decision under review and: (i) making a decision in substitution for the decision so set aside; or (ii) remitting the matter for reconsideration in accordance with any directions or recommendations of the Tribunal.' Taxation Administration Act 1953 (Cth) 11 Part IVC of the Taxation Administration Act 1953 (Cth) ('the Administration Act'), is comprised of ss 14ZL-14ZZS. Section 14ZL provides: '(1) This Part applies if a provision of an Act or of regulations (including the provision as applied by another Act) provides that a person who is dissatisfied with an assessment, determination, notice or decision may object against it in the manner set out in this Part. (2) Such an objection is in this Part called a taxation objection.' 12 Section 14ZY requires the respondent to decide a taxation objection that is lodged within the required period by allowing it, wholly or in part, or disallowing it. The decision of the respondent under 14ZY is an 'objection decision'. Section 14ZZ, relevantly for the present purpose, empowers a person dissatisfied with an objection decision to apply to the Tribunal for review of the decision. 13 Although s 14ZZA provides that the AAT Act applies in relation to the review of a reviewable objection decision subject to the modifications set out in Division 4 of Part IVC, none of those modifications impacts on the operation of s 43(1) of the AAT Act. Superannuation Contributions Tax (Assessment and Collection) Act 1997 (Cth) 14 Section 24 of the SCTAC Act is a provision of an Act that provides that a person who is dissatisfied with an assessment may object against it in the manner set out in Part IVC of the Administration Act (see s 14ZL of the Administration Act). Section 24 provides: '(1) If: (a) an assessment of surcharge on a member's surchargeable contributions is made; and (b) the member, or a superannuation provider who is the holder of the contributions, is dissatisfied with the assessment; … the member or provider may object against the assessment in the way set out in Part IVC of the Taxation Administration Act 1953. (2) An objection made by a superannuation provider may relate to all the assessments included in a class of assessments. A decision on the objection is taken to be a single decision for the purpose of calculating any fee payable in respect of lodging a reference or appeal in respect of the decision. … (3) In making a decision on the objection in so far as the objection relates to the calculation of the member's adjusted taxable income, the Commissioner is entitled to rely on: (a) the latest assessment of the member's taxable income under the Income Tax Assessment Act; and (b) the latest statement of the member's surchargeable contributions given to the Commissioner by the superannuation provider.' 15 A trustee of a superannuation fund is a 'superannuation provider' within the meaning of s 24 of the SCTAC Act (see the relevant definition in s 43 of the SCTAC Act). 16 An assessment of surcharge is made under s 15(1) of the SCTAC Act. Section 15 (1) provides: '(1) For each financial year for which there are surchargeable contributions for a member, the Commissioner must make an assessment that: (a) calculates the member's adjusted taxable income; and (b) if the adjusted taxable income is greater than the surcharge threshold: (i) calculates the surchargeable contributions; and (ii) calculates the rate of surcharge that applies to the member; and (iii) specifies the amount of the surcharge payable or, if no surcharge is payable, states that a nil amount of surcharge is payable; and (c) if the adjusted taxable income is equal to or less than the surcharge threshold—states that a nil amount of surcharge is payable.' consideration 17 The issue of whether the Tribunal has the power, on review of a relevant objection decision, to give an approval in writing under s 8(5)(b) of the SCTAC Act is to be determined by identifying the legislative intent in this regard disclosed by the statutes to which reference is made above. In seeking to identify that intent it is necessary to take into account that s 8 of the Administration Act gives the respondent wide powers of delegation. The respondent may delegate to any person all or any of his powers or functions under any law of the Commonwealth. Generally speaking, a power or function so delegated, when exercised or performed by the delegate, is deemed to have been exercised or performed by the respondent. 18 Neither party contended that a person who is dissatisfied with a refusal by the respondent to give an approval in writing under s 8(5)(b) could directly apply to the Tribunal for review of the decision to so refuse. However, the applicant contended that Part IVC of the Administration Act, read together with s 24 of the SCTAC Act, has the effect that the Tribunal, when reviewing a decision of the respondent to disallow an objection to an assessment of surcharge on a member's surchargeable contributions, can exercise its powers under s 43(1) of the AAT Act to review on the merits the decision of the respondent under s 8(5)(b) of the SCTAC Act. 19 It is convenient to give consideration first to the extent of the power given to the Tribunal by s 43(1) of the AAT Act. In Fletcher v Commissioner of Taxation (1988) 19 FCR 442 at 452 the Full Court observed: 'As a matter of principle, it must be correct … that the powers and discretions referred to in s 43(1) are the powers and discretions vested in the original decision‑maker for the purposes of making the decision under review. They do not include any powers and discretions which may be vested in the decision‑maker for some other purpose.' 20 In Comcare v Burton (1998) 50 ALD 846 Finn J at 848 described the opening phase of s 43(1) of the AAT Act as '[t]he purposive limitation on the power so given the tribunal by this provision'. His Honour at 851 stressed that s 43(1) of the AAT Act confers powers on the Tribunal in relation to matters in which it has jurisdiction; it is not itself a source of jurisdiction. Finn J at 852 pointed out that it is necessary to ascertain what is the particular reviewable decision that the Tribunal is to review and that: '[t]he process of reviewing that decision is to occur in the setting of the question(s) that gave rise to the decision. And while in that process the tribunal can exercise its s 43(1) powers, it nonetheless is obliged to answer the same question(s) as was (were) before the reconsideration decision-maker.' (citation omitted) 21 I express my respectful agreement with the approach adopted by Finn J in Comcare v Burton. In the present context, that approach requires the identification of the questions that are before the respondent when he determines an objection to an assessment of surcharge on a member's surchargeable contributions; that is, when the respondent makes an 'objection decision' within the meaning of s 14ZZ of the Administration Act concerning an assessment of surcharge on a member's surchargeable contributions ('the Objection Decision'). 22 The Objection Decision is made under s 14ZY of the Administration Act. To identify the questions that are before the respondent when he makes the Objection Decision it is necessary to identify the taxation objection which is the subject of the Objection Decision. That taxation objection is an objection under s 24 of the SCTAC Act to 'an assessment of surcharge on a member's surchargeable contributions' (s 24(1)(a)). The respondent contends that an assessment of surcharge on the Member's surchargeable contributions is made under s 15(1) of the SCTAC Act. The applicant, on the other hand, contends that the process of assessment of the surchargeable amount and of the superannuation surcharge payable thereon includes the decision of the respondent under s 8(5)(b). 23 In support of its above contention the applicant placed considerable reliance on observations made by members of the High Court in Deputy Commissioner of Taxation of the Commonwealth of Australia v Richard Walter Pty Limited (1995) 183 CLR 168 ('DCT v Walter'). In that case Mason CJ had reserved to the Court the following question: 'Does the production of the Notices of Assessment preclude wholly or in part challenge or review of the Richard Walter assessments in the proceeding under s 39B of the Judiciary Act 1903 (Cth), by reason of the operation of s 177 of the Income Tax Assessment Act 1936 (Cth)?' 24 Section 177(1) of the Income Tax Assessment Act 1936 (Cth) (the 'ITAA') gives a notice of assessment conclusive effect except in proceedings under Part IVC of the Administration Act. The question before the High Court in DCT v Walter, in my view, raised issues sufficiently removed from the issues which arise under the Question for the observations upon which the applicant relies to be of limited assistance in deciding the Question. In particular, the notice of assessment with which DCT v Walter was concerned was a notice of an assessment made under s 166 of the ITAA. Section 166 is in significantly different terms from s 15(1) of the SCTAC Act; it does not detail the steps by which an assessment is to be made. The provision of the ITAA that provides that a person who is dissatisfied with an assessment may object against it in the manner set out in Part IVC of the Administration Act is s 175A. Section 175A is also a provision that is in more general terms than s 24(1) of the SCTAC Act. 25 The crucial issue which arises under the Question is, in my view, the intended meaning of the words 'an assessment of surcharge on a member's surchargeable contributions' in s 24(1)(a) of the SCTAC Act. The objection which s 24(1) relevantly allows to be taken in the way set out in Part IVC of the Administration Act is an objection against an assessment within the meaning of those words. It is necessary to determine whether an assessment within the meaning of s 24(1)(a) includes a decision made under s 8(5)(b). If it does, the respondent, when making the Objection Decision, is required to reconsider the exercise of the s 8(5)(b) discretion. If it does not, no question concerning the exercise by the respondent of the discretion vested in him by s 8(5)(b) is before the respondent when he makes the Objection Decision. 26 At least three factors seem to me to lead to the conclusion that the legislature did not intend that s 24(1)(a) should be understood as including within an assessment a decision made under s 8(5)(b). First, as the parties each acknowledge, a decision made directly under s 8(5)(b) is amenable to judicial review under the ADJR Act. However, an objection decision under s 14ZY disallowing an objection to an assessment is not (Schedule 1 paragraph (ga) of the ADJR Act). It would, I consider, be a curious result if a decision not to approve 'another method' of calculation made directly under s 8(5)(b) of the SCTAC Act were amenable to judicial review but the same decision made as part of an objection decision under s 14ZY of the Administration Act were not. 27 Secondly, as the respondent pointed out, an application could be made and refused under s 8(5)(b) of the SCTAC Act at the beginning of a financial year but merit review by the Tribunal of the assessment of surcharge payable would not become available until after the end of the financial year. I accept that it would be a curious result, particularly having regard to the discretion vested in the Court by s 10(2) of the ADJR Act, for merits review of an assessment to become available at a time when the prescribed period within which an application may be made for judicial review of part of the assessment process had expired (see s 11 of the ADJR Act). 28 Thirdly, the language of s 15(1) of the SCTAC Act suggests that, within the meaning of the SCTAC Act, the assessment of the surcharge payable in respect of a member is conducted wholly under that subsection. Section 15(1) requires the respondent, for each financial year for which there are surchargeable contributions for a member, to make an assessment by the process specified by the subsection. That process assumes that identification of the surchargeable contributions is a matter of calculation only (s 15(1)(b)). For the identification of the surchargeable contributions to be a mere matter of calculation, the determination of the method of calculation of the surchargeable contributions must have been determined independently from, and ahead of, the assessment process. 29 I conclude that the intended meaning of the words 'an assessment of surcharge on a member's surchargeable contributions' in s 24(1)(a) of the SCTAC Act is an assessment made under s 15(1) of that Act. So understood, an approval given by the respondent under s 8(5)(b) effects the method whereby the calculation required by s 15(1)(b)(i) is made but does not itself form part of the assessment of surcharge against which s24(1)(a) allows an objection to be taken. 30 It seems to me that within the language of s 14ZL of the Administration Act, a decision under s 8(5)(b) of the SCTAC Act is a 'determination' or 'decision' rather than an 'assessment'. There is no provision of an Act or regulation that provides that a person who is dissatisfied with a determination or decision under s 8(5)(b) may object to it in the manner set out in Part IVC of the Administration Act. 31 For the above reasons I conclude that no question arising under s 8(5)(b) of the SCTAC Act is before the respondent when he makes the Objection Decision; that is, relevantly, when he disallows an objection against an assessment of surcharge on a member's surchargeable contributions. It follows that 43(1) of the AAT Act does not authorise the Tribunal, on review under s 14ZZ of the Administration Act of a decision of the respondent to disallow an objection against an assessment of surcharge on a member's surchargeable contributions, to exercise the powers and discretions conferred on the respondent by s 8(5)(b) of the SCTAC Act. conclusion 32 I conclude that the Question should be decided 'No'. The applicant must pay the respondent's costs of the decision of the Question. I certify that the preceding thirty-two (32) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Branson. Associate: Dated: 31 July 2003 Counsel for the Applicant: Nr A H Slater QC and Mr M L Robertson Solicitor for the Applicant: Freehills Counsel for the Respondent: Mr A Robertson SC and Mr M Leeming Solicitor for the Respondent: Australian Government Solicitor Date of Hearing: 24 March 2003 Date of Judgment: 31 July 2003