Hii v Commissioner of Taxation [2014] FCA 967

FEDERAL COURT OF AUSTRALIA

Hii v Commissioner of Taxation [2014] FCA 967 Citation: Hii v Commissioner of Taxation [2014] FCA 967

Parties: YII ANN HII v THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

File number: QUD 57 of 2014

Judge RANGIAH J

Date of judgment: 8 September 2014

Catchwords: INCOME TAX – appeal against reviewable objection decision made pursuant to s 14ZY of the Taxation Administration Act 1953 (Cth) – whether questions arising in the proceeding should be heard separately from any other questions

Legislation: Federal Court of Australia Act 1976 (Cth) ss 31A and 37M Income Tax Assessment Act 1936 (Cth) ss 170 and 170(1) Taxation Administration Act 1953 (Cth) s 14ZY

Date of hearing: 25 July 2014 and 1 August 2014

Place: Brisbane

Division: GENERAL DIVISION

Category: Catchwords

Number of paragraphs: 16

Counsel for the Applicant: Mr M Robertson QC

Solicitor for the Applicant: Small Myers Hughes Lawyers

Counsel for the Respondent: Mr R Derrington QC with Mr M Ballans

Solicitor for the Respondent: Australian Government Solicitor

IN THE FEDERAL COURT OF AUSTRALIA QUEENSLAND DISTRICT REGISTRY GENERAL DIVISION QUD 57 of 2014

BETWEEN: YII ANN HII

Applicant

AND: THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

Respondent

JUDGE: RANGIAH J DATE OF ORDER: 1 August 2014 WHERE MADE: BRISBANE

THE COURT ORDERS THAT:

1. Under Part 30 of the Federal Court Rules 2011 (Cth), the following questions be heard separately from the other questions in the proceeding: Question 1 Whether the respondent, in making his decision pursuant to s 14ZY of the Taxation Administration Act 1953 (Cth), was required to form an opinion that: (a) the avoidance of tax was due to evasion, pursuant to s 170(2)(a) of the Income Tax Assessment Act 1936 (Cth) ("ITAA"), in relation to the income years ended 30 June 2001 to 30 June 2004; (b) there had been evasion, pursuant to item 5 of the table to s 170(1) of the ITAA, in relation to the income years ended 30 June 2007 to 30 June 2008, (c) in amending the applicant's income tax assessments for the 2001 to 2004 and 2007 to 2008 income years. Question 2 Whether the respondent formed such an opinion in relation to each of the 2001 to 2004 and 2007 to 2008 income years. Question 3 If the respondent was not required to form the opinion as set out in Question 1, whether he relied on his opinion recorded in the Reasons for Decision dated 26 June 2012. Question 4 If the answer to Question 3 is "Yes", whether his opinion is vitiated by error of law, namely, whether the respondent misconstrued or misapplied s 170(2) of the ITAA and item 5 in the table to s 170(1) of the ITAA by failing to understand that a connection was required by those provisions between the acts he identified as evasion and the avoidance of tax. Question 5 Whether any or all of the factors considered relevant by the respondent to the formation of his opinion for the purposes of s 170(2) of the ITAA and item 5 in the table to s 170(1) of the ITAA, as recorded in the Reasons for Decision dated 26 June 2012, were capricious or otherwise incapable of rationally allowing that opinion to be formed. Question 6 Whether, if one or more of those factors was capricious or incapable of rationally allowing the respondent's opinion to be formed within s 170(2)(a) of the ITAA or item 5 in the table to s 170(1) of the ITAA, that opinion was vitiated by error of law. Question 7 If the respondent did not form any relevant opinion or if the relevant opinion was vitiated by error of law, whether the Court has jurisdiction to form its own opinion: (a) for each of the 2001 to 2004 income years, as to whether the avoidance of tax was due to evasion under s 170(2)(a) of the ITAA; (b) for the years 2007 and 2008, as to whether there had been evasion under item 5 in the table to s 170(1) of the ITAA. Question 8 If the answer to Question 7 is "Yes", whether the Court should do so. 1. The applicant file and serve an outline of submissions and any evidence upon which they seek to rely by fifteen (15) business days prior to the date set for hearing. 2. The respondent file and serve an outline of submissions and any evidence upon which they seek to rely by ten (10) business days prior to the date set for hearing. 3. The applicant file and serve an outline of submissions in reply and any evidence upon which they seek to rely in response by five (5) business days prior to the date set for hearing. 4. Proceedings be listed for hearing for two (2) days on 14 and 15 October 2014. 5. Parties have liberty to apply on giving two days' notice in writing. 6. The applicant pay the respondent's costs of today, but the costs of the application for the hearing of separate questions is otherwise reserved. Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.