Commissioner of Taxation v Ryan [2000] HCA 4

HIGH COURT OF AUSTRALIA

GLEESON CJ,

GUMMOW, KIRBY, HAYNE AND CALLINAN JJ

COMMISSIONER OF TAXATION OF THE

COMMONWEALTH OF AUSTRALIA APPELLANT

AND

GWENDA BLANCHE RYAN RESPONDENT

Commissioner of Taxation v Ryan [2000] HCA 4

3 February 2000

M126/1998

ORDER

1. Appeal allowed.

2. Set aside par 1 of the order of the Full Court of the Federal Court of Australia entered on 30 April 1999 and in lieu order:

(a) appeal allowed;

(b) set aside pars 1, 2 and 3 of the order of Spender J entered on 15 September 1997 and in lieu order that the appeal is dismissed.

On appeal from the Federal Court of Australia

Representation:

G A A Nettle QC with T P Murphy for the appellant (instructed by Australian Government Solicitor)

D G Russell QC with J J Batrouney for the respondent (instructed by Hall & Wilcox)

Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Commissioner of Taxation v Ryan

Income tax – Assessment – Notice stating no tax payable – Subsequent assessment showing assessable income and tax payable thereon – Whether initial notice an "assessment" for the purposes of s 170(3) of the Income Tax Assessment Act 1936 (Cth) – Whether subsequent assessment therefore unauthorised – Whether any tax became "due and payable" upon issue of initial notice.

Words and phrases – "assessment" – "due and payable".

Income Tax Assessment Act 1936 (Cth), ss 6(1), 166, 170, 171, 204.

1. GLEESON CJ, GUMMOW AND HAYNE JJ. The respondent ("the taxpayer") lodged a return of her income for the year ending 30 June 1987 in which she stated her taxable income for the year to be $4,470, an amount below the threshold at which income tax was levied. On 11 December 1987, the appellant ("the Commissioner") issued to the taxpayer a document entitled "Refund Notice", which stated that the tax on her taxable income was "$0.00" and that the "Amount of Refund" was $3,653.40. (It is convenient to refer to this notice as the "1987 notice".) 2. More than six years later, on 11 February 1994, the Commissioner issued to the taxpayer a Notice of Assessment for the year ended 30 June 1987 stating that her taxable income had been assessed to be $14,470 and that tax, Medicare levy and additional tax in stated amounts were payable. (It is convenient to refer to this assessment as the "1994 assessment".) An adjustment sheet accompanying the 1994 assessment said that a deduction of $10,000 claimed by the taxpayer in her 1987 return had been disallowed. 3. The taxpayer objected to the 1994 assessment. She contended that she had made a full and true disclosure to the Commissioner of all the material facts necessary for the Commissioner's assessment, that the 1987 notice was an assessment made after that disclosure, and that it followed that the Commissioner was not authorised to issue the 1994 assessment. The objection was disallowed by the Commissioner and then, at the request of the taxpayer, the Commissioner's decision was referred to the Administrative Appeals Tribunal[1]. The Tribunal affirmed the Commissioner's decision to disallow the objection. The taxpayer then appealed to the Federal Court of Australia. 4. The taxpayer's contention that the Commissioner was not authorised to issue the 1994 assessment was upheld by the Federal Court both at first instance[2] and on appeal to the Full Court[3]. By special leave, the Commissioner appeals to this Court. It was accepted that the taxpayer had made a full and true disclosure of all the material facts. The sole issue debated on the hearing of the appeal to this Court was whether, given that disclosure, the Commissioner had power to issue the 1994 assessment.