Objections to an Assessment

22.16. The Committee has received a number of submissions bearing upon the question of objections to an assessment and the nature of these will be apparent from the discussion which follows and in which it may be useful to bear in mind the following statistics which give the number of objections lodged with the Commissioner in recent years:

1969-70  1970-71  1971-72  1972-73  1973-74 
37,169  36,623  48,381  58,793  54,401 

22.17. The time-limit for a taxpayer to lodge an objection to any income tax assessment with which he is dissatisfied—within sixty days after service of the notice of assessment—would seem to be reasonable in practically all cases. The Committee recommends that this time-limit should apply in relation to assessments issued under all taxation statutes. Submissions to the Committee, however, have raised the question that there should be some means by which further time may be granted for lodgement of an objection where unusual circumstances arise. It is of interest to note that in the income tax legislation of the United Kingdom, Canada and New Zealand there are provisions enabling the granting of a further period for lodgement of an objection beyond the initial statutory period.

22.18. Provision should be made in the Australian taxation statutes enabling the Commissioner to grant further time if he is satisfied that there was a reasonable excuse for not lodging the objection in time. Where the Commissioner is not prepared to grant a request for further time, the request should be referred to a Board of Review for decision. There should be similar powers to grant extended time in relation to the lodgment of requests for reference to a Board of Review and appeals to a Court, but in these latter cases the power to extend should be vested in the Board or the Court as the case may be.

22.19. Whilst the Commissioner is bound to serve the taxpayer with written notice of his decision upon the objection, no time-limit is imposed within which he must do so. There are practical difficulties in setting a time-limit upon the Commissioner's decision. It is by no means unusual for the grounds of the objection to make it necessary for him to call for further information from the taxpayer. Moreover, grounds of objection are frequently lengthy and complex and raise important questions of law. Next should be borne in mind the large volume of individual objections to be dealt with, and lastly it should be recalled that in the exercise of his office the Commissioner stands between the requirements of the Revenue and just treatment for the taxpayer and this position imposes upon him a double duty of care. In light of these considerations the Committee believes that it is better not to impose a time-limit upon the Commissioner. It is not to be supposed that, where real hardship can be shown by the taxpayer, his representations for a speedy decision upon his objection would not be heeded. In the last resort it seems that under section 75 (v) of the Constitution the taxpayer could obtain from the High Court an order to compel the Commissioner to give his decision upon an objection.

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22.20. The Act provides that upon a reference to a Board of Review or an appeal to the Court a taxpayer is limited to the grounds stated in his objection. It is not within the jurisdiction of a Board or Court to permit the taxpayer to add any new ground of objection even though the Commissioner may be willing to consent to that being done. There is no corresponding restriction placed upon the Commissioner as to the grounds upon which he can support an assessment except that where there are two sections of the Act, each giving power to make an assessment, an assessment made under one of those sections cannot be made effective under the other. The contents of an assessment with which the dissatisfied taxpayer is bound to object ‘fully and in detail’ may make it difficult for the taxpayer to understand the basis of his purported liability to tax and the Commissioner is not bound to supply him with an adjustment sheet. It is pointed out later that a taxpayer may not be able to gather from the document supplied to him under Regulation 35 (2) the basis of assessment or the reasons for the Commissioner's decision but, even if at that stage he could do so, it would then be too late to amend his grounds of objection.

22.21. This state of affairs is highly unsatisfactory and unfair to the taxpayer. Conceded that there should not be any unlimited right of amendment, it is eminently reasonable that a taxpayer should be able to contest his case upon any ground open to him when he is placed in a position for the first time to understand the contentions which he has to meet. The Committee refers to its later recommendation in paragraph 22.25 to the effect that the Board, in the exercise of its discretion, should have power to require the Commissioner to supply the taxpayer with further particulars of the computation of the assessment and of the reasons for the decision disallowing the objection and is of the opinion that the Board should in such a case fix reasonable time after the supply of those particulars for the taxpayer to amend his grounds of objection where the particulars revealed that the original grounds were not sufficiently widely expressed. The same situation should apply where in the first instance the taxpayer appealed to a Supreme Court against the Commissioner's decision upon his objection. The Commissioner should have a corresponding right to give his decision upon the amended grounds. It could be safely left to the discretion of the Board of Review or the Court to determine the procedure which in the particular circumstances would be just to both parties.