Powers and Procedures of a Board of Review

22.22. The powers of a Board of Review are not judicial and its functions are to review all decisions of the Commissioner as are referred to it. For this purpose the Board is in the same position as the Commissioner and, in making its own decision, can substitute its own opinion or determination for that of the Commissioner. A Board of Review is an administrative body and is not bound, as is a Court, by the rules of evidence and it has no power to award costs against an unsuccessful party. It is bound to give its decision in writing either confirming, reducing, increasing or varying the assessment and, at the request of either the Commissioner or the taxpayer, must state its findings of fact and the legal reasons for its decision.

22.23. Regulation 35 of the Income Tax Regulations requires the Commissioner when referring a decision to the Board of Review, to furnish both the Board and the taxpayer with, amongst other material, the Commissioner's reasons for disallowing the taxpayer's claim. It has been held that this regulation does not empower the Board to order the Commissioner to supply the taxpayer with particulars as to how the assessment is made up or the steps in the reasoning by which the ultimate conclusion of the Commissioner was reached.

  ― 386 ―

22.24. Nevertheless, whilst not a Court, a Board of Review is a quasi-judicial body and natural justice requires, especially as the taxpayer bears the onus of displacing the decision of the Commissioner, that the taxpayer should have a sufficient knowledge of the basis of that decision to enable him to go about his task with factual material and legal argument relevant to the question which the Board is called upon to decide. The taxpayer is bound to state ‘fully and in detail the grounds on which he relies’ in his objection and the Committee sees no good reason why he should not be fairly apprised of the basis of the assessment to which he has objected and the reasons for the disallowance of his objection. While normally this information is readily available from the Commissioner, if the position is reached where a taxpayer is challenging the decision of the Commissioner before a Board of Review and considers he has not received an adequate explanation, there should be some remedy for him.

22.25. If the taxpayer was genuinely unable to gather from the document supplied by the Commissioner pursuant to Regulation 35 (1) (c) and (2) sufficient information for that purpose, he would come before the Board under a considerable handicap in the presentation of his case and the hearing would be either unduly prolonged or adjourned and further expense would in consequence be incurred. Clarification of these matters in the course of the hearing before the Board would in many instances be unsatisfactory and not a viable substitute for an adjournment. The Act should be amended to give the Board power exercisable at its discretion to require the Commissioner to supply the appropriate particulars to the Board and the taxpayer in cases where it was of the opinion that it was reasonable for the taxpayer to be provided with further particulars of the computation of the assessment and of the reasoning by which the Commissioner's decision was reached. Any application by the taxpayer for the exercise of the Board's powers on his behalf should be made within a specified reasonable time after the receipt by the taxpayer of the documents referred to in Regulation 35 (2), and the Commissioner should be notified of the application and have the right to be represented thereat. The Board's power in this connection could be exercised by any one member. The availability of a procedure of this kind would increase public confidence in the review and avoid the possibility of lengthy delays and adjournments.

22.26. An identical procedure should be followed where the taxpayer appealed directly to a Supreme Court from the Commissioner's decision upon his objection.

22.27. Any procedure which speeds litigation and reduces costs is highly desirable. Although not bound by the strict rules of evidence, the Board of Review quite properly follows those rules where the importance of the proof of certain facts is apparent. But, whilst the purpose of a reference to a Board of Review has been described in the High Court as providing ‘a less formal method of investigating facts at a hearing, and opportunity of exercising discretion and the like by a more detached administrative process’, parties before the Board tend at times to regard a hearing before the Board as one in which the whole of the evidence to be adduced must be presented and proved as if in a formal trial. The result often is that a great deal of time is taken up with the proof of facts which are or ought to be common ground between the Commissioner and taxpayer and which could readily have been admitted in advance of the hearing, thus saving time and expense in the calling of witnesses and production of documents. If, after the receipt by the taxpayer of the document referred to in Regulation 35 (2) and its possible further particularisation (referred to above), the parties were to come together before a single member of the Board in a short, preliminary hearing akin to what is known as ‘pre-trial’ procedure, all or many of the facts could be admitted and reduced to writing and such facts as remained in dispute could

  ― 387 ―
be brought within such a small compass that much of the fact-finding work of the Board would be eliminated. A further consequence would in all probability be that the questions of law would be narrowed. The saving of time, work and expense would result in the rate of progression of the cases before Boards of Review being accelerated. In the Committee's view the Board should be invested with a power to invoke a procedure of this nature to be exercised at its discretion.

22.28. Section 181 of the Act provides in effect that a person who is or has been a member of a Board of Review shall not be under any liability for any non-feasance or misfeasance in connection with his duties. The words ‘non-feasance’ and ‘misfeasance’ have technical legal meanings. It has been stated on high authority that ‘there is no such distinct wrongful act known to the law as misfeasance’; and what constitutes a misfeasance or non-feasance is a matter of not infrequent disputation.note The Committee is of the opinion that the immunity to be afforded to members of the Board of Review in connection with their duties should be the same as that afforded by section 72 of the Insurance Act 1973 to members of the Insurance Tribunal, namely, the immunity of a Justice of the High Court. The Committee also considers that a barrister, solicitor or other person appearing before a Board of Review should have the same protection and immunity as a barrister in proceedings in the High Court (cf. section 85 (2) of the Insurance Act 1973).

22.29. Section 194 of the Act provides that two members of a Board of Review shall form a quorum, the decision of the majority shall prevail, but that the Chairman shall have a deliberative but not a casting vote. Provision is made in section 180 for the appointment by the Governor-General of a member as Chairman in cases where the Chairman cannot be present. The Committee recommends that where two members form a quorum in the absence of the Chairman, the member appointed as Chairman should have a casting as well as a deliberative vote in order to prevent the possibility of a deadlock.

22.30. Section 196 (2) of the Act empowers the Board of Review to refer a question of law arising before the Board to a Court. But this power may be exercised by the Board only at the request of the Commissioner or the taxpayer. Bearing in mind the experience of the Board, the Committee believes that the power to refer a question of law to a Court should be exercisable by the Board at its discretion. There will be cases in which the state of the law in relation to a question arising before the Board is, in the opinion of the Board, in such doubt that both time and expense will be saved by a judicial decision before embarking upon a lengthy hearing of factual and legal argument before the Board itself. In a case where the Board does so refer a question of law to a Court, the Commissioner should bear the costs on the same basis as is outlined later in paragraph 22.42.

22.31. Some of the powers of a Board of Review are contained in the Act but others appear in the Income Tax Regulations. It would be more convenient and satisfactory in all respects for taxpayers and their advisers if all such powers were collected together in one place, the Act being the appropriate place for them. It is intended to propose certain amendments to the regulations in question, but the Committee must be understood as recommending that the amended regulatons, if adopted, should be incorporated in the Act.

  ― 388 ―

22.32. Regulation 39 (2) in effect enables a Board of Review to require persons to furnish information to the Board, to attend and give evidence before the Board and to produce to the Board books, documents and papers in his custody in relation to cases where the Board is of the opinion that the exercise of these requirements is necessary for the determination of matters arising before the Board. Regulation 39 (2A) provides that a person shall not without just cause or excuse fail to comply with any such requirement. Regulation 39 (3) enables the reimbursement of such a person's expenses to be made in certain circumstances. The weakness of these powers appears to be that there is no sanction provided to ensure compliance with them, and it has been ascertained that in some instances the Board's requirement is ignored with impunity. Powers such as these are essential for a proper determination of matters referred to the Board in the interests of both the Commissioner and the taxpayer. A failure on the part of a person to comply with any such requirement of the Board without just cause or excuse should be an offence against the Act and punishable by a fine of such an amount as to act as a satisfactory deterrent against non-compliance.

22.33. Whilst a Board of Review, being an administrative tribunal, is not bound by the rules of evidence, Regulation 39 provides that it shall ‘take evidence’ and may require a person to attend and ‘give evidence’. However, there is no provision as to the mode by which such oral evidence is taken or given other than the requirement of an oath or affirmation and the general statement in Regulation 38 (1) that reviews by a Board shall be conducted as the Chairman from time to time directs. It should be enacted that a witness giving oral evidence before the Board may, subject to the Chairman's directions, be examined, cross-examined and re-examined in accordance with the established procedure in the Courts. It should be expressly provided that a Board of Review should not be bound by the formal rules of evidence. A witness appearing before a Board of Review should have the same protection and be subject to the same liabilities in any civil or criminal proceedings in the High Court (cf. section 84 (3) of the Insurance Act 1973).

22.34. With these recommendations in relation to Boards of Review, the Committee also recommends that the provisions of Division 1 of Part V—Constitution of Boards of Review—in the Income Tax Assessment Act and such other provisions of Part V as relate to the practice and procedure of the Boards be transferred to the Taxation Administration Act. At the present time the Boards deal with matters arising in relation to taxes other than income tax, including estate duty and sales tax, and it is more appropriate that the constitution of the Boards and their practice and procedure be provided for in the Taxation Administration Act. This latter Act, of course, covers among other things the appointment and tenure of the Commissioner of Taxation and Second Commissioners of Taxation and provides for the constitution and procedures of Valuation Boards.