Hardship Relief
22.55. It has been proposed to the Committee that a tribunal should be established to consider cases of hardship under the Act. By virtue of section 265 such a tribunal already exists in the form of a Board consisting of the Commissioner, the Secretary to the Treasury and the Comptroller-General of Customs or such substitutes as the Minister may appoint for any of them. The practice is that substitutes are appointed to constitute the Board of Relief. Where the amount of the liability does not exceed $200, the powers of the Board of Relief may be exercised by the Commissioner; where the relief claimed is less than $2,000 in an amount of tax, the Board of Relief may refer the application to a member of a Board of Review; and where the relief claimed is not less than $2,000 in an amount of tax, the Board of Relief is bound to refer the application to a member of a Board of Review. In lieu of referring the application to a member of a Board of Review, the Board of Relief may refer the application to the Chairman of a Valuation Board constituted under the Taxation Administration Act 1953 before whom the same procedure for examining the application for relief is to be followed. It will be convenient in what follows below to discuss the matter in terms of a reference to a member of a Board of Review. Provision is made in the section for the attendance of the applicant or his representative before the member of the Board of Review who may permit the applicant to be assisted by other persons. The section contemplates that a careful and recorded examination, upon oath if necessary, shall take place before the member of the Board of Review, who must submit a report to the Board of Relief, together with the record of the examination, drawing attention to any facts which have a particular bearing on the application for relief.
22.56. The section does not, however, provide, at any rate in terms, that the member of the Board of Review shall make
any recommendation as to the form or amount of relief which in his opinion ought to be granted; nor does it ensure
that the Board of Relief must act upon the report of the member of the Board of Review. It is clear from the
construction which Courts have placed on sections similarly worded to section 265 that, although it is shown to the
satisfaction of the Board of Relief from the report and the examination of the applicant before a member of a Board of
Review that the hardship of the applicant which the section contemplates does in fact exist, the Board of Relief is
not bound to grant any relief to the applicant, as its power to grant or to decline to grant relief is purely
discretionary. The Board of Relief is not obliged to state its reasons, so that it would be virtually impossible for
an unsuccessful applicant
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to discover the basis of the refusal of his application. Accordingly, it would
not be possible for him even to ascertain whether the discretion for which no limits are imposed in the statute was
nevertheless exercised on grounds which were irrelevant to the purposes for which it was granted. From the decision of
the Board of Relief there is no appeal.
22.57. The number of cases of hardship annually dealt with and the total amount of relief granted fluctuate. In the five tax years from 1969–70 to 1973–74 the average annual number of income tax cases dealt with was 427 and the average annual total amount of relief granted was $423,263.
22.58. In the Committee's opinion the procedure for dealing with cases of hardship in section 265 should be altered. Where the amount of the liability in question does not exceed $500, the powers of the Board of Relief should be exercised by the Commissioner. Where the amount in question does not exceed $2,000, the Board of Relief should in its discretion refer the application to a single member of a Board of Review. Where the amount in question exceeds $2,000, the Board of Relief should on its discretion refer the application to a Board of Review and ought to be bound to do so if so requested by the applicant. The Board of Review is entrusted under the review provisions of the Act (see Division 2 of Part V) with functions of great importance and deals with questions involving tax liabilities which can be very considerable in amount. Judging alone by the number of cases referred to them, it is apparent that the Board of Review has the confidence of the majority of taxpayers in the disputes between themselves and the Revenue. It is obvious that Parliament reposes the same confidence in the work performed by it. The system of review as conducted by a Board of Review in a difficult field works very well. Where an application is referred by the Board of Relief either to a member of the Board of Review or to the Board of Review itself, section 265 should provide that the single member or the Board of Review, as the case may be, be required to make a recommendation which should be implemented by the Commissioner. The Committee wishes to make it abundantly clear that there is not the slightest suggestion that applications for relief have not been dealt with fairly and upon their merits by the Board of Relief under its present constitution; but it believes that the treatment of hardship applications in this way would remove from the minds of taxpayers any feelings of bias which otherwise might be present when, as is the present position, a release of a tax liability rests solely with the representatives of government departments.
22.59. The scope of the hardship covered by section 265 is that
- ‘(a) a taxpayer has suffered such a loss or is in such circumstances; or
- (b) owing to the death of a person, who, if he had lived, would have been liable to pay tax, the dependants of that person are in such circumstances,
that the exaction of the full amount of the tax will entail serious hardship.’
In the exercise of the discretion the whole or part of the tax liability may be released. The coverage of the hardship to be taken into consideration is very wide. The Committee does not favour the suggestion that guidelines be incorporated in the section for the exercise of the discretion: the circumstances in which hardship may be met with could vary in so many different ways that it would be a practical impossibility to enumerate them and a partial listing would only tend to place a restrictive construction on a discretion which ought to be capable of dealing with any genuine situation that may arise. But power should also be given to extend the time for payment for such of the tax as may not be released.
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22.60. A particular aspect of hardship relief raised in submissions to the Committee deals with Australian tax on income from overseas where remittance of that income cannot be obtained because of exchange control operating in the country of origin of the income. Some cases of dividends are particularly in point.
22.61. In some instances the provisions relating to relief from hardship are appropriate, but the vast majority of these cases can be satisfactorily dealt with by the Commissioner under his powers to grant extensions of time for payment and to waive completely, or collect additional tax for late payment, as is appropriate to the circumstances of each case.