Player v Commissioner of Taxation [2011] FCA 869 (5 August 2011)

Last Updated: 5 August 2011

FEDERAL COURT OF AUSTRALIA

Player v Commissioner of Taxation [2011] FCA 869

Citation:		Player v Commissioner of Taxation [2011] FCA 869
Appeal from:		Player v Commissioner of Taxation [2011] AATA 35
Parties:		GILLIAN PLAYER v COMMISSIONER OF TAXATION
File number:		NSD 170 of 2011
Judge:		EDMONDS J
Date of judgment:		5 August 2011
Catchwords:		INCOME TAX – superannuation – excess non-concessional contentions tax assessment – whether receipt by applicant from superannuation fund was a ‘roll-over superannuation benefit’ – whether amount received by applicant beneficially or as trustee for another fund. Held: Not a ‘roll-over superannuation benefit’ within s 306-10 of the Income Tax Assessment Act 1997 (Cth)
Legislation:		Administrative Appeals Tribunal Act 1975 (Cth) Income Tax Assessment Act 1997 (Cth) s 306-10 Federal Court Rules O 53 r 3, O53 r 20 Federal Court Rules 2011 Rules 33.12, 33.15, 33.32
Cases cited:		TNT Skypak International (Aust) Pty Ltd v Commissioner of Taxation [1988] FCA 119; (1988) 82 ALR 175 Birdseye v Australian Securities and Investments Commission (2003) 76 ALD 321
Date of hearing:	2 June 2011
Place:	Sydney
Division:	GENERAL DIVISION
Category:	Catchwords
Number of paragraphs:	24
Counsel for the Applicant:	Mr R Ellicott QC with Ms M Carpenter
Solicitor for the Applicant:	Robert Richards & Associates
Counsel for the Respondent:	Ms K Deards
Solicitor for the Respondent:	Legal Services Branch, Australian Taxation Office

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 170 of 2011

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN:	GILLIAN PLAYER Applicant
AND:	COMMISSIONER OF TAXATION Respondent

JUDGE:	EDMONDS J
DATE OF ORDER:	5 AUGUST 2011
WHERE MADE:	SYDNEY

THE COURT ORDERS THAT:

1. The appeal be dismissed.
2. Each party pay its own costs.
   

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION	NSD 170 of 2011

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN:	GILLIAN PLAYER Applicant
AND:	COMMISSIONER OF TAXATION Respondent

JUDGE:	EDMONDS J
DATE:	5 AUGUST 2011
PLACE:	SYDNEY

REASONS FOR JUDGMENT

INTRODUCTION

1. This is an appeal from a decision of the Administrative Appeals Tribunal (‘the Tribunal’) ([2011] AATA 35) in reliance on s 44(1) of the Administrative Appeals Tribunal Act 1975 (Cth) (‘the AAT Act’).
2. The Tribunal affirmed the decision of the respondent (‘Commissioner’) to disallow the applicant’s objection against an excess non-concessional contributions tax assessment for the year ended 30 June 2007.
3. The background circumstances which led the applicant to undertake the transactions, in the way she was advised, giving rise to the issue in [4] below are, from the applicant’s viewpoint, unfortunate, but they are not relevant to the resolution of the issue. Her remedies, if any, in relation to any loss she suffers as a result of the outcome of this case lie elsewhere.
4. The only issue in this case is whether a payment of $355,000 which was made by the trustee of a superannuation fund (‘the REYALP Fund’) to the applicant on 18 June 2007, by cheque paid into the applicant’s bank account, which was immediately drawn on by the applicant purchasing a bank cheque for the same amount in favour of, and banked to the credit of, the trustee of another superannuation fund (‘the IPAC Fund’), qualified as a ‘roll-over superannuation benefit’ for the purposes of s 306-10 of the Income Tax Assessment Act 1997 (Cth) (‘the 1997 Act’).
5. Consistently with this being the only issue, it is common ground that if the payment by the REYALP Fund to the applicant is a ‘roll-over superannuation benefit’ for the purposes of s 306-10, then the applicant succeeds in showing the assessment to be excessive. Equally, it is common ground that if the payment by the REYALP Fund to the applicant is not a ‘roll-over superannuation benefit’ for the purposes of s 306-10, then the assessment must stand.

THE TRIBUNAL’S DECISION

6. The Tribunal concluded that, on the facts as found, the issue was to be answered in the negative; in other words, the payment was not a ‘roll-over superannuation benefit’. The reasons given by the Tribunal for coming to this conclusion are analysed at [16] to [23] below. Unfortunately, they are not as clear as they otherwise might be but on closer scrutiny seem to be embodied in what the Tribunal says at [28] of its reasons, namely, that the applicant received the payment from the REYALP Fund legally and beneficially and not in trust for the IPAC Fund. It followed, in the Tribunal’s view, that what was paid from the REYALP Fund was not paid to the IPAC Fund, as required by s 306-10(d)(i)); rather, it was paid to the applicant.

THE APPEAL TO THIS COURT

7. An appeal to this Court from a decision of the Tribunal is limited by s 44(1) of the AAT Act to questions of law. Precise identification of the relevant questions of law is important because in the absence of a question of law the Court has no jurisdiction; moreover, it is the questions of law put forward by the appeal that form the subject matter of the appeal. In TNT Skypak International (Aust) Pty Ltd v Commissioner of Taxation [1988] FCA 119; (1988) 82 ALR 175 Gummow J said at 178:

‘Section 44 of the AAT Act is expressed in narrower terms than the old s 196 of the Tax Act. This provided for appeals from the Board of Review which “involved” a question of law. The result was that if some question of law was involved, the whole of the decision of the Board was open to review, not merely the question of law ... This no longer will be the case with appeals brought to this court under s 44 of the AAT Act. The existence of a question of law is now not merely a qualifying condition to ground the appeal, but also the subject matter of the appeal itself.’

8. Further to the jurisdictional limitation under s 44 of the AAT Act is the requirement that an applicant, in a s 44 appeal, state in the notice of appeal the question(s) of law to be raised on the appeal: O 53 r 3(2)(b) of the Federal Court Rules (Rule 33.12(2)(b) of the Federal Court Rules 2011). The rule mandates that a question of law to be raised on appeal from the Tribunal is to be stated, with precision, as a pure question of law: Birdseye v Australian Securities and Investments Commission (2003) 76 ALD 321 at [18]. Significantly, O 53 r 3(4) (Rule 33.15) prevents an applicant from raising, without the leave of the Court, any question of law other than those stated in the notice of appeal. It is therefore essential to the grounding of the Court’s jurisdiction in a s 44 appeal from the Tribunal that the notice of appeal specify the question of law in the appeal.

NOTICE AND AMENDED NOTICE OF APPEAL

9. The applicant’s notice of appeal set out five questions said to be questions of law raised on the appeal and four grounds of appeal. By notice of motion dated 17 May 2011 the Commissioner sought an order that the matter be dismissed under O 53 r 20(1)(a) (Rule 33.32(1)) on the basis that the applicant had not filed a notice of appeal that states a question or questions of law within O 53 r 3(2)(b). On the hearing of the appeal, I granted the applicant leave to file in Court an amended notice of appeal, dated 25 May 2011, setting out five further questions said to be questions of law raised on the appeal and relying on a further ground of appeal in addition to the four original grounds. The Commissioner pressed his notice of motion with respect to the amended notice of appeal.

THE APPEAL HEARING

The Notice of Motion

10. The Commissioner’s case on the hearing of the appeal was substantially, if not wholly, taken up with arguments as to why none of the grounds sought to be relied on in the amended notice of appeal raised questions of law; and, even if the questions set out in the amended notice of appeal were questions of law, that they were not grounded in the Tribunal’s reasons for decision.
11. In my view, there is considerable force in the Commissioner’s case with respect to most of the grounds of appeal although, for reasons which I come to below, I am of the view that there is at least one ground of appeal, there may be more, which raises a question of law, that is itself grounded in the Tribunal’s reasons for decision. Indeed, the question lies at the heart of the Tribunal’s decision.
12. I am therefore of the view that the Court has jurisdiction to entertain the appeal and decline to make either of the substantive orders sought in the Commissioner’s notice of motion. On the other hand, I have also come to the view, for the reasons given below, that the Tribunal did not err in answering the question of law raised by this ground of appeal and that, therefore, the applicant’s appeal must be dismissed.

Facts and Evidence in the Tribunal

13. The primary facts are not in dispute and are set out at [5] of the Tribunal’s reasons.
14. The evidence before the Tribunal is recited and analysed at [7] to [23] of the Tribunal’s reasons. It is uncontroversial save, perhaps, as to the implications that might be drawn from the following circumstances:

(1) The applicant was not cross-examined;

(2) Mr Jim Connell of Ipac Securities Limited, who gave the applicant financial advice in relation to the transaction, was not called; and

(3) the evidence of the applicant’s solicitor, Mr RJ Tinsey.

Legislation

15. Section 306-10 of the 1997 Act, relevantly provides:

‘A superannuation benefit is a roll-over superannuation benefit if:

(a) the benefit is a superannuation lump sum and superannuation member benefit; and

(b) the benefit is not a superannuation benefit of a kind specified in the regulations; and

(c) the benefit satisfies any of the following conditions:

(i) it is paid from a complying superannuation plan;

...

(d) the benefit satisfies any of the following conditions:

(i) it is paid to a complying superannuation plan;

...’

ANALYSIS

16. In the present case, all the requirements of paras (a) to (c) inclusive of s 306-10 are satisfied, and the only issue is whether the benefit satisfies (d)(i) – is it paid to a complying superannuation fund? Moreover, it was common ground that the IPAC Fund was a complying superannuation fund (see [9] of the Tribunal’s reasons).
17. So deduced, the only issue is whether the payment to the applicant qualifies as being paid to the IPAC Fund. The Tribunal at [30] of its reasons seriously questioned the Commissioner’s contention that the requirements of s 306-10 will be satisfied only if a payment is made directly by a complying superannuation plan to a complying superannuation plan; so that if the amount is first deposited to a different account before being on-paid the requirements of the section will not be satisfied. The Tribunal said:

‘The Respondent contends that the requirements of section 306-10 will be satisfied only if a payment is made directly by a complying superannuation plan to a complying superannuation plan and so that if the amount is first deposited to a different account before being on-paid the requirements of the section will not be satisfied. I am by no means sure that so technical a reading of the section is correct but it is not necessary for me, for the purposes of this decision, to come to a firm conclusion as to this issue. I would have thought that it could be argued that where (by way of example) a superannuation plan pays money into a solicitor’s trust account with a direction that the amount be on-paid to a superannuation plan the legislative provisions might be said to be satisfied.’

I totally agree with this observation.

18. On the other hand, much of the Tribunal’s process of reasoning, in my view, leaves a good deal to be desired in terms of providing the reader with a certainty of understanding of the reasons why the Tribunal came to the conclusion it did. There are a number of examples, it suffices to refer to one. At [12] the Tribunal says that there is ‘clear and cogent evidence that the Applicant did not receive [the] amount in trust but rather it was received by her and treated by her as an ETP’. This suggests, to the reader, that the fact that the applicant treated the payment as an ETP (eligible termination payment) in her filings with the Commissioner was fatal to the payment qualifying as a ‘roll-over superannuation benefit’ for the purposes of s 306-10 of the 1997 Act. That cannot be correct. How a taxpayer characterises a receipt in the taxpayer’s filings with the Commissioner is never conclusive of its true character, albeit evidence of how the taxpayer viewed its character.
19. Again at [20] of its reasons, the Tribunal said:

‘Mr Richards in the course of his submissions said that the fact that the Applicant’s accountant might have erred in the preparation of T5 and T6 in a certain manner should not prejudice the Applicant. There was no evidence of any kind before the Tribunal to the effect that those documents were prepared otherwise than as intended. There can be no doubt that the Applicant did in fact receive the amount of $355,000 as an ETP and there can equally be no doubt that she did not receive that amount in trust.’

This suggests to the reader that, the fact that a filing with the Commissioner contains information as to the character of a receipt which the filer intended to provide in the form provided, this is somehow conclusive of the true character of the receipt. Again, that cannot be correct.

20. These statements are unfortunate because they derogate from what appears to me to be the real reason why the Tribunal concluded as it did. That appears at [28] of the Tribunal’s reasons:

‘[T]he real issue relates to the question of whether the Applicant received the payment both legally and beneficially or legally only and in trust for the IPAC Fund. If she received it both legally and beneficially section 306-10 cannot apply. Put in other words, it is my view that any question of whether or not the ETP legislation was relevant [is] not to the point.’

21. At the end of the day, the Tribunal had regard to the applicant’s treatment of the payment as an ETP as no more than evidence of her beneficial receipt of the payment, albeit more cogent evidence than the applicant’s statement that she accepted the payment by way of cheque not in ‘any personal capacity but as trustee for iAccess Super’. In other words, her treatment of the payment as an ETP did not, in the view of the Tribunal, conclude the issue as to whether or not it qualified as a ‘roll-over superannuation benefit’; it was merely evidence that weighed more in favour of the conclusion that she received the payment beneficially than the evidence (the applicant’s subsequent statement) against that conclusion; and it was that finding that led the Tribunal to conclude that the payment could not qualify as a ‘roll-over superannuation benefit’ for the purposes of s 306-10 of the 1997 Act.
22. So understood, there is one ground of the amended notice of appeal which raises a question of law grounded in the Tribunal’s reasons, and that is ground 5.1A:

‘5.1A The Tribunal erred in law in not finding that if she did obtain a beneficial interest it did not prevent it from finding that the $355,000 was a roll-over superannuation benefit within s.306-10 of ITAA 97.’

That ground raises a question of law grounded in the Tribunal’s reasons at [28] where the Tribunal said:

‘If she received it both legally and beneficially section 306-10 cannot apply.’

23. In my view, the Tribunal was correct in so concluding and, in consequence, its reasons for decision disclose no error of law.

CONCLUSION

24. The appeal must be dismissed. In all the circumstances, including those referred to above, each party should pay its own costs.
    

I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Edmonds.

Associate:

Dated: 5 August 2011