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Bloomfield Collieries Pty Ltd and Anor and Innovation Australia [2009] AATA 69; (2009) 49 AAR 352; (2009) 74 ATR 946 (5 February 2009)

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Bloomfield Collieries Pty Ltd and Anor and Innovation Australia [2009] AATA 69 (5 February 2009); (2009) 49 AAR 352; (2009) 74 ATR 946

Last Updated: 3 November 2010

2009_6900.png

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION

[2009] AATA 69

ADMINISTRATIVE APPEALS TRIBUNAL )

) No: 2008/1744 and 2008/1746

GENERAL ADMINISTRATIVE DIVISION )

Re Bloomfield Collieries Pty Ltd

And Rix’s Creek Pty Ltd

Applicants

And Innovation Australia

Respondent

DECISION

Tribunal Professor GD Walker, Deputy President

Date 5 February 2009

Place Sydney

Decision The decision under review is affirmed in relation to the 2003 income year and set aside in relation to the 2005 income year.

................[sgd]..............................
Professor GD Walker
Deputy President

CATCHWORDS - research and development concession – late registration – whether, by reason of exceptional circumstances, the applicants could be registered under s 39J of the Act despite the applications not being made within time – whether the respondent, and therefore the tribunal, has a residual discretion to register the applicant companies for the relevant years – decision under review is affirmed in relation to the 2003 year and set aside in relation to the 2005 year.

...

RELEVANT ACT/S:

Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act): ss 35

Industry Research and Development Act 1986 (Cth) (the Act): ss 39JF 39S 39T

...

CITATIONS

SREE v Industry Research and Development Board (1999) 99 ATC 2237, [1999] AATA 401

Brown v FCT (1999) 99 ATC 4516

Finance Facilities Pty Ltd v Federal Commissioner of Taxation (1971) 127 CLR 106

Re Z (1970) 15 FLR 420

Ward v Williams (1955) 92 CLR 496

Commissioner of State Revenue (Vic) v Royal Insurance Australia Limited (1994) 182 CLR 51

Federal Commissioner of Taxation v Northumberland Development Co Pty Ltd (1995) 59 FCR 103

...


REASONS FOR DECISION

5 February 2009
Professor GD Walker, Deputy President
Basic facts
  1. The applicant in AAT matter number 2008/1744, Bloomfield Collieries Pty Ltd (Bloomfield), and the applicant in AAT matter number 2008/1746, Rix’s Creek Pty Ltd (Rix), on 19 October 2007 lodged with the respondent separate applications seeking late registration for research and development concession pursuant to s 39JF of the Industry Research and Development Act 1986 (Cth) (the Act) in respect of the 2002-2003 and 2004-2005 income years.
  2. The deadline for such applications for the 2003 income year was 31 January 2004 and, for the 2005 income year, was 31 January 2006.
  3. The two applicants are related companies in the Bloomfield group and their applications were substantially identical. It was conceded that there was no evidentiary difference between the two cases. I will therefore refer to the two companies as “the applicants”.
  4. The Department of Innovation, Industry, Science and Research (the department) wrote to the applicants on 24 October 2007 informing them of the decision of Innovation Australia (the board) to refuse registration for the research and development tax concession because the applications were lodged outside the statutory timeframe (T p38-39). The department invited further comments from the applicants in relation to why the respondent should consider whether to exercise its discretion to accept late applications pursuant to s 39JF of the Act.
  5. Both companies provided such further evidence but the department notified them on 13 December 2007 that it had decided to refuse their application for late registration for the tax concession pursuant to s 39JF.
  6. The applicants applied for internal review under s 39S of the Act on 21 January 2008, but on 28 March 2008 the board, following the internal review, confirmed the original decisions to refuse registration.
  7. The applicants applied to this tribunal on 24 April 2008 for review of the board’s decision to refuse registration pursuant to s 39T of the Act.
  8. At the time of the original decision and of the internal review, the respondent was known as the Industry Research and Development Board (the Act, schedules 11 and 12).
  9. Legal argument was presented concerning whether the decision under review is the initial decision of 13 December 2007 or the decision confirming the original decision on 28 March 2008.
  10. Jurisdiction is conferred on this tribunal by s 39T of the Act, which relevantly states that:
...
(1) Applications may be made to the Administrative Appeals Tribunal for review of decisions of the Board:
...

  1. That language appears to make the initial decision the one that is subject to review in this tribunal. That was the approach the tribunal took in SREE v Industry Research and Development Board (1999) 99 ATC 2237, [1999] AATA 401.
  2. Under s 39S of the Act, a decision under s 39JF of the Act not to accept a late application for registration for the research and development tax concession is a decision that can be reconsidered by the board.
  3. Hearings of applications under s 39T(1) of the Act must take place in private (s 39T(4)) and the tribunal may by order give directions as to the persons who may be present and may also give directions of a kind referred to in s 35(2)(b) or (c) of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act). No application was made for directions of either kind and none was made. The tribunal is not given power under s 35(2) of the AAT Act to prohibit the disclosure of the names of parties.
  4. At the hearing, Mr Mark Robertson of counsel, instructed by Mr Lachlan Wolfer of KPMG Tax Lawyers Pty Ltd appeared for the applicant while Ms Tessa van Duyn of Clayton Utz appeared for the respondent. The documents before the tribunal comprised the documents produced pursuant to s 37 of the Administrative Appeals Tribunal Act 1975 (the T documents), taken into evidence as Exhibit R1, together with the other documents tendered by the parties at the hearing. The applicant gave oral evidence in person.

Relevant legislation

  1. In relation to the decision, the Act relevantly provides that:
...
39J Registration of eligible companies
...
(1A) Subject to sections 39JA, 39JB, 39JC, 39JE and 39JF, the Board cannot register a company under this section, in relation to activities, in respect of a year of income:
...
(d) if the year of income ends on or after the commencement of this paragraph--unless the application for registration is made after the end of the year of income but within 10 months after the end of that year.
...
39JF Registration if application for registration made after expiry of period for making application
(1) The Board may register an eligible company under section 39J in respect of a year of income, despite the fact that the application for registration was not made within the period for making the application, if the Board considers that the application was made after the end of the period due to exceptional circumstances.
...

  1. The board has produced a policy issued in April 2005 entitled “Guidance relating to “Exceptional Circumstances” Provisions (Section 39JF of the Industry Research and Development Act 1986)” (see T pp16-17.

Issues

  1. The issues in the current applications are:

Applicant’s evidence

  1. At the hearing Mr Paul Taylor, chief financial officer and company secretary of Rix and Bloomfield, adopted his two statements dated 25 August 2008 relating to the two applicants respectively.
  2. 2003 income year: Mr Taylor stated that in relation to the 2003 income year, the applications under s 39J were, to the best of his knowledge and belief, lodged within the required time period. But those applications appeared not have been received by the respondent. While he could not positively claim from actual knowledge that the applications had been lodged with the respondent within time, a process followed in respect of each application since he had commenced employment with the applicants in 2000 (apart from the 2003 and 2005 years in dispute) was as follows:
  3. Mr Taylor had examined the applicants’ records but had been unable to locate a copy of the application for the 2003 year. Moreover, the applicants do not maintain a mail book that might otherwise evidence posting.
  4. While Mr Taylor did not specifically recall signing the 2003 application, his inability to do so reflected more the fact that it was a routine, non-contentious process, given the simplicity of the claims.
  5. In his experience, Mr Lawrence, who started with the applicants in May 1999 and remained until November 2004, was diligent and reliable. He was responsible for preparing tax compliance and similar forms for the applicants on a regular basis. The applicants and the Big Ben Holdings Group are companies generally of which they form part, had not previously experienced such a problem where an application form appeared not to have been received by the regulator.
  6. Mr Lawrence prepared tax returns and carried out other similar compliance obligations for 14 companies in the Big Ben Holdings Group and managed that process effectively.
  7. Mr Taylor did not doubt Mr Lawrence's recollection that the application for 2003 had been filed. It was only when he received a telephone call from the companies’ tax advisers on 11 October 2007 that he became aware that the respondent had said the applicants had not filed their 2003 applications.
  8. Mr Taylor immediately wrote to the respondent and submitted applications for late registration for 2003 under the “exceptional circumstances” provisions of s 39JF of the Act (T p33-35).
  9. Mr Taylor’s explanation for the absence of a copy of the 2003 application was that around that time a number of events occurred that made the companies’ accounting staff extremely busy, with the possible result that records may have been mislaid or incomplete:
  10. While he could not specifically recall signing the 2003 applications, he noted that in September 2003, the applicants lodged their 2003 income tax returns in which they claimed research and development expenditure deductions, including ACARP levies. Given that the finance team was aware of the amount of the ACARP levies for the purposes of the tax return, Mr Taylor found it difficult to understand why the applicants, but for those circumstances, could have failed to lodge the application under s 39J of the Act. That led him to believe that the application was in fact prepared and sent, though not ultimately received.
  11. 2005 income year: ACARP wrote to Mr Reginald Crick, mine superintendent for the applicants, a letter dated 12 March 2005 (T p36) stating that the Australian Taxation Office (ATO) had issued a class ruling confirming an ongoing 125 percent research and development tax concession eligibility for the ACARP levies for the period up to June 2010. The letter further asked the applicants to execute a deed of arrangement showing their commitment to ACARP.
  12. Neither Mr Taylor nor Mr Pickering became aware of that letter until some time between March and June 2005. Once they did become so aware, they sent executed copies of the deed of arrangement to ACARP on 6 June 2005 (a copy of the covering letter is annexure 1 to Mr Taylor’s statement).
  13. Mr Taylor later received a letter from ACARP dated 4 May 2006 (T p37) indicating that ACARP contributors would be eligible for the concessions because the ACARP documents satisfied the requirements of an “R & D project plan” (R & D meaning research and development) as prescribed by the Commonwealth government.
  14. Further letters from ACARP and the Department of Industry, Tourism and Resources (annexures 2 and 3) confirmed the eligibility of the ACARP levy for the concession. The letters also stated that so long as ACARP did not materially depart from the terms of the class ruling, the levy payments would be deductible until 30 June 2010.
  15. On the basis of that correspondence, Mr Taylor formed the belief that as the applicants had executed the deed of arrangement, ACARP was the central research and development body for the coal industry, the applicants’ only claim for research and development deductions for 2005 (as in past years) was the ACARP levies, which had been the subject of a class ruling, and the R & D project plan had been confirmed by the Department of Industry, Tourism and Resources, the applicants did not have to make a separate application under s 39J of the Act for the 2005 income year.
  16. In addition, during the 2005 income year Mr Lawrence left the applicants’ employ in November 2004 and was not replaced until January 2005. In the interim Mr Darren Pickering, the applicants’ management accountant, performed both his role and the financial accountant’s. Further, Mrs Sarah Richards passed away on 26 March 2005, and the finance team spent much time settling her estate, in addition to carrying out their day-to-day responsibilities.
  17. It was not until he received a telephone call from the applicants’ accountants on 11 October 2007 that Mr Taylor became aware that the companies needed to file a s 39J application for the 2005 income year. He immediately submitted such an application for late registration under the exceptional circumstances provisions of s 39JF of the Act (T p33).
  18. But for those circumstances, the applicants would have applied in relation to the 2005 year within the prescribed time period under s 39J. Failure to lodge within time stemmed from a misunderstanding about the need to make such an application. As soon as that was drawn to their attention, they duly applied.
  19. Mr Taylor also noted that the applicants did file an application in relation to the 2006 income year within the required time. But that application was filed only because the applicant had incurred research and development expenditure in addition to the ACARP levies during the 2006 year.
  20. In cross-examination, Ms van Duyn pointed out that his letter of 15 October 2007 (T pp33-35) recited that applications for the 2003 and 2005 years “have not been lodged”. Mr Taylor replied that because a copy of the 2003 application could not be found, they had drawn that inference. The apparent inconsistency with paragraph 5 of Exhibit A1 stemmed from the fact that paragraph 5 was based on the results of their internal review. As the claim had been made in the tax return, they thought the application must have been lodged.
  21. At that time, Mr Lawrence had been responsible for lodging the applications, while Mr Taylor himself had been responsible for those before 2000. Mr Pickering had that responsibility for the 2005 year.
  22. Mrs Sarah Richards was a daughter of Mr Cant and a director of the applicants, but had no responsibilities in this area.
  23. Mr Lawrence's evidence: Mr Dean Lawrence, the Bloomfield group’s financial accountant between May 1999 and November 2004, in his oral evidence by telephone adopted his statutory declaration of 11 January 2008 (Exhibit A3).
  24. In it he stated that part of his duties had been to oversee the compliance role of the group in relation to taxation matters, including R & D matters. He understood that the 2003 application could not be located by the respondent and that Bloomfield could not locate a copy of it on their files.
  25. He genuinely believed the required return would have been lodged, but because of the exceptional workload the finance team had to shoulder at the time, a copy may not have been taken.
  26. He recalled that during the 2002 year they changed the year end of the group from 30 June to 31 March, with the first application in March 2003.
  27. Further, during 2003 the group undertook a major restructuring of the family owned and controlled holding company to allow the entry of another family member. That was a major transaction that extended over many months.
  28. In addition, the group changed from PricewaterhouseCoopers to KPMG as their registered tax agent, which may have caused confusion about who was responsible for lodging the R & D applications.
  29. His recollection was that during his period at Bloomfield all requisite R & D applications had been lodged. He believed they related only to ACARP levies. He could see no reason why the 2003 version would not have been lodged.
  30. In cross-examination, Mr Lawrence said he could not recall preparing the specific application for 2003 but did recall preparing such applications yearly, and had a checklist for that purpose. He now had no written evidence of a checklist used in 2003 because he did not retain his Bloomfield records when he left the company in November 2004. But he could recall making many R & D lodgements. When he was preparing to leave the company there was a handover period for Mr Pickering. He could not specifically recall a handover program in relation to R & D application for 2004-2005, but there would have been plenty of time to conduct one.
  31. Mr Pickering's evidence: Mr Darren Pickering adopted his statutory declaration of 6 November 2007 (Exhibit A4) stating that he honestly believed that the ACARP agreement effective to 2010 was in fact all that was needed to meet the requirements for R & D registration. His email of 12 July 2004 to Mr Taylor, a copy of which was attached to his declaration, corroborated that belief.
  32. At the hearing Mr Pickering said that before the 2005 application was lodged, he had been managing accountant and retained that role until 2005 when he was relieved of his prior duties upon fully taking over Mr Lawrence's responsibilities. The handover period lasted four or five weeks during Mr Lawrence's notice period. He could not recall any specific instruction about R & D applications, but his email suggested that there had been some in relation to the ACARP agreement. His understanding was therefore that there was no need to lodge an application as the ACARP agreement was sufficient. He had not, however, sought to clarify the position with the ATO or the respondent.

Applicants' submissions

  1. The applicants adopted the submissions contained in their statements of facts and contentions (SoFaC). Mr Robertson submitted that s 36JF of the Act, like all other extension of time provisions, was of a remedial or ameliorating nature and should be construed beneficially towards the applicants (Brown v FCT [1999] FCA 563; (1999) 99 ATC 4516).
  2. The respondent’s letters of 13 December showed that in relation both to the 2003 and 2005 income years, the respondent had taken a myopic approach that imposed an unwarranted fetter on the board’s power to extend time. It had rejected any circumstances that were not outside the applicants’ control.
  3. In relation to the 2003 income year, the applicants had in place systems that ensured timely lodgement in other years. The applicants’ R & D claim was simply for the five cents per tonne levy for the research fund, a figure that could easily be derived and did not require the preparation of working papers. As the applicants had claimed a tax deduction before the time limit had expired, they were not seeking to make a retrospective application of the kind that the time limit provisions were intended to preclude. In the normal course of events the application would have been made, but a human error occurred somewhere.
  4. There was no doubt about the applicants’ entitlement under the Act and the evidence (see para 26 above) showed how the error could have occurred.
  5. As to the 2005 income year, a human error had occurred based on the mistaken belief that the company’s position was safe until 2010 and they did not need to lodge applications until then. They did in fact lodge an application in 2006, but that was because they had incurred other R & D expenditures in that year. Mr Taylor’s evidence (Exhibit A1, para 28), showed that the operative cause of the errors was correspondence by a third party with the ATO. The situation was similar to that contemplated in the explanatory memorandum, which pointed out that the bill directed the board to reconsider six specific cases that had arisen because the applicants had informed the wrong body. The applicants’ error in this case was reasonable, and constituted exceptional circumstances.
  6. Once such circumstances had been shown, the board (and the tribunal) had no residual discretion to refuse registration. The power was circumscribed once exceptional circumstances had been shown: Finance Facilities Pty Ltd v Federal Commissioner of Taxation [1971] HCA 12; (1971) 127 CLR 106.
  7. The guidelines relating to the application of s 39JF of the Act (T pp16-17) had no statutory force and were the source of the board’s error in the present case.

Consideration

  1. The deadline for applications for registration for R & D tax concessions in the 2003 income year was 31 January 2004, and for the 2005 income year it was 31 January 2006. The applicants lodged their registration applications for the 2003 year almost four years late and, for the 2005 year, almost three years late in relation to the period provided by s 39J(1A)(d) of the Act. Under s 39JF(1), however, the respondent may register the applicants if it considers that “the application was made after the end of the period due to exceptional circumstances”.
  2. The Act does not define exceptional circumstances and there appear to be no court or tribunal decisions interpreting the phrase in the context of s 39JF(1). The word “exceptional” is defined by the Oxford English Dictionary as “Of the nature of or forming an exception; out of the ordinary course, unusual, special”. The Macquarie Dictionary definition is “not usual, common, or ordinary; uncommon in amount or degree; of an exceptional kind”. In Re Z (1970) 15 FLR 420, 421, Joske J adopted the Oxford definition and other courts and tribunals have adopted similar definitions.
  3. In determining the meaning of s 39JF(1), having regard to the ordinary meaning conveyed by the text of that provision, taking into account its context in the Act and the purpose or object underlying the Act, the tribunal may have regard to extrinsic material such as the relevant explanatory memorandum. The Industry Research and Development Amendment Act 1999 (the Amending Act) inserted s 39J into the Act.
  4. The explanatory memorandum for the Industry Research and Development Amendment Bill 1998 stated that the purpose of the amendment was to increase the period for making a registration application from six months after the end of the company's year of income to ten months and to provide for a discretion to accept late applications in particular circumstances. The explanatory memorandum to the Amending Act explained that this was to make it easier for companies to meet the deadline for making an application by both increasing the period allowed and, for most companies, moving the deadline away from busiest periods on the calendar.
  5. In relation to the insertion of s 39JF of the Act, the explanatory memorandum provided that “exceptional circumstances” might include:
  6. The explanatory memorandum further stated that the limited discretion extended to the board to consider late applications did not allow retrospective access to the research and development tax concession scheme, which the current deadlines in the Act are designed to prevent.
  7. The board contends that its guidelines relating to exceptional circumstances broadly reflect parliament’s intention as expressed in the explanatory memorandum. The guidelines provide examples of such circumstances: delivery delays, personal tragedy, natural disasters or unforeseen actions of third parties which cause the out of time lodgement of registration applications as circumstances that the board may consider to be exceptional. Such occurrences would, in most cases, be unusual, uncommon or not be ordinary.
  8. The guidelines indicate that the respondent will look specifically for evidence of an unforeseen or unforeseeable event or circumstance, or combination of them, that was outside the control of the applicant.
  9. They state that the following key elements are likely to be found in a scenario claimed to constitute “exceptional circumstances”:
  10. The guidelines then give the following examples of circumstances that the board may consider to be exceptional. Circumstances which the board may consider to be outside the control of the applicant company, include (but are not limited to):
  11. On the other hand, the guidelines take the position that merely omitting to prepare an application or preparing an application in time but failing to send it are not exceptional circumstances (ie are not outside the control of the person concerned).
  12. In addition, the guidelines state that significantly late applications should prima facie not be accepted without very clear evidence that the lateness was due to exceptional circumstances.
  13. Income year 2002-2003: The evidence for the applicants starts with the proposition that the application “would have been lodged” but that a copy of it might not have been kept. The respondent argued that such a claim amounts to alleging that the application was actually lodged, which is inconsistent with a claim that it was not lodged because of exceptional circumstances. That may well be so, but in any case the fact the applicants can produce no evidence to corroborate its claim, and that the respondent has no record of receipt, leads to the conclusion that it was not in fact lodged.
  14. Mr Cant’s terminal sickness would constitute an exceptional circumstance, but it is clear that Mr Cant had no involvement in preparing and lodging the registration application, which was in any event a very simple matter as only one payment had been made. Further, Mr Cant’s death in June 2004 occurred after the deadline for lodgement and is thus not relevant.
  15. The other circumstances referred to by the applicants are the change in the applicants' financial year end date to 31 March, the corporate restructuring, the staff change leading to Mr Pickering's appointment and the change of tax agents. I do not think it necessarily matters that they were not circumstances outside the control of the applicant companies, but contrarily to the applicants’ submission, I do not think the decision under review, or the respondent’s position in these proceedings, seeks to fetter the decision-making process in that way. The guidelines state that an element likely to be found to constitute exceptional circumstances would include a circumstance outside the control of the applicant company, and all the examples given are of that nature. But a circumstance does not need to be outside the applicants’ control in order to be exceptional.
  16. This is not a case in which the delay occurred through an applicant intentionally failing to take action. The applicants moved very promptly to lodge applications once they became aware of the problem. As they had lodged previous applications, and had claimed tax deductions for R & D in their returns for the relevant year, they were not attempting to construct a retrospective claim.
  17. The applications were, however, almost four years late and the guidelines state that “significantly late applications should prima facie not be accepted without very clear evidence that the lateness was due to exceptional circumstances” (T p17). While that proposition has no statutory force, it is consistent with the legislature's policy as revealed in the Act and discussed in the explanatory memorandum.
  18. The evidence adduced supplies a number of reasons why lodgement of the application could have been overlooked, but it falls short of clear evidence of what actually happened and why the lateness was due to exceptional circumstances.
  19. The events that the applicants blame for their failure to apply are not unusual in the conduct of a sizeable business and thus cannot be regarded as exceptional. On the evidence it seems likely that the failure to apply resulted from a mere oversight. The guidelines state, and I think rightly, that merely omitting to prepare or send an application is not an exceptional circumstance. Such omissions can easily occur. Efficient organisations have bring-up files and other systems to ensure that applications and returns are lodged on time.
  20. Income year 2004-2005: The position in relation to the 2005 income year is materially different, however. Correspondence from ACARP (outlined in paras 28 to 31 above), set out in some detail the requirements with which the applicants needed to comply in order to be eligible for the R & D deduction, but nowhere mentioned their need to apply for registration in the relevant year.
  21. Having complied with all the requirements mentioned in that correspondence, it is unsurprising that Mr Taylor and Mr Pickering (paras 48 and 49 above) formed the view that, as the applicants has executed the deed of arrangement, ACARP was the central R & D body for the coal industry, the applicants’ only claim for R & D deductions for 2005 (as in past years) was the ACARP levies, which had been the subject of a class ruling, and the R & D project had been confirmed by the Department of Industry, Tourism and Resources, the applicants did not need to make a separate application under s 39J of the Act for the 2005 income year.
  22. While it would have been prudent for the applicants to seek confirmation of their understanding from the respondent or the ATO, or through their tax agents, their error cannot be regarded as unreasonable given the advice they had received from the industry’s central R & D body. It resulted from the “unforeseeable actions of a third party” within the meaning of the guidelines, although it would probably be going too far to say that they were actions over which the applicants had little or no control, as they could, and perhaps should, have sought independent advice. Nevertheless, I find that the evidence establishes the existence of exceptional circumstances.
  23. That leaves the question whether the use of the word “may” in s 39JF(1) grants the respondent, and by extension the tribunal, an implied discretion to grant or refuse registration notwithstanding that exceptional circumstances of the kind contemplated have or have not been established.
  24. Interpretation of the word “may” starts from the proposition that the task is to ascertain the real intention of the legislature. In so doing the decision-maker begins with the prima facie presumption that permissive or facultative expressions operate according to their ordinary natural meaning: Ward v Williams [1955] HCA 4; (1955) 92 CLR 496 at 505.
  25. Apparent discretions to act may, however, be rendered obligatory if the apparent intended effect of the Act leads to that conclusion: Finance Facilities at pp134-135.
  26. Thus, in the absence of clear words, no discretion should be implied from the use of the word “may” where it relates to the refund of overpaid tax: Commissioner of State Revenue (Vic) v Royal Insurance Australia Limited [1994] HCA 61; (1994) 182 CLR 51 at 64.
  27. Similarly, where the apparent discretion involves payment for property that has been acquired, the presumption against the acquisition of property other than on just terms will lead to the conclusion that the making of a payment is obligatory: Federal Commissioner of Taxation v Northumberland Development Co Pty Ltd (1995) 59 FCR 103 at 114
  28. Here it is apparent that the legislature has granted a discretion because it is impossible to foresee all the combinations of circumstances that might be regarded as unusual and, subject to the reservation that the discretion should not be exercised in such a way as to authorise a retrospective claim, a discretion is appropriate so as to enable equitable treatment of cases that fall close to the borderline on one side or the other.
  29. In this case, I find that discretionary factors point in the same direction as my findings on the question of exceptional circumstances in the case of each relevant income year. Thus I would exercise the discretion against permitting registration in relation to the 2003 year, but in favour of permitting it in relation to the 2005 year.
  30. The decision under review is therefore affirmed in relation to the 2003 year and set aside in relation to the 2005 year.

I certify that the 86 preceding paragraphs are a true copy of the reasons for the decision herein of Professor GD Walker, Deputy President


Signed: ...........................[sgd]................................................

Renee Wallace, Associate


Date/s of Hearing: 8 December 2008

Date of Decision: 5 February 2009

Solicitor for the Applicant: Mr L Wolfer, KPMG Tax Lawyers Pty Ltd

Counsel for the Applicant: Mr M Robertson

Solicitor for the Respondent: Ms T van Duyn, Clayton Utz

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