Taxing Matters
Know You of This Taxation? PART IVC OBJECTION PROCEEDINGS By Matthew Crowley
Barrister, Francis Burt Chambers
Part IVC in context 1. Forgive me the cliché of invoking Shakespeare to decorate a tax paper. It is a common pox, it seems.1 But bear with me. The line falls from the mouth of Henry VIII in the eponymous play.2 Cardinal Wolsey has fallen into royal disfavour when his machinations are exposed. Among those is Wolsey’s collection of an unlawful tax – a ‘Sixth part of each … a trembling contribution!’. Queen Katherine petitions Henry on behalf of “not a few” warning his subjects are “in great grievance … and almost appear / in loud rebellion.” The Duke of Norfolk ‘mansplains’: “for, upon these taxations / The clothiers all, not able to maintain / The many to them longing, have put off / the spinsters, carders, fullers, weavers, who / Unfit for other life, compell’d by hunger / And lack of other means, in desperate manner / Daring the event of the teeth, are all in uproar / And danger serves among them!” Henry is not amused: “Taxation! / Wherein? And what taxation? My lord cardinal / You that are blamed for it alike with us / Know you of this taxation?” Henry commands that the tax is not to be recovered: “Have you a precedent / Of this commission? I believe, not any. We must not rend our subjects from our laws / And stick them in our will.” Things do not end well for Wolsey. 2. Henry VIII is not a great play. Neither funny nor emotive, it is a morality play which is nowadays rarely staged.3 It is probably most memorable for the stage prop cannon, which was actually fired during a performance in 1613, setting fire to The Globe and burning it to the ground. But the constitutional point would probably have been pretty clear. Although Magna Carta – which (among other things) forbade taxation by royal fiat – was a dead letter by the early seventeenth century, at the same time jurists such as Sir Edmund Coke began invoking it as symbolic of a fundamental principle of English constitutional law subordinating the monarch to the law.4 That is, I think, the point of the words put into Henry’s mouth.
An organizing principle: No incontestable taxation
Your grace, it would seem Wolsey did not enjoy the play
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3. That rather large arc brings me to Part IVC of the Taxation Administration Act 1953 (Cth) (TAA). Part IVC can be seen as the fulfilment of the constitutional requirement that to be a valid exercise of the federal taxation power an assessment must be contestable.5
Of course, not all ‘objections’ or ‘objection decisions’ relate to assessments. A very recent example can be found in The Buddhist Society of Western Australia Inc v Commissioner of Taxation [2020] FCA 1126 involving the Commissioner’s revocation of the Society’s status as a deductible gift recipient. Private rulings are another. And not all objectionable decisions are ‘objection decisions’ engaging Part IVC. In fact, theoretically the validity of all decisions of the Commissioner are capable of challenge outside Part IVC for jurisdictional error. That is because the Parliament cannot oust the constitutionallyentrenched jurisdiction of the High Court to grant relief in respect of a legally invalid decision. That is, a decision vitiated by ‘jurisdictional error’ is always theoretically capable of challenge, ‘jurisdictional error’ being a conclusion that the decision was without any legal authority. But there’s the rub – Parliament does not always intend that the legal consequence of a decision wrongly made be invalidity. 4. I dare say most Part IVC proceedings do concern assessments, for obvious reasons. But in practical terms challenges to assessments must be funnelled through Part IVC. One reason is that even an otherwise meritorious challenge to an assessment made on judicial review to the High Court (or the Federal Court in its derivative statutory jurisdiction under section 39B of the Judiciary Act 1903 (Cth)) will almost certainly be refused on discretionary grounds because Part IVC has not been invoked.6 The other, more fundamental, reason is that the assessment conclusivity provisions7 mean that even assessments made wrongly are not invalid. They would not be vitiated by jurisdictional error. 5. True, a ‘provisional’ or ‘interim’ or ‘tentative’ assessment can be challenged outside Part IVC.8 But that is because they are not ‘assessments’ at all, and therefore do not engage the conclusivity provisions. Also true, an assessment affected by ‘conscious maladministration’ (bad faith) may be challenged outside Part IVC.9 But that way madness lies! There has never been a successful ‘conscious maladministration’ challenge, so far as my research has disclosed. The practically insuperable problem is a lack of evidence of bad faith. 6. Because of the assessment conclusivity provisions, an assessment would be effectively incontestable (and unconstitutional) but for Part IVC. But Part IVC is invoked on a ‘taxation objection’ –
