Wu: taxation objections - get your grounds right

The case of Wu v FCT [2018] FCA 1339 illustrates the importance of correctly stating the grounds for a taxation objection.

Mr Wu arrived in Australia in 2005 and was granted a permanent visa in February 2009. The Australian Taxation Office (ATO) assessed Mr Wu on certain deposits made into his bank accounts during the 2009 to 2012 income years. Mr Wu objected against those assessments and after the ATO disallowed the objection, Mr Wu unsuccessfully sought review of the objection decision in the Administrative Appeals Tribunal (AAT).

Mr Wu appealed the AAT decision to the Federal Court. In the Federal Court, Mr Wu submitted that the deposits were not assessable as he was a temporary resident for income tax purposes and the deposits were non-assessable non-exempt income under section 768-910. 

The Federal Court refused to remit the case back to the AAT for consideration of a new issue – whether Mr Wu was a temporary resident - even though the ATO conceded that section 769-910 had been overlooked by the parties and submitted that the point relied upon by Mr Wu could now nonetheless be raised for the first time, justifying at least a limited remittal to the AAT. Mr Wu contended that in overlooking the matter, the AAT made an error of law.

There were two issues in dispute before Steward J in the Federal Court:

  • whether the objections, which did not include section 768-910 as a ground for objection, validly raised the new ground concerning section 768-910 and if they did not, whether Mr Wu should have leave to rely on this ground under section 14ZZK of the Taxation Administration Act 1953. Steward J found that the taxpayer did not validly raise the relevant provisions in his notice of objection, and that the parties had failed to address it themselves before the AAT;

  • whether the AAT erred in law when it did not deal with a point of law which the parties themselves did not address.  In this regard, Steward J referred to and applied the “general rule” in FCT v Glennan (1990) 90 FCR 538 that no error of law occurs if the tribunal does not address issues of fact and law not the subject of argument by the taxpayer.

Steward J was not satisfied that this matter merited an exception to the general rule.  There are exceptions from the general rule where a claim (not the subject of argument) is clear on the face of the material before the tribunal.  Steward J considered this was not such a case, rather, this was a case where the parties missed a potentially relevant provision and the AAT had not erred in law by not considering section 768-910.

This case clearly serves as a reminder that parties wishing to object to assessments, and/or later review or appeal of an unsuccessful objection, must ensure that the grounds for objection are correct and include all grounds both specific and general. If the grounds for objection are not correct, the decision in Wu illustrates the limited scope to raise new grounds.

Sladen Legal’s tax team has considerable experience in preparing objections to taxation decisions.

For more information please contact:

Neil Brydges
Special Counsel | Accredited specialist in Tax Law
Sladen Legal
M +61 407 821 157 | T +61 3 9611 0176
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia  
E: nbrydges@sladen.com.au

Daniel Smedley
Principal | Accredited Specialist in Tax Law
Sladen Legal
M +61 411 319 327 |  T +61 3 9611 0105
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia  
E: dsmedley@sladen.com.au 

Rob Jeremiah
Principal l Accredited Specialist in Tax and Business Law
Sladen Legal
M +61 418 500 363  l  T +61 3 9611 0103
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
E: rjeremiah@sladen.com.au

Phil Broderick
Sladen Legal
T +61 3 9611 0163  l M +61 419 512 801   
Level 5, 707 Collins Street, Melbourne, 3008, Victoria, Australia
E: pbroderick@sladen.com.au