The Commissioner of Taxation (Commissioner) has power pursuant to section 255-15(1) of Schedule 1 of the Taxation Administration Act 1953 to permit a taxpayer to pay its tax-related liability by instalments in accordance with a payment arrangement. The recent Federal Court decision of Stojic v Deputy Commissioner of Taxation  FCA 483 (Stojic) dismissed an application by the sole director and shareholder of a company to review a decision by the Commissioner to decline to exercise that power illustrates two major points.
The first is that when negotiating a payment arrangement, propose an arrangement that you can meet. The applicant had negotiated an earlier payment arrangement on behalf of that company which was accepted by the Commissioner. However, after payment of the first instalment, the company did not make any further payments thereby breaching the terms of that arrangement.
If the terms of the earlier payment arrangement had been negotiated differently, and the company had successfully met its obligations under this arrangement, it would neither have been subject to further enforcement action to recover the outstanding tax-related liability by the Commissioner nor in an attempt to settle the dispute with the Commissioner would it have been necessary to propose a new payment arrangement.
The second point is the difficulty of taxpayers successfully objecting, reviewing, or appealing a decision by the Commissioner other than under Part IVC of the Taxation Administration Act 1953. The usual pathway for a taxpayer dissatisfied with an assessment, determination or decision made, or notice given, by the Commissioner is the objection, review, and appeal process under Part IVC.
However, the provisions of Part IVC only apply if a provision of the Tax Acts allows a person to object in the manner set out in Part IVC. Section 255-15(1) is not one of those provisions. As the taxpayer could not review the decision under Part IVC, the applicant unsuccessfully sought judicial review under the Administrative Decisions (Judicial Review) Act 1977. Stojic is the latest case illustrating the difficulty of successfully reviewing or appealing a decision by the Commissioner other than under Part IVC.
Once a taxpayer defaults on a payment arrangement, its options are limited when it comes to negotiating a new arrangement as an unfavourable decision by the Commissioner cannot be objected to under Part IVC. Stojic shows that when negotiating a payment arrangement, it is better to under promise and over deliver.
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