ATO Decision Impact Statement on Pintarich – troubling views on when a decision may not be a decision

We previously reported here and here on the Full Federal Court decision of Pintarich v Deputy Commissioner of Taxation [2018] FCAFC 79 (Pintarich) and the unsuccessful application for special leave to the High Court.  The Australian Taxation Office (ATO) has now released its Decision Impact Statement in relation to the decision in Pintarich (Decision Impact Statement).

In its Decision Impact Statement, the ATO takes the view the majority’s decision in Pintarich was consistent with authority that a decision to remit general interest charge (GIC) requires a mental process to reach the conclusion to remit GIC as well as communication of that decision.  The ATO says it had considered applications for remission of GIC by the taxpayer on three separate occasions and on each of those occasions concluded full remission was not warranted.

The ATO then goes further and states:

“[i]t is accepted that a taxpayer should be able to rely on the accuracy and clarity of any communication with the ATO, whether written or verbal.”

The ATO notes it issues a vast amount of correspondence and has even more verbal interactions with taxpayers.  In relation to the specific GIC remission template letter referred to in Pintarich, that template had been used 82,217 times in the 12-month period to October 2018.  The ATO acknowledges there may be some instances, not only in relation to use of this template, where “a communication from the ATO might not have been as clear as it could be.”  The ATO says it is committed to continually improve the clarity and useability of all standard correspondence.   In relation to the GIC remission template letter, the ATO says ‘unclear language’ has been replaced with alternative, clearer wording and the ATO is reviewing its procedures and communication to staff when entering into payment arrangements with taxpayers and the appropriate letters to use.  The ATO says it will complete a review of all payment plan letters in order to incorporate a broader range of scenarios in its automatically generated letters.

The ATO’s then says:

“…documents and other forms of communication should be interpreted within the context in which they were made as measured against the objective facts and evidence.  Whether a particular document evidences a decision is not a task left to the interpretation of the terms of such a document in isolation.  Ultimately the meaning of a document will turn on the particular facts…”

This statement by the ATO in the Decision Impact Statement arguably expands the reasoning of the majority in Pintarich; the majority found on the ordinary reading of the ATO’s letter it could be concluded a ‘decision’ had been made to remit GIC however in absence of the necessary mental element by the ATO officer, a conclusion reach on the application to remit, a valid ‘decision’ was not made (despite the ordinary reading of the letter).

In our view, the suggestion by the ATO that a taxpayer’s having to conclude what decision has been made by the ATO breeds the very ‘administrative uncertainty’ acknowledged by the majority in Pintarich (which was balanced against the perceived small likelihood a situation such as that in Pintarich would arise very often).  It is arguable this statement from the ATO goes far beyond the scenario where correspondence issued by the ATO is wrong or incorrect; the ATO suggests it is up to the taxpayer to show what and when a ‘decision’ is made by the ATO rather than the ATO’s responsibility to communicate what and when decisions are made by the Commissioner.

In the Decision Impact Statement, in reference to Kerr J’s minority decision in Pintarich, the ATO states:

“[w]hilst concerns about the fairness of the majority’s conclusion were expressed in the judgement of Kerr J…, the majority’s decision did not more than express what has long been the proper operation of the law.  Nor did the facts involved the use of automated ‘intelligent’ decision-making systems such as to lay down the application of some wider legal principle to such systems.  In this matter the decision-making responsibility rested with an individual ATO officer to properly consider the facts of the case and determine the exercise of the [Commissioner’s] discretion…whether to remit any part of the GIC.

The facts demonstrate that no such decision was made…

Putting the onus on the taxpayer to determine what was the decision of the Commissioner even in the face of clear correspondence that may or may not reflect what that decision may be also creates uncertainty for the Commissioner in opening the door to taxpayers arguing a decision that may be clear on its face is not the decision where it fails to take into account all relevant material in a particular case.

Whilst the endeavours by the ATO in the Decision Impact Statement to grapple with the wider implications of Pintarich are welcome, the implications of the ATO’s wider conclusions, putting the onus on the taxpayer to confirm when the Commissioner has made a ‘decision’ in a particular case, are troubling.  The ATO has requested comment on the consequences of Pintarich and the text of the Decision Impact Statement until 3 May 2019.  It is hoped the ATO takes the opportunity to reconsider the Decision Impact Statement before it is finalised.

To discuss this article or for any further information about the resolution of tax disputes, please contact:

Sam Campbell
Associate | Business Law
M +61 423 515 454 | T +61 3 9611 0135

Neil Brydges
Principal Lawyer | Accredited Specialist in Tax Law
M +61 407 821 157 | T +61 3 9611 0176

Kelvin Yuen
T +61 3 9611 0177