The facts in Dalby’s case continues
- During the process of considering the objection against the trustee assessment, the ATO sought further information and agreed to an extension of time in which the trustee might respond, to 29 October 2018. No response was received from the trustee or their tax agent.
- On 3 January 2019, the ATO disallowed the objection in full.
- On 21 January 2019, the trustee filed an application for review on the following basis:
“The Commissioner is seeking to disallow a legitimate deduction in spite of evidence proving the deduction is correct and valid. The Commissioner is also seeking to have the Trustee assessed instead of the Trust as part of an attempt to harass, intimidate and bankrupt me.”
Notably, this application for review did not mention a trust resolution.
- On 3 June 2019, the trustee filed its Statement of Facts, Issues and Contentions with the Tribunal, which included as one of the issues identified for determination: “Whether the Commissioner erred by issuing the assessment in the name of the Trustee only in breach of the Distribution Statement in place for that year (and previous years)”.At this time, the trustee produced (for the first time) an income distribution resolution (a ‘trust resolution’) for the 2013 year. The resolution distributed a fixed amount of trust income to a number of individual beneficiaries with the balance going to a corporate beneficiary. None of these beneficiaries returned any net (taxable) income from the trust for the 2013 income
- On 26 July 2019, the ATO filed its Statement of Facts, Issues and Contentions noting that, if the trustee wished to “agitate the issue” regarding the trust resolution, leave of the Tribunal would be required for the trustee to add this to its grounds of objection. This is because, being an application for review of a reviewable objection decision, under S.14ZZK(a) of the Taxation Administration Act 1953 (‘TAA’), the applicant is limited to the grounds stated in the taxation objection to which the objection relates, unless the Tribunal orders otherwise.
- On 27 September 2019, the trustee sent an email seeking to amend the grounds of objection.
- The decision of the Tribunal is discussed below. Note that this hearing only involved the application for leave to extend the grounds of objection to include the issue of the trust resolution. The substantive issue, being the deductibility of the $900,000 loss from gold trading activities, was not considered at this hearing, as this issue was already encompassed in the original grounds of objection (which is set down for hearing by the Tribunal at a later time).