Legal Update: Deputy Commissioner of Taxation v Scott [2015] QDC99

As part of our ongoing commitment to provide accountants and advisors with up-to-date information which assists in your business, we wish to bring to your attention a recent decision, handed down earlier this month, which has not been published in the public domain. We are on a unique mailing list which provides us with decisions which relate to tax and business law decisions.

In this case, a client disputed service of the Notices of Assessment on the basis that the notices were sent to a PO Box he no longer used and more importantly, the source of that PO Box address was his former tax agents, who provided that wrong postal address without authorisation.

The Court held that the taxpayer was bound by the information supplied by the tax agent as to the preferred address of the taxpayer, which address happened to be the post office box of the tax agent.

The Court noted that, for an address to be preferred, the taxpayer had to "indicate" that he "wishes" that address to be used by the Commissioner, "in preference to other addresses of the person".

The tax agent had been in contact with the Commissioner and used the term "postal preferred address" in respect of the taxpayer. The Court noted that the designation of such an address in a form or correspondence as an "address for service", a "preferred address", an "address for correspondence", or similar term, satisfies regulation 36(1)(c) to be the preferred address of a taxpayer.

The fact that the taxpayer then failed to amend his preferred address meant that he was effectively in breach of regulation 37A of the ITR 36. This regulation provides that once a person gives the Commissioner a preferred address for service, then the person "must subsequently maintain a preferred address for service for the purpose".

The tax agents might not have been acting for the client at the time they last communicated with the Commissioner, but they were still his authorised tax agent for the purposes of notice of his preferred address. This was because he was the taxpayer's agent either ostensibly as an implication from the usual incidents of the role of a tax agent, or impliedly through that course of dealings whereby the tax agent had, solely, provided the addresses for over ten years.

As tax agents, you may benefit from considering this case and noting;

  1. You have an apparent and/or implicit authority to provide your clients' address to the DCT, so if the information is wrong, your client will still be bound by it;
  2. All tax payers are obligated to comply with requirements to keep their address for service up to date by notifying the ATO when they change their address for service;

It may benefit you to have a small clause in your client engagement letter reminding the client of their obligations. We recommend you insert the following clause in your client engagement letter:

The client acknowledges that, under the Income Tax Regulations, the client is obliged to maintain a preferred address for service of any notice from the Australian Taxation Office. It is agreed that such address will be care of our office, unless and until advised in writing by you. Further, even though we will attempt to advise the Australian Taxation Office if we receive written advice from you to change the preferred address for service, the ultimate responsibility will be with you to give notice to the ATO (Contact the ATO by post at: GPO Box 9990 in your capital city, by telephone on 13 92 26, or online at: https://www.ato.gov.au/General/Gen/Order-ATO-products-online/ ).

If you are interested in receiving the full judgment please contact Gavin Parsons of our office direct on 9262 4471. It is a relatively complicated case to read, so we hope the above summary and suggested clause is of assistance.

Gavin Parsons

Date posted: 2015-05-19