It is important to know what you can do if the Australian Taxation Office (ATO) is investigating your affairs or the affairs of your business. Suppose you have received an objection decision or a tax assessment from the ATO that you are dissatisfied with. In that case, you may seek an appeal of that decision either before the Administrative Appeals Tribunal (AAT) or the Federal Court. But how do you determine whether to commence appeal proceedings in the AAT or the Federal Court? This article will outline some factors you may consider in making this decision.

Factors to Consider

Below is a table that sets out and compares important factors to consider when deciding whether to commence and run appeal proceedings against the ATO in the AAT or the Federal Court.

AAT

Federal Court

How do I commence appeal proceedings?

You need to either:

  • complete and lodge an 'application for review of a decision' form; or
  • lodge an application through the AAT's online service.

You will also need to provide supporting documents, such as the ATO's objection decision.

The relevant forms are accessible on the AAT's website. The suitable form will depend on whether you are a small business, an individual or an organisation.

Further, you can lodge the relevant forms in person, by fax, email or post.

The AAT will then provide a copy of your application and its supporting documents to the Commissioner.

You need to complete and file a 'notice of Appeal' using the prescribed form, together with supporting documents.

The prescribed form is accessible on the Federal Court's website.

You must file the notice of appeal in the Federal Court Registry either in person, by post or using the Commonwealth Courts Portal.

You must then serve a filed copy of your notice of appeal on the Commissioner within five days of filing.

What are the fees to commence appeal proceedings?

As of 28 June 2021:

  • The standard application fee is $962.
  • A lower fee of $95 is payable if:
    • the amount of tax in dispute is less than $5,000;
    • the ATO refused your request to be released from paying a tax debt; or
    • the ATO refused to extend the time for you to lodge an objection.
  • A fee of $517 is payable if you are a small business entity, but you are not eligible for the lower fee of $95.
  • In limited circumstances, you can pay a reduced fee of $100.

As of 1 July 2021:

  • $4,235 for a corporation; or
  • $1,455 in any other case.

Can I request an extension of time to commence my case?

Yes, if you make an 'application for extension of time for making an application for review of decision', and the AAT considers it is reasonable to provide the extension in all the circumstances.

No.

Do I have an automatic right to request a private hearing?

Yes.

No. However, in some cases, the Federal Court may exercise its discretion to grant a private hearing.

How formal is the appeal process?

The process is less formal.

The case is not heard by a judge but by a decision-maker called a 'tribunal member'.

Also, there is a more flexible approach to applying the rules of evidence in the Evidence Act 1995 (Cth).

The process is more formal.

The case is heard by a judge.

Also, it requires that the parties strictly comply with the Evidence Act 1995 (Cth).

Can I expedite my case if it is urgent?

No. It does not have an expedited hearing list for urgent matters.

Yes. It has a hearing list for urgent matters and may expedite your case to that list if needed.

Can I get an order for the other party to pay my costs of the proceedings?

Generally, no. However, in some limited circumstances, the AAT may make an order for costs.

Yes. The Federal Court has broad powers to make costs orders.

What kind of decisions can be made?

The AAT can consider the merits of the objection decision made by the ATO. That is, it can substitute its own decision for the decision of the ATO.

The AAT may:

  • affirm the objection decision;
  • vary the objection decision;
  • set aside the objection decision and substitute a new decision; or
  • remit the objection decision to the Commissioner of Taxation for reconsideration.

The Court can decide on the facts in dispute, whether the objection decision is excessive or otherwise incorrect.

It is then a matter for the ATO to apply the Court's decision accordingly.

Is the decision binding?

A judge in the Federal Court is not strictly bound to follow a decision of the AAT.

Additionally, tribunal members are not bound to follow other AAT decisions, but they usually do for consistency and sound administration in practice.

The Federal Court's decision is binding on decision-makers and the AAT.

Further, tribunal members are bound to follow a decision of the Federal Court.

However, you may appeal a Federal Court decision in the Federal Court of Appeal in certain circumstances.

Key Takeaways

Before commencing proceedings, there are numerous factors to consider when appealing an ATO objection decision, including the:

  • costs;
  • procedure; and
  • intended outcome.