Woellner, Robin (2020) ‘It is a bad look’. E-Journal of Tax Research, 18 (2). pp. 508-530.

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Abstract

That was the way a senior ATO officer characterised the ATO's refusal to remit outstanding general interest charge (GIC) owing in Pintarich v DCT [2018] FCAFC 79. It is hard to disagree. The saga began when the Australian Taxation Office (ATO) issued assessments to Mr Pintarich for some AUD 1.1 million including some $300,000 of GIC. In December 2014, after some earlier exchanges, the ATO sent Pintarich a computer-generated letter which on its face appeared to indicate that the ATO had agreed to remit the outstanding GIC and that payment of some $839,000 would finalise the whole dispute. The ATO letter was unsigned, but contained the Deputy Commissioner's name printed in the signature block. The relevant ATO officer had not been able to proof-read the final version of the letter before it was sent to Pintarich because of limitations within the ATO system. Based on the ATO letter, the ANZ Bank lent Pintarich some $839,000 which he used to pay the ATO debt. However, in May 2016, the ATO wrote again to Pintarich, stating that:

- the 2014 letter had been 'issued in error';

- Pintarich had been 'erroneously advised' (by the ATO);

- the ATO had decided not to remit the GIC; and

- Pintarich was required to pay some $361,000 in GIC within 14 days.

Pintarich took legal action, but a majority of the Full Federal Court held (Kerr J dissenting) held that the December 2014 letter did not reflect a 'decision' by the ATO to remit GIC, because the ATO officer had not engaged in the (essential) mental process of actually considering the request for remission of GIC prior to sending the letter. The ATO argued that the subsequent 2016 letter therefore embodied the only ATO 'decision' (ie not to remit most of the GIC).

The High Court refused special leave to appeal on the basis that the appeal had insufficient prospects of success. While the ATO position may have been technically correct, it seems harsh in all the circumstances for the ATO to refuse to exercise its discretion to remit when the problem was caused by an internal ATO error to which Pintarich had not - so far as appears from the case report - contributed and which led Pintarich and the ANZ Bank to act to their significant detriment. It may be going too far to say that taxpayers and their advisers will not in future be able to accept ATO documentation at face value, but certainly taxpayers (and advisers) should not be required to speculate on whether an ATO document does or does not actually represent an ATO 'decision' on a particular issue.

Cases such as Pintarich illustrate some of the emerging problems generated by the ongoing computerisation of ATO functions, as 'analogue' legal doctrines try to deal with an increasingly digital world. This dissonance risks creating taxpayer and adviser uncertainty and a consequent loss of trust in the ATO, especially as - contrary to the views of the Federal Court majority - such issues seem likely to become more common and significant as the ATO moves increasingly to a computerised mass decision-making system in which human involvement is progressively reduced. The outcome in Pintarich might also suggest that the ATO sometimes focuses on 'winning' at the expense of broader issues of fairness and the ATO's intended role. ** Accordingly, while there has been much written on the technical question of whether the ATO letter evidenced a 'decision' by the ATO to remit the GIC, this article focuses on whether the ATO' actions were fair and reasonable.

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