The Full Court of the Federal Court of Australia unanimously dismissed the appeals in Ziegler v Commissioner of Taxation [2025] FCAFC 168.
Their Honours (Bromwich, Thawley and Jackman JJ) held that the Commissioner’s duty (and power) to make an assessment of administrative penalty is not spent once an assessment is made, but can be re-exercised where the occasion requires it. That power includes increasing the amount of penalty at objection.
The Full Court held that a taxpayer cannot establish excessiveness of an assessment by proving an alleged departure from, or an alleged breach of, a settlement deed with the Commissioner.
The decision addresses the operation of s 177EA in Pt IVA of the Income Tax Assessment Act 1936, including what comprises a scheme and the requisite purpose within the meaning of that provision.
The Full Court found that s 20-20(3)(b) of the Income Tax Assessment Act 1997 (concerning assessable recoupment) is engaged if the taxpayer, as a matter of fact, deducted the relevant amount, irrespective of whether the taxpayer was lawfully entitled to that deduction; and that neither amended assessments nor s 172 of the Income Tax Assessment Act 1936 have the effect of retrospectively extinguishing earlier liabilities.
Greg O’Mahoney and Eugene Chan appeared for the Commissioner, instructed by Suzannah Auld and Kurt Bragg of the Australian Government Solicitor.
A copy of the decision can be found at: https://www.judgments.fedcourt.gov.au/judgments/Judgments/fca/full/2025/2025fcafc0168
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