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Tribunal: Deputy President Stephen Boyle

The Commissioner of Taxation issued a departure prohibition order to the applicant that prevented him from leaving Australia because he had an outstanding tax debt of over $33 million.[1] The applicant requested a departure authorisation certificate (DAC) to travel to the United Kingdom. Section 14U of the Taxation Administration Act 1953 allows the applicant to provide security to satisfy the Commissioner that they will return to Australia. The applicant provided security and his departure authorisation certificate was approved by the Commissioner for a period of three months. After the applicant returned, he requested a second departure authorisation certificate to travel to the UK again. The Commissioner refused the request and the applicant applied to the Tribunal for a review of this decision.

The security the applicant put forward for the second departure authorisation certificate was different to that put forward for the first certificate. The Tribunal reviewed communications between the parties and concluded that the offered security included several mortgages and $170,000 held in trust by the applicant’s lawyers.

The value of the offered security was a critical consideration and the Tribunal stated that it became clear during the hearing that there was little evidence of the value of the security, other than the $170,000 that was in the trust.

The Tribunal explained that it had to be satisfied the security provided sufficient incentive for the applicant to return. Put another way, would the loss of the offered security be too high a price to pay for not returning to Australia.

The Tribunal was not satisfied that the applicant had provided enough security to ensure his return to Australia. In coming to this decision, the Tribunal particularly pointed to the size of the tax liability compared to the value of the security offered and the lack of certainty as to the value of the security provided. The Tribunal also highlighted that the applicant and his wife were UK residents, the applicant’s assets and businesses were outside Australia, and the applicant was in the process of freeing himself of his Australian assets.

The Tribunal affirmed the decision not to issue a departure authorisation certificate.

Read the full written decision on AustLII.

[1] Section 14S(1) of the Taxation Administration Act 1953