A.3c.1 This appendix sets out the Tax Office's detailed responses to Chapter 4 of the review and contains the Inspector-General's comments on the Tax Office's responses.

Tax Office detailed reply to Chapter 4

Key Finding 4.1 (Paragraph 4.34)

The Tax Office's principal philosophy on litigation is that it is a means of validating the Tax Office view and ensuring that taxpayers comply with its view of the law.

This compliance aim for litigation is, in certain circumstances, overriding its involvement in activities which may lead to law clarification. These features of the Tax Office's conduct, when coupled with the absence of cost/benefit approaches by the Tax Office in terms of assessing the benefits of litigation against the total internal and external costs of litigated cases means that community perceptions that, at times, the Tax Office has a 'win at all costs' approach to litigation are justified.

Tax Office response

Litigation can provide law clarification for the community

A.3c.2 We agree law clarification is an essential tool for achieving, facilitating or promoting voluntary compliance with the law.

A.3c.3 Litigation is primarily based on bringing disputes with taxpayers to a conclusion, and reflects a taxpayer's right to contest our application of the law.

A.3c.4 Strategic litigation, law clarification and advice are central to our administration of the tax laws. The Tax Office aims to minimise litigation and disputes with taxpayers by coming to correct positions early in our compliance activities and then ensuring that taxpayers understand our position. However, it is up to taxpayers whether they exercise their rights of objection and appeal.

A.3c.5 There are law clarification opportunities that sometimes emerge from a disputed case. Law clarification promotes compliance because it provides certainty about the law for the Tax Office and the community.

The Tax Office does not have a 'win at all costs' approach

A.3c.6 'Win at all costs' is not a term that can be accurately applied to the behaviour of the Tax Office.

A.3c.7 As a Commonwealth litigant, the Tax Office follows the Model Litigant Guidelines. This means that the Tax Office will not engage in unfair tactics or practices.

A.3c.8 The Tax Office is regarded as a model litigant by the Office of Legal Services Coordination, the Federal Court and Administrative Appeals Tribunal . As such, we do not accept the Inspector-General's view that the Commissioner has a win-at-all-costs approach to litigation.

A.3c.9 This assertion seems to be based on a view that the Tax Office does not undertake a cost-benefit analysis in litigation. The reality is that all litigation by the Tax Office is based on an overall appreciation of the risks associated with a case. Revenue implications will be one of the risks considered.

Cost-benefit analysis

A.3c.10 It appears that the report's concern about the 'compliance culture' and 'compliance aims', and absence of a 'cost-benefit' analysis, reflects a view of the Inspector-General that the proposed independent area of litigation should have the flexibility to not follow its Public Rulings if it appears the Tax Office will spend more to defend the case than if the principle is simply given away. If that is the view of the Inspector-General, then we do not agree with it. A decision not to defend a case in such circumstances would mean that a taxpayer in that situation would be treated differently to other taxpayers who haven't appealed.

A.3c.11 Cost-benefit analysis is relevant at the lower levels of day to day management in each case. When a settlement is contemplated, our settlement policy guides officers to consider the cost of litigating, including internal Tax Office costs, and whether it is out of proportion to the possible benefits.

A.3c.12 This process has regard to the prospects of success, including collection of the tax, and likely award of costs. These issues are assessed as objectively as possible. The Tax Office Code of Settlement states that it would be generally inappropriate to concede or settle in the absence of special circumstances where the matter is clear cut, or there is a clearly established and articulated Tax Office view on the issue. It is important to maintain consistency of treatment for taxpayers in comparable circumstances.

A.3c.13 Even where there might be scope for settlement, there will also be cases where it is in the public interest to have judicial clarification of an issue. There will also be cases where the pursuit of the matter through the courts could have a significant flow-on effect in terms of law clarification.

Inspector-General's comments on Tax Office response

A.3c.14 Contrary to the Tax Office's response, the report does not assert that the Commissioner has a win at all costs approach to litigation. It states that there are features of the Tax Office's conduct which justify community perceptions that, at times, the Tax Office has such an approach.

A.3c.15 The report nowhere asserts that the Tax Office should have the flexibility to not follow Public Rulings if it appears that the Tax Office will spend more to defend the case than if the principle is simply given away. The Inspector-General has always accepted that cost-benefit analysis in respect of litigation involves different considerations when conducted by a government department than when conducted by a private litigant.

A.3c.16 The review did find that the Tax Office has no overall risk management framework for Part IVC litigation and that this includes having no overall framework for assessing the costs and benefits of Part IVC litigation at any level of management within the Tax Office. A very limited form of formal cost–benefit analysis for litigation was found to exist within only one business line of the Tax Office.

Key Finding 4.2

There is no formal, consolidated public statement by the Tax Office on its corporate philosophy towards tax litigation. In the continuing absence of such a statement, perceptions that the Tax Office's management of its litigation program is overly susceptible to influence by its compliance culture and by its view of underlying policy will continue to grow. Community perceptions have arisen that the Tax Office is using litigation to confirm its view of the law for compliance purposes rather than to clarify the law.

Tax Office response

A.3c.17 We accept that there is no single public statement. However, there are many publicly available documents that set out our approach to litigation. We will consolidate these public statements into one overarching statement of our corporate philosophy to litigation.

Key Finding 4.3

The Inspector-General finds that a formal, consolidated public statement is needed to provide community confidence, and appropriate guidance and direction to Tax Office staff on the Tax Office's philosophy on litigation. This statement should state that the primary aim of litigation is to resolve a dispute in a fair, timely and cost effective manner. The statement should confirm that the Tax Office's philosophy and approach to litigation is consistent with its role in the tax system as an independent and impartial administrator and that it is committed to administering the tax system in line with the rule of law. The statement should also re-affirm the Tax Office's role in relation to and distinct from the roles of Government, Parliament and the Judiciary.

Tax Office response

A.3c.18 Primarily, the Tax Office's litigation philosophy is to act as a model litigant in accordance with the guidelines attached to the Attorney-General's legal services directions. We believe the guidelines provide appropriate guidance and direction to Tax Office staff.

A.3c.19 However, we will provide a statement on our approach to the conduct of litigation, in a proposed Practice Statement on the matter.

A.3c.20 The Tax Office recognises that litigation achieves law clarification benefits for Government and the community, and also ensures that disputes between the Commissioner and taxpayers are brought to finality in a fair and consistent way.

A.3c.21 The role of the Tax Office is defined by statute and is distinct from the roles of Government, Parliament and the Judiciary.

Inspector-General's comments on Tax Office response

A.3c.22 The Inspector-General welcomes the Tax Office's intention to develop a formal statement to guide its conduct in litigation but believes that a document similar to the Taxpayers' Charter is needed to provide community confidence in the Tax Office's philosophy on litigation. A practice statement could supplement this higher status document. The Charter-like document needs to contain a formal affirmation of the Tax Office's role in relation to litigation as distinct from the roles of Government, Parliament and the Judiciary.

Key Finding 4.4

The Tax Office has stated on a number of occasions that it is prepared to not follow decisions of the courts or tribunals in other similar cases where it believes it is obliged to take steps to protect the intention of Parliament. It has also acted on this policy in a number of cases. The Inspector-General believes that these actions and statements by the Tax Office provide a basis for the perception that the Tax Office is prepared to act, and in some cases has acted, outside the rule of law.

Tax Office response

A.3c.23 The Tax Office takes great care to ensure all actions and decisions are taken in accordance with the law.

A.3c.24 A decision to go back to the courts to revisit the correctness of a previous decision is not only an extremely rare event, but it is done with great care and respect for the judicial system. The review confirms these are rare events. This supports a conclusion that the Tax Office acts very much within the rule of law.

A.3c.25 The Inspector-General has questioned our behaviour in not following a small number of finalised court decisions and concluded that our conduct has amounted to poor administration. We reject this conclusion. Advice received from the Solicitor-General and the Attorney-General's Chief General Counsel has confirmed in our view that we have acted properly in respect of the cases referred to in the report.

Inspector-General's comments on Tax Office response

A.3c.26 The advice received from the Solicitor–General and Chief General Tax Counsel makes no comment on whether the Tax Office has acted properly in respect of the particular cases referred to in the report. It sets out a number of conditions for good administration in this area. The Inspector-General believes that the Tax Office has not met these conditions in all cases to which they apply (such as that of Essenbourne).

Key Finding 4.5

There are differing views in the community on the extent to which the Tax Office should follow finalised court decisions in all situations and whether a failure to follow such decisions in all situations amounts to a breach of the principles of the rule of law.

These views range from the view that a failure to follow finalised court decisions are not justified in any circumstances through to views that failing to follow finalised court decisions are permissible provided certain conditions are met.

The Inspector-General has not sought to resolve the debate on whether the Commissioner should challenge finalised court decisions and, if he does so, the circumstances in which this can be done. The Inspector-General considers that this matter is worthy of further debate including in a broader context than the tax system and this review.

Key Finding 4.6

The Tax Office has received an opinion from the Solicitor-General and from the Australian Government Solicitor's Chief General Counsel which sets out that the following five conditions need to be met before the Tax Office can challenge a finalised court decision which it considers to be wrong:

  • that the Tax Office has credible and robust legal advice that the court's interpretation is wrong;
  • that the challenge is made as soon as possible;
  • that those affected by the challenge are advised of the Tax Office's proposed course of action;
  • that the Tax Office must take steps to avoid any suggestion that the challenge will unduly burden or prejudice individual taxpayers and must therefore fund or organise suitable assistance to bring a test case on the issue; and
  • that the challenge must not be made just because, as matter of policy, the Tax Office considers that the decision in the case is wrong or undesirable.

The Inspector-General has found during this review that Tax Office's conduct in challenging finalised court decisions has not, in relevant cases, met all the above conditions.

Tax Office response

A.3c.27 We take the suggestion that we may have acted outside the rule of law very seriously. As a result, we sought the advice of the Solicitor-General and the Attorney-General's Chief General Counsel. In its simplest terms, the advice confirms that there will be times when it is appropriate to challenge previous decisions.

A.3c.28 The advice provided some broad principles which can be used to guide conduct in this area. It should be noted that the advice also states that 'the circumstances of each case may vary and we do not consider that absolute rules are generally appropriate'.135

A.3c.29 While it is true in relation to the FBT point in Essenbourne that the Tax Office is 'of the view that there is an alternative view that was more consistent with the Tax Office's understanding of the policy intent of the law' this view was supported by advice from external counsel that the decision was incorrect.

A.3c.30 In Essenbourne, the Commissioner sought legal advice as to whether the court's decision in respect to the FBT law was in error. Shortly after the decision we were advised that a Full Federal Court would, more likely than not, come to a different view. In March 2004, Senior Counsel provided oral advice in relation to the application of Fringe Benefits Tax to employee benefit arrangements, that both Keifel J and Hill J were wrong in their rejection in the Essenbourne and Walstern cases of the ATO's construction of the FBT law as stated in TR 1999/5. This satisfies the 'legal advice' requirements of the Solicitor General advice.

A.3c.31 We accept that we have not offered test case funding in any case argued on similar issues since Essenbourne. However, this is because there has not been a case where we have not succeeded in relation to the non-deductibility of the claimed deductions for income tax purposes. This is in the context of the Tax Office having made the public statement that we would not collect FBT as well as income tax.

Inspector-General's comments on Tax Office response

A.3c.32 The Tax Office's response refers to a comment in the Solicitor-General's opinion that each case must be considered individually and that absolute rules are not generally appropriate.

A.3c.33 This feature of the Tax Office's response could be perceived as raising an issue of whether the Tax Office will follow the Solicitor-General's opinion in all cases. An agreement by the Tax Office to implement Key Recommendation 1 of the Inspector-General's report would help to mitigate this adverse perception.

A.3c.34 The response also asserts that certain oral advice provided in March 2004 by a Senior Counsel satisfies the 'legal advice' requirement of the Solicitor-General's advice. The Inspector-General considers that the Solicitor-General's opinion's reference to robust and credible legal advice which will withstand public scrutiny does not appear to contemplate oral advice.

Key Finding 4.7

The Tax Office has developed processes and procedures to identify and handle litigation involving priority technical issues. There is no formal and consolidated Tax Office statement that outlines the processes and procedures that Tax Office staff are to apply to handle litigated cases that do not involve priority technical issues.

Tax Office response

A.3c.35 We accept the finding that there is no formal statement dealing with non-priority technical issues. However, we do have in place numerous documents including documentation from each of the business lines, the Legal Services Branch litigation manual, litigation flow charts, service agreements and guidance by the Strategic Internal Litigation Committee. These documents and processes are currently being consolidated into the one handbook.

Key Finding 4.8

The high percentage of settled Part IVC appeal cases suggest that the majority of these cases are appropriately concluded by the Tax Office.

Tax Office response

A.3c.36 We accept this finding.

Key Finding 4.9

A significant proportion of disputes are proceeding to the litigation stage without the proper identification of the technical issues, facts and evidence only to be settled once the LSB officer, business line officer and, where necessary, Tax Counsel become involved.

Tax Office Response

A.3c.37 It is assumed that in this context the reference to 'disputes' is a reference to taxpayer objections.

A.3c.38 Each time the Tax Office disallows a taxpayer objection, a report is also compiled which explains to the taxpayer the reason for our decision. This report includes findings of facts and issues. Only 3 per cent of objections in non-aggressive tax planning cases go on to appeal.

A.3c.39 The litigation process can crystallise issues for both parties and generate evidence not provided earlier by the taxpayer. Litigation can clarify whether the objection officer got it wrong, and in some cases the emergence of new evidence can affect our views.

A.3c.40 As the report indicates, it is often the case that prior to litigation documents are not provided by the taxpayer, or the cooperation of taxpayers is not entirely forthcoming.

Key Finding 4.10

Key decisions on whether to engage in litigation or on the need for external counsel rest with the Tax Office's business lines, and are open to strong influence by their strong compliance culture.

Tax Office response

A.3c.41 See our response to Key Recommendation 2.

Key Finding 4.11

The Tax Office's structure for managing litigation involves people from at least three different areas within the Tax Office, all of whom have varying degrees of involvement in the case. There is no one person or area within the Tax Office which has overall responsibility for managing all issues (that is, both technical and procedural) for any one litigated case and no one person on a case team who exercises an independent oversight role.

Key Finding 4.12

The Tax Office has no area that is separate from its business lines that will review a dispute and whether litigation should be continued. There is a need for an internal review procedure at the litigation stage, with one area responsible for all aspects of resolving a dispute, including technical and procedural issues, once it proceeds to litigation. Such an area should also promote and encourage a distinct culture, corporate goal and set of values, separate from those of the compliance areas.

Tax Office response

A.3c.42 We are reviewing the end-to-end process of litigation to find efficiency and quality improvements. The corporate values that apply to all officers of the Tax Office is to act fairly in accordance with the law.

A.3c.43 See also Tax Office Response to Key Recommendation 2

Key Finding 4.13

There are strong community perceptions that the Tax Office's approach and conduct is not consistent with the model litigant rules. The Inspector-General believes that there are strong grounds for these perceptions.

Tax Office Response

Model litigant guidelines

A.3c.44 The report includes numerous assertions that the Commissioner has failed to act as a model litigant. The Commissioner regards this as a particularly serious matter and rejects the conclusion that there are 'grounds for the perceptions'.

A.3c.45 The extremely robust governance measures in place for ensuring conformance with the litigation guidelines have been provided to the Inspector-General and have not been referred to in the report.

The Commissioner of Taxation as a model litigant

A.3c.46 Every new brief that is given to counsel for the Commissioner contains instructions that we are to comply with the Model Litigant Guidelines.

A.3c.47 The Inspector-General's findings are contrary to the independent views provided by the Office of the Legal Services Co-ordination (OLSC)136, and judges and members of the Administrative Appeals Tribunal (AAT).

A.3c.48 It is noted that the Inspector-General's review team interviewed OLSC in the course of the review. The report states that:

The Office of Legal Services Co-ordination (OLSC) has reported to the Inspector-General that the Tax Office is one of the better Commonwealth Government agencies in terms of compliance with the rules and in self-reporting any potential breaches.

A.3c.49 The report also stated that:

Members of the AAT and Federal Court that were interviewed for the purposes of this review also indicated that, from their perspective, the Tax Office generally acts as a model litigant, although there were some exceptions.

A.3c.50 Unfortunately, we were not advised what those exceptions were. It may be that in some cases the Tax Office has sought more time from the courts to lodge documents.

A.3c.51 The report mentions that during the last two years, OLSC, the body responsible for monitoring breaches of the rules, received only one public complaint about an alleged breach of the model litigant rules. However, the report does not mention that OLSC did not accept the complaint in that instance.

A.3c.52 The courts expect, and have confidence, that the Commissioner will act as a model litigant.137 Extra-judicial observations of Beaumont J in Anatomy of a Federal Court tax case (2000) stated:

the Crown is expected to act, and does act, as a 'model' litigant, so that it may be anticipated that the Commissioner's response to the taxpayer's statement of facts will not seek to put in issue facts which the Commissioner ought not to place seriously in question (emphasis added)

Taking advantage of unrepresented litigants

A.3c.53 The Inspector-General referred to the case of an unrepresented litigant to suggest the Commissioner may potentially have not followed the Model Litigant Guidelines.

A.3c.54 The taxpayer did litigate his issue, in a forum specifically designed for disputing claims at low cost. It is not a breach of the rule for the Commissioner to brief counsel in such litigation.

Failure to follow previous decisions of the court

A.3c.55 The appropriate standards of conduct are set out by the Solicitor-General in his joint advice with the Attorney-General's Chief General Counsel and our response to this issue is detailed in our response to Key Finding 4.6 and also in our response to Chapter 7.

Poor upstream processes

A.3c.56 The Commissioner is able to resolve a high number of disputes prior to hearing. The Tax Office does endeavour to avoid litigation wherever possible.

A.3c.57 We are always looking to improve our feedback and training to original decision makers and officers deciding objections. Experts and senior officers are involved as early as possible in technical and complex cases. Decision makers have the benefit of the Tax Office law precedent database, which facilitates consistency in decision making. If decision makers have concerns about any of the precedents, they are obliged to escalate matters for review. Objection decisions are also subject to a technical quality review (TQR) process.

A.3c.58 However, we do not accept that when we concede cases at the litigation stage after reviewing the evidence and argument by the taxpayer that this amounts to a breach of the guidelines.

Other comments under the model litigant discussion

The Behm report

A.3c.59 The report says:

The Behm review found that the Tax Office's overall compliance with these directions was uneven.

A.3c.60 The Tax Office agrees the Behm report makes that comment.138 However, the discussion before the comment was focused entirely on procurement of legal services. After referring to some other government guidelines at the start of the chapter, the focus of concern was made clear by the statement:

Seen as a whole, these guidance documents provide clear direction on the procurement of services, and on the delivery of 'in house' services in a competitive market.

A.3c.61 In fact, the term 'model litigant' appears only once in the Behm report at Chapter 5 where he raises a perceived concern, not evidence of a breach.

Litigation complaints in the Tax Office

A.3c.62 The report makes reference to a number of cases (24) in the period January 2005 to May 2005. Not one of these cases related to complaints about our conduct as a litigant.

Model litigant governance process

A.3c.63 The Legal Services Branch Executive, Second Commissioner, and Commissioner are kept informed about how our litigation conforms with the Attorney-General's legal services directions. This includes any remedial action that is in place where we have not met our obligations in any area.

Inspector-General's comments on Tax Office response

A.3c.64 Contrary to the opening paragraph of the Tax Office response to this finding, the report only contains assertions from stakeholders that the Tax Office has failed to act as a model litigant and examples of conduct found by staff of the Inspector-General during the fieldwork for this review which the Inspector-General noted may be examples of failure to follow these rules. The Inspector-General has not sought to determine whether any of these examples reported to him or highlighted during his fieldwork amount to such breaches as he considers that this is a matter which needs to be determined by the Office of Legal Services Coordination.

A.3c.65 The report states that there are strong community perceptions that the Tax Office's approach to litigation is not in accordance with the model litigant rules. The Tax Office's response states that the Tax Office 'rejects' the conclusion that there are grounds for these perceptions. However the report sets out in some detail the bases for these perceptions which include various flaws in the measures which are currently in place for detecting potential and actual possible breaches of the model litigant rules.

A.3c.66 The report states that these measures are in need of improvement. A need for these measures to be improved is not compatible with the Tax Office's assertion that these measures are 'extremely robust'. The report notes that other reviews have raised similar issues. The report makes recommendations for improving these measures. The Tax Office has agreed elsewhere in this report to implement a number of these recommendations.

Subsidiary recommendation 4.1

The Tax Office should develop practical guidelines for staff on the application of the model litigant guidelines.

Tax Office response

A.3c.67 Agreed

A.3c.68 A proposed practice statement on the conduct of litigation will further guide staff on the Model Litigant Guidelines, in accordance with the Attorney-General's broader policy for Commonwealth departments.

A.3c.69 Since 1999, the Legal Services/ Legal Practice internal website has contained a Legal Practice Note advising staff about the Model Litigant Guidelines.

A.3c.70 All briefs to counsel from the Commissioner in tax litigation contain copies of the guidelines.

Subsidiary recommendation 4.2

The Tax Office, as part of its public statement on its philosophy and approach to tax litigation, should make taxpayers aware of the model litigant guidelines and that the Office of Legal Services Co-ordination is responsible for administering the model guidelines, including considering any alleged breaches of the model litigant guidelines. This should also include making taxpayers aware of the model litigant guidelines at the outset of litigation.

Tax Office response

A.3c.71 Agreed

Subsidiary recommendation 4.3

The Tax Office should introduce an escalation process whereby senior tax officers or independent counsel, at the request of taxpayers or their representatives, may administratively review alleged breaches of the model litigant guidelines and departures from the Tax Office's stated philosophy and approach to litigation.

Tax Office response

A.3c.72 The Tax Office has a well-established and effective escalation process. Alleged breaches of the Model Litigant Guidelines will continue to be referred to the Office of Legal Services Co-ordination (OLSC) by the Tax Office General Counsel, who is responsible for the relationship with OLSC.

A.3c.73 Other complaints concerning the conduct of litigation will continue to be reviewed by an independent senior officer.

Inspector-General's comments on Tax Office response

A.3c.74 The Tax Office has not responded to the terms of this recommendation. It confirms that an escalation process for potential breaches of the model litigant rules exists but has not agreed to make this process accessible to taxpayers or their representatives or to extend it to issues concerning the Tax Office's overall conduct in litigation. The Inspector-General believes that the Tax Office should implement this recommendation in full.

Key Finding 4.14

The Inspector-General found no recent evidence that the Tax Office is not following public rulings and determinations in the conduct of litigation.

Inspector-General's comments on Tax Office response

A.3c.75 The Tax Office provided no response to this key finding. The terms of this finding have now changed since the date of provision of the draft report for comment to the Tax Office. This was because, after this date, the Tax Office published material139 which confirmed that in the recent case of Queensland Rail140 it did not follow the terms of one of its published excise bulletins regarding the diesel fuel rebate. The finding now reads:

'The Tax Office has a policy of not departing from its published position (as set out in rulings, determinations and similar documents) in the conduct of litigation. It has however not followed this policy in one recent case.'

Key Finding 4.15

There should be a process inside the Tax Office which would allow the terms of a ruling to be urgently reviewed where litigation which relies on the ruling is underway and doubts arise on the correctness of the ruling.

Tax Office response

A.3c.76 Such a process is already well established.

Inspector-General's comments on Tax Office response

A.3c.77 The Tax Office has indicated to the Inspector-General that it considers that the existing public rulings program process is the appropriate mechanism for reviewing the terms of any ruling. However, this process does not involve the kind of quick and prioritised review that is contemplated in this key finding for cases which are already subject to the litigation process. These kinds of cases require quick clarification in order that the relevant dispute may be resolved in a fair, timely and cost-effective manner.

Subsidiary recommendation 4.4

The new area of the Tax Office responsible for the management of all aspects of litigation should establish a formal process under which the terms of existing Tax Office rulings are urgently reviewed, either internally by the Tax Office or by outside parties where during the litigation process doubts arise as to the correctness of the rulings.

Tax Office response

A.3c.78 Where doubts arise during the litigation process about the correctness of a Tax Office ruling, the issue will continue to be escalated to the Tax Counsel Network for urgent attention.

Inspector-General's comments on Tax Office response

A.3c.79 The Inspector-General believes that the Tax Office should implement this recommendation in full. An escalation of the matter to the Tax Counsel Network will not achieve an urgent review of a ruling that is the subject of pending litigation if any change to the ruling can only be achieved by the Tax Counsel Network using current lengthy rulings program processes.

135 Paragraph 5 of the opinion 'Application of Precedent to Tax Cases' by David Bennett QC and Henry Burmester QC.

136 OLSC is responsible for investigating and monitoring breaches of Legal Services Directions, including Model Litigant Guidelines.

137 See Melbourne Steamship Limited v Moorhead (1912) 15 CLR 133, 342; Kenny v South Australia (1987) 46 SASR 273. More recently in a tax context see Queensland Trading and Holding Co Ltd and Another v Federal Commissioner of Taxation [2004] FCA 1036 at paragraph 49.

138 Principal Findings 4.1.1: 'The Government's policies with respect to the provision of legal services are set out in the Attorney-General's Directions. Those policies are not well understood in the Tax Office LP, and the Tax Office LP's compliance with those policies is uneven.'

139 See Agenda Item 8 and Attachment 3 of the NTLG Minutes for meeting of 7 September 2005, publicly released on the ATO's website at www.ato.gov.au on 24 March 2006.

140 Queensland Rail v F C of T. First instance appeal before the Federal Court- decision reserved.