Are the Commissioner's Debt Recovery Powers Excessive?

The Commissioner of Taxation has broad powers for the making assessments and recovery of tax debts. A taxpayer's protection against abuse of these powers lies primarily in the rights to objection and appeal under Part JVC of the Tax Administration Act 1953. However the Commissioner may effectively nullify those rights because ss. 14ZZM and 14ZZR of the TAA permit recovery of tax and any penalties notwithstanding that a review or an appeal on the correctness of the assessment is yet to be determined. Accordingly a taxpayer may be forced to defend debt recovery and perhaps bankruptcy proceedings which could exhaust the financial resources needed to overturn the underlying assessment. This paper considers the Commissioner's policy with respect to TAA ss. l4ZZM and 14ZZR in the light of general principles of administrative law and recent developments in income tax law. The authors conclude that the Commissioner's interpretation of his power is too narrow due to a failure to take into account the broader features of the income tax system They conclude that this problem ought to be redressed by legislative reforms to generally defer the Commissioner's power of recovery until after a full hearing of the appeal against the underlying assessment.