His argument rested entirely on an internal ATO practice statement. He pointed to no statutory requirement.
A taxpayer challenged amended assessments for eight income years. As a preliminary question, he argued the Commissioner was required to follow an internal ATO practice statement when forming an opinion of fraud or evasion.
The Federal Court said no. Yadav v Commissioner of Taxation [2026] FCA 140.
The facts
The Commissioner issued amended assessments under s 170(1) of the ITAA 1936 for the years 2011 to 2018, on the basis of an opinion that there had been fraud or evasion [1], [3].
The taxpayer applied for two preliminary questions to be heard separately [2]. First, whether the Commissioner was required to follow PS LA 2008/6 and form a separate evasion opinion for each income year. Second, if so, whether the Commissioner had failed to do that. His argument rested entirely on the content of the practice statement. He pointed to no statutory requirement [9].
The decision
Practice statements do not have statutory force. Section 170 imposes no fetter on the Commissioner’s ability to form an opinion of fraud or evasion and no process by which that opinion must be formed [11]. The Court applied Macquarie Bank Limited v Commissioner of Taxation [2013] FCAFC 119: a practice statement cannot prevent the Commissioner from exercising powers of assessment or reassessment [14]-[16].
Even if question 2 had arisen, the Commissioner did form a separate opinion for each year. The Evasion Opinion document asked whether the officer had formed an opinion in relation to “each” income year, and the officer recorded “Yes” [30].
Each year need not be assessed in isolation. A continual pattern of behaviour may amount to a blameworthy act even where a single instance may not. Assessing evasion necessarily involves the circumstances in which the conduct occurred [28]-[29].
The taxpayer also emailed the Court after the hearing with further submissions, without leave and without notice to the Commissioner. The Court disregarded the email [37]. He was ordered to pay the Commissioner’s costs [38].
Practical takeaways
ATO practice statements are internal guidance, not law. A failure to follow a practice statement does not invalidate an assessment or the formation of an opinion under s 170. The Full Court authority on this point is binding.
The Commissioner is not required to assess each income year in a vacuum. Cross-year patterns of conduct are relevant to whether there has been evasion.
If you are running a preliminary question, stay within its scope. The Court will not allow a party to unilaterally expand the issues at the hearing [33]-[34]. And do not email chambers after a hearing without leave. The time for submissions is before and during the hearing, not after [37].
General information only. This note was accurate when written. The law may have changed since and the note is not updated. It is not legal or tax advice, does not take account of your circumstances and must not be relied upon as a substitute for advice on your own matter. If the issue is live for you or your client, email arda@nortonquaytaxlaw.com.au for advice on the current position.