Section 29 (2) of the Administrative Appeals Tribunal Act 1975 (Cth.) states that the general rule is that an application for review of a decision made by the Deputy Commissioner of Taxation must be made to the Administrative Appeals Tribunal ("AAT") within 60 days after the day upon which the person is notified of the reviewable decision.

The normal 28 day period is extended to 60 days by S.14ZZC of the Taxation Administration Act 1953.

Section 29 (7) of the Administrative Appeals Tribunal Act 1975 (Cth.) provides that the AAT, upon application in writing, may extend the time for the making of an application for a review of the taxation decision if the AAT is satisfied that it is reasonable in all the circumstances to do so.

Both the Federal Court of Australia and the Administrative Appeals Tribunal have considered when a taxpayer should have leave to extend time within which to commence an appeal against a decision by the Deputy Commissioner of Taxation.

In summary, these principles are as follows:

- Applications to extend time will generally not be granted unless either the Federal Court or the AAT is positively satisfied that it is proper to do so;

- It is a pre-condition to the exercise of the discretion to extend time in favour of the taxpayer that the application shows a reasonable explanation of the delay and that it is fair and equitable in the circumstances to extend time;

- A distinction will be made between the case of a taxpayer who has continued to make the ATO aware that he or she contests the finality of the decision and a case where the ATO was allowed to believe that the matter was finally concluded - if for example, nothing is heard from the taxpayer for a lengthy period;

- Any prejudice to the ATO including any prejudice in defending the proceedings occasioned by the delay is a material factor militating against the grant of an extension;

- The mere absence of prejudice is not enough to justify the grant of an extension. Public considerations often intrude. A delay which may result, if the application is successful, in the unsettling of other taxpayers or of established practices will prove fatal to the application for an extension of time;
The merits of the substantial application must be taken into account in considering whether an extension of time should be granted. In other words, if either the Federal Court or the AAT is reasonably satisfied that the taxpayer has little or no chance of success on the substantial application, it is more likely than not that the application to extend time within which to commence the appeal will be disallowed; and

- The errors or neglect of a taxpayer's advisors will not be visited on that taxpayer. In other words, if the reason why an application was not commenced within the 60 day appeal period was due to the neglect or default of the taxpayer's accountants, solicitors, barrister or other advisors, then the Federal Court and AAT are more likely to allow the application for extension of time.

For instance, in NT97/399-409 and Deputy Commissioner of Taxation AAT No. 12809 [1998] AATA 266 (9 April 1998), Senior Member Block found that a delay of over five years coupled with a taxpayer who did not appear to have ever taken his taxation obligations seriously, required the taxpayer to provide an adequate explanation for the delay. The ATO objected to the extension of time for commencing the appeal upon the basis that the officers involved in determining the taxpayer's assessments would be less available had the review been sought on time. Senior Member Block stressed that merit alone is not a sufficient ground to grant the extension. Consequently, the taxpayer's request to extend the time to appeal the ATO's decision was denied.

It is clear from these legal authorities that the primary thrust of any enquiry as to whether to grant or refuse an extension of time is that the AAT does what is just and equitable between the taxpayer and the ATO. Whilst allowing applicant taxpayers to have their cases heard is important, to do so may not always produce a result that is just and equitable between the parties.

These legal authorities differ from New South Wales and Victorian precedents relating to extensions of time within which to bring an action for, say, personal injuries or property damage for negligence or for breach of contract. Those authorities place emphasis on the merits of the substantial application and less weight on the reasons for delay or prejudice to potential defendants.

Accordingly, taxpayer applicants should be particularly careful to provide reasonable explanations when pursuing extensions of time to the AAT or Federal Court under Section 29 (7) of the Administrative Appeal Tribunal Act 1975 (Cth.).