In International All Sports Ltd v Commissioner of Taxation (No.2) [2011] FCA 1027 the Federal Court has ordered the Commissioner to pay indemnity costs from the date that an Offer of Compromise was made by the taxpayer.  This is an important decision, as it shows that the Commissioner is not immune from the operation of the Federal Court Rules, including those relating to Offers of Compromise and their heavy costs consequences.

In making the order, Jessup J rejected the Commissioner’s submission that the provisions of Order 52B (those relating to appeals of objection decisions) amounted to a code, and did not include the provisions of Order 23 dealing with offers of compromise.  In doing so, his Honour noted (at [5]) that the Commissioner had made the very same submission in Clark v Commissioner of Taxation [2010] FCA 415 and was rejected.