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17 Sep 08 AAT upholds decision not to remit penalty - Archibald Dixon

The AAT has upheld the Commissioner's decision not to remit a penalty of 50% of the shortfall amount of $171,363, being the amount of an incorrectly claimed GST input credit. The Commissioner detected the false and misleading statement (namely, the claim in the taxpayer's BAS regarding the entitlement to the input tax credit) and no payment was made by the Commissioner to the taxpayer. But the Commissioner imposed an administrative penalty pursuant to Div 284 of Schedule 1 to the Taxation Administration Act 1953 on the basis that the claim for an input tax credit had been made recklessly. The shortfall amount, the Commissioner decided, resulted from recklessness by the taxpayer (the trustee of a superannuation fund) or its agent as to the operation of a taxation law.

The matter had been remitted to the AAT by the Full Federal Court after Collier J (who heard the Commissioner's appeal from the original decision of the AAT partially remitting the penalty on the basis that there had been no loss to the revenue) held that there were no "special circumstances" for remission. The Full Federal Court held firstly that her Honour was in error in concluding that special circumstances were necessary for a remission of the penalty. The Full Federal Court then held that the matter should have been remitted to the AAT for determination in accordance with law (that is, without taking into account the irrelevant considerations).

After reviewing all the evidence, a differently constituted AAT affirmed the Commissioner's decision not to remit, stating (at para 28): "...I am not satisfied that the imposition of the penalty amounted to a harsh outcome having regard to the circumstances of the Fund or its beneficiaries." Archibald Dixon as trustee for The Dixon Holdsworth Superannuation Fund and FCT [2008] AATA 825 (AAT, Hack DP, 16 September 2008).

For a copy of the decision, go here.


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