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The Full Federal Court (Spender, Ryan and Emmett JJ) has partially allowed the taxpayer's appeal from the decision of Collier J, who had set aside the AAT's decision to reduce the penalty imposed by the Commissioner for making a false statement to the Commissioner. Collier J had done so on the basis that the AAT had taken an irrelevant considerations into account, namely, that the taxpayer's false statement had been detected before any loss to the revenue had occurred. As to whether any remission of penalty was justified, her Honour concluded that it is necessary that there be special circumstances before the discretion to remit can be exercised. Finding no special circumstances, her Honour's order setting aside the variation had the consequence that the original penalty decision was reinstated. The taxpayer appealed to the Full Federal Court.

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 (see para 21 of the Court's judgment). 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). The Court said, at para 26:

"The ultimate conclusion of the primary judge on the relevant question of law raised by the appeal was correct. However, it is by no means clear that her Honour correctly construed the Tribunal’s reasoning. There was no basis for her Honour, in effect, to substitute her own decision on the matter under review by the Tribunal. The matter should have been remitted to the Tribunal for consideration of the question of whether any part of the penalty should be remitted on the basis that the outcome is harsh, having regard to the particular circumstances of the Taxpayer."

Archibald Dixon as Trustee for the Dixon Holdsworth Superannuation Fund v Commissioner of Taxation [2008] FCAFC 54 (Full Federal Court; Spender, Ryan and Emmett JJ; 8 April 2008).

For a copy of the decision, go here

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