The AAT (sitting as the Small Taxation Claims Tribunal) has affirmed the Commissioner's objection decision not to grant the taxpayer release from the payment of certain taxation debts under s 340-5(3) of Schedule 1 to the Taxation Administration Act 1953. The taxpayer owed a taxation debt in the total sum of $52,109.15.
Although finding that the taxpayer would suffer "serious hardship" if the debt was not released, including likely bankruptcy, the AAT noted at paras 26 and 27:
"It is well-accepted that the finding of serious hardship does not oblige the Respondent [Commissioner], or the Tribunal, to exercise his or her discretion in favour of the Applicant [Taxpayer]...
Where serious hardship is shown, the relevant question that must be asked in determining whether the discretion to grant relief should be exercised is 'whether, in all circumstances, it is just and proper to provide the requested relief' (emphasis added)..."
After reviewing the taxpayer's circumstances, the AAT concluded that the relevant factors weighed against the exercise of the discretion to release the tax debt.
The AAT also noted at para 64 that "it was indicated at the hearing that the Respondent would not pursue the outstanding debt while the Applicant remained on a DSP from Centrelink, remained unemployed and did not gain or produce any further income. This undertaking was provided in writing the day after the hearing."
Watson and FCT  AATA 823 (AAT, Professor Deutsch DP, 4 November 2014).