Tax administration 2012

Reasonably arguable position: What is the standard?

Source: Taxation In Australia Journal Article

Published Date: 1 Nov 2012


Under s 284-75(2) of Sch 1 to the Taxation Administration Act 1953 (Cth), a taxpayer is liable to an administrative penalty if, in a statement to the Commissioner, the taxpayer has treated an income tax law as applying to a matter in a particular way that was not “reasonably arguable”. The expression “reasonably arguable” formerly appeared in s 226K of the Income Tax Assessment Act 1936 (Cth). In a 2003 case, Walstern v FCT, Hill J expounded a number of propositions about the correct approach to penalty under the former s 226. Those principles have been applied in a number of decisions of the Full Court of the Federal Court without reservation until recently.

This article considers whether and, if so, to what extent, the observations in those cases have modified the Hill J formulation and introduced a lower standard as the test for what constitutes a reasonably arguable position.

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Tax administration 2012

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