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Reasonably arguable position: What is the standard?


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.

Author profile:

Christopher Branson
Chris was admitted as Solicitor NSW September 1967 and admitted as Barrister NSW in August 1975. He was then appointed Queen’s Counsel and QC in all states and territories. Chris has practised as an advocate in NSW, ACT, WA and NT since 1975 and is currently the Deputy Chairman of the Law Council of Australia Taxation Subcommittee and is a Member of the Board of Taxation Advisory Panel. Current at 01 February 2012 Click here to expand/collapse more articles by Chris C BRANSON.
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