The ACT Civil and Administrative Tribunal has decided to reduce by [20% or 10% points] the penalty tax payable by a couple (the taxpayers) in relation to a land tax default.

The taxpayers were the owners of a residential property, which was rented out from May 2012 to May 2014. They objected to the penalty tax arguing that they were overseas, were unaware of land tax, and relied on their agent to manage the property. They also argued it was the responsibility of the agent to inform the Commissioner and to discharge the obligations of a taxpayer under the tax law. When the taxpayers became aware of the land tax liability, they commenced payment immediately by instalments.

The Tribunal held that the combined effect of several factors in the case, including the taxpayers’ credibility as witnesses, supported a finding that there were “exceptional circumstances” warranting a remission of penalty tax.

It held a remission of 20% of the penalty tax imposed was appropriate. This meant that penalty tax should be imposed at 40% instead of 50% in the circumstances.

However, it held the Tribunal had no jurisdiction to review the decision regarding interest.

(Wade & Anor v Comr of ACT Revenue (Administrative Review) [2014] ACAT 79, ACT Civil and Administrative Tribunal, Beacroft M, 24 December 2014.)

[LTN 3, 7/1/15]