The AAT has mostly affirmed the Commissioner’s decision to impose on a taxpayer an administrative penalty for “recklessness” in relation to claims for input tax credits made in 9 amended BASs for the September 2008 to December 2010 quarters.

Before the Tribunal, the taxpayer sought remission of id=”mce_marker”5,535 in penalties. The Commissioner had refused the majority of the taxpayer’s claims for input tax credits made in the amended BASs for the relevant quarters and imposed penalties broadly on the basis that the taxpayer did not have valid tax invoices when the claims were made.

The taxpayer sought to argue there was no “recklessness” in preparing and submitting the amended BASs (and that another related entity was entitled to the input tax credits and therefore the actual shortfall was minimal), that there was a “controversy” which affected the taxpayer’s accounting affairs at the time, and that the responsibility for the irregularities in the revised BASs laid primarily with the taxpayer’s accountants and tax agents, particularly in assuming that the taxpayer and its related companies had been grouped for GST reporting purposes (the companies were grouped from 1 July 2011).

The AAT found the taxpayer had not failed to exercise reasonable care in relation to 3 items concerning its June 2010 BAS (reflecting input tax credit claims totalling $568). However, the AAT held the taxpayer had otherwise failed to establish that the Commissioner’s penalty assessment was excessive. Among other things, the AAT noted the evidence establishing that the external accountants were not actually provided with tax invoices prior to submitting the amended BASs. It also refused to exercise the discretion to remit the penalties in the circumstances.

(AAT Case [2014] AATA 49, Re Cartesian Capital Pty Ltd and FCT, AAT, Ref No: 2013/0685, Taylor SM, 31 January 2014.)

[LTN 21, 3/2/14]