The AAT has affirmed a decision of the Commissioner to impose on a taxpayer a 50% administrative penalty of the tax shortfall amount on the basis of “recklessness”.
- The taxpayer was a carpenter by trade.
- The Commissioner audited the taxpayer in relation to his BASs for the period 1 January 2007 to 30 June 2010 and found he had over-claimed input tax credits.
- The tax shortfall amount was around id=”mce_marker”30,000 and the penalty imposed was some $65,000 based on 50% of the shortfall amount.
- The taxpayer did not dispute the tax shortfall but argued he was not responsible for the penalty maintaining that it was the Commissioner who was mostly responsible for it.
- It was alleged that Tax Officers had represented that he was entitled to claim ITCs for the purchase of his family home and, additionally, the taxpayer claimed it was the Commissioner that allowed the situation to go on for so long without him being audited.
- It was also alleged that a car salesman had represented that the taxpayer could claim back the GST on the purchase of his cars.
The AAT held the taxpayer had failed to discharge the onus of proving that the penalty was excessive. It held the decision to impose an administrative penalty of 50% was the correct or preferable one. It also held the penalty should not be remitted in the circumstances.
(AAT Case [2014] AATA 631, Moore and FCT, AAT, Ref No: 2013/2632, Lazanas SM, 2 September 2014.)
[LTN 171, 4/9/14]