The AAT has affirmed the Commissioner’s decision to refuse to release a taxpayer from an income tax and PAYG instalment debt pursuant to s 304-5 of the TAA as it considered the taxpayer would not suffer serious hardship.
The taxpayer was a retired solicitor who had been in practice since 1979. He sought a release from income tax and PAYG instalment liabilities of $130,961 which formed a part of a total tax liability of $235,288 as at July 2012. The remaining liability related to GST, which the AAT noted was non-releasable. The taxpayer argued that the debt of $130,961 should be released as he would suffer serious hardship should he be required to pay that amount. He provided evidence that all the assets of the “household” are owned by his wife and that he has no assets of any significance.
The AAT said that “serious hardship” is sufficiently broad to involve examination of the assets and income of a spouse, which is relevant in this case. It held there was no evidence that the taxpayer did not have, or would continue to have access to, adequate transportation, medical treatment, food, clothing or other basic requirements of life if the debt was not released. Coupled with evidence the AAT said showed that the taxpayer had made large sums of discretionary expenditure at handy-man stores and liquor stores instead of satisfying the tax debt, the Tribunal held that the debt should not be released and affirmed the Commissioner’s decision.
(AAT Case [2012] AATA 814, Re Neimanis and FCT, AAT, Ref No 2011/5204, Tamberlin DP, 20 November 2012.)
[LTN 226, 21/11]