The AAT has affirmed a 75% shortfall penalty imposed on 2 taxpayers in relation to failing to lodge their income tax returns on time for the 2005 income tax year.
The taxpayers were an individual and a company which had the individual as its sole director and secretary. For the year ended 30 June 2005, the taxpayers failed the lodge income tax returns. The Commissioner issued default assessments and imposed penalties at the base rate of 75% of the shortfall. The taxpayers objected to the penalties imposed arguing that the Commissioner’s discretion should have been exercised due to the personal circumstances of the taxpayers. The taxpayers cited the inability to access records, ill health, and a break-in as reasons outside of their control which affected the timely lodgment of the tax returns.
The AAT held the taxpayers had not discharged their burden of proof to show that the discretion should be exercised in their favour. Further, the Tribunal said “[t]he conduct of the [taxpayers] as outlined above, does not persuade the Tribunal that an exercise of discretion is appropriate in these circumstances”. The AAT also held that the penalties imposed were not excessive or unjust. Hence, the AAT affirmed the 75% shortfall penalties imposed by the Commissioner in relation to the 2005 income tax year.
(AAT Case [2012] AATA 3, Re Ohl & ACN 104 950 156 Pty Ltd and FCT, AAT, Ref Nos 2010/3737 and 2010/5022, Cunningham SM, 5 January 2012.)
[LTN 5, 10/1]