In a decision handed down on Fri 20.9.2013, the AAT affirmed the Commissioner’s decision refusing a taxpayer’s claim for tax deductions for the relevant year. In doing so, it also affirmed the imposition of 50% penalty on the shortfall amount for “recklessness”.
The taxpayer’s tax return for the 2011-12 tax year was lodged with the Commissioner by his tax agent. In that return, the taxpayer claimed deductions for work-related car expenses, work-related clothing and laundry expenses, and other work-related expenses (including phone expenses and a car dealer’s licence expense), totalling some $34,300. After an audit of the return, the Commissioner determined the taxpayer had made unsubstantiated claims in relation to his work as a car salesman for most of the deductions claimed and imposed a penalty of around $6,100, being 50% of the tax shortfall.
Before the Tribunal, the taxpayer did not refute the tax shortfall amount, but argued his conduct should not have resulted in such a severe penalty. It was submitted that he had paid most of the penalty with id=”mce_marker”,400 outstanding and was unable to pay the remainder. The Tribunal noted it was not in dispute that the taxpayer claimed deductions against his income, which were not substantiated. However, the Tribunal was of the view that the taxpayer’s conduct was more serious than mere failure to tax reasonable care. Among other things, the Tribunal noted the taxpayer did not maintain a log book or retain invoices or receipts. The Tribunal was satisfied the 50% penalty was appropriate and that there was no basis for remission in the circumstances.
(AAT Case [2013] AATA 671, Re Perry and FCT, AAT, Ref No: 2013/1795, Kenny SM, 20 September 2013.)
[LTN 183, 20/9/13]