The AAT has affirmed the Commissioner’s decision not to remit 75% penalties of $650,000 imposed on a taxpayer under s284-75(3) and s284-90 of Sch 1 to the TAA for failing to lodge 13 BAS returns between 2007 and 2011 – a period during which it sold 7 out of 10 townhouses it had developed in suburban Sydney.
The Tribunal found that the assessments (which created the ‘shortfalls’ that the penalties were based on, were validly raised on the basis of ‘fraud or evasion’.
- It found that the taxpayer had failed to discharge the burden of proving there was no “fraud or evasion” as it failed to adduce any sworn evidence on the matter.
- It found that there clearly was fraud and evasion as the taxpayer had deliberately withheld information and failed to lodge BAS returns so as to instead pay off loan liabilities.
- It further found that the taxpayer was well aware of the need to lodge BAS returns (as evidenced by a previous history of lodgement) and that the sale of the townhouses would generate a GST liability (as evidence by correspondence with the Tax Office).
- The AAT also noted that disclosure only occurred after the audit process had begun.
The AAT then found that the taxpayer had not discharged the onus that there were grounds for remission of the penalty and, in any event, found that remission was not appropriate for a range of reasons including:
- its failure to comply with its BAS obligations was consistent and long-term;
- the failure to lodge occurred despite the Commissioner having sent the taxpayer 13 reminder notices;
- the taxpayer was aware of its obligation to file a BAS; the taxpayer repeatedly delayed providing documents to the Commissioner during the audit process;
- the taxpayer did not take any steps to arrange a payment plan with the Commissioner; and
- the taxpayer adduced no evidence that it would suffer hardship if the penalties were not remitted.
Accordingly, the AAT found that there were no grounds for remission of the penalty, in whole or in part.
(Re The Norwestern Trust and FCT [2017] AATA 361, AAT, File No: 2015/2226, Deutsch DP, 22 March 2017.)