The AAT has dismissed a taxpayer’s application to be released from a tax debt of some $52,000 that accrued over 4 income years and of which some id=”mce_marker”3,000 comprised GIC.
The taxpayer argued that serious financial hardship would otherwise result and that bankruptcy would be a conceivable outcome and that, furthermore, there were no prospects of any financial improvement in his situation.
However, in dismissing the taxpayer’s application, the AAT first noted that the discretion to grant release from a tax debt under s 340-5(3) of Sch 1 to the TAA should only be granted if satisfying the tax liabilities would cause serious hardship and then whether the discretion should be exercised in whole or part in the circumstances of the case. The AAT found that the following factors worked against the taxpayer.
- He had used available funds to discharge debts due to other private creditors and did so in part in preference to debts due to the ATO.
- He had a poor compliance history.
- The circumstances in which he arrived at the position, wherein he would suffer serious hardship, was a set of circumstances largely of his own making (eg he derived a significant amount of income in the relevant years as a self-employed person but failed to lodge tax returns and/or pay tax liabilities on time in respect of those years).
- The taxpayer was offered and entered into some very generous repayment plans all of which he abandoned shortly after commencement, largely without explanation.
(AAT Case [2014] AATA 823, Re Watson and FCT, AAT (sitting as Small Taxation Claims Tribunal), Ref No 2013/3895, Deutsch DP, 4 November 2014.)
[LTN 214, 5/11/14]