Aurora Developments Pty Ltd v Federal Commissioner of Taxation (No 2)

Aurora Developments Pty Ltd and the Federal Commissioner of Taxation were involved in a dispute over the imposition of an administrative penalty by the Commissioner under the Taxation Administration Act 1953 (Cth). The central issue before the court was whether Aurora and its agents demonstrated reasonable care in formulating a Business Activity Statement for the month ending 31 July 2004. The court examined the relevance of the complexity of the legislative provisions, the difficulty of applying historical facts to these provisions, and the arguability of Aurora's position in determining whether reasonable care was exercised. This case required the court to consider whether the power to impose penalties falls under section 33(3) of the Acts Interpretation Act 1901 (Cth).

The court found that while Aurora had ceased its development project and negotiated termination arrangements with Australand, it had not taken certain steps that might have been considered reasonable, such as seeking a private ruling. The court noted that the taxpayer's failure to seek a ruling was not necessarily indicative of a lack of reasonable care, especially if the taxpayer's position was supported by expert advice and was generally held within the industry. The court concluded that Aurora had not exercised reasonable care in failing to take certain steps, leading to the imposition of a penalty. The court dismissed the application, directed the Commissioner to submit draft orders, and made no order as to costs under the Test Case Funding Deed.