Automotive Invest Pty Ltd and Commissioner of Taxation (Taxation)

This matter concerned an application for review of an objection decision made by the Commissioner of Taxation under Part IVC of the *Taxation Administration Act 1953* (Cth). The applicant, Automotive Invest Pty Ltd, sought to challenge administrative penalties imposed by the Commissioner. The proceeding was heard together with a related Federal Court proceeding, where the Commissioner had conceded that certain assessments were excessive to a limited extent, although the taxpayer was otherwise unsuccessful.

The primary legal issues before the court were whether the applicant and its agent took reasonable care within the meaning of s 284-75(5) of Schedule 1 to the *Taxation Administration Act 1953*, and whether the safe harbour provision in s 284-75(6) of Schedule 1 applied. The court was also required to determine whether the imposed penalties should be remitted.

The court considered the evidence regarding the advice sought by the applicant from external advisers, Fortunity Group Pty Ltd and PricewaterhouseCoopers (PwC), concerning its luxury car tax obligations. The applicant's director, Mr Denny, testified that he had provided detailed explanations of the business model and instructed his advisers to ensure a conservative tax position. However, the court noted that contemporaneous documentary evidence indicated Fortunity was aware of the charging of admission fees from January 2016, and it was likely PwC was also aware before the museum opened. The court found no good reason why the applicant would inform one adviser of this fact but not the other.

Ultimately, the court allowed the application for review in part. It directed that the penalties should not be remitted further than the 50% already done by the Commissioner, reflecting the Commissioner's concession in the Federal Court proceeding that the assessments were excessive to some extent. The parties were directed to confer and submit agreed orders to give effect to the reasons.