Bosanac and Commissioner of Taxation (Taxation)

This matter concerned an appeal by the Applicant, Ms. Bosanac, against a decision of the Commissioner of Taxation regarding a tax shortfall penalty. The dispute centred on whether the penalty, initially set at 75%, should be remitted in full or in part under section 298-20 of Schedule 1 to the *Taxation Administration Act 1953* (Cth). The case was heard by Deputy President Boyle of the Administrative Appeals Tribunal.

The primary legal issue before the Tribunal was to determine the extent to which the tax shortfall penalty should be remitted, considering the broad discretion granted by section 298-20 of Schedule 1. This required the Tribunal to assess whether the Applicant's personal circumstances made it appropriate to reduce the penalty from the 75% level, which was based on the tax agent's intentional disregard of tax law. The Tribunal had to consider the Applicant's arguments regarding her lack of financial understanding and intent to mislead, as opposed to her tax agent's actions.

The Tribunal reasoned that while the initial 75% penalty reflected the tax agent's deliberate actions, the Applicant's personal circumstances, specifically her lack of financial knowledge and absence of actual intent to lodge a false or misleading return, were relevant considerations for exercising the discretion under section 298-20. The Tribunal rejected the Commissioner's argument that considering the Applicant's personal culpability would be a "back-door" circumvention of the appropriate penalty. Applying the principles from *Sanctuary Lakes*, the Tribunal found it was appropriate to remit part of the penalty.

Ultimately, the Tribunal varied the decision under review, reducing the 75% shortfall penalty to 60% for the income tax year ended 30 June 2013, to recognise the Applicant's personal circumstances.