Carey and Butt v Commissioner for Act Revenue

The applicants, Carey and Butt, sought review of the Commissioner for ACT Revenue’s decision regarding land tax, interest, and penalty tax. The Administrative Appeals Tribunal (AAT) was tasked with determining whether the decision was legally sound and if the applicants were entitled to a remission of penalty tax. The Tribunal had to consider whether the interest charged was a reviewable decision, whether the applicants exercised reasonable care, and whether they had a reasonable excuse for their incomplete disclosure. The applicants also argued that their misunderstanding of the exemption status of their property should be considered for the remission of penalty tax.

The key legal issues before the Tribunal included whether the interest charged on the land tax was subject to review, whether the applicants exercised reasonable care, and whether they had a reasonable excuse for their incomplete disclosure. Additionally, the Tribunal needed to determine if there was intentional disregard of tax laws and whether the applicants’ incomplete disclosure and misunderstanding about the exemption status of their property warranted a remission of penalty tax.

The Tribunal found that the interest charged was not a reviewable decision and that the applicants did not exercise reasonable care. However, the Tribunal did acknowledge that the applicants did not intentionally disregard tax laws and that their incomplete disclosure and misunderstanding about the exemption status of their property were relevant factors. The Tribunal concluded that a remission of penalty tax was warranted, substituting the original decision with a remission of 40% of the penalty tax. The Tribunal also clarified that the remitted penalty tax would result in a 30% penalty tax rate instead of 50%. The Tribunal dismissed the review of interest on land tax for want of jurisdiction.

The Tribunal ordered that the decision of 1 June 2015 not to remit penalty tax is set aside, and a decision remitting 40% of the penalty tax is substituted. The outcome is that the penalty tax will be imposed at 30% instead of 50% of the land tax payable for the relevant period. The review of the interest on land tax payable for the relevant period was dismissed for want of jurisdiction.