Carvell and Commissioner of Taxation (Taxation)

[2021] AATA 3627

Carvell and Commissioner of Taxation (Taxation) [2021] AATA 3627 (8 October 2021)

Division:TAXATION AND COMMERCIAL DIVISION

File Numbers:2019/1625         

2019/1626

2019/1627

Re:John Carvell

APPLICANT

AndCommissioner of Taxation

RESPONDENT

DECISION

Tribunal:Member R Reitano

Date:8 October 2021

Place:Brisbane

The reviewable decision is affirmed with respect to both the assessments and the penalties issued.

................................[SGD]........................................

Member R Reitano

Catchwords

TAXATION – default assessments – administrative penalties - taxpayer’s burden to prove assessment excessive – taxpayer’s burden to prove correct taxable income – whether assessment is excessive or incorrect – whether penalty should be remitted – decision affirmed

Legislation

Taxation Administrative Act 1958 (Cth)

Income Tax Assessment Act 1936 (Cth)

Cases

Drake v Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634

Federal Commissioner of Taxation v Rigoli (2013) ATC 20-407; [2013] FCA 784

Gashi v Federal Commissioner of Taxation (2013) 209 FCR 301

Secondary Materials

Practice Statement Law Administration PS LA 2014/4

REASONS FOR DECISION

Member R Reitano

8 October 2021

INTRODUCTION

1. This is an unexplained deposits case which results from Mr Carvell’s failure to lodge tax returns for the 2015, 2016 and 2017 tax years. After Mr Carvell failed to lodge his returns the Commissioner of Taxation (Commissioner) undertook an audit of Mr Carvell’s affairs which identified deposits for which there was no satisfactory explanation, so the Commissioner assessed Mr Carvell’s tax based on the amounts of the unexplained deposits as being his taxable income.

2. This case demonstrates the difficulties that confront a taxpayer who has for whatever reason, failed to lodge a tax return and has left it to the Commissioner to assess their taxable income for himself, an assessment with which the taxpayer may ultimately disagree.

3. It also illustrates the common misunderstanding that the Commissioner’s default assessment, based on the amounts of undisclosed deposits, is not an ‘in fact’ or ‘actual’ assessment which a taxpayer can overturn in whole or in part upon review by proving that some or all of deposits have an explanation. The Commissioner may or may not adopt that approach in making his decision, but it has no part in the review process before this Tribunal. The position is more complex as I explain below.

   THE FACTUAL CONTEXT

4. The background can be dealt with briefly because it is relatively straightforward.

5. On 9 March 2018 the Commissioner issued assessments to Mr Carvell based on treating as taxable income the amounts of unexplained deposits in Mr Carvell’s bank accounts of: $870,882; $208,474; and $254,493 in the 2015, 2016 and 2017 tax years. I will refer later to the detail of the deposits that were unexplained.

6. Mr Carvell had not lodged tax returns for those years so the Commissioner assessed tax on those amounts as taxable income for those years. The Commissioner also issued a notice by which he assessed administrative penalties arising from Mr Carvell’s failure to lodge tax returns for each of the 2015, 2016 and 2017 tax years.

7. On 15 June 2018 Mr Carvell lodged an objection to all of those assessments.

8. On 18 March 2019[1] the Commissioner made an objection decision by which he allowed in part the objection made by Mr Carvell to the default assessments for the 2015 and 2017 tax years, disallowed default assessments for the 2016 tax year and disallowed the objection to the imposition of administrative penalties although the assessments of penalties was adjusted to reflect the part of the objection that was allowed.

   [1] Exhibit 1, Section 37 T Documents T21 page 254.

9. The result of the objections[2] was that the default assessments for each of the years were then based on taxable income of $454,926, $208,474 and $189,393 for the 2015, 2016 and 2017 tax years respectively. In addition to the tax assessed, administrative penalties of $143,317.56, $65,638.10, $56,961.51 were imposed. Shortfall interest charges were also applied.

   [2] Exhibit 1, Section 37 T Documents, T2 pages 11-26.

10. On 22 March 2019, Mr Carvell applied for a review of the objection decision in respect of the assessments made of his taxable income for the 2015, 2016 and 2017 tax years, and of the penalties imposed for failing to lodge a return in each of those years.

    THE ISSUES

11. The first issue is whether Mr Carvell has proven what his taxable income was in each of the 2015, 2016 and 2017 years because it is only by doing this can he demonstrate the assessments made by the Commissioner based on the unexplained deposits, were excessive or otherwise incorrect. The second issue is whether the administrative penalties or any part of them should be remitted.

    THE NEED TO PROVE WHAT THE ASSESSMENT SHOULD HAVE BEEN

12. The starting point is in s.14ZZK(b)(i) of the Taxation Administration Act 1953 (Cth) (TAA) which provides that in a review the taxpayer must prove that the Commissioner’s assessment is excessive or otherwise incorrect and, significantly, what the assessment should have been. The burden of proof is not discharged by simply showing that the methodology or aspects of the content of the assessment undertaken by the Commissioner was or were flawed or wrong, which is a matter I will return to in a moment.

13. The operation of s.14ZZK(b)(i) requires the taxpayer to prove on the balance of probabilities what his actual taxable income was in order to prove the amount by which the Commissioner’s assessment is excessive or incorrect. It is not necessary to explain the multiplicity of ways in which proof might be presented of a taxpayer’s actual assessable income, but it would most probably usually proceed by the taxpayer bringing evidence which is capable of demonstrating what her or his income actually was and what the value of any deductions from that income are.

14. So, where a taxpayer conducted a business in a year of income, ordinarily it would be likely to see primary records evidencing transactions carried out in the course of the business produced and, most probably, some explanation about the underlying transactions themselves. As is the case here, the other side of that will be that the taxpayer necessarily must prove that no other income was earned except that which she or he seeks to prove by evidence.

15. The inability to explain things like bank deposits will obviously undermine a taxpayers claim that the taxpayer has in fact proved their assessable income because it leaves wide open the inference that there is unaccounted income for which the taxpayer has not owned up to in demonstrating her or his taxable income.

16. The proposition is well illustrated in this case because at the outset of the hearing, Mr Carvell was reminded of the need for him to prove what his taxable income was for each of the years. It was being suggested to him he had brought no evidence about that. The question of his assessable income was not addressed at all in his Statement of Issues, Facts and Contentions filed before the review, or in an affidavit that he had filed which was his evidence.

17. Undeterred, Mr Carvell responded that he had earned no taxable income in any of the years: that proposition was quickly put to bed when it was, for example, pointed out to Mr Carvell that he had earnt interest on a term deposit in December 2014 or that, in the middle of 2014 each week for about 21 weeks, an amount of $500 had been deposited into his bank account with the words ‘CBA Wages’ appearing as the description. There were other amounts deposited in Mr Carvell’s bank accounts for which he was unable to offer any explanation because he did not remember what they were. This also suggested he earned income in the years in question. These kinds of things meant that Mr Carvell had not proven what his taxable income was for each of the years quite apart from the damage that his statement about earning no income did to the believability of his evidence more generally.

18. The issue about credit or believability, if it needs explanation, arises in very simple terms because Mr Carvell told the Tribunal that he earnt no income in the face of 22 entries over 21 weeks that had the words ‘CBA Wages’ alongside them. That is a significant reason why the Tribunal would be extremely careful about accepting Mr Carvell’s word in the absence of corroboration. There are other reasons why his evidence is to be treated with significant care or should not be accepted. Mainly concerning his lack of recollection and failures to produce documents and the fact that some of his explanations simply did not ring true.

19. More fundamental to the question of proof of Mr Carvell’s assessable income in the years concerned is the fact that Mr Carvell accepted that he had interests in businesses operated through three corporate entities:[3] Timeout Industries Pty Ltd, Night Out Entertainment Pty Ltd and J C Importing Pty Ltd at one time or another during the years concerned. Those companies conducted businesses involving things like operating a café, a bar and restaurant and a boat importing business. Mr Carvell also had at one time an interest in a tyre franchise through one of the corporate entities.

    [3] Exhibit 5, Affidavit of John Carvell.

20. Mr Carvell also said that he had let out his home on one or more occasions in return for payment and that he also had an interest in a commercial rental property that derived income, at the very least, by being used for electoral purposes. There was no evidence at all about the income (or loss) that Mr Carvell had made from any of the businesses aside from the bald assertion that Mr Carvell made about not having earnt any income in the years in question. There was no evidence about what, if any, income had been derived from renting his home or the commercial property, even though he conceded at various time in his evidence he had received income from them.

21. There is no evidence that would allow a finding about what Mr Carvell’s taxable income was in any of the years in issue. To the extent that Mr Carvell says that he earnt no income in those years, I am unable, on the balance of probabilities, to make a finding to that effect for the reasons I have given. I cannot accept Mr Carvell’s evidence about these facts, as it is clearly wrong. Further, without evidence of the transactions conducted by the companies and the businesses referred to in the evidence as well as concerning the commercial rental property and renting his home, it is simply not possible to make any relevant finding about Mr Carvell’s actual assessable income in the relevant years.

22. It follows that Mr Carvell has not proven what his taxable income was in the relevant years, and I am unable, in light of that, to determine whether the Commissioner’s assessment is excessive or otherwise incorrect. So far as this aspect of the objection decision is concerned it follows that the Commissioner’s decision should be affirmed.

    THE DEFAULT ASSESSMENT

23. Mr Carvell’s approach in the review was to attempt to disprove elements of the Commissioner’s default assessment by identifying particular deposits and attributing them to something that Mr Carvell claimed was not taxable income. That approach misunderstands the way the default assessment process operates: for one thing, it wrongly treats the default assessment as an actual assessment, which it is not. For another thing, it assumes that taxpayers can derogate from their obligation to prove their taxable income by assuming the Commissioner’s default assessment is some sort of starting point, which again, it is not.[4] It also misunderstands what I have dealt with earlier about Mr Carvell’s obligation to prove what in fact his taxable income was for the relevant years.

    [4] Gashi v Federal Commissioner of Taxation (2013) 209 FCR 301; Federal Commissioner of Taxation v Rigoli (2013) ATC 20-407; [2013] FCA 784, [8].

24. Although the matter could be disposed of on the basis that Mr Carvell has not satisfied the onus of establishing what his taxable income was for each of the years, I will nonetheless deal with his explanations for the deposits that were unexplained in each of the years because Mr Carvell and the Commissioner argued some of the matter on that basis. It also shows that Mr Carvell’s ‘explanations’ do not offer any sound basis for a conclusion that the amounts were not assessable income.

25. In general terms, most of Mr Carvell’s explanations for the deposits are incapable of being accepted because they are not corroborated by independent or objective relevant documentary evidence. The lack of such evidence is in a context where I have indicated there were serious issues about the credibility of some of Mr Carvell’s evidence, in particular his assertion he had earnt no income in the years in issue when it was readily proved he had.

26. The absence of any financial records at all about almost all of the matters which I refer to below in fact raises greater suspicion about the fact of the transactions having taken place in the way Mr Carvell says they did. The sheer number of cash transactions in many cases for large amounts of money often paid periodically over days or weeks in amounts just shy of $10,000 also raises a great deal of doubt about the explanations offered by Mr Carvell. In fairness I should add that in relation to a number of transactions Mr Carvell did frankly concede that his version of events was an assumed one and a deal of his evidence was littered with a lack of any recollection about things which of course also impacts upon relying on his evidence.

27. I will deal with the deposits roughly in the groups in which they were addressed in Mr Carvell’s evidence.

28. Mr Carvell’s bank account for November 2014 over about a week and a half total records four deposits totalling $35,000.[5] There are three deposits of $9,500 and one $6,500. Mr Carvell says that the money was a result of him selling a caravan to an unnamed man in Western Australia. Mr Carvell has not produced any financial records relating to the transaction. He has produced a manifest which he says he received when the caravan was imported in 2011. Tellingly, there are no other financial records about it: there are no documents about Mr Carvell’s purchase of the caravan, there are no receipts, no registration documents (because he says he was unable to register it), no invoices and no other documents relating to the financial aspects of the claimed transaction. Mr Carvell says he no longer remembers the name of the purchaser of the caravan and he cannot find any other records.

    [5] Exhibit 1, ST Documents, ST44 page 396.

29. I am unable to accept Mr Carvell’s self-serving statements about the sale of the caravan in the absence of some corroborative evidence. Further, I do not consider the manifests or a photograph of the caravan corroborate any of the financial aspects of the claimed sale. This is especially so having regard to the size of the sum involved, namely $35,000, but also because of the way in which Mr Carvell gave some of his evidence. He was unconvincing because of his inability to give details about the claimed transaction. The failure to explain in any convincing way the instalments that were paid and why, add to the doubts over Mr Carvell’s evidence.

30. Also in November 2011 Mr Carvell says he sold a motorcycle for $27,030 which also was paid for in instalments,[6] this time three instalments of about $9000 each over about 11 days. The motorcycle was a Harley Davidson Street Glider. Again, whilst some documents are produced about the motorcycle (again manifests relating to its shipment and some documents relating to an unregistered vehicle permit from December 2012) there are no documents of a financial nature at all. The purchaser’s identity or even place of residence is not identified. Again, I am unable to accept Mr Carvell self-serving statements explaining the deposits because there is no corroborative evidence that would make it more probable than not that the transactions in fact occurred. I am left again with only Mr Carvell’s say so. The curiousness about the sum of $9000 being deposited over and over again in November 2014 raises some suspicion about what the money was really for but that probably does not matter given what I have said already about the lack of any documentary or third party corroboration.

    [6] Exhibit 1, ST Documents, ST44 page 396.

31. From November 2014 until June 2015 there are a series of nine deposits into Mr Carvell’s bank account totalling $27,161.87. The Commissioner conceded on objection that one amount of $10,000 is not assessable income.[7] The reason for the concession is of no significance in this review. So far as the remaining deposits are concerned, there is no detail to explain the transactions. Some of the amounts are very small such as $110, $317, $600, and $122.65. I would accept that those smaller amounts might be amounts recovered from what Mr Carvell says was sold through garage sales and the like, but the problem is that it is unlikely that a garage sale was conducted over seven months. It is less believable that Mr Carvell cannot provide any detail about what was sold in respect of the larger amounts of $5000, $5892, $1919.29 and $3200.93, who those goods were sold to and what the method of sale was. At best for Mr Carvell was his concessions that he could not remember anything about the sales. Also, there is, like with most of Mr Carvell’s explanations, nothing really other than Mr Carvell’s say so; which is absent corroboration. I would not accept this evidence because it is self-serving. Again, the lack of detail only fuels the doubts I generally have about Mr Carvell’s believability.

    [7] MFI C, Respondent’s Statement of Facts, Issues and Contentions [35A].

32. In September and November 2014 respectively there are two large sums $152,525 and $178,600 deposited into Mr Carvell’s bank account. He says these are the proceeds of a sale of some businesses he operated through a corporate entity: a cafe and a tyre franchise. He stated that the sums paid to him were the repayments of loans that were made by him to the company that owned each business. There is a contract for sale of the café business for an amount of $180,000 but not for the tyre franchise.[8] There are no documents so far as the tyre franchise is concerned and no other documents of any description so far as the café business is concerned.

    [8] Exhibit 1, T Documents, T14 page 107.

33. There are, for example, no financial records of any kind produced. There are no loan documents which one would anticipate would have been relatively easy to produce especially as Mr Carvell was a director of both companies. There are no financial statements of the company showing that the loan existed and when it was made. There is nothing to confirm the initial advance of funds to the company or in fact any advances of funds to the company. Mr Carvell said in his evidence that the sums deposited represented the proceeds of sale of the businesses. He suggested that a loan was the same as the proceeds of sale. He said an accountant told him it was a loan.

34. The sums deposited raise real issues that suggest they may well have been income but again I do not need to go that far. The simple fact is that in ordinary circumstances there would be documents evidencing such loans or remittances of the proceeds of sale and it would have been presumably fairly easy to produce them so that the nature and character of the deposits could be ascertained. The lack of documentary corroboration means I am unable to accept Mr Carvell’s say so about the transactions, especially where his evidence was, to say the least, confusing about what the amounts deposited were.

35. Between 7 July 2014 and 1 December 2014,[9] a period of roughly 21 weeks, each week Mr Carvell received a payment of $500 into his bank account that bore the description ‘CBA Wages’. Mr Carvell accepted the rather inevitable conclusion about these transactions, namely that he could not explain away the clear inference that they were wages. I should add that these types of entries and their lack of explanation in one sense fortifies the need for corroboration concerning the other transactions: where there is smoke there is fire. They also raise, yet again, serious questions about the believability of Mr Carvell’s evidence. The inability to explain a regular $500 payment over almost six months does not sound credible.

    [9] Exhibit 1, T Documents, T20 pages 199-239.

1. On 19 December 2014 a deposit in the amount of 10,644.71[10] appeared in Mr Carvell’s bank account. He says this was a bank guarantee for the tyre franchise and the amount was a loan to the company operating the business. Apart from confirming Mr Carvell’s business interest at the time, no financial records are produced not even a copy of the bank guarantee. The same sort of corroborative documents I identified in respect of the other loans would ordinarily be expected to be available and evidence the transaction. They were not produced. I do not accept the explanation for the deposits. I should add that Mr Carvell accepted that the amount of $644,71 represented interest which he received and was income which I have already said is at odds with his evidence he received no income at all in the relevant years.

   [10] Exhibit 1, ST Documents, ST46 page 428.

2. On 6 November 2014 an amount of $10,000 was deposited into Mr Carvell bank account. Mr Carvell said he recalled this was for a loan repayment and that he assumed it was for a deposit for a loan repayment, but he had no recollection of it. Again, no records at all are produced.

3. Between September 2014 and May 2015, three amounts totalling $256.17 were deposited into Mr Carvell bank account.[11] There was no satisfactory explanation offered for the deposit other than they constituted ‘refunds’ or ‘repayments of credit cards’. Again, no documents were produced to corroborate anything about the deposits.

   [11] Exhibit 1, T Documents, T20 pages 199-239.

4. Between 18 August 2014 and 13 May 2015 there were deposits of $2226.45 which were deposits for trucks. Mr Carvell has no specific recollection about them. He says he did not seek any records from the trucking company to prove the transactions. He says one amount was a refund of a deposit paid on a pre-paid credit card for when he went on a cruise.[12] He did not bother getting records for the smaller amounts because of their size and it seems he did not bother in respect of the larger amounts because they went too far back.

   [12] Transcript, page 50, lines 37-42.

5. Between 9 December 2015 and 27 April 2016 there are 16 transactions totalling about $188,097 into Mr Carvell’s bank account.[13] Mr Carvell says that these were payments to him where he ‘assisted’ a friend. The payments related to him assisting the friend when he was ‘unofficially’ working as a ‘construction or project manager’. Immediately the proposition that Mr Carvell was working for someone else raises the spectre that he was likely to have received remuneration or income for that. He says the payments were for expenses he incurred for labour and equipment, but apparently not his labour.

   [13] Exhibit 1, ST Documents, ST44 pages 400-428.

6. Mr Carvell says that the developer who was involved with the site had suddenly left and his friend continued to reimburse for moneys that were recouped over time. In relation to these amounts Mr Carvell was able to produce some invoices. Some of them were issued to companies in which Mr Carvell had an interest and recorded at times work done for those businesses.[14] Despite the fact that he provided the invoices to the Commissioner to evidence the transactions, Mr Carvell said he was reimbursed and he could not understand why the invoices were to different companies some of which were related to him and some of which were not. He could not explain how some of them were relevant at all. He did not reconcile the payments by reference to the companies or businesses or explain individually the amounts deposited and paid. A particular curiosity with these payments is that the friend who the work was done for was also a director of a company that Mr Carvell was a director of. It would have, so it seems, been possible to corroborate the transactions by having the other director provide some evidence. The confused nature of the evidence together with my doubts about the explanation offered and Mr Carvell’s credit means it is not possible to accept the explanation about these deposits.

   [14] Exhibit 1, T Documents, T14 page 166.

7. Next Mr Carvell says that deposits of $4389.58 in November 2015 and two other transactions of $209.19 represented the proceeds of sale from personal items. So far as the sale of personal items is concerned, Mr Carvell offered no explanation about what he sold or any detail of the transactions. He said he could not remember anything connected to the claimed sale. That is a sufficient enough reason not to accept his explanation.

8. Mr Carvell accepts that he cannot explain a deposit of $6,585 made on 16 September 2016.[15] He also accepts that deposit but asserted it must have been part of the insurance payments made to him at around about the same time. I cannot accept that especially because the deposit seems to have come from elsewhere and because it would have been fairly easy to obtain evidence about it if that were the case.

   [15] Exhibit 1, ST Documents, ST44 page 400.

9. In the period 21 September 2016 to 28 December 2016 deposits totalling either $36,650 (or $37,000 if an amount of $450 which was not addressed in the evidence but with the same transaction description as the others is included in this amount),[16] were made to Mr Carvell’s bank account. The words ‘ARK HOSPITALITY’ appear in the description of the deposit. Mr Carvell says these were sales of stock and plant and equipment. One entry contains the words ‘security deposit’ alongside it, but Mr Carvell could not explain what that referred to. He did not understand other references within the descriptions. Neither do I. There is no satisfactory explanation offered for the deposits and despite Mr Carvell’s explanation, I am unable to determine what the deposits were concerned with.

   [16] Exhibit 1, ST Documents, ST45 page 413 cf MFI C, Respondent’s Statement of Facts, Issues and Contentions page 16.

10. In the period 22 September 2016 to 14 October 2016 Mr Carvell’s bank account shows 9 deposits totalling $72,800. He says that this was in respect of a hot rod that he refurbished and later sold. He has produced some photos of a hot rod. He says he has no records about the car’s registration because it could not be registered. He produced no records about the claimed sale of the car. The sale, again, paid to Mr Carvell by instalments, six of which are around the $9,000 mark, which was characteristic of some of Mr Carvell’s other ‘sales’ of things. Again, the deposits were made over a short period of time, about ten days except for one deposit that happened nine months later. Some of the payments were made to one bank account and others were to another bank account. The lack of corroborative evidence means I do not accept Mr Carvell’s explanation about these deposits. In the absence of corroboration there are significant questions about the transaction. The complete lack of any detail or even the name of the purchaser means I cannot be satisfied on the probabilities that the transaction occurred.

11. On 15 March 2017 a deposit of $40,000 appears in Mr Carvell’s bank account. Mr Carvell says this related to the sale of a truck.[17] He produces no records about the transaction other than a photo of a truck.[18] It may be accepted that the amount was received from Tunney Trading Pty Ltd and which is a company that conducted a trucking business, but the complete absence of any records means that I have no way of knowing what the amount was paid for. It would have been a fairly easy thing, for example, for Mr Carvell to have gone to the truck business and retrieved any records they may have had of the transaction or obtained a statement from someone about the sale. The absence of corroboration means that I cannot accept Mr Carvell’s self-serving statement about what the money was paid for.

    [17] Exhibit 1, T Documents, T34 page 284.

    [18] Exhibit 1, ST Documents, ST45 page 426.

12. In December 2016 and May 2017 there are four deposits to Mr Carvell’s bank account totalling $23,500 which Mr Carvell says were for the sale of ‘personal use items’.[19] Mr Carvell could not remember what he sold. The lack of any recollection about what he sold for significant sums of money means I cannot accept the explanation offered.

    [19] Exhibit 1, ST Documents, ST44 page 414.

13. Mr Carvell concedes he cannot explain a deposit on 11 January 2017 for the amount of $86.35.[20]

    [20] Exhibit 1, ST Documents, ST44 page 415.

14. It follows from the above parade through Mr Carvell’s deposits that I am unable to accept any of his explanations for them. The lack of credible corroborative evidence and, as I have said, documents proving the relevant transactions that are said to have led to the deposits leaves me in much the same position as the Commissioner. That being the deposits were unexplained and, on the face of things, suggestive of Mr Carvell receiving income during the relevant period.

15. In any event, as Mr Carvell has failed to prove what his assessment should have been I am unable to find that the Commissioner’s assessment, based as it was on the above unexplained deposits, was excessive or otherwise incorrect as required by s.14ZZK of the TAA.

    REMISSION OF PENALTIES

16. The imposition of administrative penalties is prescribed by s.284-75(3) of Schedule 1 of the TAA which applies where a taxpayer has failed to give returns to the Commissioner and the Commissioner determines the tax related liability without assistance from the taxpayer. The penalty is 75% of the tax shortfall and is increased for 2016 and 2017 by 20% because of the fact that Mr Carvell had been liable to a penalty in the previous year for that item (see s.284-220(1)).

17. Section 298-20 of the TAA provides the Commissioner with a discretionary power to remit all or a part of the penalty. There is no indication in s.298-20 about when the Commissioner should exercise that power but the Commissioner has provided some guidance about the exercise of the discretion in Practice Statement Law Administration PS LA 2014/4 (PS LA 2014/4) no doubt to ensure that the discretion is exercised uniformly and consistently. PS LA 2014/4 is not binding on the Tribunal but like with policy, generally I would apply it unless there was some sound reason to depart from it.[21] There does not appear to be any basis to depart from it in this case.

    [21] Drake v Minister for Immigration and Ethnic Affairs (No 2) (1979) 2 ALD 634.

18. In dealing with whether an administrative penalty should be remitted in whole or part PS LA 2014/4 says that the following are relevant:

    (a)Did the Applicant have a genuine, yet mistaken, belief that lodgement was not required as opposed to an indifference to, or a rejection of, their obligations?

    (b)Did the Applicant understand his obligations to lodge but circumstances beyond his control affected his ability to lodge?

    (c)Does the amount of penalty imposed by law cause an unjust result?

    (d)Did the Applicant have credits available to offset the amount of the tax-related liability payable?

    (e)Was the Applicant extraordinarily cooperative during an examination?

19. Mr Carvell says that the breakdown of his marriage effected his mental state, that he has had heart surgery in 1999 which has resulted in repeated visits to hospital and accepts he should have dealt with the need to lodge his returns. There was no sound or particular evidence that such a condition afflicted him in the years when he should have lodged his returns or affected him so that he was unable to lodge his returns.[22]

    [22] Exhibit 1, T Documents, T14 pages 97-104.

20. There is no doubt the stress of the separation from his wife and of proceedings concerned with that would have taken their toll. There does not appear to be any correlation between the separation proceedings or his claimed heart condition and not lodging his tax returns. This is especially so in circumstances where Mr Carvell was able to do so many other ‘day to day’ things such as selling personal items and refurbishing his hot rod but also where he did things of significance: selling two businesses for significant amounts and helping his friend as a project manager. It is to be remembered as well that his proceedings involving separation concluded in August 2014 when final orders were made.[23] Those proceedings do not explain much about the 2016 and 2017 tax years and why no tax returns were lodged.

    [23] Exhibit 1, T Documents, T14 page 75.

21. The circumstances in 2015, 2016 and 2017 do not seem such that would objectively have meant that Mr Carvell could not have lodged his tax returns. I do not accept that Mr Carvell was not aware of his obligation to lodge his tax returns in those years. This is because, as a person of some business acumen, with interest in a café and a tyre franchise who owned commercial rental property and who was able to work as a commercial or project manager, it is simply not credible to suggest that he did not know what was required of him so far as tax returns were concerned. There is nothing that suggests that there is anything unjust in circumstances where I know little about Mr Carvell’s financial or asset position that might otherwise suggest the administrative penalties would impose an unjust result. The other ‘grounds’ for remission in PS LA 2014/4 do not appear to be relevant.

22. I do not consider that in the circumstances there is any basis for remitting the administrative penalties or any part of them. It follows that I will affirm the Commissioner’s decision not to remit the administrative penalties or any part of them.

    CONCLUSION

23. I am unable to find that the Commissioner’s assessments of Mr Carvell’s tax for the 2015, 2016 and 2017 were excessive or otherwise incorrect or that the administrative penalties imposed on Mr Carvell should be remitted in whole or part. I affirm the Commissioner’s objection decision.

I certify that the preceding 58 (fifty -eight) paragraphs are a true copy of the reasons for the decision herein of Member R Reitano

...................................[SGD]....................................

Associate

Dated: 8 October 2021

Date of hearing:	10 September 2021
Date final submissions received:	10 September 2021
Applicant:	By Videoconference
Counsel for the Respondent:	Ms B Kabel
Solicitors for the Respondent:	Mr K Bragg, Australian Government Solicitor