FSYC and Commissioner of Taxation (Taxation)
[2022] AATA 2680
•19 August 2022
FSYC and Commissioner of Taxation (Taxation) [2022] AATA 2680 (19 August 2022)
Division:TAXATION AND COMMERCIAL DIVISION
File Number:2021/8070
Re:FSYC
APPLICANT
AndCommissioner of Taxation
RESPONDENT
DECISION
Tribunal:Member D Mitchell
Date:19 August 2022
Place:Brisbane
The Tribunal affirms the decision under review.
.....................[SGD].............................
Member D Mitchell
CATCHWORDS
TAXATION – application for release from tax debt – whether debt related to goods and services tax can be released – where family violence was present – decision under review affirmed
LEGISLATION
Taxation Administration Act 1953 (Cth)
CASES
Isaacman and Commissioner of Taxation [2014] AATA 541
REASONS FOR DECISION
Member D Mitchell
19 August 2022
INTRODUCTION
FSYC (the Applicant) is seeking review of an objection decision of the Commissioner of Taxation (the Respondent) dated 6 October 2021.[1]
[1] Exhibit 1, T Documents, T33, page 220, Objection Decision and T2, pages 70-79, Reasons for decision on objection.
The reviewable objection decision disallowed the Applicant’s objection to a decision to grant them partial release from the payment of their tax liabilities.[2]
[2] Exhibit 1, T Documents, T31, pages 217-218, Decision on tax debt release application.
The relevant law in this matter is outlined in the Taxation Administration Act 1953 (Cth) (TAA 1953).
BACKGROUND
The facts in this matter are not in dispute. The Applicant:[3]
·migrated to Australia in November 2007 on a student visa;
·is not an Australian citizen, however at all relevant times was an Australian resident for tax purposes;
·was granted an Australian Business Number (ABN) on 14 January 2008; and
·was victim of family violence, perpetrated against them by their former partner, who at the time was their sponsor for a partner visa and was trading under their ABN.
[3] Exhibit 2, Tribunal Book, Tab 2, Respondent’s Statement of Facts, Issues and Contentions.
On 14 October 2020, the Applicant lodged a debt release application along with supporting documentation to the Respondent.[4]
[4] Exhibit 1, T Documents, T27, pages 167-210, Application for tax debt release with attachments.
On 9 June 2021, the Respondent notified the Applicant that it had decided to partially release them from payment of their tax debts.[5]
[5] Exhibit 1, T Documents, T31, pages 217-218, Decision on tax debt release application
As a result the Applicant was left with a total tax debt of $31,672.12 being:[6]
(a)$17,443.12, incurred from quarterly BAS lodgements for the periods ending 30 June 2014 to 30 June 2016; and
(b)$14,229.00 comprised of income tax and instalment amounts incurred in the years ended 30 June 2019 and 30 June 2020 which was after the end of their relationship with their former partner.
[6] Exhibit 2, Tribunal Book, Tab 2, Respondent’s Statement of Facts, Issues and Contentions, paragraph 31.
On 25 July 2021, the Applicant lodged an objection in relation to the debt release decision, on the basis that they had proved that they had been subjected to fraud and blackmail by their former partner.[7]
[7] Exhibit 1, T Documents, T32, page 219, Objection.
On 6 October 2021, the Respondent disallowed the Applicant’s objection[8] indicating that:[9]
(a)The original decision to partially release the Applicant from [their] tax debt was correct.
(b)The income tax/PAYG instalment portion of the tax debt in the amount of $14,229 was not incurred under the influence of [their] former partner and it was not appropriate to release.
(c)The GST portion of the tax debt in the amount of $17,443.12 was not eligible to be considered for release.
[8] Exhibit 1, T Documents, T33, page 220, Objection Decision and T2, pages 70-79, Reasons for decision on objection.
[9] Exhibit 2, Tribunal Book, Tab 2, Respondent’s Statement of Facts, Issues and Contentions, paragraph 35.
In an application for review of decision, received by the Tribunal on 28 October 2021, the Applicant sought review of the Respondent’s objection decision.[10] The Applicant provided their reason for making the application was:[11]
It was proved many times that tax debt occurred 2014-2017 during the time of blackmail. ATO released most of the debt but I believe this should be released as well. AAT Immigration court also aware of this blackmail/fraud tax debt.
[10] Exhibit 1, T Documents, T1, pages 1-69, Application for review and attachments.
[11] Exhibit 1, T Documents, T1, page 3, Application for review and attachments.
Where a taxpayer is dissatisfied with an objection decision made by the Respondent, they may apply to the Tribunal for a review of the decision or appeal to the Federal Court against it.[12]
[12] Section 14ZZ of the TAA 1953.
On application for review of a reviewable objection decision, the Applicant has the burden of proving that the decision should not have been made or should have been made differently.[13]
[13] Section 14ZZK(b)(ii) of the TAA 1953.
On 12 August 2022, a Hearing was conducted by Microsoft Teams. At the Hearing, the Applicant was self-represented, appeared by Microsoft Teams and provided evidence under affirmation.
At Hearing the Applicant confirmed that they were not seeking release from their non-GST taxation liability as that debt arose after the end of their relationship with their former partner. The Applicant told the Tribunal that they do not dispute that they need to pay that debt. The Tribunal notes that at the time of Hearing the Applicant’s undisputed taxation liability was $8,814.80, comprising of PAYG instalments of $8,356.00 and general interest charge on PAYG instalments of $458.80.[14]
[14] Exhibit 3, Respondent’s note confirming the Applicant’s current liabilities dated 11 August 2022.
At the time of Hearing the Applicant sought release from taxation liability amounting to $13,400.36, comprising of GST of $12,443.12 and general interest charge on GST of $957.24.[15]
[15] Exhibit 3, Respondent’s note confirming the Applicant’s current liabilities dated 11 August 2022.
ISSUES
The sole issue before the Tribunal is whether the Applicant’s GST liabilities are eligible for release.
CONSIDERATION
The Tribunal acknowledges the Applicant’s openness with both the Respondent and the Tribunal throughout the release from debt process. The Applicant has provided significant documentary evidence to support their claims regarding their personal circumstances whilst in a relationship with their former partner between 2011 and 2017.[16]
[16] Exhibit 1, T Documents.
The Tribunal further notes that the Applicant’s evidence in relation to the alleged family violence they experienced was accepted by the Migration and Refugee Division (MRD) of the Tribunal in 2019 in considering the partner visa application.[17] Further the Tribunal notes that the Respondent accepted that the Applicant was subject to the blackmail and family violence they had alleged and that the tax debts were incurred by them and the business while under the control of their former partner trading under their ABN.[18]
[17] Exhibit 1, T Documents, T23, pages 144-157, MRD migration decision.
[18] Exhibit 2, Tribunal Book, Tab 2, Respondent’s Statement of Facts, Issues and Contentions, paragraph 30.
Having reviewed the material before it, which includes statements of the Applicant, statements from treating doctors and medical and police reports, the Tribunal has no reason to question the evidence of the Applicant in relation to how the GST debts in question arose.
It was clear at Hearing that the Applicant becomes easily distressed when addressing their previous circumstances. The Tribunal found the Applicant to be open and honest in their conduct with the Tribunal. On that basis and in consideration of the evidence before it as a whole, although such a finding is not necessary in this matter, the Tribunal nonetheless accepts the Applicant’s evidence and concurs with the findings of the MRD and Respondent in relation to the Applicant’s claims of family violence.
Unfortunately, in this matter the question before the Tribunal is a purely legal question with regards to whether or not the Applicant’s GST liabilities are able to be considered for release. If those liabilities are not eligible to be considered for release the matter ends there, and there is no need for the Tribunal to consider whether the Applicant meets the release requirements.
The Respondent in its Statement of Facts, Issues and Contentions[19] comprehensively outlined the pathway leading to the present application before the Tribunal and contended that the Commissioner, or the Tribunal standing in the shoes of the Commissioner, does not have the discretion to release GST liabilities.[20] At Hearing the Respondent reiterated that contention.
[19] Exhibit 2, Tribunal Book, Tab 2, Respondent’s Statement of Facts, Issues and Contentions.
[20] Exhibit 2, Tribunal Book, Tab 2, Respondent’s Statement of Facts, Issues and Contentions, paragraphs 39-45.
In the lead up to the Hearing, the Applicant provided a Statement of Facts, Issues and Contentions seeking that the Tribunal make a decision to release them from the GST debts which they said occurred during family violence. Alternatively, they requested the Tribunal “wave off” the interest which added to the debt from 2017 to date.[21]
[21] Exhibit 2, Tribunal Book, Tab 1, Applicant’s Statement of Facts, Issues and Contentions.
At Hearing, the Applicant told the Tribunal that they understood the Respondent’s objection decision and contentions. They said that they understand that the law would not allow the Respondent or Tribunal to make a different decision, however, they believed that they needed to complete the Tribunal process in order to make an application to the Finance Minister for waiver of the GST debt.
Part 4-50 of Schedule 1 to the TAA 1953 deals with release from particular taxation liabilities. Of particular relevance in this matter, Division 340 of Schedule 1 to the TAA 1953 provides the Commissioner with powers to release an individual or a trustee of the estate of a deceased person from certain income tax liabilities they have incurred, if satisfied that if they were required to satisfy the liability, they would suffer serious hardship.[22]
[22] Sections 340-1, 340-5 and 340-10 of Schedule 1 to the TAA 1953.
Section 340-5 of Schedule 1 to the TAA 1953 provides:
340‑5 Release from particular liabilities in cases of serious hardship
Applying for release
(1) You may apply to the Commissioner to release you, in whole or in part, from a liability of yours if section 340‑10 applies to the liability.
(2) The application must be in the *approved form.
(3) The Commissioner may release you, in whole or in part, from the liability if you are an entity specified in the column headed “Entity” of the following table and the condition specified in the column headed “Condition” of the table is satisfied.
Entity and condition Item Entity Condition 1 an individual you would suffer serious hardship if you were required to satisfy the liability 2 a trustee of the estate of a deceased individual the dependants of the deceased individual would suffer serious hardship if you were required to satisfy the liability
Effect of the Commissioner’s decision
(4) If the Commissioner:
(a) refuses to release you in whole from the liability; or
(b) releases you in part from the liability;
nothing in this section prevents you from making a further application or applications under subsection (1) in relation to the liability.
Notification of the Commissioner’s decision
(5) The Commissioner must notify you in writing of the Commissioner’s decision within 28 days after making the decision.
(6) A failure to comply with subsection (5) does not affect the validity of the Commissioner’s decision.
Objections against the Commissioner’s decision
(7) If you are dissatisfied with the Commissioner’s decision, you may object against the decision in the manner set out in Part IVC.
Section 340-10 of Schedule 1 to the TAA 1953 outlines the taxation liabilities to which section 340-5(3) applies. Section 340-10 of Schedule 1 to the TAA 1953 provides:
340‑10 Liabilities to which this section applies
(1) This section applies to a liability if it is a liability of the following kind:
(a) fringe benefits tax;
(b) an instalment of fringe benefits tax;
(c) *Medicare levy;
(d) *Medicare levy (fringe benefits) surcharge;
(e) a *PAYG instalment.
(2) This section also applies to a liability if it is a liability that is specified in the column headed “Liabilities” of the following table and the liability is a liability under a provision or provisions of an Act specified in the column headed “Provision(s)” of the table:
Liabilities and provision(s) Item Liabilities Provision(s) 1 additional tax (a) section 93 or 112B of the Fringe Benefits Tax Assessment Act 1986;
or
(b) former section 163B or subsection 221YDB(1), (1AAA), (1AA) or (1ABA) or Part VII of the Income Tax Assessment Act 1936
2 administrative penalty in relation to fringe benefits tax or *tax Part 4‑25 in this Schedule 3 general interest charge (a) former section 163AA, former section 170AA, former subsection 204(3) or former subsection 221AZMAA(1), 221AZP(1), 221YD(3) or 221YDB(3) of the Income Tax Assessment Act 1936; or
(aa) section 5‑15 in the Income Tax Assessment Act 1997; or
(b) section 45‑80 or 45‑620 or subsection 45‑230(2), 45‑232(2), 45‑235(2) or 45‑235(3) in this Schedule
3A shortfall interest charge Division 280 in this Schedule 4 interest section 102AAM of the Income Tax Assessment Act 1936 5 penalty former section 163A of the Income Tax Assessment Act 1936 6 *tax (a) section 128B of the Income Tax Assessment Act 1936; or
(b) section 128V of the Income Tax Assessment Act 1936; or
(c) section 4‑1 of the Income Tax Assessment Act 1997; or
(d) section 840‑805 of the Income Tax Assessment Act 1997; or
(da) section 840‑905 of the Income Tax Assessment Act 1997; or
(e) section 840‑805 of the Income Tax (Transitional Provisions) Act 1997
The TAA 1953 does not provide a discretion to release liabilities that are not listed in section 340-10 of Schedule 1 to the TAA 1953. There is no dispute that GST liabilities and the associated general interest charges are not liabilities to which release, in cases of serious hardship, can be granted.
This issue was considered by Senior Member Walsh in Isaacman and Commissioner of Taxation [2014] AATA 541 who stated at [23]:
The types of tax liabilities from which an individual may be released under s 340-5(3) are listed in s 340-10 of Schedule 1 to the TAA and include income tax, PAYG instalments and associated penalties and interest, such as GIC (these are referred to as "eligible liabilities"). However, indirect taxes, like GST (and GIC on GST), which are not listed in s 340-10 (referred to as "ineligible liabilities"), cannot be released. Accordingly, the Tribunal has no discretion to release Mr Isaacman from that portion of his tax liability which relates to his GST liability and the GIC thereon.
The Tribunal agrees with Senior Member Walsh and the contentions made by the Respondent. The debt release provisions of the TAA 1953 do not apply to GST debts or the associated general interest charges. Further, the Tribunal was unable to identify any provision or discretion within the tax laws that would allow it to make a different decision.
CONCLUSION
Whilst the Tribunal acknowledges the difficult situation that led to the Applicant’s GST liabilities, those circumstances have no bearing on whether or not the debt can be released.
Based on the evidence before it, and in particular the Applicant’s concession that the tax law does not provide an avenue for GST liabilities to be released, the Tribunal is not satisfied that the Applicant discharged their onus to prove that the Respondent’s objection decision should not have been made or should have been made differently.
Consequently, the decision under review is affirmed.
I certify that the preceding 33 (thirty-three) paragraphs are a true copy of the reasons for the decision herein of Member D Mitchell
...................[SGD].............................
Associate
Dated: 19 August 2022
Date of Hearing: 12 August 2022 Applicant: By MS Teams Advocate for the Respondent: Mr Preesan Pillay Solicitors for the Respondent: Australian Taxation Office
Key Legal Topics
Areas of Law
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Tax Law
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Administrative Law
Legal Concepts
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Appeal
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Statutory Construction
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Remedies
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