FYYB and Commissioner of Taxation (Taxation)

The Administrative Appeals Tribunal reviewed a decision by the Commissioner of Taxation to disallow an objection lodged by FYYB (the Fund) against the Commissioner's refusal to remit a portion of an administrative penalty. The penalty was imposed under the *Superannuation Industry (Supervision) Act 1993* (Cth) for contraventions of section 67(1) of that Act, specifically the borrowing of money by the Fund from one of its members. The Fund had borrowed $220,000 in 2015, which did not fall within any prescribed exceptions, and this contravention persisted through the 2015, 2016, and 2017 tax years.

The legal issue before the Tribunal was whether any part of the remaining administrative penalty of $7,500 should be remitted. The Tribunal acknowledged that the Fund had indeed contravened section 67(1) of the *Superannuation Act* in the relevant tax years. The Commissioner's discretion to remit penalties is guided by Practice Statement PS LA 2020/3, which considers the purpose of the penalty provision, the trustee's behaviour and circumstances, the seriousness of the contravention, and the potential for unintended or unjust results.

The Tribunal noted that the purpose of penalty provisions includes specific and general deterrence. While the Fund's compliance history regarding lodgements was mentioned, the Tribunal focused on the seriousness of the borrowing contravention itself, which had not been fully rectified even at the time of the review. The Tribunal considered that the total penalty, which would have been approximately $32,000 before any remission, should not be unjust or overly oppressive and should reflect the seriousness of the contravention.

Ultimately, the Tribunal was satisfied that the Commissioner's decision to remit the penalty to $7,500 met these criteria. Therefore, the Tribunal affirmed the Commissioner's decision of 17 August 2020, which disallowed the Fund's objection.