Highrise Concrete Contractors (Aust) Pty Ltd v Commissioner for ACT Revenue

Highrise Concrete Contractors (Aust) Pty Ltd sought review of a decision by the Commissioner for ACT Revenue imposing a 90% penalty tax rate on the company’s payroll tax liability. The ACT Payroll Tax Assessment and Collection Act 1994 provides for a penalty tax rate of up to 90% where there is a failure to pay tax on time. The Administrative Appeals Tribunal (AAT) was tasked with determining whether the penalty tax rate was appropriate in the circumstances.

The key legal issue was whether the penalty tax rate of 90% was excessive and unjust in the circumstances, warranting a reduction. The company argued that mitigating factors such as the company’s previous good compliance record and the fact that the late payment was due to an honest mistake should have led to a lower penalty tax rate. The Commissioner contended that the maximum penalty tax rate was warranted due to the company’s failure to make the payroll tax payment on time.

The Tribunal found that while the company’s failure to pay on time was serious, the 90% penalty tax rate was excessive in the circumstances. The Tribunal noted the company’s previous good compliance record and the fact that the late payment was due to an honest mistake. The Tribunal was satisfied that a penalty tax rate of 50% was more appropriate to reflect the seriousness of the offence while also taking into account the mitigating factors. Accordingly, the Tribunal set aside the 90% penalty tax rate and substituted a 50% penalty tax rate.