Hulsen and Commissioner of Taxation
[2014] AATA 190
•4 April 2014
[2014] AATA 190
Division TAXATION APPEALS DIVISION File Number
2013/4914
Re
Adrian Hulsen
APPLICANT
And
Commissioner of Taxation
RESPONDENT
DECISION
Tribunal Mr R G Kenny, Senior Member
Date 4 April 2014 Place Brisbane The Tribunal affirms the Objection Decision.
...................Sgd..................................................
Mr R G Kenny, Senior Member
CATCHWORDS
TAXATION – Taxation liability – Release – Whether payment of tax liability would cause serious hardship – Factors relevant to exercise of discretion – Decision affirmed
LEGISLATION
Acts Interpretation Act 1901 (Cth) s 15AB
Taxation Administration Act 1953 (Cth) ss 14ZZK and Sch 1 ss 340-1, 340-5, 340-10, 353-10
CASES
Federal Commissioner of Taxation v ANZ Savings Bank Ltd (1994) 94 ATC 4844
Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614
Minister for Immigration and Ethnic Affairs v Pochi (1980) 4 ALD 139
Minister for Immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82
Powell v Evreniades and Ors (1989) 87 ALR 117
Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634
Kirby and Collector of Customs (1989) 20 ALD 369Thomas and Commissioner of Taxation [2014] AATA 102
SECONDARY MATERIALS
Explanatory Memorandum to the Taxation Laws Amendment Bill (No 6) 2003 (Cth)
Practice Statement, PS LA 2011/17
REASONS FOR DECISION
Mr R G Kenny, Senior Member
4 April 2014
BACKGROUND
On 28 December 2012, the Commissioner of Taxation (“the Commissioner”) received an application from Mr Adrian Hulsen seeking release from his taxation obligations amounting to $103,283.93. On 7 May 2013, the Commissioner advised Mr Hulsen of its decision that part of that sum was ineligible for release and that the grant of release of the eligible amounts was refused. On 28 June 2013, the Commissioner received an objection against that decision and, on 6 August 2013, the Commissioner disallowed the objection. On 27 September 2013, Mr Hulsen sought review of the decision by the Tribunal.
In s 340-10 of Sch 1 of the Taxation Administration Act 1953 (Cth) (“the TAA 1953”), the tax liabilities which were eligible for release and those that cannot be released are listed. At the date of his objection, Mr Hulsen was listed by the Commissioner as having the following eligible and ineligible tax liabilities:
Type of liability Period Total Liability Eligible Liability Income tax 2008 15,051.16 15,051.16 Eligible general interest charge (“GIC”) 11,288.26 11,288.26 ITI associated with lodged returns 2008-2012 16,836.00 16,836.00 Eligible GIC 7,111.57 7,111.57 ITI associated with unlodged returns September 2012 159.00 159.00 Ineligible liabilities
Goods and Service Tax
Income tax withholding
failure to lodge penalties
12/06-3/13
12/06-3/07
38,222.59
1,225.00
8,800.00
nil
nil
nil
Ineligible GIC 3,590.35 nil Total 103,283.93 50,445.99
Mr Hulsen does not dispute that categorisation or the amounts listed as eligible or ineligible liabilities. As at the date of the hearing, Mr Victor Tse, for the Commissioner, submitted that the total of Mr Hulsen’s debt was $129,806.37 comprising $52,458.49 and $77,347.88 of eligible and ineligible liabilities, respectively. Again, this was not disputed by Mr Hulsen.
The issue for determination is whether Mr Hulsen may be released from his eligible liabilities under s 340-5(3) of Sch 1 of the TAA 1953 which provides that an individual may apply for release, in whole or part, from tax liability on the ground that he would suffer “serious hardship” if he were required to satisfy the liability. The Commissioner’s decision was that the threshold test of serious hardship was not met. If it were met, it would still be necessary to determine whether to exercise discretion to release Mr Hulsen from his liabilities.
MR HULSEN’S SUBMISSIONS
Mr Hulsen does not dispute the Commissioner’s calculations concerning his liabilities. He accepted that only the eligible liabilities may be the subject of release but submitted that he would suffer serious hardship if he were not released from them. He contended that he had a flawless record in relation to tax matters until around 2008 when he experienced a breakdown in his marriage, difficulties in his dealings with his then wife concerning various matters including arrangements for their children and health problems associated with those matters. Mr Hulsen, who was self-employed in a concrete tank construction business from 2004 until 2012, had financial problems in part because of an injury to his right arm which prevented him from undertaking the necessary work of the business. He submitted that any consideration of his history with the Australian Taxation Office (“ATO”) should look to his entire record and not just the recent years of
non-compliance.
From 1 October 2012, Mr Hulsen has owned and operated an aquarium shop (“Aquapets”). He purchased Aquapets through a vendor finance arrangement in which he makes repayments on his debt of $32,000 from his business takings. The business was badly run down and his efforts have been directed to rebuilding it and improving his holdings of stock. As a result, his monthly takings have continued to improve.
He submitted that release from his eligible liabilities would enable him to repay the outstanding ineligible liabilities. He is willing to sell his house which, after the settlement of his mortgage obligations, would enable him to make a payment in the order of $50,000 to the ATO. He submitted that his business profits would enable him to make weekly payments sufficient over a few years, to discharge his outstanding debt.
He referred to recent payments of $100 per week to the ATO and he submitted that he would be able to increase that to $150 or more depending on the profitability of Aquapets.
Mr Hulsen conceded that, in recent years, he had discharged some of his obligations other than those he owed to the ATO. This included payments under his vendor finance arrangements as well as to the finance company GE, which financed his purchase of various household items. He explained that, on separation, his wife took most of their furniture and essential items such as a refrigerator and washing machine. He borrowed from GE but the loan was interest free for 12 months and, to take advantage of that, he made repayments on that loan. He continues to make these payments at $50 per fortnight.
EVIDENCE
Mr Hulsen lives in a house with his daughter aged 13 years. He has two other daughters, one of whom lives with his former wife and for whom he pays child support.
He purchased his house in 1994 for $70,000. It is a 50 year old timber and asbestos building which was moved to a bush block about 15 years ago and which has bare timber floors and front steps which are falling apart. The house needs painting and is not connected to the telephone or power grid as he runs a generator and has some solar panels. His estimate of current value is $95,000. The house purchase was financed through the Commonwealth Bank with a loan of $63,000 and the current loan balance is $62,000. He advised that he owned an unregistered 1995 Ford F100 which he valued at $2,000. He and his son share the ownership of a boat which he described as an “old tinny” valued at $1,000. Those were the only assets listed by him in his application for release. He has two accounts with the Bank of Queensland with balances of $9 and $200. In his application for release form, he wrote that he had an outstanding debt of $2,334.06 to GE.
In a document completed on 19 December 2013, Mr Hulsen listed, as part of his fortnightly income, $330 in family tax benefit. He listed his fortnightly expenses as:
Item Amount ($) mortgage 250 food and household expenses 350 household repairs and maintenance 20 electricity and gas 20 telephone 15 water, council rates 25 clothing 20 vehicle registration and insurance 30 vehicle repairs, maintenance, petrol, oil 200 school fees and other educational expenses 25 medical, dental or pharmacy 10 child support or maintenance 50 hire purchase payments, 50 Entertainment 20 Tax department 200 internet; vehicle loan repayments or leasing charges; fares; household insurance; health insurance; life insurance, sickness or accident insurance, superannuation contributions, child care, loan repayments, credit card repayments 0 Total 1,285
Mr Hulsen provided no supporting documentation for those income and expenditure details. Nonetheless, Mr Tse conceded that this assessment of expenses was reasonable. On 14 February 2014, Mr Hulsen provided the following documentation relating to Aquapets and himself:
Adrian Hulsen
Trading as Adrians Aquapets
Profit and Loss Statement
For the period 01 October 2013 to 31 December 2013
Income $ $ Sales 20,073 Less costs of goods sold Opening stock 11,500 Purchases 8,464 19,964 Closing stock 11,500 8,464 Gross profit 11,609 Less expenses Rent 2,550 Electricity 826 Telephone 357 Insurance 388 Bank charges 156 Sundry expenses 453 4,730 Net profit 6,879
Based on those figures, Mr Tse submitted and Mr Hulsen agreed that Mr Hulsen’s fortnightly income from Aquapets was $1,146.50[1] which, with family tax benefit, gave a total fortnightly income of $1,476.50. With expenses at $1,285 per fortnight, Mr Tse submitted and Mr Hulsen agreed that this provided an excess of income over expenditure of $191.50.
[1] Net profit for the December quarter of $6,879 divided by 6 (fortnights).
Adrian Hulsen
Trading as Adrians Aquapets
Profit and Loss Statement
For the year ending 30 September 2013
Income $ $ Sales 84,429 Less costs of goods sold Opening stock 0 Purchases 65,159 65,159 Closing stock 11,500 53,659 Gross profit 30,770 Less expenses Rent 8,500 Electricity 2,391 Telephone 1,476 Insurance 1,331 Bank charges 437 Sundry expenses 565 14,700 Net profit 16,070
Adrian Hulsen
Trading as Adrians Aquapets
Statement of assets and liabilities
as at 10 February 2014Assets $ $ Bank account 252 Stock – dry goods 7,000 Stock – live fish 4,500 Plant and equipment 32,000 Electricity deposit 700 Total assets 44,452 Liabilities Vendor loans 29,200 Trade creditors 4,568 Total liabilities 33,758 Net assets 10,685
Adrian Hulsen
Personal Statement of assets and liabilities
as at 10 February 2014Assets $ $ House and land 95,000 Furniture 2,000 Motor vehicle (F100 not registered) 1,500 Old tinny 1,000 Timber etc at home 2,000 Total assets 101,500 Liabilities House mortgage 62,355
Child support 12,823 GE credit line 1,419 ATO 105,370 Total Liabilities 181,967 Net liabilities 80,467
Mr Hulsen also provided a record of his gross income per month from Aquapets from October 2012 to January 2014:
GROSS INCOME Month $ October 2012 2,538.75 November 2012 5,066.50 December2012 6,250.17 January 2013 6,031.87 February 2013 8,962.30 March 2013 9,841.45 April 2013 8,332.85 May 2013 7,717.10 June 2013 6,056.35 July 2013 8,826.20 August 2013 7,444.60 September 2013 6,460.95 October 2013 8,099.00 November 2013 6,206.20 December 2013 7,776.15 January 2014 10,191.30
Valuations of Mr Hulsen’s house and land were provided by George Pyziakos from Central Realty Gin Gin, and Mr M Kelly from Ray White. Mr Pyziakos noted the poor condition of the house and valued the property as vacant land worth $80,000 to $90,000. Mr Kelly noted the unfinished nature of the house and fitting of solar power and estimated that, for a certain type of buyer, it would realise $130,000 to $140,000 on the open market but that, at auction, it would bring $80,000 to $100,000.
In a medical report, dated 10 February 2014, from Dr Riazal Ali, Mr Hulsen’s treating doctor, described him as suffering from depression for many years and he noted that he ruptured his right biceps tendon in May 2012. An ultrasound of Mr Hulsen’ right elbow, dated 1 May 2012, revealed “evidence of distracted right biceps tendon at elbow level with evidence of bursal fluid deep to the tendon”.
Mr Hulsen said that he was in receipt of the disability support pension about 10 years ago because of a back injury and severe headaches. He suffers from depression and his arm injury makes physical work difficult. Mr Hulsen has had ongoing disputation with his former wife over care of their two daughters. He has an outstanding amount of child support payments which he estimates is $12,823. From May 2008, he had both children living with him for 18 months even though he was still liable to pay child support to the mother for the both of them during that time. Mr Hulsen remarried in November 2010 but the marriage ended in January 2012.
On 4 December 2013, the Commissioner commenced proceedings in the Magistrates Court of Queensland against Mr Hulsen to recover a debt of $50,637.94 together with other amounts related to further general interest charge under the TAA 1953 and costs. Mr Hulsen advised that he did not intend filing a defence to that claim which relates only to that part of his debt which comprised ineligible liabilities.
CONSIDERATION
The Commissioner’s power to release a taxpayer from certain tax liabilities is set out in Division 340 of Sch 1 of the TAA 1953 of which s 340-1 reads:
The Commissioner may release you from a particular liability that you have incurred if you are an individual, or a trustee of the estate of a deceased person, and satisfying the liability would cause serious hardship.
It is not in dispute that the liabilities that may be the subject of release in this matter are the eligible liabilities listed above.[2]
[2] See paragraphs 2 and 3 (above).
Under s 14ZZK(b)(i) of the TAA 1953, Mr Hulsen bears the onus of proof in this matter[3] and the standard of proof is on the balance of probabilities.[4] The Commissioner’s ordinary powers of investigation to obtain information and evidence, which are set out in Division 353 of Sch 1 of the TAA 1953, do not apply to matters of release from taxation liability.[5] For matters relating to release, the onus is on Mr Hulsen “to furnish sufficient information for the Commissioner to be satisfied that a release from liabilities would be appropriate”.[6]
[3] See Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614 and Federal Commissioner of Taxation v ANZ Savings Bank Ltd (1994) 94 ATC 4844.
[4] Minister for Immigration and Ethnic Affairs v Pochi (1980) 4 ALD 139; and Kirby and Collector of Customs (1989) 20 ALD 369.
[5] Citing ss 353-10(1)(a)(i) and (b)(i) of Sch 1 of the TAA Act.
[6] Citing the Explanatory Memorandum to the Taxation Laws Amendment Bill (No 6) 2003 at [4.28]. For application, see s 15AB(2)(e) of the Acts Interpretation Act 1901(Cth).
The TAA 1953 provides no guidance on the meaning of the term “serious hardship”. [7] However, the Commissioner has issued a Practice Statement, PS LA 2011/17
[7] See Powell v Evreniades and Ors (1989) 87 ALR 117 at 122-3 and a summary of relevant cases in Thomas and Commissioner of Taxation [2014] AATA 102 at [19], [20].
(“the Practice Statement”), on the subject of debt relief. This provides guidance to those who administer the TAA 1953.[8] In part, it reads:
Release decision - determining serious hardship
23. It is recognised that the payment of tax may require a degree of restraint in regard to expenditure on other goods or services. However, payment of tax at the prescribed rate will not usually create a situation of serious hardship. In some circumstances, however, financial losses or other adverse factors may limit a person's capacity to pay to such an extent that the impact of payment of the tax will amount to serious hardship.
24. Section 340-5 of Schedule 1 to the TAA allows the Commissioner to release certain liabilities due to serious hardship. The term 'serious hardship' is not defined at law and must be given its ordinary meaning. The ATO applies several tests to determine whether serious hardship exists. The object of the tests is to determine whether the consequences of paying the tax would be so burdensome that the person would be deprived of what are considered necessities according to normal community standards.
25. Serious hardship would be considered to exist where payment of a tax liability would result in the person being left without the means to afford food, clothing, medical supplies, accommodation, education for children and other basic requirements at a reasonable level. On the other hand, elements of hardship may be regarded as marginal or minor rather than serious, if the consequences of payment of the tax are seen, for example, as a limitation of social activities or entertainment, or loss of access to goods or services of a more discretionary nature.
26. As a first step in considering an application for release, the ATO must determine the person or persons to be included in the assessment of serious hardship factors. The assessment of serious hardship is not limited only to the person's present circumstances. The person's future ability to provide food and clothing, for family members or others for whom the person has responsibility may also be considered.
27. Conversely, although a person's immediate situation may suggest inability to meet the combined total of the tax debt and family expenditures, that factor will not indicate serious hardship if the income or asset positions of other members of the family suggest that the person cannot reasonably be regarded as responsible for all relevant outgoings. For example, the separate earnings, allowances or benefits received by other family members may be relevant to an assessment of the person's overall financial circumstances.
[8] As to the appropriateness of the Tribunal’s reliance on documents such as the Practice Statement, see Drake and Minister for Immigration and Ethnic Affairs (No. 2) (1979) 2 ALD 634 at 639-645 per Brennan J (President) and Minister for Immigration, Local Government and Ethnic Affairs v Roberts (1993) 41 FCR 82 at 86 per Einfeld J.
Subject to those general considerations, the Practice Statement sets out two means by which to evaluate the merits of individual serious hardship cases. These are the income/outgoing tests[9] and the assets/liabilities tests.[10] The Practice Statement also lists under the heading “Other factors”, the matters to be taken into account when, having found serious hardship, determining whether to exercise the discretion to release the tax payer from liability.[11]
[9] Paragraphs 29-31 of the Practice Statement.
[10] Paragraphs 32-36 of the Practice Statement.
[11] Paragraphs 37, 38 of the Practice Statement.
The income/outgoing tests quantify the taxpayer’s capacity to meet the tax liability from current income. The Practice Statement reads:
29. … The tests in sequence are:
(i) What is the person's capacity to pay, based on the income and outgoings provided in the application or supporting documents and what net income remains after deducting total outgoings from total income?
(ii) Does the ATO accept that the income and outgoings stated are accurate and that the outgoings are necessary, or is there scope to increase the net income available or to reduce outgoings to meet the tax debt without undermining the person's ability to maintain a reasonable standard of living?
(iii) If there is a margin by which available income exceeds reasonable outgoings, is it sufficient to allow the liability to be met within an acceptable time frame?
30. In relation to the second test in subparagraph 29(ii) of this practice statement, evidence that suggests a person incurs above-average expenditure on food, clothing or services, a high level of private travel or entertainment expenses, or payments for leisure goods such as caravans, boats and higher-priced motor vehicles would usually lead the ATO to a conclusion that capacity to pay exists. Within this test, the ATO also seeks to determine whether there is discretionary expenditure that could be reduced or deferred to improve capacity to pay the tax debt.
31. For the purposes of the third test in subparagraph 29(iii) of this practice statement, the ATO generally takes a two to three year payment span as an initial yardstick. Capacity to pay at a limited rate which would not see the debt cleared in two to three years that would be a factor indicating that granting of partial release may be appropriate.
Mr Tse and Mr Hulsen agreed, and I am reasonably satisfied, that on the documentation provided by Mr Hulsen, his fortnightly income exceeds his reasonable fortnightly expenditure by $191.50. His reasonable expenses include a fortnightly payment of
$200 to the ATO in respect of his debt. In the event that he was released from the debt relating to eligible liabilities, he foreshadowed that he would be able to increase this to $300 per fortnight for the debt relating to ineligible liabilities. At that repayment rate,
Mr Hulsen’s annual repayments would be in the order of $7,800. Over the two to three year time-frame noted above in the Practice Statement, Mr Hulsen would be unable to discharge his debt which currently stands at $77,347.88. I am satisfied that this would be the case even if Mr Hulsen sold his house and applied the proceeds, after discharging his mortgage obligations, to the ATO debt.The assets/liabilities tests are concerned with determining whether the taxpayer's equity in assets indicates capacity to pay the tax debt and it may also be necessary to consider whether the acquisition of assets has unreasonably been put ahead of meeting tax liabilities.[12] The Practice Statement reads:
[12] See paragraph 32 of the Practice Statement.
33. There are several types of assets which the ATO would generally regard as normal and reasonable possessions, and which would not be expected to be surrendered or sold to meet revenue debts. Subject to the proviso that values are modest rather than extravagant, those assets include:
·ownership of, or equity in, a residential property which is the person's home
·a motor vehicle
·furniture and household goods
·tools of trade, and
·cash on hand or bank balance sufficient to meet outgoings for necessities or other reasonable expenditures, for example, funds put aside by aged persons to cover funeral expenses.
34. Other assets such as caravans (except where a caravan serves as the person's residence), holiday homes, luxury motor vehicles, boats, substantial life assurance or annuity entitlements, shares and other investments will generally be regarded by the ATO as indicating capacity to pay, through either disposal or use as security for borrowings, without involving serious hardship.
35. Generally, the ATO would also need to be satisfied that assets have been valued realistically, and liabilities are accurately recorded. Where doubts arise in relation to these aspects, the ATO may seek clarification of the basis of valuation, or of other information. However, certified valuations from professional valuers will not normally be required.
36. In relation to liabilities, in some cases the ATO will consider whether deferment or rescheduling of a person's commitments is a viable option. Where a person's asset position indicates untapped borrowing capacity, the likely quantum of repayments arising will, in turn, have a bearing on the outcome of the income/outgoings tests discussed earlier.
Mr Hulsen’s asset holdings are not substantial in financial terms. Chief amongst these is his residential property where he lives. While that may not usually be considered, for surrender or sale to meet debts, Mr Hulsen indicated a willingness to sell the property. The condition of Mr Hulsen’s house may enable him to realise an amount of $95,000 which, after the discharge of his mortgage of $62,000, would leave him with an amount of approximately $33,000 to pay towards his tax debt. No estimate of the value of Aquapets was in evidence but a business bank account, stock, plant, equipment and his electricity deposit are valued by Mr Hulsen at $44,452. Clearly the sale of his house and his business would leave Mr Hulsen having to find rented premises for himself and his daughter and he would be without an income from the business. Even if all of his assets were sold, it is unlikely that the realised amount would satisfy the liability in relation to his eligible liabilities. The information about his personal bank accounts is that the total in the Bank of Queensland is approximately $200. Significantly, in addition to the ATO debt, Mr Hulsen has other undischarged debts listed in his latest statements as $62,355 on his house mortgage, $1,419 to GE, $12,823 to the
Child Support Agency and $29,200 to the vendor of Aquapets.On the application of each of the tests set out in the Practice Statement, I am satisfied that Mr Hulsen is in serious hardship as that term is used in s 340-1 of Sch 1 of the TAA 1953. That does not necessarily mean the release of his obligations will be granted. Consideration must be given to whether the discretion to do so should be exercised. In that regard, the Practice Statement reads:
37. Apart from the financial factors discussed in preceding paragraphs, the ATO may consider additional factors when evaluating cases. Some could have a bearing on the ATO's decision while others, though offered as grounds warranting release, may not be relevant.
38. If the ATO decides that payment of a releasable liability (see paragraph 6 of this practice statement) will cause serious hardship, the next step in the decision making process is to decide whether or not to grant a release. If serious hardship is established, the ATO is not bound to grant release (Corlette v. Mackenzie 96 ATC 4502; (1996) 32 ATR 667). Nevertheless, it is clear that the ATO is obliged to act reasonably and responsibly, and should not act arbitrarily or capriciously. Examples of situations in which the ATO may decide against granting release, even though implications of serious hardship may be drawn, are:
· where it appears that the person has, questionably or otherwise, disposed of funds or assets without making proper provision to meet tax liabilities
· where the granting of release would not result in reduction of hardship, such as where the person has other liabilities or creditors to such an extent that release from the tax debt will not relieve hardship
· where the person has used available funds to discharge debts due to other private creditors in preference to debts due to the ATO
· where the person has used available funds to discharge debts due to other business creditors where those payments are not considered reasonably necessary to maintain the viability of the business and could be considered as unfair preference payments to the detriment of the ATO
· where the person, without good reason, has failed to pursue debts due to them, or to seek possible contributions from insurers, or persons with joint responsibilities for debts
· where serious hardship is associated with a single event or short term outcome, such as might be encountered in the more speculative or seasonal business undertakings where the effects are likely to be only short term
· where the person has a poor compliance history, and
· where the person is unable to demonstrate that they have made provision for future.
I am satisfied that Mr Hulsen has not disposed of funds or assets without making proper provision to meet tax liabilities, has not failed to pursue debts due to him and has not failed to seek possible contributions from other persons. The hardship faced by
Mr Hulsen does not bear the character of an association with a single event or one with a short term outcome. Over some years, he had to deal with family disputation which had financial as well as psychological consequences and also an injury to his arm which impacted heavily on his capacity to maintain his concrete tank business.Mr Hulsen conceded that he had prioritised the payments of debts other than those owed to the ATO. In particular, this was the case with his payments to GE in relation to his household goods. From the time he completed his application for release until he provided the recent documentation on 14 February 2014, the debt decreased from $2,334.06 to $1,419. His explanation for doing so to gain the benefit of an interest free repayment period appears reasonable but, nevertheless, by doing so he gave preference to GE over the ATO. His debt in relation to vendor financing also reduced over that period from $32,000 to $29,200.
Mr Tse submitted that Mr Hulsen has a poor compliance history in relation to his dealings with the ATO. Certainly, that is the case since 2008. Indeed, Mr Hulsen conceded this. However, he said that his entire history should be considered and that, from the time that he commenced work in 1978 when he was 15 years of age, he had a good compliance history. There was no evidence before me in relation to that long time-frame of Mr Hulsen’s dealings with the ATO. What is unchallenged is that, in seven of the last nine years, he has made late lodgement of his income tax returns and 34 of his last 36 business activity statements were lodged late. Also, he has only begun to make repayments of his debts at the rate of $200 per fortnight. That history cannot be ignored and I am satisfied that Mr Hulsen has had a poor compliance record over recent years.
The prioritising of debts and Mr Hulsen’s poor compliance record vitiate against the exercise of discretion in his favour. However, the most significant factor that leads me to the conclusion to refuse the grant for release which Mr Hulsen is seeking is that I am satisfied that the release would not result in reduction of his hardship. He has debts to other creditors in excess of $40,000. The sale of his house for $95,000 and mortgage repayment of $62,000 is likely to result in some $33,000 and would leave him with a substantial shortfall amount and a need to continue discharging his debts to the other creditors. I am satisfied that Mr Hulsen has not discharged the onus of proof to enable him to be released from his tax obligations.
DECISION
The Tribunal affirms the Objection Decision.
I certify that the preceding 31 (thirty-one) paragraphs are a true copy of the reasons for the decision herein of Mr R G Kenny, Senior Member ........................Sgd............................................
Associate
Dated 4 April 2014
Date of hearing 11 March 2014 Applicant In person Solicitors for the Respondent Victor Tse, Australian Taxation Office
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