Kidd and Commissioner of Taxation (Taxation)

[2020] AATA 4801

Kidd and Commissioner of Taxation (Taxation) [2020] AATA 4801 (30 November 2020)

Division:TAXATION AND COMMERCIAL DIVISION

File Number:          2019/6906

Re:Douglas Kidd  

APPLICANT

AndCommissioner of Taxation

RESPONDENT

DECISION

Tribunal:Member D Mitchell

Date:30 November 2020

Place:Brisbane

The Tribunal affirms the decision under review.

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

Member D Mitchell

CATCHWORDS

TAXATION – application for release from tax debt refused – whether taxpayer would suffer serious hardship if required to satisfy tax debts – whether household income should be taken into account – whether discretion to release debt in part or in full should be exercised – decision under review affirmed

LEGISLATION

Administrative Appeals Tribunal Act 1975 (Cth)

Income Tax Assessment Act 1997 (Cth)
Taxation Administration Act 1953 (Cth)

CASES

Commissioner of Taxation and A Taxpayer [2006] FCA 888

Commissioner of Taxation v Milne (2006) 153 FCR 52
Corlette and Another v Mackenzie and Others (1996) 62 FCR 597
Powell v Evreniades (1989) 21 FRC 252
Re Filsell and Commissioner of Taxation [2004] AATA 1012
Van Grieken v Veilands (1991) 21 ATR 1639

SECONDARY MATERIAL

Practice Statement Law Administration 2011/17: Debt relief, waiver and write off

REASONS FOR DECISION

Member D Mitchell

30 November 2020

INTRODUCTION

1. Mr Douglass Kidd (the Applicant) is seeking review of an objection decision of the Commissioner of Taxation (the Respondent) dated 27 August 2019.[1]

   [1]    Exhibit 1, T Documents, T5, page 52, Notice of Objection Decision; and T2, pages 7-10, Reasons for Decision.

2. The reviewable objection decision disallowed the Applicant’s objection to a decision not to grant him a release from his personal taxation liability of $5,644.29 which relates to a Notice of amended assessment for the income year ended 30 June 2018 (the 2018 year). The reviewable decision was made on the basis that the Respondent considered that the Applicant did not satisfy the criteria for hardship release.

   BACKGROUND

3. The Applicant and his partner have four children, one biological child and three foster children ranging between five and twelve years of age.[2]

   [2]     Exhibit 2, Supplementary T Documents, ST6, page 15, Department of Finance Statement of Financial      Details form complete by the Applicant.

4. The Applicant and his family live in rented accommodation.[3]

   [3]     Exhibit 2, Supplementary T Documents, ST6, page 18, Department of Finance Statement of Financial      Details form complete by the Applicant.

5. The Applicant is presently employed by QLD Health on a temporary full-time basis.[4]

   [4]     Exhibit 2, Supplementary T Documents, ST6, page 16, Department of Finance Statement of Financial      Details form complete by the Applicant.

6. An amended assessment of income tax for the 2018 year was issued on 1 April 2019 to the Applicant to include amounts of wages paid to him of which he had not recorded in his original income tax return. This resulted in an income tax liability (which included a small shortfall interest charge) of $5,644.29 (tax debt) being raised against the Applicant.[5]

   [5]     Exhibit 2, Supplementary T Documents, ST2, pages 3-6, Applicant’s Notice of Amended Assessment     for the 2018 financial year.

7. The Applicant requested a release from the tax debt from the Respondent by phone on 23 April 2019 on the grounds of financial hardship.[6] On the same day the Respondent made a decision not to grant the Applicant a release of the tax debt.[7]

   [6]     Exhibit 2, Supplementary T Documents, ST3, pages 7-9, Respondent’s notes relating to the application   of release by phone from the Applicant.

   [7]     Exhibit 1, T Documents, T3, pages 11-12, Notice of Release Decision.

8. The Applicant objected to the decision not to release him from the tax debt, providing a statement, payslips and bank account statements.[8]

   [8]     Exhibit 1, T Documents, T4, pages 13-51, Applicant’s letter of objection and attachments.

9. On 27 August 2019, the Respondent disallowed the Applicant’s objection.[9] The Respondent summarised the reasons for their decision as follows:[10]

   26. You have met the income/outgoings and assets/liability tests, but did not meet           criteria for the other relevant factors test. As you have not satisfied all three    tests, you have not satisfied the criteria for hardship release.

   27. We acknowledge your personal circumstances as stated in your objection;      however release decisions are solely based on the stringent yet balanced     requirements of serious hardship, so as to substantiate differential treatment to those taxpayers who, despite the struggle, pay their taxes.

   28. All taxpayers have a responsibility to manage their affairs to ensure they meet           their tax obligations. Granting you a release would give you an advantage   over other taxpayers who have lodged and paid on time.

   29. Therefore, based on the relevant hardship tests, we have determined that the            original decision to refuse to release you from your tax debt is correct.

   [9]     Exhibit 1, T Documents, T5, page 52, Notice of Objection Decision; and T2, pages 7-10, Reasons for      Decision.

   [10]    Exhibit 1, T Documents, T2, page 10, Reasons for Decision.

10. The Applicant sought review of the Respondent’s objection decision by this Tribunal by way of an application made on 22 October 2019.[11]

    [11]    Exhibit 1, T Documents, T1, pages 1-6, Application for Review.

11. By consent it was agreed that this matter could be adequately determined in the absence of the parties. The Tribunal agreed to review the objection decision in accordance with section 34J of the Administrative Appeals Tribunal Act1975 (Cth). As such, a hearing was not conducted in this matter, the Tribunal’s decision has been reached “on the papers” having considered the documents filed by the parties.

12. The Tribunal admitted into evidence and considered the following:

    ·Exhibit 1, T Documents – Section 37 T-Documents (pages 1 to 52).

    ·Exhibit 2, Supplementary T-Documents – Supplementary Section 37 ST -Documents (pages 1 to 191).

    ·Exhibit 3, Respondent’s Statement of Facts, Issues and Contentions and Submissions, dated 17 June 2020 (pages 1 to 17).

    ·Exhibit 4, Applicant’s Submission received by the Tribunal on 1 July 2020 (pages 1 to 6).

    THE LAW

13. The relevant law in this matter includes the Income Tax Assessment Act 1997 (Cth) (ITAA 1997) and the Taxation Administration Act 1953 (Cth) (TAA 1953).

14. Where a taxpayer is dissatisfied with an assessment, they may object against it in accordance with the requirements set out in Part IVC of the TAA 1953.

15. The Respondent must decide whether to allow, wholly or in part; or disallow, the taxpayer’s objection.[12]

    [12] Section 14ZY of the TAA 1953.

16. A taxpayer dissatisfied with the Respondent’s objection decision may apply to the Tribunal for a review of the decision or appeal to the Federal Court against it.[13]

    [13] Section 14ZZ of the TAA 1953.

17. Section 14ZZK(b)(ii) of the TAA 1953 provides that on application for review of a reviewable objection decision, the Applicant has the burden of proving that the taxation decision should not have been made or should have been made differently.

18. 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 income tax liabilities they have incurred if satisfying the liability would cause serious hardship.[14]

    [14] Sections 340-1, 340-5, 340-10 of the TAA 1953.

19. 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.

1. Section 340-10 of Schedule 1 to the TAA 1953 outlines the taxation liabilities to which section 340-5(3) applies. Relevantly to this matter taxation liabilities include income tax payable under section 4-1 of the ITAA 1997 and administrative penalties in relation to income tax set out in part 4-25 of Schedule 1 to the TAA 1953.

2. There is no dispute that the taxation debt the Applicant is seeking to be released constitutes a taxation liability for the purposes Division 340 of Schedule 1 to the TAA 1953.[15]

   [15]    Exhibit 3, Respondent’s Statement of Facts, Issues and Contentions and Submissions, dated 17 June      2020, paragraph 35.

3. The TAA 1953 does not provide a definition of what constitutes serious hardship. This concept in relation to taxation debts has been considered in a number of Court and Tribunal decisions. It is accepted that the term “serious hardship” has its ordinary meaning.

4. In Commissioner of Taxation and A Taxpayer [2006] FCA 888, Stone J approved the principles established by Hill J in the case of Powell v Evreniades (1989) 21 FRC 252.  Stone J stated:

   …. that ‘‘serious hardship’’ is itself the test that has to be applied to an applicant’s circumstances to decide if that applicant is eligible for relief from a tax debt. There is no other test, although there may be issues about which factors, in the particular circumstances, are or are not relevant to this determination. It is because the assessment is based so squarely on the individual circumstances that Hill J in Evreniades thought it was inappropriate to try and identify, in the abstract, the circumstances that would give rise to serious hardship.

   .… In Evreniades, Hill J gave such an example when he recognised that there would be ‘‘severe financial hardship’’ if persons were left ‘‘destitute without any means of support’’. The Taxation Ruling gives a similar example when it says that there would be serious hardship if a taxpayer were left ‘‘without the means to achieve reasonable acquisitions of food, clothing, medical supplies, accommodation, education for children and other basic requirements’’. I do not see any inconsistency in these examples. Effect must be given to the qualification of ‘‘reasonable’’ in the Taxation Ruling and, consistently with the reasoning of Hill J, these examples do not exclude the possibility that something less than destitution will constitute serious hardship. Whether this is so depends on the particular circumstances of each case.[16]

   …..

   Implicitly, the Tribunal was assessing the respondent’s individual circumstances by reference to normal community standards.[17]

   [16]    Commissioner of Taxation and A Taxpayer [2006] FCA 888 at [16]-[17].

   [17]    Commissioner of Taxation and A Taxpayer [2006] FCA 888 at [55].

5. It is clear that in assessing whether “serious hardship” is established consideration must be given to whether the taxpayer, if required to pay the tax debt would experience financial difficulties which are serious, however not necessarily at the level of causing destitution. 

6. It has been established that in determining the issue of serious hardship consideration of the financial situation of the taxpayer includes their financial relations with other members of their household. This principle was outlined by Gummow J in Van Grieken v Veilands (1991) 21 ATR 1639. When considering whether the taxpayers financial relationship with his wife, son who was living at home and family business being run from home was an irrelevant consideration, Gummow J provided at 1646:

   But the determination of whether the exaction of the full amount of the tax would entail serious hardship properly involves a consideration of the financial affairs of the taxpayer, including his financial relations with the other members of his household, and with any family company.

7. The Respondent has issued Practice Statement Law Administration 2011/17: Debt relief, waiver and write off (PSLA 2011/17) which provides guidance to its officers in relation to making decisions pursuant to applications made under section 340-5 of Schedule 1 to the TAA 1953. Relevantly clause 8 provides:

   8. Definition of serious hardship

   ‘Serious hardship’ is given its ordinary meaning.

   We consider serious hardship to exist where the payment of a tax liability would result in a person being left without the means to afford basics such as food, clothing, medical supplies, accommodation or reasonable education.

   We have tests to apply in helping you decide 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.

   These tests are:

   ·            the income/outgoings test

   ·the assets/liabilities test

   ·            other relevant factors.

8. Finding that serious hardship exists however does not end the matter. Authorities have established that there is a two stage approach that should be applied in determining whether the discretion to release should be exercised. In Re Filsell and Commissioner of Taxation [2004] AATA 1012 at [14] Member Trowse provided:

   In the Tribunal’s opinion, the language of the legislation requires a two stage approach. First, the decision-maker must decide whether the settlement of the liability will result in serious hardship. If that decision is favourable to the applicant, the discretion offered by sub-section 340-5(3) then falls for consideration.  In reaching the decision to release in whole or part, the question to be addressed is whether, in all the circumstances, it is just and proper to provide the requested relief. Matters pertaining to the incident and consequence of the tax and the effect of its exaction upon the affairs of the person will hear upon the issue of whether the relief is just and proper. Support for the two stage approach is to be found in the decision of the High Court in Rex v Trebilco; ex parte F.S. Falkiner & Sons Ltd (1936) 56 CLR 20.

9. The approach outlined by Member Trowse has been cited and applied in the Federal Court in Commissioner of Taxation v Milne (2006) 153 FCR 52 and Commissioner of Taxation and A Taxpayer [2006] FCA 888 and also in a number of Tribunal decisions.

10. It is clear that where the Tribunal finds that serious hardship would be experienced, it must then consider whether the discretion to release the taxpayer from the liability in their favour.  It is a matter of discretion for the Tribunal rather than a right for an Applicant.[18]

    [18]    As per Wilcox J in Corlette and Another v Mackenzie and Others (1996) 62 FCR 597 at 598.

    ISSUES

11. The issue before the Tribunal is whether the Applicant’s tax debt of $5,644.29 in relation to the 2018 year should be released in part or in full, pursuant to section 340-5 of Schedule 1 to the TAA 1953.

12. To determine whether the Applicant’s tax debt should be released, the Tribunal must consider whether:

    (a)the Applicant would suffer serious hardship if he were required to pay the tax debt; and

    (b)if so, should the discretion to release him in full or in part for that tax liability be exercised?

    APPLICANT’S EVIDENCE AND CONTENTIONS

13. Through out the process of applying for a release from his tax debt and the subsequent objection and application to the Tribunal, the Applicant has provided details of his income, expenses, assets and liabilities which included payslips and banks statements and were supported by written submissions. The Applicant also provided details during the Tribunal process in relation to the payments received by his partner together with bank statement details.

14. The Tribunal notes that throughout the process the income and expenditure amounts disclosed by the Applicant have changed. The Tribunal acknowledges that this has been highlighted by the Respondent,[19] however for the purposes of this decision the Tribunal considers it only necessary to detail the most current information provided.

    [19]    Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions and Submissions, page 4, paragraphs 20-21.

15. In his written submission to the Tribunal (received on 1 July 2020) the Applicant referred to his income being an average of $2,100.00 per fortnight.[20] In the Statement of Financial Details form completed by the Applicant he outlined that his net fortnightly income after tax was $1,943.06.[21]

    [20]    Exhibit 4, Applicant’s submissions received by the Tribunal on 1 July 2020, page 1.

    [21]    Exhibit 2, Supplementary T Documents, ST6, page 16, Department of Finance declaration form completed          by the Applicant.

16. The most up to date details provided by the Applicant in relation to his expenditure was provided in his written submission to the Tribunal (received on 1 July 2020) outlining the following fortnightly family expenses:[22]

    [22]    Exhibit 4, Applicant’s submissions received by the Tribunal on 1 July 2020, page 3.

Expense Description	Amount per fortnight
Rent	$600.00
Power bill	$124.00
Gym fees for the Applicant and his wife (currently both locked into two year contacts)	$110.00
Internet	$32.00
Fuel for both cars	$160.00
Phone bill	$70.00
Gym Creche	$24.00
Credit repair (finance company)	$40.00
Car insurance	$48.00
Amazon prime	$3.50
Laptop repayment	$18.00
Upskill (relating to study being undertaken by his wife)	$72.00
Netflix	$9.00
Daycare Fees	$230.00
Groceries	$500.00
Fairwork Debt – instalment plan	$100.00
Money3 personal loan repayment (three-year contract)	$148.00
Professional Development Course (six month contract)	$184.00
TOTAL	$2472.50

1. The Applicant provided that this outline of expenditure “is a very open and honest account of our weekly family expenses which all of this is very unlikely to change in the next 12 months.”[23] Consequently the Tribunal is satisfied that these amounts remain relevant.

   [23]    Exhibit 4, Applicant’s submissions received by the Tribunal on 1 July 2020, page 3.

2. The Applicant’s partner receives fortnightly payments of Family Tax Benefit as at May 2020 of $789.60[24] together with Foster Payments which can vary, however based on the information before the Tribunal between June 2019 and May 2020 averaged $1,450.84.[25]  This equates to average fortnightly payments being received by the Applicant’s partner of $2,240.44.

   [24]    As seen at Exhibit 2, Supplementary T Documents, ST15, page 162, Spreadsheet of Applicant’s           partners bank transactions.

   [25]    Calculation set out at Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions and   Submissions, page 6, paragraph 23.

1. In the Statement of Financial Details form completed by the Applicant he outlined his and his wife’s assets which included motor vehicles, superannuation, bank balances and household furniture. The asset pool is minimal.[26] The monies owed by the Applicant were also provided and their repayments are outlined in the fortnightly expenses provided above.[27]

   [26]    Exhibit 2, Supplementary T Documents, ST6, pages 20-25, Department of Finance declaration form       completed by the Applicant.

   [27]    Exhibit 2, Supplementary T Documents, ST6, pages 18-19, Department of Finance declaration form       completed by the Applicant.

2. The Applicant contends that:[28]

   ·He currently earns an average of $2,100 per fortnight but that is never guaranteed, some fortnights he earns a lot less than that. He has 4 dependent children and his partner who is a stay at home mother to support. He currently has the responsibility to pay $2100.00 worth of expenses for my family out of my fortnightly wage.

   ·He has always been compliant with his personal taxation affairs.

   ·The source of the debt was not his fault, it was the fault of his employer at the time not paying the correct amount of tax to the ATO.

   ·He is of good character and this should be taken into consideration by the Tribunal. He is a returned serviceman, having served and been deployed as a member of the Royal Australian Navy. He is working full time but struggling to support his wife and family of four financially. Three of their children are foster children and they work very hard to support these children that have come from a disadvantaged background and history of abuse. He has always been an upstanding and law-abiding member of the community.

   ·In his current work role, he is only in a temporary position, so his employment is not guaranteed past January 2021.

   ·The claims by the Respondent that a company he was previously a director of displayed poor compliance with their taxation obligations are unsubstantiated and irrelevant to this matter.

   ·The payments received by his partner are not classified as income and the purpose of the payments are to meet the needs of the children in their care, and that covers only some of their ongoing living expenses. The purpose of these payments is not to repay debts that the ATO has claimed against your partner.

   ·The Foster Payments received by his partner is the base payment provided to all approved carers when providing direct care for a child cared for under the Child Protection Act1999 (Qld). It is also paid to long-term guardians and permanent guardians who were approved carers for the child prior to being granted long-term guardianship. It is paid fortnightly in arrears, at different rates depending on the age of the child. The allowance may not cover all costs associated with caring for a child, it is expected to help meet the day-to-day costs of caring.

   [28]    Exhibit 4, Applicant’s submissions received by the Tribunal on 1 July 2020, pages 1-5.

   RESPONDENT’S CONTENTIONS

3. The Respondent in their Statement of Issues, Facts and Contentions and Submissions dated 17 June 2020[29] provided analysis of the income, expenditure, asset and liability information provided by the Applicant in relation to this matter up to that date.[30] The Respondent noted that in the course of the application for release, the objection and these proceedings, the Applicant provided incomplete details of his fortnightly income and expenditure and of his financial relations with other members of his household.[31] The Respondent having provided analysis of the bank details provided by the Applicant suggest that they show that the Applicant has other accounts that have not been disclosed.[32]

   [29]    Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions and Submissions.

   [30]    Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions and Submissions, pages 4-5,         paragraph 21.

   [31]    Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions and Submissions, pages 4-6,         paragraphs 20-23.

   [32]    Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions and Submissions, pages 6-9,         paragraphs 23-27.

4. The Respondent submits that the Applicant had not yet lodged his income tax return for the year ended 30 June 2019 and that although it was unable to conclusively determine the Applicant’s current taxable income, based on information reported to it, the Respondent estimates the Applicant’s taxable income to be approximately $90,350.00.[33]

   [33]    Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions and Submissions, page 10,           paragraph 29-30.

5. The Respondent contends that the Tribunal should not accept the Applicant’s contention that he would suffer serious hardship if he were to satisfy the tax debt.[34] The Respondent relies on the following submissions:[35]

   [34]    Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions and Submissions, page 16,           paragraph 62.

   [35]    Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions and Submissions, pages 11-16,     paragraphs, 40-61.

   ·The Respondent is unable to conclusively determine what the Applicant’s current taxable income is as he had not lodged his income tax return for the year ended 30 June 2019, however based on information available to it, estimates that the Applicant received $90,350.00 of salary and wages income in the 2019 year.

   ·The Applicant’s partner reported $26,384.00 in taxable income in her income tax return for 2019 derived from salary and wages. It is conceded that based on the bank statements provided to date it is likely that the Applicant’s partner is no longer receiving salary and wages and is only receiving the Family Tax Benefit and foster carer payments.

   ·The Applicant’s partner receives fortnightly payments of $789.60 of Family Tax Benefit.

   ·The Applicant and his partner received Foster Payments which when taking an average provide an additional $1,450.84 per fortnight to the household.

   ·The Respondent accepts that the Foster Payments are not income for tax purposes, those payments are to help reimburse the day-to-day costs of providing foster care, including, but not limited to, clothing, personal care items, energy and utility costs and household goods for the relevant foster child.

   ·The expenditure outlined by the Applicant include household expenses relating to the foster children. Accordingly, the foster payments should be included in calculating the household income for the purposes of this application because they are a source of funds available to the Applicant from which those household expenses are met.

   ·The household’s net fortnightly position is a surplus of approximately $1,650.99.

   ·In analysing the bank statements there are a number of instances where the Applicant deposits money into his partner’s account for household expenses. There are a number of noteworthy withdrawals from the Applicant and his partner’s bank accounts that while individually modest total a significant sum. The Respondent has not been informed of what those amounts were used for and it is not easily identifiable as to whether they have been applied to discretionary or non-discretionary purchases.

   ·In the absence of a detailed explanation by the Applicant in relation to these transactions, it is open for the Tribunal to conclude that it is indicative of the Applicant’s household having a surplus of income available to it to pay the tax debt.

   ·Given the modest amount of the tax debt, if some, if not all, of that surplus could have been used to satisfy the tax debt in a reasonable timeframe. If the Applicant applied $434.17 out of the surplus of $1,650.99 per fortnight to the tax debt it would be paid in 6 months.

   ·The income/expenditure test is not satisfied, as it is not unreasonable for the Applicant to use the surplus to pay his tax debt. Further if the Applicant were to lodge his income tax return for the 2019 year and receive a credit, the tax debt would be reduce resulting in a higher capacity to pay and less of the surplus being required.

6. The Respondent contended that should the Tribunal find that the Applicant would suffer serious hardship, that it ought not exercise the discretion to grant the release sought by the Applicant.[36] The Respondent relied on the following submissions:[37]

   ·The bank statements providing by the Applicant evidence a large amount of unexplained withdrawers of which at least some could have been directed to the tax debt and at the time of expenditure or at least after April 2019 the Applicant knew he had the tax debt.

   ·The Applicant has used available funds to discharge debts due to other private creditors in preference to debts due to the Respondent.

   ·The Applicant has recently exhibited a poor compliance history in that he has had an income tax debt since 2018, has made no payment towards the tax debt since lodging his application for release on 24 April 2019 and has not lodged his income tax return for the year ended 30 June 2019 which was due on 31 October 2019.

   [36]    Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions and Submissions, page 16,           paragraphs 63-66.

   [37]    Exhibit 3, Respondent’s Statement of Issues, Facts and Contentions and Submissions, pages 16-17,     paragraphs 67-74.

   CONSIDERATION

7. The Tribunal accepts the Applicant’s submissions that the disclosed income and expenditure was likely to remain stable for at least 12 months past the date of his submission made on 1 July 2020 and therefore relies on this information in assessing whether the Applicant would suffer serious hardship if he was required to pay the tax debt.[38]

   [38]    Powell v Evreniades (1989) 21 FCR 252 at 266.

8. The Tribunal accepts that the Applicant is of good character however the matter to be decided turns on whether the Applicant would suffer serious hardship if he was required to pay the tax debt in question.

9. Considering all of the evidence before it in totality the Tribunal is not satisfied that the Applicant would suffer serious hardship if he was required to pay the tax debt in question.

10. In considering the Applicant’s asset and liability position the Tribunal accepts that he does not have assets from which he could seek avenues from to satisfy his tax debt.

11. However, noting, based on the evidence before it that the income and expense amounts relating to the Applicant’s household are at best an estimate and by taking into consideration the lower income amounts and higher expense amounts, by the Tribunals calculations the Applicant’s household position is a fortnightly surplus of approximately $1,700[39]

    [39]    Being calculated as follows: Applicant’s income $1,943.06 + Applicant’s partner’s payments $2,240.44 – household expenses $2472.50 = $1711.

12. The Tribunal considers based on the information before it, that such a surplus would allow the Applicant to enter into a payment arrangement with the Respondent which would see his tax debt repaid in a reasonable time without impacting upon his ability to provide reasonable accommodation, food, clothing, medical supplies and education for himself and his family.

13. It is clear to the Tribunal that it is likely that the Applicant has not fully disclosed his full financial position or that of his household. In addressing the contentions set out by the Respondent in their written submissions the Applicant did not address any of the points raised in relation to his and his partner’s bank account activities or his payment of other debts ahead of his tax debt. As such the Tribunal accepts the Respondent’s contentions that the unexplained evidence in relation to the Applicant and his partner’s bank account transactions support the premise that the household has a reasonable fortnightly surplus of funds available to it.

14. The Applicant’s contention that the payments received by his partner in relation to caring for the children in their care is not income and should not be considered in deciding whether he should be released from his tax debt, is unreasonable. The Applicant seeks to include all household expenses when calculating his overall financial position, however, does not consider that all income or payments received by that household should be considered. If the Tribunal accepts that the Applicant’s fortnightly income is approximately $1,946.06 and that his household’s fortnightly expenses are approximately $2,472.50 and that it was only his income that was available to satisfy those expenses, they would not be met and the Tribunal would expect to see a higher level of debt. In reality though, the household has additional fortnightly funds available to it of approximately $1,700.

15. If only the Applicant’s income was to be taken into consideration, then it would be more reasonable for only a portion of the expenses to be taken into consideration. If the fortnightly expenses were to be attributed in an equal share between the Applicant and his partner this would leave him with surplus of approximately $700.[40]

    [40]    Being calculated as follows: Applicant’s income $1943.06 – (Household expenses $2,472.50/2) = $706.

16. Consequently, the Tribunal does not accept the Applicant’s contention that his partner’s payments should not be taken into consideration. The Tribunal considers in applying the decision of Gummow J in Van Griekan v Veilands (1991) 21 ATR 1639 at 1646 that in determining whether the Applicant would suffer significant hardship should he not be released from his tax debt, the Tribunal should consider his financial relationship with his partner, and as such in this instance it is the household income and payments and expenses that are relevant.

17. Having concluded that the Applicant did not satisfy the onus of proof in relation to establishing he would suffer serious hardship, it is unnecessary for the Tribunal to consider should the discretion to release the debt be exercised.

    CONCLUSION

18. For the reasons set out above, the Tribunal is not satisfied that the Applicant has discharged the onus of proof to establish that he would suffer serious hardship if he were required to pay the relevant tax debt.

19. Accordingly, the decision under review is affirmed.

I certify that the preceding 56 (fifty-six) paragraphs are a true copy of the reasons for the decision herein of Member D Mitchell

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

Associate

Dated: 30 November 2020

Hearing:	Heard on the papers
Applicant:	Mr Douglas Kidd
Advocate for the Respondent:	Ms Teigen Kershaw
Solicitors for the Respondent:	Australian Taxation Office