Mangat and Commissioner of Taxation (Taxation)

This matter concerned an appeal by Dr Mangat against an amended assessment for the income year ended 30 June 2013, and a related administrative penalty imposed under s 284-75(3) of Schedule 1 of the *Taxation Administration Act 1953* (Cth). The dispute also involved a question of whether the capital gains tax discount applied, which hinged on the date of acquisition of a beneficial interest in a right to acquire shares, and whether this date was more than 12 months before the cancellation of options. The Tribunal was required to determine the correct income tax liability and the appropriate level of remission for the administrative penalty.

The legal issues before the Tribunal were twofold: first, the correct assessment of income tax, specifically concerning the application of the capital gains tax discount to shares acquired under an employee share scheme, and second, the extent to which an administrative penalty, initially imposed at 75% and then partially remitted by the Commissioner to 50% due to Dr Mangat's failure to lodge her tax return, should be further remitted under s 298-20 of Schedule 1 to the TAA.

The Tribunal affirmed the Commissioner's objection decision regarding the amended assessment for the 2013 income year. However, it set aside the objection decision concerning the administrative penalty. The Tribunal reasoned that while Dr Mangat's delay in lodging her tax return was inexcusable, her subsequent engagement with the Commissioner through her tax agent indicated she was not entirely indifferent to her obligations. Considering the objective of promoting consistent treatment of taxpayers and the purpose of penalty remission, the Tribunal determined that a further remission was warranted. It found that Dr Mangat's conduct fell between the levels of "recklessness" and "failure to take reasonable care," and that the penalty should be remitted from 50% to 40% of the tax shortfall.