RFZD and Commissioner of Taxation (Taxation)
[2022] AATA 988
•14 April 2022
RFZD and Commissioner of Taxation (Taxation) [2022] AATA 988 (14 April 2022)
Division: SMALL BUSINESS TAXATION DIVISION
File Numbers: 2020/8245, 2020/8246 and 2020/8247
Re:RFZD
APPLICANT
AndCommissioner of Taxation
RESPONDENT
DECISION
Tribunal:Senior Member Dr Linda Kirk
Date:14 April 2022
Place:Sydney
The Reviewable Decision dated 16 October 2020 is affirmed.
....................................[SGD]....................................
Senior Member Dr Linda Kirk
CATCHWORDS
TAXATION – objection decision - superannuation guarantee charge - shortfall – whether the amended SGC assessments and SGC and PAYGW penalties correctly imposed – whether the penalty imposed on the Applicant by the Commissioner should be remitted in whole or in part - decision under review affirmed
LEGISLATION
Taxation Administration Act 1953 (Cth) ss 284-75 and 14ZZK
Superannuation Guarantee (Administration) Act 1992 (Cth) ss 31-32, 50, 59, 62, 284-75, 298-20
CASES
Commissioner of Taxation v Cassaniti (2018) 266 FCR 385
Danmark Pty Ltd v Federal Commissioner of Taxation (1944) 7 ATD 333
Federal Commissioner of Taxation v Dalco [1990] HCA 3
Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81
Hua-Aus Pty Ltd v Commissioner of Taxation (2010) 184 FCR 430
Imperial Bottleshops Pty Ltd and Egerton v Federal Commissioner of Taxation (1991) 22 ATR 148
McCormack v Commissioner of Taxation (1979) 143 CLR 284
Rawson Finances Pty Ltd v Federal Commissioner of Taxation (2013) 93 ATR 775
Sivai v Commissioner of Taxation [2021] SCA 1253
Trautwein v Federal Commissioner of Taxation [1936] HCA 77
Ward v Commissioner of Taxation [2016] FCAFC 132
SECONDARY MATERIALS
Australian Taxation Office, Practice Statement Law Administration 2011/28
Australian Taxation Office, Practice Statement Law Administration 2014/4
REASONS FOR DECISION
Senior Member Dr Linda Kirk
14 April 2022
INTRODUCTION
RFZD (‘the Applicant’) is seeking review pursuant to Part IVC of the Taxation Administration Act 1953 (Cth) (‘TAA’) of a decision of the Commissioner of Taxation (‘the Respondent’) dated 16 October 2020 (‘the Reviewable Decision’)[1] to allow in part the Applicant’s objection to:
(a)amended assessments of superannuation guarantee charge (‘SGC’) (‘Amended SGC Assessments’) and SGC (Part 7) penalties for the quarterly periods ending 31 December 2016, 31 March 2017, 30 June 2017 and 30 September 2017; and
(b)administrative penalties applied in relation to pay as you go withholding (‘PAYGW’) for the monthly periods from December 2016 to August 2017 inclusive.
(collectively, ‘the Relevant Periods’)
[1] T2.
On 11 December 2020, the Applicant filed with the Tribunal an application for review of the Reviewable Decision.[2]
[2] T1, 1-4.
The application was heard by the Tribunal on 5 March 2021.
The following documents was before the Tribunal:
·Section 37 T-documents (T1-T20, pp. 1 - 254) filed 25 January 2021 (Exhibit R1)
·Supplementary T-Documents (T2-T27, pp. 255-268) filed 23 March 2021
·Applicant’s Statement of Facts, Issues and Contentions dated and filed 9 July 2021
·Respondent’s Statement of Facts, Issues and Contentions dated and filed 30 July 2021
·Annexure 1 of the Respondent’s Statement of Facts, Issues and Contentions: Reconciliation of the Applicant’s accounts with the RFZD Payment filed 30 July 2021
·Annexure 2 of the Respondent’s Statement of Facts, Issues and Contentions: Calculation of the Administrative Penalty filed 30 July 2021
The Tribunal has reviewed all the evidence before it and refers to all relevant materials below.
BACKGROUND AND RELEVANT FACTS
Audit decision
On 7 August 2019, the Respondent commenced an audit for the period July 2014 to August 2017. The audit was to determine whether the Applicant had met its obligations as an employer on the basis that PAYG withholding reported by the Applicant’s employees was more than the amounts reported by the Applicant.
The Respondent provided the Applicant with a lodgement planner which listed the specific documents it required to be provided by 19 August 2019,[3] which included activity statements, income tax returns and PAYG withholding annual reports.[4] The Applicant did not comply with this request by the required date.[5] The Applicant informed the Respondent that certain QuickBooks data could not be retrieved, that original bank statements were missing, that paper copies of wages records needed to be located, and that it would be surprised if some activity statements had not been lodged.[6]
[3] T3.1; T7, 27; T4.1.
[4] T4.1, 20-21.
[5] T6.
[6] T11, 63.
Following a request by email dated 19 August 2019, the Applicant was given an extension of time until 19 September 2019 to lodge the requested documents.[7] The Applicant did not lodge the documents by this date.[8]
[7] T4, 18.
[8] T6, 25.
By email dated 17 September 2019 the Respondent advised the Applicant that the audit was being finalised as the Applicant had been given sufficient time to lodge documents but had failed to do so.[9]
[9] T6, 25.
By email dated 18 September 2019, the sole director of the Applicant (‘the Director’), requested that the Respondent ‘hold off “closing” the audit’ to allow him to locate source documents dating back to July 2014. He stated that some of the QuickBooks data for the Applicant could not be located and requested time to calculate what may be owing for PAYG.[10]
[10] T6, 24.
By email on the same date, the Respondent advised the Director that the Applicant had not provided documents by the agreed date, and if it disagreed with the audit outcomes it could lodge an objection.[11]
[11] T6, 24.
On 23 September 2019, the Director, wrote to the Respondent requesting a further extension of time. He explained that the data was not kept in an organised way and that a bookkeeper and accountant would have to re-enter the data for the relevant period.[12] In his reply, the Respondent stated:
When discussing additional time past this date, you have not lodged the documents requested or agreed that you have overdue obligations. For these reasons I have closed the audit case as explained in previous correspondence.[13]
[12] T11, 62-63.
[13] T11, 62.
The Respondent informed the Applicant that he had used information available to him to estimate the PAYG amount, that the Applicant did not lodge SGC statements for the relevant quarters, and it did not provide any other information to assist him.[14]
[14] T7, 29, 30.
On 23 September 2019, the Respondent issued the results of the audit with reasons for decision. He determined to raise SGC assessments for the Relevant Periods, found the Applicant was liable for a Part 7 penalty, and determined that he would partially remit the penalty.[15] The Respondent also advised that administrative penalties would be imposed under s 284-75(3) TAA.[16]
[15] T7, 31.
[16] T7, 34.
As the Applicant lodged the majority of the activity statements after the due date, the Part 7 penalty on the SGC was imposed at 80 per cent due to the Applicant’s unsatisfactory compliance history. This was a reduction from the automatic 200 per cent that applies under the legislation. The penalty for failing to lodge documents for 1 December 2016 to 31 August 2017 period was imposed at 75 per cent as the statements were already overdue and the Applicant had been given sufficient opportunity to lodge them.
The calculation of the PAYGW penalty was provided to the Applicant in the audit decision.[17] The liability was calculated by reference to the source documents available to the Respondent, including income tax returns lodged by individuals who reported wages from the Applicant’s ABN. The audit decision notes that the Applicant had not lodged PAYGW activity statements or annual reports and had not reported its PAYG withholding.[18] The Applicant lodged statements reconstructed from QuickSuper data and QuickSuper Employee Contribution Detail documents.[19] It did not provide to the Respondent any other information to assist his review, nor did it otherwise comply with its statutory obligations to provide documents requested by the Respondent.
[17] T7, 37-38 and amended T2, 11. 87.
[18] T7, 29.
[19] T15 and T16.
The Respondent issued notices of amended SGC assessments for the Relevant Periods to align with the results of the audit.[20]
[20] T8-T9.
Objection Decision
On 3 October 2019, the Applicant lodged an objection to the audit decision.[21]
[21] T11, 61.
On 4 December 2019, the Respondent advised the Applicant to validate its objection by lodging an objection form.[22] On 16 December 2019, the Applicant lodged an Objection Form.[23]
[22] T12, 68.
[23] T14.1.
On 7 January 2020 the Applicant provided handwritten gross earning information to the Respondent.[24] On 20 January 2020 the Applicant provided the Respondent with QuickSuper data.[25]
[24] T15.
[25] T16.
On 8 February 2020 the Respondent provided its calculation and asked the Applicant to provide a response by 14 February 2020.[26] The Respondent further invited the Applicant to lodge late payment offset forms (‘LPOs’) and said that the decisions on penalties would be made after those actions were taken.
[26] T17.
On 9 February 2020 the Applicant advised it would respond by 21 February 2020.[27]
[27] T18.
On 18 March 2020, the Applicant lodged LPOs and requested the Respondent to finalise the objection.[28]
[28] T19.1.
On 16 October 2020, the Respondent issued reasons for the Reviewable Decision.[29] The Reviewable Decision reduced the SGC shortfall and penalties in the audit decision. In relation to the SGC shortfall, the Applicant’s objections were allowed in part in relation to three periods and were allowed in full in relation to the period ending 30 September 2017 so that both the shortfall for that period and the Part 7 penalty were reduced to zero. The Respondent reduced the SGC shortfall amount (nominal interest and shortfall components) by applying the Applicant’s LPOs to the periods ended 31 December 2016 and 31 March 2017. In relation to the Part 7 penalty, the penalty for two periods was reduced from 80 per cent to 2 per cent, and for one period it was reduced from 80 per cent to 65 per cent. The PAYG withholding penalty was reduced from 90 per cent to 75 per cent.
[29] T2, 5-12.
On 22 October 2020, the Respondent made the Amended SGC Assessments for the Relevant Periods and issued letters regarding the reduced SGC amounts.[30] The total SGC liability from the Amended SGC Assessments was recorded as $21,881.49, excluding penalties and interest charges.
[30] ST21-T27.
On 11 December 2020, the Applicant made a payment of $21,878.46 on its Superannuation Guarantee Employer account (‘RFZD Payment’).[31]
[31] T19.1.
The Respondent applied the RFZD Payment, beginning with the amounts remaining on the earliest period first, with the following effect:
·the amounts payable for the periods ending 31 December 2016 and 31 March 2017 were reduced to zero;
·for the period ending 30 June 2017, the nominal interest was paid in full and the amount payable for the shortfall component was reduced to $1,765.19; and
·the balance of the administrative component, penalties and interest charges remained outstanding.
The Applicant’s total SGC liability consists of:[32]
[32] As at 30 July 2021.
Period end date
SGC
Shortfall
Nominal interest
Admin component
Shortfall GIC
Part 7 Penalty
Part 7 Penalty GIC
Total
30/06/2017 $1,765.19 $0.00 $20.00 $495.25 $3,985.63 $367.55 $6,633.62 LEGISLATIVE FRAMEWORK
Superannuation Guarantee Charge (SGC)
SGC is applied automatically where a superannuation shortfall exists and consists of three components: the shortfall amount, the nominal interest component and the administrative component: sections 31-32 of the Superannuation Guarantee (Administration) Act 1992 (Cth) (‘SGAA’). The Respondent does not have any discretion under the SGAA to remit the nominal interest or administrative components.
Section 50 SGAA provides the manner in which the Respondent must apply payments of SGC or related penalty charges:
50 Order of payments
The Commissioner must apply payments of superannuation guarantee charge, or related penalty charge, for a quarter that are made by or on behalf an employer, so that the employer’s liability to pay the nominal interest component for the quarter is discharged before all other amounts.
Part 7 Penalty
Under s 59(1) SGAA, where an employer fails to pay SGC for a quarter, it is liable to pay a penalty in addition to the SGC. This penalty is automatically imposed by the SGAA and is calculated as double the SGC amount:
Part 7—Additional superannuation guarantee charge
59 Failure to provide statements or information
(1) If an employer other than a government body refuses or fails to provide, when and as required under this Act, a superannuation guarantee statement or information relevant to assessing the employer’s liability to pay superannuation guarantee charge for a quarter, the employer is liable to pay, by way of penalty, additional superannuation guarantee charge equal to double the amount of superannuation guarantee charge payable by the employer for the quarter.
Section 59(2) SGAA requires an employer to keep records in relation to superannuation payments to its employees and produce those records as and when required by the Respondent:
(2) An employer liable to pay superannuation guarantee charge for a quarter must:
(a) keep a record in relation to the quarter containing details of the basis of calculation of the following amounts:
(ii) the individual superannuation guarantee shortfalls of the employer for the quarter;
(iii) the employer’s nominal interest component for the quarter;
(iv) the employer’s administration component for the quarter;
that were specified in a superannuation guarantee statement under section 33 or a statement under section 34; or
(b) produce to the Commissioner, when and as required by the Commissioner under this Act, a document containing details of the basis of calculation of the amounts referred to in paragraph (2)(a) that were specified in a superannuation guarantee statement under section 33 or a statement under section 34.
Section 62(1) SGAA requires the Respondent to assess additional SGC payable by an employer:
62Assessment of additional superannuation guarantee charge
(1) The Commissioner must make an assessment of the additional superannuation guarantee charge payable by an employer under this Part and must, as soon as practicable after the assessment is made, give written notice of the assessment to the employer.
Section 62(3) SGAA authorises the Respondent to remit all or part of the additional SGC payable by an employer:
(3) The Commissioner may remit all or part of the additional superannuation guarantee charge payable by an employer under this Part, but, for the purposes of applying subsection 33(1) of the Acts Interpretation Act 1901 to the power of remission conferred by this subsection, nothing in this Act is taken to prevent the exercise of the power at a time before an assessment is made of the additional superannuation guarantee charge
PAYGW Penalty
Sub-section 284-75(3), Schedule 1 TAA, provides the circumstances in which a taxpayer is liable to an administrative penalty:
(3) You are liable to an administrative penalty if:
(a) you fail to give a return, notice or other document to the Commissioner by the day it is required to be given; and
(b) that document is necessary for the Commissioner to determine a *tax‑related liability (other than one arising under the *Excise Acts) of yours accurately; and
(c) the Commissioner determines the tax‑related liability without the assistance of that document.
The basis for calculating the administrative penalty is set out in item 7 in the table in s 284-90, Schedule 1 TAA as 75% of the tax-related liability.[33] Where there are inadequate records, the Respondent can estimate this amount based on statements made by the employer, the number of employees and estimated gross wages, wage records from earlier periods and amounts notified by the employer on previously lodged activity statements.
[33] The calculation of the penalty was provided to the Applicant in the audit decision T7, 37-38 and amended T2, 11.
Section 298-20 of Schedule 1 gives the Respondent the discretion to remit all or part of a Part 7 penalty:
298‑20Remission of penalty
(1) The Commissioner may remit all or a part of the penalty.
(2) If the Commissioner decides:
(a) not to remit the penalty; or
(b) to remit only part of the penalty;
the Commissioner must give written notice of the decision and the reasons for the decision to the entity.
Note: Section 25D of the Acts Interpretation Act 1901 sets out rules about the contents of a statement of reasons.
(3) If:
(a) the Commissioner refuses to any extent to remit an amount of penalty; and
(b) the amount of penalty payable after the refusal is more than 2 penalty units; and
Note: See section 4AA of the Crimes Act 1914 for the current value of a penalty unit.
(c) the entity is dissatisfied with the decision;
the entity may object against the decision in the manner set out in Part IVC.
Practice Statements
Practice Statements are designed to provide guidance to the Respondent’s staff and are not legally binding. They do not restrict the exercise of discretion by the Respondent but rather assist to produce consistency in discretionary decision making.
PSLA 2011/28
Practice Statement Law Administration 2011/28 (‘PSLA 2011/28’) provides guidance to decision-makers in relation to remission of a Part 7 penalty:
Remission of the Part 7 penalty
15. Tax officers should use this practice statement as a guide in exercising the Commissioner's discretion to remit any part of the Part 7 penalty to ensure that employers are treated appropriately having regard to their circumstances, so that employers in like circumstances (so far as practicable) receive like treatment. Tax officers must obtain information relevant to the penalty remission decision and fully document the relevant evidence and the basis on which the penalty remission decision is made.
16. Any decision concerning the remission of the Part 7 penalty must have regard to the circumstances of the case including the effort made by the employer to comply with the obligation to self-assess the liability for SGC. Tax officers should bear in mind that the purpose of imposing penalties is to ensure employees' superannuation entitlements are protected and to encourage future voluntary compliance and continuing co-operation from employers. It is appropriate to treat genuine attempts to comply differently to situations where an employer does not make an effort to comply. This approach accords with principles of the Taxpayers' Charter and with the compliance model.
17. A penalty remission decision should be made following the three step process outlined at paragraphs 19 to 28 of this practice statement.
18. In considering an objection against an assessment of the Part 7 penalty, tax officers should also consider relevant facts and circumstances that were applicable, but not known, when the original assessment of the penalty and any remission decision were made.
Step 1
19. Step 1 of the penalty remission process involves determining a basic level of remission having regard to the employer's attempt to comply with their superannuation guarantee (SG) obligations. The following table illustrates the level to which the Part 7 penalty might be remitted based on the employer's attempt to comply.
Degree of attempt to comply
Level of penalty remission
The residual penalty is equivalent to:
Genuine attempt to comply
· An employer lodges an SG statement after the lodgment due date but before Australian Taxation Office (ATO) compliance action.[21]
100% of the penalty imposed.
Nil of the SGC
Moderate attempt to comply
· An employer lodges an SG statement after the lodgment due date in response to ATO compliance action.
* refer to paragraphs 20-21 for late payment offset considerations.
87.5% of the penalty imposed.
25% of the SGC
Default assessment information provided by employer
· A default assessment is made based on information provided by the employer after the lodgment due date in response to ATO compliance action.
75% of the penalty imposed.
50% of the SGC
Default assessment information not provided by employer
• A default assessment is made where the employer has failed to lodge an SG statement or provide relevant information in response to ATO compliance action.
62.5% of the penalty imposed. 75% of the SGC
Treatment of late payment offset (LPO) claims
20. If an employer lodges an SG statement with an LPO claim and the LPO claim is equivalent to their total SG shortfall, this may indicate that the employer has made a genuine attempt to comply. Remit the penalty by 100%.
21. If an employer lodges an SG statement with an LPO claim and the LPO claim is less than the employer's total SG shortfall, this may indicate that the employer has made a moderate attempt to comply. Under the first step of the remission process, remit the entire penalty that applies to the LPO amount and for the residual penalty not covered by the LPO, remit the penalty by 87.5%.
Step 2
22. Step 2 of the penalty remission process involves determining whether a lower or higher level of remission is appropriate having regard to the employer's compliance history in relation to both:
· their SG obligations, and
· their obligations under other taxation laws.
23. If the employer has:
· a good compliance history, the penalty remission may be increased; or
· a poor compliance history, the penalty remission may be decreased.
Step 3
24. Step 3 of the penalty remission process involves considering all other relevant facts and circumstances to ensure that the resulting Part 7 penalty assessment is appropriate. If, after considering such other relevant facts and circumstances, a tax officer determines that the resulting Part 7 penalty assessment would not be appropriate, they should consider increasing the level of penalty remission.
25. Paragraph 47 of this practice statement provides a non-exhaustive list of other relevant facts and circumstances that may indicate a need for further remission and the amounts by which tax officers may consider increasing the level of penalty remission. If such other relevant facts or circumstances are not present, it may still be appropriate to consider increasing the level of penalty remission. This may be appropriate to avoid a Part 7 penalty assessment that would be considered harsh in the particular circumstances of the employer. Where steps 1 and 2 are appropriately applied, a penalty assessment would not typically be considered harsh in the absence of additional mitigating facts.
26. However, such further penalty remission would not usually be appropriate if the employer:
· fully understood their SG obligations, but nevertheless failed to comply. Refer to paragraph 48 of this practice statement.
· took steps to prevent or obstruct the ATO from determining their SGC liability. Refer to paragraphs 49-50 of this practice statement, or
· took steps to evade payment of their SGC liability, such as through 'phoenix' activities.
27. In the more serious cases, particularly if the employer fully understood their SG obligations but took steps to obstruct the ATO or evade liability, a reduction in the level of remission may be appropriate. However, a final penalty that exceeds 90% of the SGC would only be applied in the most serious cases and should not be applied without approval of a Senior Executive Service (SES) officer.
28. In all cases, an overall assessment of whether the penalty would be harsh in the circumstances is required.
Remission of the TAA default assessment administrative penalty
29. Tax officers should consider remitting in full an employer's liability to the TAA default assessment administrative penalty. This is regardless of the extent to which the Part 7 penalty is remitted. The Part 7 penalty, being the penalty specifically provided for by the SGAA, is usually the appropriate penalty to apply where an employer fails to comply with their SG obligations.
EXPLANATION
Application of Step 1
30. The levels of basic remission under Step 1 are to avoid harsh penalty assessments and are specified to provide clarity and consistency regarding the levels of penalties that would ordinarily be considered to be harsh. However, it is emphasized that this is the first step in the process of consideration of remission and that all of the relevant circumstances must be considered under Steps 2 and 3, before reaching a final view regarding the level of penalty remission. The particular circumstances may include factors which indicate a lesser or greater level of remission is appropriate.
ATO compliance action
31. For the purposes of this practice statement, ATO compliance action commences on the date an employer receives notification of an audit in writing or by phone, or when an employer has been given a notice of estimate of unpaid SGC.
Genuine attempt to comply
32. If the employer lodges an SG statement for a quarter after the lodgment due date but before ATO compliance action, this may indicate that the employer has made a genuine attempt to comply with their SG obligations. In this situation, under the first step of the remission process, remit the penalty in full.
Moderate attempt to comply
33. If an employer lodges an SG statement after the lodgment due date in response to ATO compliance action, this may indicate that the employer has made a moderate attempt to comply with their SG obligations. In this situation, under the first step of the remission process, remit the penalty by 87.5%.
Default assessment - information provided by employer
34. If the Commissioner makes a default assessment for a quarter based on information provided by the employer in response to ATO compliance action, this may indicate that the employer has made some attempt to comply with their SG obligations. In this situation, under the first step of the remission process, remit the penalty by 75%.
Default assessment - information not provided by employer
35. If the Commissioner makes a default assessment for a quarter due to the employer failing to lodge an SG statement or provide relevant information, this may indicate that the employer has made little or no attempt to comply with their SG obligations. In this situation, under the first step of the remission process, remit the penalty by 62.5%.
36. In those circumstances, a higher level of penalty would ordinarily apply. The basic remission of 62.5% reflects a view that a penalty in excess of 75% of the SGC would ordinarily be harsh unless there are particular circumstances that warrant a higher penalty applying.
Treatment of late payment offset (LPO) claims
37. If an employer lodges an SG statement with an LPO claim and the LPO claim is equivalent to their total SG shortfall, this may indicate that the employer has made a genuine attempt to comply. Remit the penalty by 100%.
38. If an employer lodges an SG statement with an LPO claim and the LPO claim is less than the employer's total SG shortfall, this may indicate that the employer has made a moderate attempt to comply. Under the first step of the remission process, remit the entire penalty that applies to the LPO amount and for the residual penalty not covered by the LPO, remit the penalty by 87.5%.
39. For example, if an employer's SGC that is disclosed on an SG statement is $10,000 and the employer also includes an LPO claim for $7,000, under Step 1, the Part 7 penalty amount of $20,000 is initially remitted by $14,000 (that is the portion of the penalty that applies to the LPO claim). The remaining penalty balance of $6,000 ($20,000- $14,000) is then remitted by 87.5%. Refer to example 2.
Application of Step 2
Compliance history
40. An employer's compliance history is based on their past behaviour, attitudes and actions in complying with their taxation law obligations. This is to be evaluated by objectively considering information in ATO records as well as information supplied by the employer and other parties.
41. For the purposes of this practice statement, an employer's compliance history is considered by reference to the period commencing three years before the commencement of the period subject to ATO compliance action and finishing on the date that ATO compliance action commences. For example, if the period subject to ATO compliance action is from 1 October 2008 to 31March 2011, and ATO compliance action commences on 1 October 2011, the employer's compliance history for consideration is the period between 1 October 2005 and 30 September 2011.
42. The employer's SG compliance history will be given more weight than their compliance history in respect of their obligations under other taxation laws. This is to ensure that those employers who repeatedly do not comply with their SG obligations receive a Part 7 penalty assessment that:
· is appropriate and encourages them to lodge their SG statements on time and better protect the superannuation entitlements of employees, and
· helps to maintain a level playing field amongst employers by discouraging employers from obtaining an unfair competitive advantage by using unpaid SGC as working capital or otherwise.
43. The evaluation of an employer's SG compliance history should focus on:
· the number of quarters for which the employer has failed to lodge an SG statement by the due date, or for which the Commissioner has made a default assessment, and
· the degree of the employer's attempt to comply with their SG obligations, and
· a shift in behaviour by an employer that has been subject to a previous audit. This may be demonstrated by an improvement or deterioration in their level of engagement and co-operation with the Commissioner during the compliance activity.
44. Whilst a good compliance history is generally one where the obligations of complying with the taxation laws have been met, an employer does not necessarily need to have a flawless compliance history to be considered to have a good compliance history for the purposes of this practice statement. An employer may have a good compliance history even though there are isolated instances of non-compliance in respect of their SG and other taxation law obligations, particularly if there are extenuating facts and circumstances.
45. An employer that does not have a good compliance history does not necessarily have a poor compliance history. The existence of some culpable behaviour may preclude a conclusion that the employer has a good compliance history, but the level of that culpable behaviour may not warrant a conclusion that the employer's compliance history is poor.
46. However, an employer with an established history of non-compliance and no improvement in their level of engagement with the Commissioner during a compliance activity cannot be considered to have a good compliance history.
Application of Step 3
Other relevant facts and circumstances
47. Other relevant facts and circumstances and the level of penalty remission that may be appropriate depending on the particular circumstances, include (but are not limited to):
· natural disasters, such as flood, bushfire, earthquake or the like[25] - consider increasing penalty remission to 100%
· individuals being determined, as a result of ATO compliance action, to be engaged under a contract that is wholly or principally for their labour, but the employer has a reasonably held argument for not treating the individuals as employees for SG purposes - consider increasing penalty remission to 100%
· the provision of incorrect advice or guidance by the ATO - consider increasing penalty remission to 100%
· ill health of the employer or a key employee of the employer - consider increasing remission of the residual penalty by up to 50% (or higher, including to 100% depending on the nature of the business and the circumstances and severity of the ill health)
· the employer has provided evidence that they have taken steps to mitigate the circumstances that contributed to their non-compliance with their SG obligations - consider increasing penalty remission based on the individual facts of the employer, or
· the employer's non-compliance with their SG obligations occurring in their first year of operation, and their principals having no previous business experience - consider increasing penalty remission.
Employer fully understanding their SG obligations
48. When considering the level of penalty remission for an employer that has made no attempt to comply with their SG obligations, there are circumstances that may indicate that the employer fully understood those obligations. Examples include where the employer:
· has been previously subject to ATO compliance action relating to their SG obligations
· has previously lodged an SG statement, or
· is a tax or superannuation practitioner, such as a registered tax agent, who would be expected to have a high level of knowledge of their SG obligations.
Employer taking steps to prevent or obstruct the ATO from determining their SGC liability
49. It is expected that during ATO compliance action, tax officers will receive reasonable co-operation from employers. However, a lack of co-operation alone does not indicate that an employer was actively seeking to prevent or obstruct the Commissioner from determining their SGC liability. An action of a passive nature, such as not responding to an ATO letter, although unhelpful, is not active hindrance.
50. However, an employer will generally be viewed as taking steps to prevent or obstruct the Commissioner from determining their SGC liability, if there is:
· repeated failure to keep appointments to supply information without an acceptable reason
· the deliberate supply of information that is irrelevant, inadequate or misleading in regards to the accurate determination of their SG obligations, or
· engagement in any culpable behaviour to delay the provision of information.
PSLA 2014/4
Practice Statement Law Administration 2014/4 (‘PSLA 2014/4’) provides guidance to decision-makers in relation to the administration of the PAYGW penalty imposed by s 284-75(3) TAA.
The scope of the practice statement is set out in clause 9 which provides:
This practice statement provides guidelines on how the Commissioner’s discretion in subsection 298-20 (1) to remit the penalty may be exercised. There is no intention to lay down conditions that may restrict the exercise of the discretion. Nor does the practice statement represent a general exercise of the Commissioner’s discretion. Rather, the guidelines are provided to:
· help ATO staff in the exercise of the discretion, and
· ensure that entities in like situations receive like treatment.
Clauses 10 and 11 relevantly provide:
Administration of the subsection 284-75(3) penalty
10. The administration of the penalty involves three steps:
· Step 1. Establish if the entity is liable to the penalty
· Step 2. Assess the penalty
(a) determine the tax-related liability concerned
(b) calculate the BPA (including determining if the BPA is reduced
(c) determine whether the BPA is increased under section 284-220
(d) determine the amount of penalty
(e) consider whether remission under subsection 298-20 is appropriate, and apply the remission decision· Step 3. Notify the entity of their liability to pay the penalty amount and the reasons why they are liable to pay the penalty. The Commissioner is not required to give written notice of the decision and the reasons for the decision to the entity where the penalty has been remitted in full.[15]
11. ATO staff must undertake each of these steps in the order in which they appear above. For example, assessment of the penalty cannot take place until the entity's liability to the penalty has been established. Each step is discussed in detail in paragraphs 12 to 60 of this practice statement.
Clauses 26 and 27 relevantly provide:
Determine any remission of the penalty
26. The Commissioner has the discretion to remit all or part of the penalty under subsection 298-20(1). ATO staff must consider the question of remission in each case where a penalty has been imposed based on all of the relevant facts and the particular circumstances of the entity and having regard to the purpose of the provision.
27. Relevant matters for the remission of penalty include that a major objective of the penalty regime is to promote consistent treatment by reference to specified rates of penalty. This objective would be compromised if the penalties imposed at the rates specified in the law were remitted without just cause, arbitrarily or as a matter of course.
Clause 28 details the approach which should be adopted regarding the discretion to remit penalties:
The discretion to remit penalties, in whole or in part should be approached in a fair and reasonable way. Remission, in full or in part, will generally occur when:
· an entity has a genuine, yet mistaken, belief that lodgement was not required as opposed to an indifference to, or a rejection of, their obligation
· an entity understood their obligation to lodge but circumstances beyond their control affected their ability to lodge
· the amount of penalty imposed by law causes an unjust result
· there were credits available to offset the amount of the tax-related liability payable, or
· there was extraordinary cooperation during an examination.
ISSUES FOR DETERMINATION
The issues for determination are whether in the Relevant Periods:
·the Amended SGC Assessments and the Part 7 Penalties; and
·the Administrative Penalties
were excessive or otherwise incorrect.
This requires consideration of the following questions:
·Is the calculation of the Amended SGC Assessments and Part 7 penalty correct?[34]
·In relation to the Part 7 penalty, has the Applicant established any additional grounds that warrants reconsideration of the steps in the penalty remission process in PSLA 2011/28?
·Is the calculation of the Administrative Penalty correct?[35]
·Has the Applicant established grounds for the Tribunal to exercise the discretion under clause 28 of PSLA 2014/4 to remit any of the PAYGW penalty?
SUBMISSIONS
[34] The Applicant’s total SGC liability including the Part 7 penalty is $6,633.62.
[35] The Applicant’s PAYGW penalty liability is $116,331.00.
Applicant
SGC liability
The Applicant was not aware that the relevant superannuation contributions had not been made at a particular time by its bookkeeper and therefore was unaware that the SGC statements needed to be lodged with the ATO. The possible explanation for the non-compliance was the bookkeeper’s lack of knowledge and understanding of the strictness of the statutory time limits imposed by law in relation to the payment of the superannuation contributions.[36]
[36] Transcript of proceedings, 3 December 2021, 13.
The processes and systems in place at the relevant time were that the bookkeeper would put the data from the timebooks completed by staff into QuickBooks and this would then be used to make and record payments. QuickSuper was the system used by the Applicant to record superannuation payments. During the relevant period there was a corruption of the data in QuickBooks and it could not be recovered. The cost of recovering the data for the period from July 2014 to August 2017 is astronomical and was not undertaken by the Applicant.[37] The Applicant was unable to lodge a statement without access to the QuickBooks data.[38] The SGC shortfall arose due to an error and honest mistake of the bookkeeper.[39]
Part 7 penalty
[37] Transcript, 13.
[38] Transcript, 15.
[39] Transcript, 17.
The discretion in section 62(3) SGAA to remit the Part 7 penalty in full should be exercised. The four-step remission process should have been followed by the Respondent.[40]
[40] Transcript, 13.
The Applicant made an attempt to comply when it was made aware of the SGC shortfall and it made an early voluntary disclosure that it had paid the director’s super inclusive of his wages.[41] It complied with its obligations, although late, and this should have been considered by the Respondent. He should have provided additional remission because of the Applicant’s good compliance history.
[41] Transcript, 15.
The Applicant paid the majority of its SGC and further remissions should have been given in relation to this. The Applicant’s non-compliance with SG obligations did not occur in the first year of operation, but it was unintended and was caused by the data being corrupted. The Applicant did make a significant proportion of the SG contributions on time, and the SG shortfalls represent a smaller portion of its overall SG obligations for the quarters. The Applicant took reasonable steps to ensure that contributions were made on time, but a third-party error led to the SG contributions being late. The Applicant took all reasonable steps to ensure contributions would be made on time, and a loss of the essential bookkeeping records and data from QuickBooks impacted on its ability to comply with its obligations, either in terms of making contributions on unknown SG shortfalls or the lodging of SG statements.[42]
[42] Transcript, 17.
In this case there are exceptional circumstances which prevented the Applicant from lodging a SG statement. It was unintended for the data to be corrupted and access to the records to be removed. It is unfathomable that someone would place themselves in the position where they receive a penalty based on the fact that they are unable to file a statement and were unable to provide other documents that were required in relation to the PAYG.[43] Accordingly, these unintended consequences are such that the penalty should not have been applied in the manner it was and/or remission of the penalty should have occurred.[44] The results have been unfair, unintended and unjust: Ward v Commissioner of Taxation.[45]
PAYG penalty
[43] Transcript, 19.
[44] Transcript, 19.
[45] [2016] FCAFC 132 [39] and [41].
The penalty was introduced to ensure fairness and here it has been used unfairly. The base penalty amount is the same percentage as that imposed for intentional disregard of a taxation law or a false or misleading statement. It is harsh and in the circumstances is not appropriate. The first step is determining if the penalty is imposed by law. The penalty for determining a tax-related liability without the required document is imposed where an entity fails to give the Respondent by the date it is required to be given. It is unclear how the Respondent calculated the assessment and the documents on which it was based.[46] In relation to the date for the lodgement of documents, this was not made clear to the Applicant.[47]
[46] Transcript, 22.
[47] Transcript, 24.
There also is no evidence to show that the document was necessary for the Respondent to accurately determine the figures in relation to the PAYG withholding. Section 284-75(3) created an unjust result and should not have been applied.[48] It was only applied as a punitive measure to impose on the Applicant a 75 per cent penalty. This is not just or appropriate in the circumstances.[49] There was no intentional disregard by the Applicant at any material time. Nor was there recklessness in any regard at any material time in relation to the Applicant’s conduct. The unintended circumstances were that the data was not able to be accessed by QuickBooks, and this could not be something that is deemed to be an intentional disregard. The Applicant chose not to mislead, voluntarily disclosed its circumstances and its position, and sought to cooperate with the Respondent. The base penalty should have been capped at the 25 per cent of the shortfall amount and then remission should have reduced it to zero because the Applicant took reasonable care to comply with the taxation law.[50] Reasonable care does not connote the highest level of care or perfection. The expression ‘reasonable care’ requires an objective evaluation of whether a reasonable person in the same circumstance as the taxpayer, would have exercised greater care. In this case the Applicant could not obtain the data and it obtained all the information it could prior to the audit decision. The Applicant acted with ordinary prudence, and in a manner a reasonable person would have done, to provide the information and not mislead, and it made early voluntary disclosures.[51]
[48] Transcript, 24.
[49] Transcript, 24.
[50] Transcript, 25.
[51] Transcript, 26.
Taking reasonable care in the context of making a statement to the Respondent or to an entity within the meaning of section 284-75(4) means giving appropriately serious attention to complying with the obligations imposed under a taxation law. The reasonable care test requires an entity to take the same care in fulfilling its tax obligations that could be expected of a reasonable ordinary person in their position. This means that even though the standard of care is measured objectively, it takes into account the circumstances of the taxpayer. In the Applicant’s circumstances it lost the information it was required to provide, Imposition of a penalty of 75 per cent is completely unjust and unreasonable in the circumstances when the Applicant acted reasonably.[52]
[52] Transcript, 26.
The level of knowledge, education, experience and skill of the Applicant should be taken into account. It does not have a specialist tax knowledge. When having regard to the size and nature of the Applicant, it put in place appropriate record keeping systems or other procedures for complying with its tax obligations. These systems failed the Applicant in this circumstance. The Applicant relied reasonably upon the information provided by a third party. The Applicant has not misled nor provided false information. It provided the records that it could obtain, which were the records from QuickSuper. The reduction should be applied under section 284-225 for voluntary disclosures of information that could be used to calculate the shortfall amount.[53]
[53] Transcript, 27.
The Applicant cooperated and there should be a reduction and remittance in relation to the penalty. Further remission should be made from the 25 percent cap having regard to the voluntary disclosures that were made throughout the audit and objection processes.[54] Remission should be approached in a fair and reasonable way. Remission in full, or in part, is generally when an entity has a genuine yet mistaken belief that the lodgement was not required as opposed to indifference to or rejection of its obligations. In this case, the Applicant was not indifferent, nor did it reject its obligations. It complied with its obligations to the best of its capacity to do so and it acted in a reasonable way. It chose not to mislead. It chose to make voluntary disclosures and provide the information it did have as soon as it could and in the very limited timeframe available. It was not a timeframe large enough for it to provide the information that was required over the three-year period.[55]
[54] Transcript, 30.
[55] Transcript, 31.
The Applicant understood its obligation to lodge, but circumstances beyond its control affected its ability to do so. The amount of the penalty imposed by law caused an unjust result in the circumstance. Remission may be appropriate where the entity went beyond what was asked or expected to assist the Respondent during examination. The Applicant did not just assume lodgement was not required, but sought advice and took reasonable care in its inquiries commensurate with the resources available to it. This is similar to the level of care of a reasonable person in a similar situation would take to understand their obligations. The Applicant was however unable to provide the information required in the circumstances by 19 September 2019.[56]
[56] Transcript, 33.
In determining the extent to which a penalty should be remitted, all relevant circumstances should be taken into account including what events occurred and the impact of those events on the entity’s capacity to prepare and lodge documents. The data has now in some part been recovered from QuickBooks and this was provided by the Applicant to the Respondent. QuickSuper was also provided. The remaining data would have to be manually re-entered which has not been done because there has already been a calculation made in relation to the PAYG withholding amount which is not contested.[57]
[57] Transcript, 34.
Respondent
The Applicant has not discharged its onus of establishing if or how the Respondent’s calculation of the SGC shortfall amount is excessive or otherwise incorrect. The Respondent has relied on the materials provided by the Applicant in order to calculate this amount.[58]
SGC liability
[58] Transcript, 40.
The Applicant has not led any evidence to counter its calculation of the SGC shortfall amount. The making by the Applicant of a lump sum payment on the same day that it lodged its review application should be taken as an admission of both the accuracy of the Respondent’s assessments as well as the Applicant’s liability for this amount.[59]
[59] Transcript, 40.
The Respondent does not have any discretion under the SGAA to remit the nominal interest or administrative components of the charges. In relation to the calculation of the remaining penalty amount, it results from how the amount that was paid by the Applicant has been applied to the nominal interest charges in priority, as required under the SGAA.[60]
Part 7 penalty
[60] Transcript, 41.
The Part 7 penalty is automatically imposed at 200 per cent. What is in dispute is the reduction to a two per cent penalty for two periods and a 65 per cent penalty for one period. The factors that were taken into account in reducing the penalty are set out in the Respondent’s objection decision. These are that the Applicant had lodged LPOs, it had a full compliance history and failed to lodge several overdue statements, and that it was the Applicant’s first audit regarding super obligations. A significant reduction in the penalty was made taking into account these factors.[61]
[61] Transcript, 41.
The Applicant has not provided relevant evidence in support of remitting this penalty. The discretion was properly exercised, and no further remission is warranted as the Respondent issued default assessments at the audit stage because the Applicant had made no attempt whatsoever to comply with the proposed timetable. Nor was it able to provide any of the information requested at the objection stage, despite having ample opportunity to do so. The LPOs were applied and given proper consideration at the objection stage, and the Respondent is not aware of any circumstances that would make it appropriate to remit penalties.[62]
[62] Transcript, 41.
There is nothing in the evidence to show that the Applicant, whose directors are lawyers and running a law firm, did not understand their superannuation guarantee obligations. The Applicant claims that its bookkeeper was unaware of the severity of the law, but this is not a basis on which the penalties should be remitted. There is no evidence as to the alleged difficulty of retrieving information other than emails from the Director stating it would possibly take three to six months to compile the information.[63]
[63] Transcript, 41.
The Applicant accepts that there were no accurate records from which calculations could have been made. The LPOs lodged by the Applicant are not voluntary disclosures but an acknowledgement that payments were not made at the time they were due, and this non-compliance was rectified through the LPO process. The evidence shows that there was a lack of organisation and incorrect practices in the keeping of records by the Applicant. It is not the Respondent’s responsibility to rely on a lack of information, rather he makes his assessments based on the information that can be provided.[64]
PAYG penalty
[64] Transcript, 42.
The Applicant has not provided the Respondent with any of the specific documents requested to accurately determine its tax liability. The information that the Applicant provided up to the objection stage was limited to QuickSuper employee contribution details and gross earning information. Nor during the course of the review did the Applicant provide other documents that would allow the Respondent to reassess the penalty. The Applicant still has not provided any PAYG withholding annual reports. This demonstrates a refusal to comply with the process, as well as an admission that these documents are either not available, or that the Respondent’s assessments are in fact correct.[65]
[65] Transcript, 42.
The discretion was correctly exercised by the Respondent in the objection decision which reduced the penalty to 75 per cent. The Applicant’s evidence does not support any further remission, either during the objection or in the conduct of these proceedings. The relevant factors are that the Applicant does not appear to be under any mistaken belief and appears to fully understand its obligations, especially given that it has complied with those obligations in the period prior to the ones that are in dispute. There is no evidence, other than the Applicant’s representative’s claims, that the penalty would cause an unjust result. There is nothing to prevent the Applicant from sending further documents to the Respondent at any time.[66]
[66] Transcript, 42-43.
Any confusion in the dates when the Applicant was required to provide documents at the audit or objection stages were remedied by the fact that it had ample opportunity at later stages and through the conduct of these proceedings to provide those documents. The Applicant’s interactions with the Respondent did not therefore demonstrate extraordinary cooperation. The penalty is appropriate in the circumstances and the lack of records only serves to confirm that the Respondent’s assessments, made on the information that was available, are in fact correct.[67]
[67] Transcript, 43.
CONSIDERATION AND REASONS
There are three distinct aspects of the amount currently owed by the Applicant: the SGC liability, the Part 7 penalty and the PAYGW penalty.
Burden and standard of proof
The Applicant has the burden of proving that the Reviewable Decision should not have been made or that it should have been made differently.[68] Discharging the burden of proof requires the Applicant to establish the facts upon which it relies and, if it is necessary for the Applicant to establish a particular fact in order to displace the Respondent’s decision, the Applicant must satisfy the Tribunal with respect to that fact.[69]
[68] Subsection 14ZZK(b)(ii) TAA.
[69] Hua-Aus Pty Ltd v Commissioner of Taxation (2010) 184 FCR 430 at [22] citing Danmark Pty Ltd v Federal Commissioner of Taxation (1944) 7 ATD 333 at 337.
In Federal Commissioner of Taxation v Dalco,[70] Brennan J stated:
the Commissioner is entitled to rely upon any deficiency in proof of the excessiveness of the amount assessed to uphold the assessment, though the taxpayer is limited to the grounds of his objection.[71]
[70] [1990] HCA 3.
[71] At [14].
Similarly, in Gauci v Federal Commissioner of Taxation,[72] Mason J as he then was noted:
The Taxation Act does not place any onus on the Commissioner to show that assessments were correctly made, nor is there any statutory requirement that the assessments should be sustained or supported by evidence. Consequently, unless the appellant shows by evidence that the assessment is incorrect, it will prevail.[73]
[72] [1975] 135 CLR 81.
[73] At 89.
In Trautwein v Federal Commissioner of Taxation,[74] Latham CJ stated that the taxpayer must, at least as a general rule, go further and show not only that the statement is wrong, but also positively show what correction should be made in order to make the assessment correct.[75] The Commissioner is entitled to put the applicant to proof of any or all facts relevant to the issue of an assessment being excessive or otherwise incorrect: Sivai v Commissioner of Taxation.[76]
[74] [1936] HCA 77.
[75] At [2].
[76] [2021] SCA 1253 at [72].
The standard of proof is the balance of probabilities.[77] It has been described as involving a weighing up of the arguments of each party so that if a taxpayer succeeds in ‘weighing down the scales ever so slightly in [its] favour’ then it will have discharged the burden.[78] The taxpayer can discharge the burden in any one of several ways. For example, it can do so by direct evidence and/or by drawing inferences from the evidence,[79] but not from conjecture.[80] While evidence from a taxpayer is not prima facie unacceptable, uncorroborated, self-serving statements are to be tested closely and received with the greatest caution.[81] Importantly, there is no onus on the Commissioner to show that an assessment or, in this case, an objection decision, is correct.[82] Therefore, the Applicant cannot succeed merely by identifying errors or flaws in the Respondent’s decision.
[77] McCormack v Commissioner of Taxation (1979) 143 CLR 284 (‘McCormack’) at 303.
[78] Commissioner of Taxation v Cassaniti (2018) 266 FCR 385 at 409, [88] per Steward J.
[79] McCormack at 323 per Murphy J and at 303 per Gibbs J.
[80] Rawson Finances Pty Ltd v Federal Commissioner of Taxation (2013) 93 ATR 775 at [88] per Jagot J.
[81] McCormack at 302 per Gibbs J; Imperial Bottleshops Pty Ltd and Egerton v Federal Commissioner of Taxation (1991) 22 ATR 148 at 155.
[82] McCormack at 303-304 citing Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81.
SGC liability
The Applicant did not present evidence to counter the Respondent’s calculation of the superannuation shortfall, and the Tribunal accepts the calculation made for the Applicant’s SGC liability. The finding is supported by the evidence before the Tribunal that on 11 December 2020 the Applicant made a payment of $21,878.46 on its Superannuation Guarantee Employer account indicating its acceptance of its liability for this amount.
Part 7 penalty
Section 59(1) SGAA provides that where a taxpayer fails to pay SGC for a quarter, it is liable to pay a penalty in addition to the SGC. This penalty is automatically imposed by the SGAA. The penalty is calculated as double the SGC amount.
There is no discretion under the SGAA to remit the nominal interest or administrative components of the charges. The remaining penalty amount was correctly calculated by the Respondent following the application by it of the payment made by the Applicant on 11 December 2020 to the nominal interest charges as required under the SGAA.
In the Reviewable Decision, the Respondent reduced to two per cent the penalty for two periods and to 65 per cent penalty for one period. The factors he took into account in remitting the penalty were the Applicant’s lodgement of LPOs, its compliance history, that this was the Applicant’s first audit, and that the Applicant did not appear to have any employees after 1 September 2017.
The Tribunal has had regard to the process outlined in PSLA 2011/28 and finds for the following reasons that there are no grounds to exercise the discretion to further remit the penalties imposed on the Applicant.
The Applicant claims that its failure to make SGC payments was due to its bookkeeper’s lack of knowledge of the legal requirements in relation to the payment of superannuation contributions. The Tribunal does not accept that the Applicant, whose directors are lawyers, did not understand its superannuation guarantee obligations. It finds that the Applicant is responsible for the actions and omissions of the bookkeeper it tasked to undertake the task of ensuring its legal obligations were met. Accordingly, it is not satisfied that this is a ground for the further remission of the penalties.
The evidence before the Tribunal is that Applicant did not comply with the proposed timetable for the provision of documents to the Respondent during the audit process. It claims that it was unable to do so within the timeframe because relevant data had been corrupted and accordingly the required information could not be retrieved. The Applicant did not present any evidence to the Tribunal substantiate its claims about the difficulty and cost of retrieving the information. It relies on the emails from the Director to the Respondent stating it may take three to six months to compile the information, and the Applicant’s representative’s claim that the cost to do so would be ‘astronomical’. The Director did not give oral evidence at the hearing and therefore he could not be questioned about basis on which the estimates of the time and cost required to recover the data were made. What is clear from the evidence is that the Applicant’s record-keeping practices were highly disorganised and did not allow it to meet its statutory obligations.
The evidence before the Tribunal is that the Applicant did not provide the information requested by the Respondent at the objection stage. Accordingly, the Applicant’s failure to provide relevant information was not limited to the audit process and was based on an unsubstantiated claim that the required data could not be retrieved and compiled in a timely manner and without excessive expense.
The Tribunal is satisfied that the LPOs made by the Applicant were correctly applied and properly considered by the Respondent at the objection stage. These LPOs were not voluntary disclosures, but payments made by the Applicant to rectify its non-compliance with its statutory obligations.
For the reasons stated, the Tribunal finds that the Applicant has not established that there are additional grounds that make it appropriate to exercise the discretion to further remit the Part 7 penalties.
PAYGW Penalty
The Tribunal has considered whether there are grounds to exercise the discretion to remit the PAYGW penalty in accordance with paragraph 28 of PSLA 2014/4 outlined in [44] above.
The Applicant has not provided evidence to the Tribunal of any of these factors which would warrant further remission of the penalty. The correspondence between the Applicant and the Respondent during the audit and objections stages does not indicate that the Applicant had a genuine but mistaken belief that lodgement was not required. The Applicant’s understanding of its obligations is demonstrated by its compliance with these obligations in earlier periods.
The Applicant’s evidence is that it was an error or omission by its bookkeeper that resulted in its failure to lodge. For the reasons stated above, the Tribunal is not satisfied that the Applicant’s bookkeeper’s actions or omissions are circumstances beyond the Applicant’s control. The Applicant is responsible for ensuring that its bookkeeper was taking necessary steps to ensure that it met its statutory obligations.
There is no evidence before the Tribunal, other than the Applicant’s representative’s claims, that the penalty would cause an unjust result for the Applicant. Whereas the Tribunal accepts that the date by which the Applicant was required to provide documents at the audit stage was unclear, it had sufficient time and opportunity during both the objection process and the conduct of this review to provide these documents. Nor does the evidence support a finding that the Applicant was extraordinarily cooperative during the audit and objection processes.
The Tribunal is satisfied that the discretion was correctly exercised by the Respondent in the objection decision which reduced the penalty to 75 per cent and finds that there are no grounds to support further remission of the PAYGW penalty.
DECISION
The Reviewable Decision dated 16 October 2020 is affirmed.
I certify that the preceding 91 (ninety -one) paragraphs are a true copy of the reasons for the decision herein of Senior Member Dr Linda Kirk
..................................[SGD].....................................
Associate
Dated: 14 April 2022
Date(s) of hearing: 3 December 2021 Solicitors for the Applicant: Mr D Mezger Solicitors for the Joined Party: Ms N Dubey, Australian Taxation Office
Key Legal Topics
Areas of Law
-
Tax Law
-
Administrative Law
Legal Concepts
-
Penalty
-
Remedies
-
Appeal
-
Statutory Construction
3
9
0