Smith and Commissioner of Taxation (Taxation)

The Administrative Appeals Tribunal considered the case of Smith and the Commissioner of Taxation. The applicants, a retired couple, sought to be released from their tax liability on the grounds that payment would cause them serious hardship. The dispute centred on whether the Commissioner's decision to refuse this release was correct.

The primary legal issue before the Tribunal was whether the applicants had discharged the onus of proving that the Commissioner's objection decision should have been made differently, specifically concerning the exercise of discretion to release them from their tax liability due to serious hardship. This required the Tribunal to consider the factors relevant to the exercise of that discretion.

The Tribunal reasoned that the applicants, who had experienced significant financial setbacks including the collapse of a major contractor and substantial mechanical breakdowns in their business, had demonstrated considerable stress and effort to meet their obligations to creditors and employees. Their subsequent sale of their business and family home, while yielding some proceeds, left them with limited remaining assets and a new home purchase that precluded further borrowing. Considering these circumstances, the Tribunal was satisfied that the discretion to release the applicants from their tax debt should have been exercised.

Consequently, the Tribunal set aside the Commissioner's decisions and substituted a new decision. The applicants' total tax debt for the 2015, 2016, and 2017 income years, including general interest charges, was reduced to $21,000, with each applicant being liable for $10,500.