T T Lam and HT Ngo and Commissioner of Taxation (Taxation)
[2016] AATA 552
•29 July 2016
T T Lam and HT Ngo and Commissioner of Taxation (Taxation) [2016] AATA 552 (29 July 2016)
Division
TAXATION & COMMERCIAL DIVISION
File Number
2014/1053
Re
T T Lam and HT Ngo
APPLICANT
And
Commissioner of Taxation
RESPONDENT
DECISION
Tribunal Deputy President F J Alpins
Date 29 July 2016 Place Melbourne The decision under review is affirmed.
..............[sgd]...........................................
Deputy President F J Alpins
TAXATION – administrative penalties – Pay As You Go (PAYG) withholding – penalty for failure to withhold amounts from payments made under labour hire arrangement – whether applicant liable to penalty – whether further remission of penalty warranted - whether applicant discharged burden of proof – Taxation Administration Act 1953 (Cth)
PRACTICE AND PROCEDURE – jurisdiction of Tribunal – Part IVC of Taxation Administration Act 1953 (Cth) – whether jurisdiction to determine validity of notice given to the applicant of liability to pay penalty
Legislation
Administrative Appeals Tribunal Act 1975 (Cth) s 25
Taxation Administration Act 1953 (Cth) ss 14ZL, 14ZQ, 14ZU, 14ZY, 14ZZ, 14ZZK; Sch 1 ss 12-60, 16-30, 250-5, 250-10, 255-1, 298-5, 298-10, 298-20
Cases
Bai v Commissioner of Taxation [2015] FCA 973
BRK (Bris) Pty Ltd v Commissioner of Taxation (2001) 46 ATR 347
Consolidated Media Holdings Ltd v Commissioner of Taxation [2011] FCA 367
Danmark Pty Ltd v Federal Commissioner of Taxation (1994) 7 ATD 333
Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60
Federal Commissioner of Taxation v SNF (Australia) Pty Ltd (2011) 193 FCR 149
Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81
Hua-Aus Pty Ltd v Commissioner of Taxation [2010] FCA 341
Imperial BottleshopsPty Ltd & Egerton v Federal Commissioner of Taxation (1991) 91 ATC 4546
Rawson FinancesPty Ltd v Commissioner of Taxation [2013] FCAFC 26
Richardson v Commissioner of Taxation (1932) 48 CLR 192 (1932) 48 CLR 192
Sanctuary Lakes Pty Ltd v Commissioner of Taxation [2013] FCAFC 50
Sandbach and Commissioner of Taxation [2015] AATA 1024
Temples Wholesale Flower Supplies Pty Ltd v Federal Commissioner of Taxation (1991) 29 FCR 93
Trautwein v Federal Commissioner of Taxation (1936) 56 CLR 63
Trylow v Commissioner of Taxation [2004] FCA 446
Secondary Materials
ATO Practice Statement Law Administration 2007/22
ATO Miscellaneous Taxation Ruling MT2008/1
PAYG Bulletin No 3 Pay as You Go Withholding and Labour Hire Firms
Primary Production Industry Partnership Issues Register at para 10.1.4
NAT 1013-6.2000 Pay As You Go (PAYG) Withholding Tax Tables - Special Tax Tables for Individuals Seasonally Employed in the Horticultural Industry
NAT 1013-5.2006 Pay As You Go (PAYG) Withholding Tax Tables - Special Tax Tables for Individuals Employed in the Horticultural Industry
REASONS FOR DECISION
Deputy President F J Alpins
29 July 2016
INTRODUCTION
This proceeding concerns the liability of the applicant, being the partnership between Mr T T Lam and Ms H T Ngo, to an administrative penalty for failure to withhold amounts as required by Div 12 of the Pay As You Go (“PAYG”) withholding provisions contained in Pt 2-5 of Sch 1 to the Taxation Administration Act 1953 (Cth) (the “TAA”) during the period 1 July 2004 to 30 September 2008 (the “relevant period”) for payments contended by the respondent (the “Commissioner”) to have been made under a labour hire arrangement; it also concerns the question of whether that penalty ought to be remitted further pursuant to s 298-20 of that Schedule.
FACTS
Mr Lam, being the husband of Ms Ngo, was the sole witness at the hearing. He gave evidence by way of witness statement and orally; he was cross-examined.
During the relevant period, Mr Lam and Ms Ngo carried on a business in partnership (trading as “Al’s Farming”) of providing workers to farmers in the Robinvale area of Victoria, although it appears from Mr Lam’s evidence given under cross-examination that during the relevant period the business provided workers to only one farmer, at a farm known as “Grapeland”. (There was some suggestion from bank statements before the Tribunal that the business might also have provided workers to another farm during the relevant period, but under cross-examination Mr Lam was unable to recall whether that was so.) Under cross-examination, Mr Lam said that he now works as a supervisor for Grapeland but that he had not asked the farmer there to give evidence on his behalf at the hearing of this proceeding.
Mr Lam was the sole employee of the business. On some occasions the farmer would approach him seeking workers and on other occasions Mr Lam would approach the farmer to ascertain whether he required workers. Upon the farmer’s request, Mr Lam would then recruit workers to meet his labour requirements, either by advertising in a newspaper published in Vietnamese, from the book he kept of possible workers or by introductions from past workers. He would tell interested workers about the available work, the farmer’s requirements and the rates of pay, based upon what the farmer had told him. In his oral evidence, Mr Lam said that about 40 to 50 workers were required at any one time and that there tended to be “a lot” of turnover of workers.
The workers were provided mainly for tasks related to the farmer’s crops of table grapes. They were required to harvest the grapes, to prune the vines, to cover the vines with netting and to undertake related tasks, each of which occurred at a different time of year. Workers were also required to plant and harvest asparagus crops, although to a much lesser extent. The harvesting season for asparagus took place at a different time of year, over about two months.
When workers arrived at the farm for the first time, the farmer explained what they were required to do and demonstrated how to perform the required tasks. Mr Lam sometimes attended these meetings. In his witness statement, Mr Lam said that the farmer, the farmer’s family members and sometimes the farmer’s staff supervised the workers to ensure that they did their work correctly; sometimes Mr Lam assisted in translating for those who did not speak English. The farmer and the workers kept track of the work performed, such as the number of boxes of grapes that had been picked. The farmer maintained the right to dismiss workers whose work he considered to be unsatisfactory.
Mr Lam said that the farmer told the workers that they must provide their Tax File Number (“TFN”) or Australian Business Number (“ABN”) (when engaged through a separate entity) within three days, or else they would be required to leave. However, Mr Lam said that he never discussed with the farmer why he said that, nor did he ever discuss PAYG withholding with the farmer.
Each week the farmer would meet with Mr Lam and make a lump sum payment to him, for an amount comprising the total payments owing to each worker that week and Mr Lam’s fee for recruiting the workers. The farmer usually made the payment by cheque and, about once a month, by cash. He would hand a piece of paper to Mr Lam at the same time, on which he set out the hours worked by each worker, the applicable rate of pay and the amounts owing to each of them. Upon receiving his payment, Mr Lam would write out an invoice for that amount and hand it to the farmer. I note that there was no documentary evidence of such invoices before the Tribunal.
Under cross-examination, Mr Lam explained that his fee was calculated on the following basis. At grape harvesting time, he received 10% of the total amount paid to the workers, which depended in turn upon the number of boxes of grapes they picked. For other tasks relating to the vines, including pruning, he received 10 cents per vine. For asparagus picking, the workers were paid on the basis of the number of kilograms picked; Mr Lam explained under cross-examination that his fee for the asparagus crops was 5 cents per kilo picked. Accordingly, Mr Lam did not know the actual amount of his fee until he received the lump sum payment each week.
Mr Lam said under cross-examination that he did not keep those pieces of paper, as he would tear off pieces and give them to the relevant workers when he paid them, by cash. However, he said that maintained a book in which he made entries each week of the lump sum payment he had received from the farmer.
All the lump sum payments received by the partnership were deposited into its sole bank account. Mr Lam (or, according to his witness statement, his wife) then withdrew the amounts necessary to pay the workers, by means of a cash cheque. Mr Lam paid the workers weekly, in cash.
As I have indicated, the applicant’s former accountant and tax agent did not give evidence; Mr Lam said that he had not asked him to do so, but understood that he was still in practice, in Robinvale. He said that he had last spoken to him “a long time ago”. Under re-examination, Mr Lam said that the applicant had changed accountants in about 2009, because in about 2007 he had had a minor stroke and his wife took over dealing with the partnership’s accountant and preferred to engage a Vietnamese accountant. Mr Lam said that the stroke had, amongst other things, affected his memory.
Under cross-examination, Mr Lam said that he and his wife had sought advice from their former accountant prior to establishing their business in September 2004 and had established a partnership for that purpose upon his advice. When Mr Lam was asked under cross-examination whether he had sought advice about the tax obligations of the proposed business at the time, he said that “I think he said something about it – about the tax”, but that he could not recall what was said, nor whether he had told his accountant about how he intended to run the business.
Mr Lam said that his former accountant had prepared the partnership’s Business Activity Statements (“BAS”) from the commencement of the business and that he also prepared the income tax returns for the partnership. Mr Lam said that he had visited his accountant quarterly for the former purpose, at which time he would provide the accountant with certain records he had kept or maintained, including the partnership’s cheque book and cheque deposit book. He also provided the accountant with a copy of the invoices he gave to the farmer each week for the lump sum payments.
Mr Lam was unable to provide a satisfactory explanation of how his accountant would have worked out the amounts being paid to workers when preparing the income tax return for the partnership, given that Mr Lam did not keep records of the amounts payable to each worker. However, Mr Lam said that he believed that the invoices he prepared for the farmer might have itemised his fee and payments to workers separately.
Under cross-examination, Mr Lam said that the applicant’s former accountant had later returned the documents he gave to him. However, under re-examination, he said that his wife had told him that, while he was in hospital recovering from his stroke and she was with him, their home had been robbed, “all my paperwork” and folders were destroyed and all his furniture was “trashed”. Although Mr Lam referred to the existence of a police report about the matter and said that it had been provided to his representative appearing at the hearing, no such report was tendered in evidence.
Mr Lam said that he also provided the accountant on those occasions with the ABN and TFN details provided by workers; he said that the accountant said that he needed those details but did not tell him why. Mr Lam said that he did not remember whether he had discussed with his accountant any requirement to withhold amounts from the payments he made to workers, nor whether the accountant had advised him that he was not required to withhold amounts from such payments.
Under re-examination, Mr Lam agreed with his representative when it was put to him that he had relied “extensively” upon the former accountant’s experience and guidance with respect to the applicant’s BAS and income tax returns. He said that he did not understand the BAS and partnership tax returns at the time they were lodged. He had done “some reading” about the partnership’s taxation obligations in preparing BAS, having read ATO correspondence about such matters, but “didn’t understand all of it”.
In evidence before the Tribunal were BAS lodged by the applicant for the following periods, in which the following amounts of (a) total salary, wages and other payments and (b) PAYG tax withheld were reported:
· quarter ending 30 September 2004: (a) $14,605; (b) $1,899 · quarter ending 31 December 2004: (a) $34,448; (b) $4,481 · quarter ending 30 June 2007: (a) $2,069; (b) $269 · quarter ending 30 September 2007: (a) $3,678; (b) $478.
Under cross-examination, Mr Lam confirmed, with respect to the BAS for the quarter ending 30 September 2004, that the figure of $14,605 represented payments made to workers. However, he said that that his accountant had not explained to him why the above amounts had been withheld from payments made to workers.
A letter from the respondent dated 19 April 2012 concerning the results of its audit of the applicant, to which I refer below, indicates that no other PAYG amounts were withheld by the applicant during the relevant period. Under re-examination, Mr Lam said that he was not aware at the time that amounts had been withheld during certain quarters during the relevant period but not during others, as the accountant did not discuss it with him.
Mr Lam said that he did not review the income tax returns for the partnership prepared by the accountant, as he did not understand them. He said that he did not check them before signing them at his accountant’s office and that the accountant did not explain to him how he had prepared the returns. Mr Lam said that during the relevant period he was not familiar with the concept of PAYG withholding.
Mr Lam was cross-examined about the partnership’s income tax returns for the relevant years of income. I note that the main business activity of the partnership was described in each of those returns as being “contract labour supply service (except provision of specific services)”.
The partnership disclosed the following amounts of business income in each of the relevant years:
· 2005 income year:
$398,172
· 2006 income year:
$662,930
· 2007 income year:
$612,998
· 2008 income year:
$690,444
· 2009 income year:
$269,081
Under cross-examination, Mr Lam confirmed that each of those amounts reflected the total lump sum payments he received from the farmer in each of those years.
In each of the relevant income years, the partnership claimed a deduction for “Contractor sub-contractor and commission expenses”, in the following amounts:
· 2005 income year:
$351,406;
· 2006 income year:
$612,083;
· 2007 income year:
$551,872;
· 2008 income year:
$661,993;
· 2009 income year:
$239,112
Under cross-examination, Mr Lam confirmed that each of those amounts reflected the total payments made to workers in each of those income years.
Mr Lam was cross-examined about his evidence given in his witness statement to the effect that the partnership merely paid the workers “on behalf of the farmer”. When it was put to him that that evidence was inconsistent with the partnership’s income tax returns, in that the partnership had returned the lump sum payments received from the farmer as income of the partnership and had claimed deductions for the payments made to workers, Mr Lam corrected his evidence, acknowledging that the payments were in fact made by him on behalf of the partnership’s business and not by or on behalf of the farmer. Mr Lam said that the farmer told the workers on their arrival that Mr Lam would pay them on Fridays and that the workers looked to him for payment.
Under cross-examination, Mr Lam accepted that the description in the partnership’s objection of its principal business as being “the provision of labour hire services” was correct.
It was apparent from the documents before the Tribunal that the partnership provided the Australian Taxation Office with 36 TFN declarations provided by workers during the period 30 September 2004 to 28 May 2008, but that all but one of the TFN declarations lodged was found not to have a valid associated TFN. In his oral evidence, Mr Lam said that most workers had provided ABNs rather than TFNs and also said that his accountant had been responsible for checking the validity of the TFNs provided.
PROCEDURAL HISTORY
By letter dated 19 April 2012, the Commissioner informed the applicant of various adverse conclusions he had reached as a result of his audit of the partnership conducted for the relevant period. Relevantly, he stated that the applicant had failed, as required under the PAYG withholding provisions contained in Div 12 of Sch 1 to the TAA, to withhold a total of $464,354 from payments it made to labour hire workers and was therefore liable under s 16-30 of Sch 1 to the TAA to a penalty of the same amount. That amount was calculated on the basis that the applicant had been required to withhold a total of $471,481 over the relevant period, but had only withheld a total of $7,127.
The Commissioner also informed the applicant in that letter that, pursuant to s 298-20 of Sch 1 to the TAA, he had remitted the penalty amount in part, by 25%, to an amount of $348,265.50, on the basis that the failure to withhold had resulted from intentional disregard of the applicant’s PAYG withholding obligations (see ATO Practice Statement Law Administration 2007/22).
The applicant lodged an objection dated 2 August 2012 against various taxation decisions, including with respect to the penalty imposed under s 16-30 of Sch 1 to the TAA, to which the applicant objected on the grounds that the partnership was not required to withhold the relevant amounts under Div 12 or, alternatively, that the penalty under s 16-30 ought to have been remitted in full on the basis that reasonable care had been taken by the applicant with respect to its relevant taxation obligations.
The Commissioner’s objection decision is dated 28 February 2012 on its face, but must have been made after that date, given the dates of the preceding documents (perhaps, read in chronological context, on 28 February 2013, although nothing turn on that point). The Commissioner allowed the applicant’s objection in part. Relevantly, the Commissioner further remitted the penalty under s 16-30 to 50% of the amount to which the applicant was otherwise liable, having determined that the applicant had been reckless with regard to its PAYG withholding obligations (see ATO PS LA 2007/22). The amount of the penalty was therefore reduced to $232,177.
For some reason that is not clear from the documents before the Tribunal, the Commissioner issued a notice of penalty for failure to withhold amounts to the applicant on 27 March 2013, stating that the amount of the penalty was $348,265 (and the due date for payment), despite having already apparently remitted the penalty further by his objection decision. In any event, he issued a further such notice on 13 December 2013 in the amount of $232,177, which corresponds with the amount of the penalty remaining as a consequence of the Commissioner’s objection decision.
The applicant lodged this application for review on 17 February 2014, although I note that the application is dated 17 February 2013, evidently in error. It is stated in the application form that the decision the subject of the application for review was made on 13 December 2013 and was further stated in an attachment that “the decision to be reviewed is the [Commissioner’s] decision of 13 December 2013 to imposed a penalty on [the applicant]”. (I note that the applicant was granted an extension of time for the making of its application.)
LEGISLATION AND LEGISLATIVE HISTORY
Pay As You Go (PAYG) Withholding – Pt 2-5 of Sch 1 to TAA
The provisions governing PAYG withholding are contained in Pt 2-5 of Sch 1 to the TAA. Division 12 of that Part concerns payments from which amounts must be withheld.
The provision which the Commissioner contends gives rise to such a withholding obligation in this proceeding is s 12-60(1) of Sch 1 to the TAA, which provides as follows:
“An entity that *carries on an *enterprise must withhold an amount from a payment that it makes to an individual in the course or furtherance of the enterprise if:
(a)the enterprise is a *business of arranging for persons to perform work or services directly for clients of the entity, or the enterprise includes a business of that kind that is not merely incidental to the main activities of the enterprise; and
(b)the payment is made under an *arrangement the performance of which, in whole or in part, involves the performance of work or services by the individual directly for a client of the entity, or directly for a client or another entity.”
I note that s 12-60(1) was amended by Act no.41 of 2005, but in a respect that is immaterial for present purposes.
Section 3AA(2) of the TAA provides that an expression has the same meaning in Sch 1 as in the Income Tax Assessment Act 1997 (Cth) (“ITAA 1997”) (save for when an expression is given a particular meaning in Sch 1: s 3AA(1A)). The term “arrangement” is defined in s 995-1 of the ITAA 1997 to mean “any arrangement, agreement, understanding, promise or undertaking, whether express or implied, and whether or not enforceable (or intended to be enforceable) by legal proceedings”. The term “entity” is relevantly defined in that provision to mean a partnership. I note that an “enterprise” is relevantly defined include “an activity, or series of activities, done … in the form of a ... business” (s 9-20 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth); see s 995-1 of the ITAA 1997).
Section 16-30 of Sch 1 to the TAA previously provided, relevantly, that:
“(1)An entity … that:
(a)fails to withhold an amount as required by Division 12; ...
…
is liable to pay to the Commissioner a penalty (the penalty amount) equal to that amount.
(2)The penalty amount is due at the time when the entity would have had to pay to the Commissioner the amount referred to in subsection (1).” (Emphasis in original.)
Section 16-30 in its previous form was repealed under the Tax Laws Amendment (2006 Measures No. 2) Act 2006 (Cth) (Act no. 58 of 2006) (the “2006 Amending Act”) and was replaced by a substituted provision, which commenced operation on 22 June 2006 and provides as follows:
“An entity … that:
(a)fails to withhold an amount as required by Division 12; ...
…
is liable to pay to the Commissioner a penalty equal to that amount.”
Machinery provisions for administrative penalties – Subdivision 298-A of Pt 4-25 Sch 1
The substituted form of s 16-30 of Sch 1 to the TAA introduced by the 2006 Amending Act corresponds with a contemporaneous amendment to s 298-5 of Sch 1 to the TAA. The 2006 Amending Act amended the latter provision so that it expressly provides that the scope of Subdivision 298-A in Pt 4-25 of Sch 1, which contains machinery provisions for administrative penalties, extends to administrative penalties imposed on an entity by a provision of Div 16 in Sch 1.
The following provisions of subdiv 298-A are also relevant. Section 298-10 imposes an obligation on the Commissioner to notify an entity of its liability to pay an administrative penalty within the scope of that Subdivision, as follows:
“The Commissioner must give written notice to the entity of the entity’s liability to pay the penalty and of the reasons why the entity is liable to pay the penalty. The Commissioner may do so in any other notice he or she gives to the entity. The Commissioner is not required to give reasons if he or she decides to remit the penalty”.
(I note in passing that, the Commissioner’s obligation under that provision to notify an entity of the reasons for its liability (and the exception to that requirement), arose upon the commencement of Act no. 75 of 2005.)
Section 298-15 of Sch 1 provides that “[t]he penalty becomes due for payment on the day specified in the notice, which must be at least 14 days after the notice is given to the entity”.
Section 298-20 empowers the Commissioner to remit an administrative penalty and relevantly provides as follows:
“298-20(1) The Commissioner may remit all or a part of the penalty.
298-20(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.
298-20(3)If:
(a) the Commissioner refuses to any extent to remit an amount of penalty; and
…
(c) the entity is dissatisfied with the decision;
the entity may object against the decision in the manner set out in Part IVC.”
(I note in passing that the requirement to give reasons for such a decision was inserted in s 298-20 by Act no. 75 of 2005.)
It is also relevant to refer to certain provisions of Pt 4-15 of Sch 1 to the TAA, which governs collection and recovery of tax-related liabilities and other amounts, particularly in Divs 250 and 255 of that Part. Section 250-5(1) provides that “[a] tax-related liability may arise for an entity before it becomes due and payable by that entity”. A “tax-related liability” is defined in s 255-1(1) to mean “a pecuniary liability to the Commonwealth arising directly under a *taxation law (including a liability the amount of which is not yet due and payable)” and includes an administrative penalty under s 16-30 of Sch 1 to the TAA (see s 250-10(2) of Sch 1 to the TAA).
Part IVC of TAA
Part IVC of the TAA (ss 14ZL – 14ZZS) governs, amongst other things, taxation objections, objection decisions and the review of such decisions by the Tribunal.
Section 14ZL of the TAA relevantly provides:
“(1) This Part applies if a provision of an Act or of regulations (including the provision as applied by another Act) provides that a person who is dissatisfied with an assessment, determination, notice or decision .... may object against it in the manner set out in this Part.
(2)Such an objection is in this Part called a ‘taxation objection’.”
Division 3 of Pt IVC contains provisions concerning taxation objections, including how and when they are to be made (see ss 14ZU and 14ZW respectively) and how they are to be dealt with by the Commissioner. Section 14ZY relevantly provides that the Commissioner must decide whether to allow (wholly or in part), or disallow, a taxation objection. Such a decision constitutes an “objection decision” (s 14ZY(2)).
Section 14ZZ(1)(a)(i) relevantly entitles a person dissatisfied with the Commissioner’s objection decision to apply to the Tribunal for review of the decision. (I note that the objection decision must be a “reviewable objection decision”, but that term is not significant in this instance (see definition in s 14ZQ)).
Section 14ZZK(b) of the TAA provides that the applicant has the burden of proving:
“(i)if the taxation decision concerned is an assessment – that the assessment is excessive or otherwise incorrect and what the assessment should have been; or
(ii)in any other case – that the taxation decision concerned should not have been made or should have been made differently”.
The term “taxation decision” is defined in s 14ZQ to mean “the assessment, determination, notice or decision against which a taxation objection may be, or has been, made”.
ISSUES BEFORE THE TRIBUNAL
The applicant sought to raise the following issues before the Tribunal, in the following order:
(a)whether the Commissioner was authorised under the Income Tax Assessment Act 1936 (Cth), the ITAA 1997 and the TAA to issue a penalty notice to the applicant (more specifically described in the applicant’s written submissions lodged after the hearing, as being a penalty notice “for an estimated amount”) in relation to [the] failure[s] to withhold PAYG where the alleged failure[s] took place up to more than nine years (as calculated in those submissions) before the date of the penalty notice;
(b)whether the applicant liable to withhold PAYG under s 12-60 of Sch 1 to the TAA from payments made to workers;
(c)whether the Commissioner’s reduction of the penalty to 50% was an appropriate reduction.
With respect to the first issue, it was contended by the applicant that the Commissioner was not authorised to issue either the penalty notice dated 27 March 2013 nor the penalty notice dated 13 December 2013 (the latter, as I have indicated, purportedly being the subject of the application for review), first because they were impermissibly based upon an estimate of the applicant’s liability and further because, in essence, the expiration of an applicable time limit precluded their issuance.
The Commissioner submitted that the first issue does not properly arise for determination in this proceeding, given its nature. I accept that submission.
The Tribunal only has such jurisdiction as is conferred upon it by enabling enactments (see s 25(1) of the Administrative Appeals Tribunal Act 1975 (Cth)). The Tribunal’s jurisdiction arises pursuant to s 14ZZ(1)(a) of the TAA, which entitles a person who is dissatisfied with the Commissioner’s reviewable objection decision to apply to the Tribunal for review of that decision.
In this case, the reviewable objection decision was the Commissioner’s decision by which he allowed the applicant’s objection in part and, amongst other things, further remitted the penalty under s 16-30 to 50% of the amount to which the applicant was otherwise said to be liable.
The “taxation decision” for the purposes of s 14ZZ(1)(a) of the TAA against which the applicant objected was the Commissioner’s decision made pursuant to s 298-20 of Sch 1 to the TAA to remit part of the penalty to which the applicant was said to be liable under s 16-30 of Sch 1 (the “remission decision”). The applicant’s right to object against that decision under Pt IVC of the TAA arose pursuant to s 298-20(3), given the Commissioner’s refusal to remit the amount of penalty in full (see s 298-20(3)(a)).
As the taxation decision the subject of this proceeding is the remission decision, s 14ZZK(b)(ii) of the TAA applies – the applicant has the burden of proving that the remission decision should not have been made or should have been made differently. (Although the Commissioner submitted that the issue before the Tribunal was (merely) whether the remission decision should have been made differently for that purposes of that provision, I explain later in these reasons why, in my view, the prior question of whether the decision should not have been made also arises for consideration.)
As I have said, the applicant purported to seek review of the notice of penalty issued on 13 December 2013 pursuant to s 298-10 of Sch 1 to the TAA, although I note that there was some suggestion in its written submissions in reply lodged after the hearing that the applicant did not press the contention that that notice constituted the decision under review.
In any event while, as is explained below, the issue of whether the applicant was in fact liable to a penalty under s 16-30 of Sch 1 for failure to withhold properly arises for consideration in the context of review of the Commissioner’ objection decision, such liability does not derive from a notice given under s 298-10. A penalty under s 16-30 becomes due and payable upon the giving of such notice, in accordance with s 298-15 of Sch 1, but liability arises beforehand (see s 250-5(1) of Sch 1 to the TAA).
While “the Commissioner is required to give written notice to an entity of its liability to pay a penalty … the Commissioner does not make an assessment” (Consolidated Media Holdings Ltd v Commissioner of Taxation [2011] FCA 367 at [65] per Emmett J). Rather, such liability arises by operation of law in the prescribed circumstances (see Temples Wholesale Flower Supplies Pty Ltd v Federal Commissioner of Taxation (1991) 29 FCR 93 at 98; see also Trylow v Commissioner of Taxation [2004] FCA 446 at [4] per Hill J). Accordingly, the question of the Commissioner’s authority to give notice of the applicant’s liability to a penalty under s 16-30 does not arise upon review by the Tribunal of the objection decision.
That is so even though the genesis of a proceeding such as this one necessarily lies in a giving of notice under s 298-10, as “[a]lthough the Act is the direct source of the liability to pay a penalty … , in practice no question of such a liability will arise until the Commissioner makes a decision to require payment (Temples Wholesale Flower Supplies at 483).
The Tribunal “must perform its function of review to arrive at the correct and preferable decision … in accordance with the legislative constraints imposed by Pt IVC of the [TAA]” (Bai v Commissioner of Taxation [2015] FCA 973 at [38] per Rares J). Given the terms of s 14ZZK(b)(ii), the only state of satisfaction that the Tribunal is required to reach in reviewing the objection decision is that, on the facts as found, the applicant has proved that the remission decision should not have been made or should have been made differently. If the Tribunal is not so satisfied, the application for review must be dismissed (see Rawson FinancesPty Ltd v Commissioner of Taxation [2013] FCAFC 26 at [111]-[112], [116] per Jagot J, Nicholas J agreeing). The first issue raised by the applicant and its contentions made with regard to that issue, do not bear upon the Tribunal’s statutory task in this proceeding.
However, as I have indicated, the issue of whether the applicant was liable to a penalty under s 16-30 of Sch 1 to the TAA does properly arise in this proceeding. As I have said, the taxation decision in issue is the decision made under s 298-20 of Sch 1 to remit less than the whole penalty. Given that such a decision is necessarily predicated on the assumptions that the entity was required by Div 12 to withhold an amount and failed to do so for the purposes of s 16-30, review of the objection decision involves not merely consideration of the question of remission but also consideration of the question of whether the entity was liable to pay any penalty at all (Trylow at [7] per Hill J, citing Richardson v Commissioner of Taxation (1932) 48 CLR 192 (1932) 48 CLR 192 (see at 203-205) and Temples Whole Flower Supplies (see at 483-486; although cf. the use of the term “imposed” in s 298-5 of Sch 1).
It is in this way that, in my view, an applicant might discharge its onus of proof under s 14ZZK(b)(ii) by establishing that a remission decision under s 298-20 “should not have been made” as the Commissioner’s discretion under that provision is only enlivened if a penalty within its terms is in fact imposed (see s 298-5); relevantly, if the applicant is liable to pay a penalty pursuant to s 16-30.
In my view it necessarily follows, reading s 14ZZK(b)(ii) consonantly with s 14ZZK(b)(i) (which applies to assessments), that it is open to an applicant to seek to prove that a taxation decision “should not have been made” and also that it “should have been made differently” in the alternative, even though a conclusion that the taxation decision concerned “should not have been made” at all would preclude the need for any conclusion as to whether it should have been made differently.
Alternatively, an applicant might prove that a remission decision under s 298-20 “should have been made differently”. That might be established on the basis that the amount of the penalty the subject of the remission decision was less than that determined by the Commissioner (see Richardson at 204); relevantly that, while the applicant was required but had failed to withhold an amount for the purposes of s 16-30 of Sch 1, it was a lesser amount than that determined by the Commissioner for the purposes of the remission decision.
An applicant might also prove that a remission decision under s 298-20 “should have been made differently” for the purposes of s 14ZZK(b)(ii) on the basis that the Commissioner ought to have exercised the discretion under s 298-20 so as to remit the penalty to a greater extent than he had for the purposes of that provision and thus the Tribunal, given its role upon review, should do the same.
CONSIDERATION
Onus of proof – s 14ZZK(b) of TAA
Before turning to address the issues properly before the Tribunal, being the applicant’s liability to a penalty under s 16-30 for failure to withhold pursuant to s 12-60 of Sch 1 and, if necessary, the issue of its remission, it is convenient to set out some general principles concerning the onus of proof borne by the applicant in this proceeding.
As I have said, the applicant bears the burden of proving that the remission decision “should not have been made or should have been made differently” (s 14ZZK(b)(ii) of the TAA). Accordingly, in this proceeding the applicant must prove that:
(a)it was not required to withhold amounts pursuant to s 12-60(1) of Sch 1 to the TAA during the relevant period or that it did not fail to do so for the purposes of s 16-30 of Sch 1, and thus the remission decision should not have been made;
(b)it was required to withhold (or failed to withhold) lesser amounts during the relevant period than the amounts determined by the Commissioner for the purposes of the remission decision, and thus is liable to a lesser penalty, so that the remission decision should have been made differently; or
(c)the penalty arising under s 16-30 ought to have been remitted to a greater extent than it was, so that the remission decision should have been made differently on that account.
As I have said, the penalty was remitted by 25% in making the remission decision; subsequently it was remitted by 50% upon the making of the objection decision, being the decision under review.
Although the two provisions in s 14ZZK(b) have discrete application, they are to be read consonantly in terms of their import. Accordingly, “the onus rests upon the [applicant] of establishing the facts upon which [it] relies” and if it is necessary to establish a particular fact to discharge the statutory onus under the TAA, it must satisfy the Tribunal with respect to that fact (Danmark Pty Ltd v Federal Commissioner of Taxation (1994) 7 ATD 333 at 337; Hua-Aus Pty Ltd v Commissioner of Taxation [2010] FCA 341 at [22] per Edmonds J).
It follows that if no evidence is adduced, if such evidence as is adduced is not a reasonable explanation of why the remission decision should not have been made or should have been made differently and therefore is not accepted as discharging the onus or if such evidence is otherwise rejected, the remission decision must prevail (Hua-Aus at [23]). The Commissioner does not bear any onus requiring him to show that the remission decision was correctly made or to show that it can be sustained or supported by evidence (Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81 at 89 per Mason J).
It is well-settled that “evidence of witnesses who have an interest in the outcome of litigation needs to be approached critically” (Federal Commissioner of Taxation v SNF (Australia) Pty Ltd (2011) 193 FCR 149 at [82] per Ryan, Jessup and Perram JJ). However, it must “be borne in mind that the evidence of a taxpayer is not to be regarded as ‘prima facie unacceptable’” (Imperial BottleshopsPty Ltd & Egerton v Federal Commissioner of Taxation (1991) 91 ATC 4546 at [4552] per Hill J).
However, as I said in Sandbach and Commissioner of Taxation [2015] AATA 1024, a taxpayer’s explanation that he is unable to produce records because, for example, they have not been kept or have been lost or misplaced does not obviate the need to discharge the burden of proof – such an explanation is no substitute for such records as might serve to discharge that burden. The same can be said of a taxpayer’s explanation as to why they are unable to recall relevant events. That is particularly so where there is a failure to call other witnesses who might be able to give evidence, corroborative or otherwise, which assists the applicant in discharging the onus of proof. As Latham CJ stated in Trautwein v Federal Commissioner of Taxation (1936) 56 CLR 63 at 87:
“In the absence of some record in the mind or in the books of the taxpayer, it would often be quite impossible to make a correct assessment. The assessment would necessarily be a guess to some extent, and almost certainly inaccurate in fact. There is every reason to assume that the legislature did not intend to confer upon a potential taxpayer the valuable privilege of disqualifying himself in that capacity by the simple and relatively unskilled method of losing either his memory or his books.” (Emphasis added.)
Furthermore, as Jessup J noted in Rawson Finances at [62] (quoting Minister for Immigration and Ethnic Affairs v Pochi (1980) 31 ALR 666 at 685), the Tribunal must proceed by reference to “rationally probative evidence” rather than on mere “suspicion or speculation”. The Tribunal must bear in mind the distinction between “permissible inference” and “impermissible conjecture” (see Rawson Finances at [88] per Jagot J).
Liability to penalty under s 16-30 for failure to withhold under s 12-60
As I have indicated, it is necessary before turning to consider the issue of remission to consider the antecedent issue of the applicant’s liability to a penalty under s 16-30 which might warrant remission and, accordingly, whether it was required to withhold amounts by operation of s 12-60(1) of Sch 1 to the TAA.
I consider that the evidence before the Tribunal establishes clearly that the applicant carried on an “enterprise” within the terms of para (a) of that provision during the whole of the relevant period and that all of the payments it made to farm workers to which I have referred were made under an “arrangement” within the terms of para (b) of that provision (as that term is defined) and the applicant’s client being the “Grapeland” entity or alternatively the farmer to whom I have referred, there being no precise evidence about the vehicle constituting the applicant’s “client”.
The applicant made payments to individuals “in the course or furtherance of” its enterprise, being a “business of arranging for persons to perform work or services directly for clients” of the applicant, being local farmers. Furthermore, those payments were made under an “arrangement the performance of which, in whole or in part, involve[d] the performance of work or services by the individual[s] directly” for the applicant’s client. The evidence establishes that the applicant’s business and the payments made by the applicant to farm workers were of precisely the kind contemplated by s 12-60(1) and thus rendered the applicant subject to withholding obligations pursuant to that provision.
In its written submissions lodged after the hearing, the applicant submitted that “based on the testimony of [Mr Lam] it is arguable that the [applicant was] not the employer … of the workers or had a contract with the workers”. Further, the applicant submitted that Mr Lam “was acting as nothing more than an agent for the farmer, who was the real employer”.
Section 12-60 is to be construed and applied in accordance with its terms and not by paraphrasing them. The applicants contended characterisations of the farmer as the ‘’employer” and the applicant as his ‘’agent’’ are not to the point. In any event, I reject the submission that either the applicant or Mr Lam was merely acting as an agent of the farmer. As I have said, the applicant was carrying on a business within the terms of s 12-60, of arranging for persons to do farm work directly for its clients. It made payments to farm workers under an arrangement with a particular client the performance of which involved such workers harvesting grapes and asparagus and undertaking related tasks directly for that client, out of weekly lump sum payments it received from that client in carrying on that business.
Given the terms of s 12-60, the true issues which arise are whether the entity was carrying on an enterprise, and therefore a business, of the requisite kind and whether it made payments of the requisite kind under a relevant arrangement. The application of s 12-60 does not depend upon either the relevant entity or any client being characterised as an employer. The applicant’s submission that it was “nothing more than an agent”, put in terms of the statutory text of s 12-60, could only be taken as a submission that the applicant did not carry on a business within the terms of para (a) or else that there was not an “arrangement” within the terms of para (b). However, neither Mr Lam’s evidence nor the documentary evidence before the Tribunal supports the applicant’s submissions in that regard. As I have said, Mr Lam conceded under cross-examination that the applicant was not merely an agent of the farmer, despite assertions in his witness statement to contrary effect.
Furthermore, the applicant’s taxation treatment of the lump sum payments it received from the farmer as partnership income, its claiming of deductions for the payments to workers and its description of its main business activity in its income tax returns do not support its submissions. As I have said, the former accountant did not give evidence and so there is no evidence before the Tribunal to detract from those contemporaneous documents, which I prefer to Mr Lam’s evidence, particularly given that it was often, perhaps understandably, vague. Furthermore, there was no evidence given by the farmer which might support such a submission, which was essentially an assertion in view of the contrary evidence before the Tribunal.
I note that the applicant also submitted in his written submissions lodged after the hearing that “it was the obligation of the [farmer] to remit PAYG”, relying upon material published on the ATO’s website in the “Primary Production Industry Partnership Issues Register” describing features of a shearing operation known as “levy shearing”, where “the contractor acts as an employment broker and provides a team which is employed by the woolgrower”, the latter being responsible for remitting PAYG. The applicant submitted that the arrangement described in that material “is the arrangement closest to that between the [applicant], the farmers and the workers”.
It suffices to say in that regard that the issue before the Tribunal is the application of the statutory text in s 12-60 to the facts as found in this case, which cannot depend upon analogies drawn from any opinion expressed by the Commissioner about a hypothetical scenario described in a publication of the kind adverted to by the applicant, leaving aside whether the analogy is an apt one.
The same can be said of another publication of the ATO on which the applicant sought to rely in support of its submissions about s 12-60, described as “PAYG Bulletin No 3 Pay As You Go Withholding and Labour Hire Firms”.
Accordingly, the applicant was required by s 12-60 of Sch 1 of the TAA to withhold amounts from the relevant payments it made to the farm workers during the relevant period. There was no real issue before the Tribunal as to whether the applicant had failed to do so for the purposes of s 16-30(1)(a) of Sch 1 – the gist of the applicant’s case in that regard was that it was not required to withhold such amounts. In any event, as I have indicated, based on the evidence before the Tribunal, the applicant only withheld a total of $7,127 during the relevant period.
While the applicant submitted in the context of seeking to impugn the penalty notices that the amount of penalty was impermissibly an estimate, it adduced no evidence to establish, nor did it otherwise submit, that the actual amounts it failed to withhold, and thus the actual amount of penalty to which it was liable under s 16-30 of Sch 1 to the TAA, were less than that upon which the remission decision was based. As I have said, the penalty was calculated for the purposes of the remission decision on the basis that the applicant had failed to withhold a total amount of $464,354 during the relevant period.
In his written submissions lodged after the hearing, the Commissioner submitted that the evidence given at the hearing, particularly Mr Lam’s confirmation that the relevant amounts claimed as deductions in the partnership’s income tax returns represented payments made to workers, established that the amount of penalty upon which the remission decision was based was in fact less than it ought to have been. However, the Commissioner said that as the applicant did not take issue with the amount of the penalty the subject of the remission decision, the Commissioner would not contend that the decision under review should be disturbed so as to increase its amount.
I note that the applicant did take issue with the amount of the penalty, in that it submitted, albeit in the context of the issue not properly before the Tribunal, that the amount of the penalty should be based upon a 13% withholding rate. The applicant relied in that regard on successive withholding schedules made under Sch 1, called “Special Tax Tables for Individuals Seasonally Employed in the Horticultural Industry”, although I note that they are said to apply to withholding payments covered by s 12-35 of Sch 1 to the Act, rather than s 12-60. The schedules prescribed a standard withholding rate of 13% for payees (or 29% in the case of overseas visitors on a working holiday), but required that 48.5% (or other amounts in the latter case) be withheld in circumstances where the payee did not provide a valid TFN declaration before payment.
However, it remains the case that there was no evidence adduced by the applicant to establish that the amount of the penalty should have been some amount other than the amount upon which the remission decision was based, nor as to what that amount should have been. Accordingly, the applicant has not discharged the burden of proving that the remission decision should have been made differently in that regard. I turn now to the question of remission of the penalty pursuant to s 298-20.
Remission of penalty
The discretion under s 298-20 of Sch 1 to the TAA is a broad one; the question which arises under that provision “is simply whether the decision-maker is satisfied having regard to the taxpayer’s particular circumstances that it is appropriate to remit penalty in whole or in part”; (Sanctuary Lakes Pty Ltd v Commissioner of Taxation [2013] FCAFC 50 at [249], [251] per Griffiths J (Edmonds J agreeing). Accordingly, the “power under s 298-20 requires consideration to be given to the particular circumstances of the taxpayer” (at [251]).
I note that the Commissioner in making the remission decision and objection decision had regard to ATO Practice Statement Law Administration 2007/22 (the “Practice Statement”), which is an instruction to ATO staff concerning the exercise of the discretion under s 298-20.
It is appropriate for the Tribunal to have regard to the policy expressed in the Practice Statement in reviewing the objection decision; however, the Tribunal is not bound by it, as the law lies in the statutory text of s 298-20 (Drake v Minister for Immigration and Ethnic Affairs (1979) 2 ALD 60 at 69-70 per Bowen CJ and Deane J). As I have indicated, the real question raised by that provision is that posed by Griffiths J in Sanctuary Lakes; the concepts of reasonable care and recklessness referred to in the Practice Statement do not form part of the statutory text governing remission of a penalty under s 16-30 and thus do not have the same import as they would otherwise have (cf. s 284-90(1) of Sch 1 to the TAA).
While such concepts may properly be considered in the exercise of the discretion in s 298-20, not being irrelevant considerations, they cannot confine its exercise and should be weighed in the balance of all relevant matters concerning the taxpayer’s particular circumstances (see Sanctuary Lakes at [157] per Greenwood J, at [225], [250] per Griffiths J). The Practice Statement focuses on the “payer’s behaviour” until the failure to withhold and certain other specified factors; however, consideration of the taxpayer’s particular circumstances requires that further and wider matters relevant to the exercise of the discretion be taken into account.
As I have said, the penalty under s 16-30 was remitted by 25% in making the remission decision and then by 50% in making the objection decision. Shortly stated, the applicant submitted that it should be remitted in full or else to 13%, on the following bases:
(a) Mr Lam’s and Ms Ngo’s lack of business experience prior to the commencement of the applicant’s business;
(b) that, by the time the Commissioner commenced his audit of the applicant, the applicant did not have its business records relating to the relevant period, as they were under no legal obligation to retain such records for more than five years;
(c) consonantly, that the applicant had lodged its tax returns and BAS in a timely manner but the Commissioner had not inquired into its taxation affairs until “relatively recently resulting in the [applicant’s] inability to provide records and information relating to earlier years outside the time limits for amended assessments and penalty notices”;
(d) the applicant used a tax agent to assist with the preparation of its BAS, income tax returns and “other government related reporting obligations”, “with the tax agent not giving any indication that the manner in which the business was conducted potentially did not comply with [its] PAYG obligations”;
(e) the applicant’s “factual situation” is similar to that described in the “Primary Production Industry Partnership Registry” publication to which I have referred above.
The applicant also referred to the Practice Statement and Miscellaneous Taxation Ruling MT2008/1, appearing to submit in substance that the penalty should be remitted in full on the basis that the applicant had exercised reasonable care for the purposes of the guidelines in the Practice Statement.
The essential difficulty with the applicant’s submissions as to why the penalty under s 16-30 of Sch 1 should be remitted further is that in many respects they were founded on assertions of fact set out in the applicant’s written submissions lodged after the hearing, rather than on evidence before the Tribunal. For instance, the applicant submitted that ‘[t]he [applicant] and [its] tax agent were under the impression that they as agents of the farmer were under no obligation to withhold PAYG as the workers worked directly for the farmers, provided TFN’s [sic] and ABN’s [sic] and were independent contractors”.
The asserted “impression” held by Mr Lam is contradicted by his evidence that he provided ABN and TFN details to the accountant upon his request. It also does not sit well with Mr Lam’s knowledge that the applicant was conducting a business, as revealed by his evidence about the establishment of the business and about the nature of the amounts returned as income and claimed as deductions in the applicant’s income tax returns.
I note that the “impression” asserted to have been held by the former accountant does not sit well with the applicant’s submission that the accountant had not given “any indication that the manner in which the business was conducted potentially did not comply with [its] PAYG obligations”. Given that the former accountant did not give evidence, the Tribunal can only draw an inference about any “impression” he might have had from the BAS and partnership income tax returns in evidence. Those documents indicate that the accountant was well aware of the applicant’s withholding obligations, given the description of the applicant’s business, the withholdings which did occur on occasion and the deductions for payments made to workers claimed in the partnership’s income tax returns.
As I have indicated, Mr Lam could not recall what advice his accountant had given about the applicant’s PAYG obligations, but did recall that the accountant had given taxation advice of some kind when the business was being established. Furthermore, he had done “some reading” about the partnership’s taxation obligations. Based on the evidence before the Tribunal, I accept that Mr Lam relied upon his former accountant in terms of the preparation of the applicant’s BAS and income tax returns. However, I do not accept that Mr Lam was quite so ignorant of the operation of the PAYG system or of the applicant’s failure to comply with its withholding obligations as feigned in his somewhat self-serving evidence in that regard. The inference I draw from Mr Lam’s evidence and the documents before the Tribunal, considered in totality, is that Mr Lam was aware of, but essentially “closed his eyes” to the issue during the relevant period.
While the applicant submitted that it relied upon the accountant, it had the advantage of having the accountant’s advice and assistance in the establishment of its business and in the preparation of its BAS and income tax returns. Given Mr Lam’s poor recollection of events and the absence of any corroborating evidence which might have been given by other witnesses (whether the accountant, the farmer or Ms Ngo), the Tribunal is not prepared to conclude that the accountant did not bring the applicant’s PAYG obligations or any failure to comply with them to Mr Lam’s attention. I infer from Mr Lam’s evidence about his dealings with the farmer and the accountant that he was aware that the TFNs and any ABNs provided by workers were significant to the applicant’s taxation affairs and obligations.
As the respondent submitted, given the applicant’s submission that Mr Lam had no or limited understanding of the applicant’s taxation affairs and obligations and its business structure, the applicant’s failure to call the accountant to give evidence is a significant impediment to the discharging of its onus of proof.
There is no satisfactory explanation as to why, despite the considerable deductions claimed, PAYG of only small amounts was withheld on only some occasions. The fact that only 36 TFN declarations made by workers during the relevant period were provided by the applicant, and only one of those had a valid associated TFN, does not weigh in favour of further remission. I do not accept Mr Lam’s evidence that “most” workers instead provided ABNs. There is no documentary or other evidence to corroborate that statement; it seems somewhat implausible that his memory was clearer on that point than on others. I note also his evidence that there was a high turnover of workers during the relevant period. In any event, that evidence is far too vague to have any real probative effect.
I turn now to the applicant’s submissions concerning its lack of documentary evidence. I note that there was no indication given as to what documentary evidence the applicant was prevented from tendering and how it might have assisted its case so as to warrant further remission. I note also that the applicant did not attempt to rectify any deficiency in proof by calling other witnesses who might have given favourable evidence.
Moreover, as I have said, in exercising the discretion to remit under s 298-20, the Tribunal must consider the applicant’s particular circumstances. I am not satisfied on the evidence before the Tribunal that the applicant’s lack of documentary evidence was connected in any way to the expiration of any period for which it was required to keep records for taxation purposes. There is no evidence that the applicant destroyed or otherwise relinquished business records in reliance on that provision. Rather, Mr Lam gave evidence, under re-examination, to the effect that his wife told him in 2007 that all such records had been destroyed when their house was burgled. As I have said, Ms Ngo was not called to give evidence which might have had more probative value. Furthermore, the police report to which Mr Lam referred was not tendered. I note also that no explanation was given as to the whereabouts of any business records which came into existence after that time and before the end of the relevant period.
Accordingly, and given the (unexplained) failure to call any witnesses who might have corroborated Mr Lam’s evidence or otherwise given evidence favourable to the applicant’s case, I do not accept the applicant’s submission to the effect that further remission is warranted on the basis that its ability to discharge the onus of proof was impeded by the expiration of any prescribed record-keeping periods. I am not satisfied, based on the evidence before the Tribunal, that it was so impeded. As the Tribunal is necessarily concerned with the applicant’s particular circumstances for the purposes of s 298-20, it is unnecessary for me to make general observations about the circumstances in which the expiration of a record-keeping period might constitute a relevant consideration for the purposes of that provision.
I do not consider that the “Primary Production Industry Partnership Registry” publication and the related factual analogy the applicant seeks to draw to which I have referred above bears upon the issue of remission under s 298-20 any more than it does on the question of liability to the penalty under s 16-30 of Sch 1.
Given Mr Lam’s poor recollection of events, the lack of corroborating evidence and the failure to call the former accountant to give evidence despite submitting that the applicant relied on him to a significant degree, I am not satisfied, based upon the evidence before the Tribunal, that the penalty should be remitted further on the basis that the applicant’s conduct was not so blameworthy as to be reckless (see PSLA 2007/12; see also BRK (Bris) Pty Ltd v Commissioner of Taxation (2001) 46 ATR 347 at 364 per Cooper J). The applicant has failed to prove that the remission decision should have been made differently on that basis.
Nor am I satisfied, based on the evidence before the Tribunal, that there are any other aspects of the applicant’s particular circumstances that warrant further remission.
CONCLUSION
For the above reasons, the applicant has failed to discharge the burden of proof under s 14ZZK(b)(ii) of the TAA. Accordingly, the Tribunal will affirm the objection decision.
112. I certify that the preceding 111 (one hundred and eleven) paragraphs are a true copy of the reasons for the decision herein of Deputy President F J Alpins
.......[sgd]..............................................
Associate
Dated 29 July 2016
Date of hearing 4 August 2015 Date final submissions received 21 October 2015 Representative for Applicant
Counsel for Respondent
Mr H Enslin, Enslin & Associates
Mr P Nicholas
Solicitor for Respondent Mr M Sadhu, ATO Review & Dispute Resolution
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