VGGL and Commissioner of Taxation
[2013] AATA 867
•5 December 2013
[2013] AATA 867
Division TAXATION APPEALS DIVISION File Number(s)
2012/0694, 2013/0363
Re
VGGL
APPLICANT
And
Commissioner of Taxation
RESPONDENT
DECISION
Tribunal Professor R Deutsch, Deputy President Date 5 December 2013 Place Sydney The objection decision dated 20 December 2011 is affirmed. The objection decision dated 14 November 2012 is varied to remit by 25% the administrative penalty imposed for failing to take reasonable care in respect to the period 1 July 2005 to 30 September 2008. The objection decision dated 14 November 2012 is otherwise affirmed.
.............[sgd]..........................................
Professor R Deutsch, Deputy President
CATCHWORDS
TAXATION AND REVENUE – goods and services tax – whether the applicant was entitled to claim certain input tax credits – liability for administrative penalty – whether penalty should be remitted – one objection decision affirmed and the other varied
LEGISLATION
A New Tax System (Goods and Services Tax) Act 1999 ss 11-1, 11-5, 11-15, 29-10
Taxation Administration Act 1953 s 14ZZK; Sch 1 ss 284-75, 284-90, 284-220, 298-20
CASES
BRK (Bris) Pty Ltd v Commissioner of Taxation [2001] FCA 164; (2001) 46 ATR 347
Dixon v Commissioner of Taxation [2008] FCAFC 54; (2008) 167 FCR 287
Hart v Commissioner of Taxation [2003] FCAFC 105; (2003) 131 FCR 203
Pearson v Deputy Commissioner of Taxation [2009] FCA 558; (2009) 74 ATR 437
Re Bayconnection Property Developments Pty Ltd and Commissioner of Taxation [2013] AATA 40
Re DG Empire (as trustee for the DG Empire Trust) and Commissioner of Taxation [2007] AATA 1485; (2007) 66 ATR 925
Re Huynh and Commissioner of Taxation [2008] AATA 305; (2008) 72 ATR 206
Re Sgardelis and Commissioner of Taxation [2007] AATA 1499; (2007) 68 ATR 963
Re TSC 2000 Pty Ltd and Commissioner of Taxation [2007] AATA 1629; (2007) 66 ATR 945Ryvitch v Commissioner of Taxation [2001] FCA 806; (2001) 47 ATR 381
SECONDARY MATERIALS
A New Tax System (Goods and Services Tax) Act 1999 Waiver of Tax Invoice Requirement Determination (No. 1) 2004 – Decision of a Court or Tribunal
REASONS FOR DECISION
Professor R Deutsch, Deputy President
5 December 2013
FACTUAL BACKGROUND
The Applicant, a sole trader, was registered for goods and services tax (GST) on 12 February 2004 and has been continuously so registered since that date.
The Property Development
During the periods in dispute in these proceedings, namely, from September 2005 to September 2008 and September 2009, the Applicant operated a property development business.
As part of that business the Applicant contracted a building contractor to build three townhouses at an address in Cremorne, New South Wales. The project was largely financed by way of a loan from the St George Bank and it seems that the loan was made to an associate of the Applicant, a company (“CPF”).
The project was essentially completed in March 2008.
From time to time progress payments were requested pursuant to the building contract by the builder and such payments were made to the builder by CPF which drew down part of the loan from St George Bank in order to make those progress payments.
Subsequently, all three townhouses were sold with the Applicant being in each case recorded as the vendor in both the contract for sale and the subsequent transfer. Lots one and two were sold as taxable supplies with, in both cases, the margin scheme being used in making the taxable supply.
Lot 3 was the subject of considerable debate at the hearing, but for the moment I shall simply make the point that according to the Contract for Sale this unit was not sold as a taxable supply as it was not made in the course or furtherance of an enterprise that the vendors carried on and as a result the margin scheme was not used in making the supply.
The Litigation
The Applicant was also a director of a company, HW, which sold and maintained water filtration systems.
At all relevant times there were two issued shares in HW. In early 2005 the Applicant sold his share to a company, BI, for $850,000.
On 1 April 2005 BI brought proceedings against the Applicant alleging oppression and misleading and deceptive conduct. After a lengthy and protracted series of cases the matter was finally resolved in favour of the Applicant by the High Court of Australia.
In pursuing those proceedings the Applicant incurred substantial legal fees. The legal fees themselves attracted GST and the Applicant claimed the GST paid on the provision of those legal services as input tax credits. In other words, the Applicant asserted that the legal fees incurred in the BI proceedings were creditable acquisitions by the Applicant, being acquired by him in carrying on an enterprise as a property developer.
THE ISSUES
A number of issues as set out below have been identified by the parties arising from the facts outlined above:
·Is the Applicant entitled to claim input tax credits in the amount of $63,935.80 in relation to the construction of the townhouse on Lot 3 (“Issue No 1”)?
·Is the Applicant entitled to claim input tax credits in the amount of $67,837.01 in relation to legal expenses incurred in respect of the proceedings by BI (“Issue No 2”)?
·Is the Applicant entitled to claim input tax credits in the amount of $250.77 and $132.00 in relation to the enterprise carried on by the Applicant as a property developer (“Issue No 3”)?
·Is the Applicant entitled to claim input tax credits in the amount of $1,972.72 and $2,300.00 in relation to accounting and professional fees associated with HW (“Issue No 4”)?
·Is the Applicant entitled to claim input tax credits in the amount of $8,616.00 in relation to other expenses that have been incurred (“Issue No 5”)?
·Is the Applicant liable to an administrative penalty pursuant to s 284-75 of Schedule 1 to the TAA in relation to the period 1 July 2005 to 30 September 2008 (“Issue No 6”)?
·Is the Applicant liable to an administrative penalty pursuant to s 284-75 of Schedule 1 to the Taxation Administration Act 1953 (“TAA”) in relation to the period 1 September 2009 to 30 September 2009 (“Issue No 7”)?
·Is the Applicant liable to a further administrative penalty by virtue of an uplift of 20% in relation to the period 1 September 2009 to 30 September 2009 (“Issue No 8”)?
·Should the administrative penalty imposed on the Applicant be remitted in whole or in part pursuant to s 298-20 of Schedule 1 to the TAA (“Issue No 9”)?
Before considering these specific issues it is relevant to set out the statutory provisions which are the subject of consideration in these proceedings.
THE STATUTORY FRAMEWORK
In respect of Issues Nos 1 to 5 (“the GST issues”) the relevant statutory provisions are contained in Division 11 of A New Tax System (Goods and Services Tax) Act 1999 (Cth) (“the GST Act”).
Most relevantly ss 11-1, 11-5 and 11-15 respectively provide that:
11‑1 What this Division is about
You are entitled to input tax credits for your creditable acquisitions…
11‑5 What is a creditable acquisition?
You make a creditable acquisition if:
(a) you acquire anything solely or partly for a *creditable purpose; and
(b) the supply of the thing to you is a *taxable supply; and
(c) you provide, or are liable to provide, *consideration for the supply; and
(d) you are *registered, or *required to be registered.
11‑15 Meaning of creditable purpose
(1) You acquire a thing for a creditable purpose to the extent that you acquire it in *carrying on your *enterprise.
(2) However, you do not acquire the thing for a creditable purpose to the extent that:
(a) the acquisition relates to making supplies that would be *input taxed; or
(b) the acquisition is of a private or domestic nature.
…
In respect of Issues Nos 6 to 9 (“the Penalty issues”) the relevant statutory provisions are all contained in Schedule 1 to the TAA.
284‑75 Liability to penalty
(1)You are liable to an administrative penalty if:
(a) you or your agent makes a statement to the Commissioner or to an entity that is exercising powers or performing functions under a *taxation law; and
(b) the statement is false or misleading in a material particular, whether because of things in it or omitted from it; and
(c) you have a *shortfall amount as a result of the statement.
…
284‑90 Base penalty amount
(1) The base penalty amount under this Subdivision is worked out using this table:
Base penalty amount
Item
In this situation:
The base penalty amount is:
1
Your *shortfall amount or part of it resulted from intentional disregard of a *taxation law by you or your agent
75% of your *shortfall amount or part
2
Your *shortfall amount or part of it resulted from recklessness by you or your agent as to the operation of a *taxation law
50% of your *shortfall amount or part
3
Your *shortfall amount or part of it resulted from a failure by you or your agent to take reasonable care to comply with a *taxation law
25% of your *shortfall amount or part
…
284‑220 Increase in base penalty amount
(1)The *base penalty amount for your *shortfall amount, or for part of it, for an accounting period is increased by 20% if:
(a) you took steps to prevent or obstruct the Commissioner from finding out about the shortfall amount; or
(b) you became aware of the shortfall amount or part after a statement had been made to the Commissioner about the relevant *tax‑related liability and you did not tell the Commissioner about it within a reasonable time; or
(c) the base penalty amount was worked out using item 1, 2 or 3 of the table in subsection 284‑90(1) and a base penalty amount for you was worked out under one of those items for a previous accounting period; or
(d) the base penalty amount was worked out using item 4, 5 or 6 of that table and a base penalty amount for you was worked out under that item for a previous accounting period; or
(e) your liability to a penalty arises under subsection 284‑75(3) and you were liable to a penalty under that subsection for a previous accounting period.
…
298‑20 Remission of penalty
(1) The Commissioner may remit all or a part of the penalty.
…
RESOLVING THE ISSUES
ISSUE No 1 – Is the Applicant entitled to claim input tax credits in the amount of $63,935.80 in respect of Lot 3?
Looking purely at the relevant Contract for Sale dated 29 January 2009 (ST3) it is clear that Lot 3 was not sold as a taxable supply. The Contract specifically makes it clear that that sale was not made “in the course or furtherance of an enterprise that the vendor carries on”. The box towards the bottom of that page has been explicitly marked with an “x”. Further, a box with the label “No” has been marked with an “x” indicating that this is not a taxable supply for GST purposes and that the so-called margin scheme will not apply.
This is in marked contrast to the Contracts for Sale in respect of Lots 1 and 2. For both Lot 1 (relevant Contract for Sale dated 14 March 2009 (ST1)) and Lot 2 (relevant Contract for Sale dated 9 March 2009 (ST2)) the relevant “x” markings indicate that GST is to apply in full on the basis that the margin scheme would apply.
As far as I can see there is nothing to suggest that any of these markings were in any way inappropriate or failed to accurately reflect the true position. It appears that the contract was prepared by competent solicitors who would have known the significance of the markings.
The Applicant has suggested in verbal submissions that the markings with the letter “x” in the Contract for Sale of Lot 3 were fraudulent and that perhaps some unauthorised adjustments were made, but no evidence to this effect was proffered by the Applicant. The Applicant simply made the assertion. In the absence of clear evidence of tampering or some other fraudulent behaviour the documents as they stand must be taken at face value.
The position seems to be that the Applicant intended from the outset that the sale of Lot 3 would not be a taxable supply and this was properly reflected in the markings on the Contract of Sale.
The Applicant also asserted that the sale of all the townhouses were one entered into and completed by the St George Bank Limited (“St. George”) as “mortgagee in possession” (T137-510) rather than by the Applicant. Even if this is relevant which is by no means clear, the assertion does not sit well with the facts.
First, there is no evidence that St George ever took possession of the townhouses. It is true that on settlement of Lot 3 St George received the lion’s share of the proceeds (T135-491), but that simply reflects the fact that it was owed a substantial sum as mortgagee. In and of itself it does not suggest that the bank had taken possession and was acting as mortgagee in possession at the time of sale.
Secondly, on each transfer the Applicant is named as the “transferor” (ST6-135, 132 and 129). Had the townhouses been sold by the bank as mortgagee in possession the bank would have executed a Transfer by Mortgagee under Power of Sale under s 58 of the Real Property Act 1900 (NSW).
Thirdly, on each sale the solicitors that the Applicant instructed, namely Day Dockrill, acted on the sales and the Applicant in each case was specifically named as the vendor.
For these reasons I conclude that the bank had not been appointed as mortgagee in possession and the sale of Lot 3 was completed by the Applicant as vendor and the sale was, in accordance with the written contract, not one made as a taxable supply for GST purposes. Accordingly, input tax credits cannot be claimed by the Applicant in relation to the sale of Lot 3.
ISSUE No 2 – Is the Applicant entitled to claim input tax credits in the amount of $67,837.01, in relation to legal expenses incurred in respect of the proceedings by BI?
Having regard to the statutory definitions set out above, it is clear that the Applicant is entitled to input tax credits for creditable acquisitions he makes. The Applicant will only make a creditable acquisition to the extent that the acquisition is made for a creditable purpose which is only the case if the thing in question is acquired in carrying on the Applicant’s enterprise.
The enterprise which the Applicant carries on is described as an enterprise of property development. This means that the Applicant must demonstrate in respect of each amount claimed as an input tax credit that the acquisition to which the claim for credit relates was made by him in carrying on that enterprise of property development.
In relation to the substantial legal fees incurred by the Applicant for the BI litigation, the evidence does not provide a clear connection between the legal services acquired and the conduct of a business of property development. The Applicant argues that the legal fees were largely incurred so as to protect the Applicant’s reputation as a director and that any adverse findings against the Applicant would have resulted in a complete collapse of the townhouse development.
However, this connection is vague and imprecise and while the legislation does not call for a precise connection, it does require that the legal services must have been acquired in carrying on the enterprise, being the property development. The reality however is that these legal fees had nothing whatsoever to do with property development – rather they were connected with HW, a company whose business line was in the maintenance and sale of water filtration systems. Had it been involved in property development there may well be a stronger case to sustain the view that there is a connection that is adequate to ground a claim that input tax credits should be available. In the circumstances, such a connection does not exist.
Clearly, the BI proceedings were conducted by the Applicant, but in no way can it be said that those legal proceedings had been brought in relation to the Applicant’s conduct in carrying on an enterprise as a property developer. Accordingly, the GST claimed as input tax credits cannot be allowed.
ISSUE No 3 – Is the Applicant entitled to claim input tax credits in the amount of $250.77 and $132.00 in relation to the enterprise carried on by the Applicant as a property developer?
There is very little in the way of concrete evidence to support these small claims – the Tribunal has not been provided with bills, invoices or any other written evidence that might support the claims.
The only reference to these amounts is in a letter from Thomsons Lawyers (T153-597) to the Australian Taxation Office dated 3 September 2011 where at page 4 reference is made to:
Legal fees relating to the property development project – $250.77
Legal fees – other – $132.00
These items are also separately itemised in Annexure A to that letter which indicates that the $250.77 GST amount was made up of two amounts, one for GST of $238.41 paid on 1 June 2006 to “Sally Nash Lawyer” relating to “Legal Fees – Building Project” and another for GST of $12.36 paid on 24 May 2006 paid to North Sydney Council relating to “Legal Fees – GHK claim”. From the evidence it is difficult to identify the purpose of these payments.
The GST amount of $132.00 is said to be paid to “Sprusson & Ferguson” for “Trident Legal Fees” and was paid on 13 July 2005. No other information relating to this payment was forthcoming.
The lack of invoices is a significant problem. It has been said that “[t]he tax invoice is the cornerstone of the GST regime” (Re Huynh and Commissioner of Taxation (2008) AATA 305; (2008) 72 ATR 206). Section 29-10(3) of the GST Act reinforces the need for and importance of the existence and presentation of tax invoices.
However, there is no doubt that the lack of such invoices is not always fatal to the availability of input tax credits – that much at least has been made explicitly clear by virtue of a Determination issued by the Commissioner pursuant to s 29-10(3). In A New Tax System (Goods and Services Tax) Act 1999Waiver of Tax Invoice Requirement Determination (No. 1) 2004– Decision of a Court or Tribunal issued on 24 February 2004 the Commissioner specifically provides that if, for example, the Tribunal finds that an entity has made a creditable acquisition and is entitled to an input tax credit then the requirement for a tax invoice does not apply (Re Bayconnection Property Developments Pty Ltd and Commissioner of Taxation (2013) AATA 40 at [88]).
While that provides some comfort to the Applicant in this case, it remains the position that the Tribunal has been given little relevant information about the nature of these amounts and how they relate to the enterprise in question. In these circumstances the Tribunal is left with no alternative but to deny the claims.
Issue No 4 – Is the Applicant entitled to claim input tax credits in the amount of $1,972.72 and $2,300.00 in relation to accounting and professional fees associated with HW?
In the hearing the Applicant appeared to concede that he could not claim input tax credits in relation to at least one of these items.
In any event there are at least two problems with these claims.
First, it appears that they were amounts paid to the firms Synergy Associates and Sprusson and Ferguson for accounting and legal fees in relation to HW and as such they do not relate to the carrying on by the Applicant of an enterprise as a property developer.
Secondly, again no tax invoices have been produced in relation to either amount.
As in relation to Issue No 3 the lack of a tax invoice might be otherwise cured by the production of sufficient information to allow the Tribunal to come to a different conclusion and allow the input tax credit claims but in this case such information is lacking.
For these reasons neither amount can be claimed as input tax credits for GST purposes.
Issue No 5 – Is the Applicant entitled to claim input tax credits in the amount of $8,616.00 in relation to other expenses that have been incurred?
In relation to this amount the Applicant has not demonstrated to the Tribunal how it is that this expense represents a creditable acquisition made in carrying on an enterprise as a property developer and tax invoices again have not been produced.
In these circumstances the claim for GST input tax credits must be rejected.
Issue No 6 – Is the Applicant liable to an administrative penalty pursuant to s 284-75 of Schedule 1 to the TAA in relation to the period 1 July 2005 to 30 September 2008?
The Respondent has imposed the base penalty amount under s 284-90 on the shortfall arising in relation to the period 1 July 2005 to 30 September 2008 on the basis that the Applicant failed to exercise reasonable care.
In determining whether reasonable care has been exercised it is necessary to consider what a reasonable person in the same circumstances as the Applicant would be likely to have done in relation to the statements made that have given rise to the shortfall. In doing so it would appear to be necessary to have regard to the nature of the obligation and the particular circumstances of the taxpayer. This would seem to take into account the size of the shortfall, the type of item involved, the complexity of the law involved and the difficulty or expense in avoiding the risk of making an error.
It is true that the Applicant employed the use of a registered tax agent and that is a positive step taken by the Applicant to limit the risk. However, having regard to the number of input tax claims that were made and the size of the claims in total, it is difficult to understand how the Applicant could have proceeded without querying the registered tax agent whether such claims can be made without tax invoices or other substantial evidence to substantiate these expenses and establish their relationship to the underlying enterprise. One might understand how such an oversight may have slipped under the radar if there were only a few items claimed as input tax credits or if there were many, but they totalled a relatively small amount. However, in the circumstances as presented where there are many claims and a substantial total not querying the registered tax agent in regard to how this claim could be made is a serious matter which is suggestive of a lack of reasonable care.
Accordingly, the view of the Tribunal, the penalty is not excessive.
Issue No 7 – Is the Applicant liable to an administrative penalty pursuant to s 284-75 of Schedule 1 to the TAA in relation to the period 1 September to 30 September 2009?
The Applicant is liable to an administrative penalty under s 284-75 in respect of any false or misleading statement made in relation to a material particular if a shortfall amount arises as a result.
Clearly, having regard to the conclusions reached above a shortfall amount did arise and there was a false or misleading statement in a material particular. In respect of the period in question the liability to the shortfall penalty is strict and attaches to the taxpayer whether it was the taxpayer or his or her agent that made the false or misleading statement and despite the taxpayer being unaware of the false or misleading statement having been made (Re DG Empire (as trustee for the DG Empire Trust) and Commissioner of Taxation [2007] AATA 1485; (2007) 66 ATR 925).
The Applicant argued before the Tribunal that he could place reliance upon the fact that the relevant statement was made by his registered tax agent. Although not explicitly referring to the section it would appear that the Applicant was relying upon s 284-75(6) of Schedule 1 to the TAA.
While that subsection does purport to give some protection to taxpayers who rely on their tax agents to prepare and lodge documents which might contain false or misleading statements, the section only applies in relation to statements made on or after 4 June 2010. Accordingly that defence, even if it were otherwise available which is not at all clear, is not available in relation to a statement made on 10 November 2009.
In working out the base penalty amount under s 284-90, the Respondent took the view that the shortfall amount resulted from recklessness by the Applicant or his agent.
Recklessness has been variously described as involving gross negligence or gross carelessness or gross indifference to whether or not the material is true and correct (Ryvitch v Commissioner of Taxation [2001] FCA 806; (2001) 47 ATR 381; Pearson v Deputy Commissioner of Taxation [2009] FCA 558 (2009) 74 ATR 437).
It is clear that it is not necessary to demonstrate dishonesty; rather, the question is one of the degree of carelessness or indifference to the consequences which have been exhibited in the Applicant’s behaviour.
Further, in Hart v Commissioner of Taxation [2003] FCAFC 105; (2003) 131 FCR 203 Hill and Hely JJ explained recklessness as involving conduct which shows a “disregard of, or indifference to, consequences foreseeable by a reasonable person” and cited with approval the statement offered by Cooper J in BRK (Bris) Pty Ltd v Commissioner of Taxation [2001] FCA 164; (2001) 46 ATR 347 at 364:
Recklessness in this context means to include in a tax statement material upon which the ITAA 1936 or regulations are to operate, knowing that there is a real, as opposed to a fanciful, risk that the material may be incorrect, or be grossly indifferent as to whether or not the material is true and correct, and that a reasonable person in the position of the statement-maker would see there was a real risk that the [ITAA 1936] and the regulations may not operate correctly to lead to the assessment of the proper tax payable because of the content of the tax statement. So understood, the proscribed conduct is more than mere negligence and must amount to gross carelessness.
In reviewing the September 2009 Business Activity Statement there are a number of matters that are clearly a concern in relation to the behaviour exhibited by the Applicant.
First, a claim was made at label 1B of the Statement in respect of GIC and penalties which had previously specifically been rejected by the Commissioner.
Secondly, the claims in dispute were not supported by tax invoices. Indeed there were no adequate records maintained which were capable of substantiating these amounts without the existence of those tax invoices. On occasions taxpayers might be excused for not being aware of the need to keep and provide tax invoices but this can hardly be the case in this instance where the Applicant had been registered for many years and had already been found wanting in relation to a previous problem triggered by a lack of the tax invoices.
Thirdly, at the time the relevant BAS was lodged the Applicant had already become fully aware of all the issues concerning the BAS statements relating to the periods from 1 July 2005 to 30 September 2008. The Applicant was thus on notice as to a number of issues that arose in relation to the claimed input tax credits and would have been aware that many of the same issues would arise again.
In my view these three matters demonstrate at the very least an indifference as to the consequences of the outcomes for the Applicant and accordingly the label recklessness is entirely applicable. Accordingly, I find that the rate of penalty imposed is correct.
Issue No 8 – Is the Applicant liable to a further administrative penalty by virtue of an uplift of 20% in relation to the period 1 September to 30 September 2009?
In broad terms, s 284-220 of Schedule 1 to the TAA provides for an increase in the base penalty amount by 20% if one of three circumstances prevails:
·the taxpayer took steps to prevent or obstruct the detection of the shortfall amount; or
·the taxpayer became aware of a shortfall amount after a statement was made but did not inform the Commissioner in a reasonable period of time; or
·the taxpayer was penalised for similar conduct relating to a previous accounting period.
On this occasion the third circumstance referred to above was relevant as the taxpayer had already suffered penalties for similar conduct in relation to previous accounting periods.
On that basis the uplift penalty is not excessive.
Issue No 9 – should the administrative penalty imposed on the Applicant be remitted in whole or in part pursuant to s 298-20 of Schedule 1 to the TAA?
Pursuant to s 298-20 the Commissioner may remit all or part of the penalty. The decision to remit or not to remit is clearly reviewable, but the burden of proving that the Commissioner’s decision to refuse to remit penalties should have been made differently is very clearly on the Applicant (s 14ZZK(b)(iii)).
It will only be in the most exceptional cases that a discretion to remit would be exercised favourably in respect of a taxpayer where the taxpayer has behaved recklessly (Re TSC 2000 Pty Ltd and Commissioner of Taxation [2007] AATA 1629; (2007) 66 ATR 945 and Re Sgardelis and Commissioner of Taxation [2007] AATA 1499; (2007) 68 ATR 963).
In circumstances where the Applicant has failed to exercise reasonable care, the discretion to remit the administrative penalty is more likely to be exercised positively in favour of the Applicant.
The relevant legislation is completely silent on the matters which the Commissioner and the Tribunal must take into account in deciding whether to exercise the discretion to remit. Clearly, there is no need to demonstrate any particular special circumstances that must exist before the discretion to remit a penalty can be exercised (Dixon v Commissioner of Taxation [2008] FCAFC 54; (2008) 167 FCR 287 at 291).
In considering whether to remit the penalties in this particular case I think it is important to have regard to a number of matters:
·the Applicant employed a registered tax agent to deal with his affairs in relation to the months in question;
·prior to this period the taxpayer appears to have had a good compliance history;
·the Applicant appears to have honestly believed that the amounts in question were capable of being claimed as input tax credits and indeed if tax invoices could have been provided or some other supporting evidence had been provided at least some of these expenses are likely to have been allowed as input tax credits.
In these circumstances, and having regard to these three matters in particular, the Tribunal is of the view that some remission of the penalties in relation to the period 1 July 2005 to 30 September 2008 should be allowed. Full remission is not warranted. However, the Tribunal believes that in the circumstances a 25% penalty remission that is, is appropriate in relation to the penalties imposed for a failure to take reasonable care.
No remission of penalties should apply in relation to the penalty imposed for recklessness.
DECISION
Accordingly, the objection decision dated 20 December 2011 is affirmed. The objection decision dated 14 November 2012 is varied to remit by 25% the administrative penalty imposed for failing to take reasonable care in respect to the period 1 July 2005 to 30 September 2008. The objection decision dated 14 November 2012 is otherwise affirmed.
I certify that the preceding 74 (seventy four) paragraphs are a true copy of the reasons for the decision herein of Professor R Deutsch, Deputy President.
...............[sgd]........................................................
Associate
Dated 5 December 2013
Date of hearing 15 October 2013 Applicant In person Advocate for the Applicant Self Counsel for the Respondent Mr Ben Kasep
0
6
0