| JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : DEVELOPMENT & RESOURCES ACT : TAXATION ADMINISTRATION ACT 2003 (WA) CITATION : WYN RECRUITMENT PTY LTD and COMMISSIONER OF STATE REVENUE [2013] WASAT 136 MEMBER : JUDGE T SHARP (DEPUTY PRESIDENT) HEARD : 29 JULY 2013 DELIVERED : 27 AUGUST 2013 FILE NO/S : DR 154 of 2013 BETWEEN : WYN RECRUITMENT PTY LTD Applicant
AND
COMMISSIONER OF STATE REVENUE
Respondent
Catchwords: Payroll tax - Penalty Tax - Remission - Application of Commissioner's Practice TAA 18.2 and TAA 20.2 - Whether exceptional circumstances Legislation: Payroll Tax Assessment Act 2002 (WA), s 5(1), s 6, s 7(1), s 7(4), s 9GA, s 26(1), s 26(3), s 27(1), s 28A(1), s 9GA
Payroll Tax Assessment Regulations 2003 (WA), reg 47
State Administrative Tribunal Act 2004 (WA), s 31(3)
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Taxation Administration Act 2003 (WA), s 19, s 26(1)(b), s 26(3), s 27(1), s 29, s 29(1), s 30, s 30(1), s 40(1) Result: Application dismissed
Summary of Tribunal's decision: The applicant sought a revision of penalty tax that had been imposed by reason of late lodgement of its payroll tax returns. The Commissioner of State Revenue had already remitted the penalty tax in accordance with his published practice. The practice provided that further remission would only be made in exceptional circumstances.
The Tribunal concluded that there were sound policy reasons to follow the published practice and that the Commissioner had applied the practice appropriately when he declined to further remit the penalty tax. Accordingly, it upheld the Commissioner's assessment and dismissed the application.
Category: B
Representation: Counsel:
Applicant : In person (through Mr G Cass and Mr K Harty)
Respondent : Mr J O'Sullivan
Solicitors:
Applicant : N/A
Respondent : State Solicitor's Office
Case(s) referred to in decision(s):
Bettison and Commissioner of State Revenue [2011] WASAT 183
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REASONS FOR DECISION OF THE TRIBUNAL:
Background 1 The applicant seeks a review under s 40(1) of the Taxation Administration Act 2003 (WA) (TA Act)of a decision of the respondent (Commissioner). The applicant originally sought a review of the Commissioner's decision of 26 February 2013 to disallow an objection to the Commissioner's decision not to grant further remission of penalty tax levied against the applicant. The penalty tax had been levied against the applicant for the late lodgement of monthly pay-roll tax returns and the late payment of pay-roll tax. 2 The Tribunal then invited the Commissioner to reconsider its decision and notify the applicant of any further decision. The Commissioner subsequently advised the applicant on 24 May 2013 that it had determined to further reduce the rate of penalty tax imposed. The applicant was not satisfied with the Commissioner's further decision and proceeded with its application. Accordingly, pursuant to s 31(3) of the State Administrative Tribunal Act 2004 (WA) (SAT Act), the Commissioner's determination dated 24 May 2013 is the decision to be reviewed by the Tribunal.
Material before the Tribunal 3 The applicant's application was lodged with the Tribunal on 26 April 2013, and the matter was heard on 29 July 2013. Prior to the hearing, the applicant filed a statement of issues, facts and contentions dated 25 June 2013.On 12 June 2013, the Commissioner filed a statement of issues, facts and contentions and a bundle of relevant documents.
Agreed Facts 4 The facts of this matter are largely agreed between the parties.
The applicant 5 The applicant was incorporated on 2 May 2007. 6 At all times during the relevant period, the applicant carried on business as an employment agency in the mining industry. In general terms, the applicant arranges for persons whom it engages to be placed at the worksites of other companies who pay a fee to the applicant. The applicant pays wages to the persons it has engaged. (Page 4)
Pay-roll tax compliance history of the applicant 7 On 19 February 2008, the applicant was registered as an interstate nongroup employer for the purposes of the Pay-roll Tax Assessment Act 2002 (WA) (PTA Act)effective from 1 July 2007. 8 During the relevant period the applicant had access to, and lodged pay-roll tax returns through an electronic system known as Revenue Online (ROL). ROL allows persons to electronically lodge returns and make payments and view online its account balances and outstanding payments. 9 From 1 July 2008 until March 2010, pay-roll tax returns for the applicant were lodged on time or within the time allowed by the Commissioner. The applicant's returns, including the relevant payments, from April 2010 were made as follows: • The April 2010 and May 2010 returns were lodged late by periods of 10 days and 11 days respectively and late payment penalties of an amount equal to 2.5% and 5% respectively of the tax payable were imposed. • The June 2010 return was lodged 14 days late (on 5 August 2010). The late payment penalty was remitted to an amount equal to 10% of the tax payable. • The July 2010 return was lodged on time. • The August 2010 return was lodged 13 days late (on 20 September 2010). The late payment penalty was remitted to an amount equal to 10% of the tax payable. • The September 2010, October 2010 and November 2010 returns were lodged late but late payment penalties were not imposed. • The December 2010 return was lodged 10 days late (on 17 January 2011). The late payment penalty was remitted to an amount equal to 10% of the tax payable. • The January 2011, February 2011, March 2011 and April 2011 returns were lodged late by 35 days, 8 days, 33 days and 32 days respectively. The late payment penalties were remitted to an amount equal to 10% of the tax payable. (Page 5)
• The May 2011 return was lodged on time but without payment. A late payment penalty was imposed and remitted to an amount equal to 10% of the tax payable. • No further returns were lodged until October 2011. • On 27 September 2011, the Commissioner wrote to the applicant seeking the lodgement of returns for August and September 2011. • The June 2011 return was lodged on 4 October 2011, more than two months late. The late payment penalty was remitted to an amount equal to 10% of the tax payable. • The July 2011 return was also lodged on 4 October 2011, more than two months late. The late payment penalty was remitted to an amount equal to 10% of the tax payable. • On 3 November 2011, the Commissioner wrote to the applicant issuing a default estimate of liability in respect of the August and September 2011 returns that had not been lodged. • The failure to lodge the August 2011 and September 2011 returns resulted in the imposition of penalty tax for nonlodgement which was remitted to an amount equal to 20% of the estimated liability. • The Commissioner, in respect of payments due in August and September 2011, issued a demand notice requesting payment of $352,593 on 22 December 2011 and issued a further notice on 20 January 2012. • On 1 March 2012, the Commissioner wrote to the applicant requesting the lodgement of returns for October 2011, November 2011, December 2011, January 2012 and February 2012. • The October 2011, November 2011 and December 2011 returns were lodged on 8 March 2012 (between two and four months late). The late payment penalty was remitted to an amount equal to 10% of the tax payable. The (Page 6)
applicant also sought a reassessment of the estimated liability for the August 2011 and September 2011 returns at this time. Penalty tax was remitted to an amount equal to 20% of the reassessed tax payable for August and September. • The Commissioner sent an email to the applicant on 28 March 2012 requesting lodgement of the January 2012 and February 2012 returns by 4 April 2012. • On 17 April 2012, the Commissioner issued a default estimate of liability in respect of the January 2012 and February 2012 returns. • By email dated 19 April 2012, the Commissioner requested lodgement of the March 2012 return by 26 April 2012. • By email dated 4 May 2012, the Commissioner issued a default estimate of liability in respect of the March 2012 return. • By letter dated 30 May 2012, the Commissioner issued a default estimate of liability in respect of the April 2012 return. • By letter dated 16 August 2012, the Commissioner issued a default estimate of liability in respect of the May 2012 return. The letter further advised that an amount of $1,529,653 was due for payment immediately and that default estimates of liability were about to be raised in respect of the June 2012 and July 2012 returns with penalty tax to be imposed at the rate of 20%. • The January 2012, February 2012, March 2012, April 2012 and May 2012 returns incurred late lodgement penalties which were remitted to an amount equal to 20% of the tax payable. • On 21 August 2012, the applicant lodged returns for June 2012 and July 2012. The applicant sought a reassessment of assessed liabilities for the October 2011, November 2011 and December 2011 returns. The applicant also lodged returns for the months of January (Page 7)
2012, February 2012, March 2012, April 2012 and May 2012. • As at 21 August 2012, the applicant's outstanding pay roll tax balance exceeded $2 million. • Because the June 2012 and July 2012 returns were lodged late (on 21 August 2012) they incurred late payment penalties which were remitted to an amount equal to 10% of the tax payable. • On 23 August 2012 the applicant made a payment of $723, 625.57. On 24 August 2012, the applicant made a further payment of $103,000. • The August 2012 return was lodged on 21 September 2012 (a period of two weeks late). The late payment penalty was remitted to an amount equal to 10% of the tax payable. • The September 2012 return was lodged on time. • On 24 September 2012 the Commissioner issued garnishee notices to Calibre Rail Pty Ltd in the amount of $714,549 and to Sinclair Knight Merz Pty Ltd in the amount of $446,492. • The garnishee notices were lifted on 28 September 2012 after the applicant made a payment in the amount of $1.2 million. • During the relevant period the Commissioner had imposed penalties totalling $341,764.14 in relation to the late lodgement and late payment of monthly pay-roll tax returns.
Applicant's objection 10 By email dated 12 October 2012, the applicant sought full remission of the penalties imposed. On 5 December 2012, the Commissioner advised the applicant that it would remit penalties imposed in respect of the late lodgement of the April and May 2010 returns, but would not grant a further remission of penalty tax. This reduced the total of the penalties imposed to $337,600.03. (Page 8)
11 By letter dated 4 February 2013, the applicant objected to that decision. The objection was disallowed by the Commissioner on 26 February 2013. 12 The applicant lodged an application for review of the Commissioner's decision to disallow the objection with the Tribunal on 26 April 2013. 13 On 14 May 2013, the parties attended a mediation at the Tribunal. The Commissioner was then invited to reconsider the matter and notify the applicant of any further decision by 24 May 2013. 14 By letter dated 24 May 2013, the Commissioner advised the applicant that, having reviewed the matter, the Commissioner had determined to reduce the rate of penalty tax imposed for non-lodgement of pay-roll tax for the months of August and September 2011 and January, February and March 2012 from 20% to 10%. The Commissioner also determined to reduce the rate of penalty tax for late lodgement and payment of pay-roll tax returns for the months of October, November and December 2011 from 10% to nil. This resulted in penalty tax being reduced by an amount of $86,777.35, leaving a total penalty imposed of $250,822.68. 15 Pursuant s 31(3) of the SAT Act, the decision of the Commissioner dated 24 May 2013 is the decision the subject of review in this application. 16 There is no dispute as to the amount of primary pay-roll tax payable by the applicant. The application relates solely to the decision of the Commissioner not to wholly remit the amount of penalty tax imposed. To the extent that the penalty tax has already been remitted, the Commissioner's decision is not challenged.
Mr Shayne Hall 17 Mr Shayne Hall was at the relevant time a director of the applicant. He held the position of commercial manager and was solely responsible for the preparation and lodgement of pay-roll tax returns from June 2010. Mr Hall had access to the ROL system. 18 In or about November 2011, Mr Hall was experiencing difficulties concerning his exwife and access to his two children. During this time Mr Hall was also experiencing marital difficulties with his second wife, from whom he subsequently separated. (Page 9)
19 Mr Hall's involvement in the business of the applicant ceased in September 2012. Subsequent to the relevant period Mr Hall attempted suicide.
Mr Glen Cass 20 Mr Glen Cass is the sole shareholder and a director of the applicant. 21 Mr Cass' partner took her own life on 19 March 2011. 22 Mr Cass was overseas from 7 October 2011 to 31 March 2012 in Dubai and the UK developing business opportunities. 23 Mr Cass suffered a burst aorta on 1 January 2012 while at his mother's house in the UK and underwent emergency surgery to save his life. He was discharged from hospital on 17 January 2012, but was required to remain in the UK where he was able to work to some extent up until 31 March 2012 when he returned to Australia. 24 Mr Cass underwent open heart surgery on 12 September 2012 in Sydney to correct the emergency surgery performed in the UK.
PTA Act 25 Section 5(1) of the PTA Act: Pay-roll tax is payable, in accordance with the payroll tax Acts, on wages that are WA taxable wages. 26 Section 6 of the PTA Act: Pay-roll tax is due for payment on the last day for lodging the return of the wages on which the pay-roll tax is payable. 27 Section 7(1) and s 7(4) of the PTA Act: 28 Section 9GA of the PTA Act: An amount in respect of services that is paid or payable by an employment agent (directly or indirectly) to a person who was engaged to perform the services for a client of the employment agent, or to some other person, as a (Page 10)
result of which engagement the employment agent receives payment (directly or indirectly, whether by way of a lump sum or an ongoing fee) in relation to the period during which the services are performed for the client by the person engaged to perform them is taken to be wages paid or payable by the agent (as an employer) to the person for or in relation to the services performed by the person. 29 Section 26(1) of the PTA Act provides that an employer 'must lodge a return for each month specifying the amount of WA taxable wages paid or payable by the employer during the month …'. 30 Section 26(3) of the PTA Act: A monthly return must (a) for a month other than June be lodged within 7 days after the end of the month, or within any further time allowed by the Commissioner in a particular case; and (b) for June be lodged within 21 days after the end of the month, or within any further time allowed by the Commissioner in a particular case. 31 Lodgement of returns by electronic means is provided for by s 28A(1) of the PTA Act and by reg 47 of the Pay-roll Tax Assessment Regulations 2003 (WA). 32 It is not in dispute between the parties that the applicant is liable to pay pay-roll tax on the amount of wages it pays to workers engaged to perform services for its clients. The applicant is an employment agent for the purposes of the PTA Act and the deemed employer of the persons it engages.
TA Act 33 Section 19 of the TA Act provides that 'the Commissioner may make an assessment on the basis … of the Commissioner's estimate of the amount of liability'. 34 Section 26(1)(b) of the TA Act creates the liability to pay penalty tax '… where the taxpayer does not lodge an instrument in accordance with a taxation Act;'. 'Instrument' is defined in the TA Act to include 'an instrument, or return that is required under a taxation Act for the assessment of tax'. 35 Section 26(3) of the TA Act provides that the amount of penalty tax payable is equal to 100% of the primary tax liability. (Page 11)
36 Section 27(1) of the TA Act: If tax is not paid by the due date, the taxpayer is liable to pay an amount of penalty tax for late payment equal to 20% of the amount outstanding on the due date. 37 Section 29(1) of the TA Act: The Commissioner has the power to remit the penalty tax wholly or in part. 38 Section 30 of the TA Act: Guidelines for remitting penalty tax (1) The Commissioner must publish the policy followed by the Commissioner when deciding whether or not to remit penalty tax under section 29. (2) The Commissioner must, at the request of a taxpayer, make a copy of the guidelines available to the taxpayer.
Commissioner's Practice 39 As required by s 30(1) of the TA Act, the Commissioner has published two relevant policy statements concerning the exercise of its discretion under s 29 of the TA Act to remit penalty tax Commissioner's Practice TAA 18.2 (CP 18.2) and Commissioner's Practice TAA 20.2 (CP 20.2). 40 CP 18.2 is valid from 1 March 2011 to the present, and deals with remission of penalty tax for late or non-lodgement of returns. CP 20.2 is valid from 14 December 2012 to the present and deals with remission of penalty tax for late payment.
CP 18.2 41 No remission will be given when the Commissioner has reasonable grounds to suspect that tax has been evaded or the Commissioner has been misled. Otherwise, the general practice for remission of penalty in respect of payroll tax for late or nonlodgement of returns by registered taxpayers is set out at CP 18.2, paragraphs 4 8. CP 18.2 relevantly provides that penalty tax for late or nonlodgement of quarterly or monthly payroll tax returns will be remitted as follows: • 5% of the tax payable for the first 'occurrence' in 12 months; (Page 12)
42 A single penalty is payable once in respect of each transgression under the TA Act in respect of a late lodgement of a return and late payment of tax. For example, where penalty tax has been raised as a result of late lodgement, penalty tax will not also be raised in regard to the same transgression for late payment. 43 Each 'occurrence' of a transgression is covered by CP 18.2 and CP 20.2. An 'occurrence' will be determined by reviewing the previous 12 month period and ascertaining the number of transgressions that have occurred. The 12 month period is a 'rolling period' which extends back and is viewed from the most recent occurrence. 44 Paragraph 27 of CP 18.2 provides that further remission of penalty tax to a lower rate will only be considered in exceptional circumstances, which include, but are not limited to where: 27.1 the late or non-lodgement of a return occurred as a result of advice issued by the Office of State Revenue; 27.2 the default was associated with illegal activity of the lodging party or any other person acting on behalf of the liable party where the liable party was not involved in the activity; 27.3 the late or non-lodgement of a return was occasioned by the death or serious illness of the liable party or responsible party; 27.4 an investigator or other officer reports that there are other exceptional reasons which may warrant a further remission of the penalty tax; 27.5 a taxpayer or the taxpayer's representative has made written representations providing details of other exceptional circumstances. 45 CP 18.2 at paragraph 28 provides that penalty tax in circumstances outlined in paragraphs 27.1 to 27.3 is generally to be remitted in full, unless the relevant Branch Manager agrees that penalty tax will only be partially remitted. In the case of paragraphs 27.4 and 27.5, the relevant Branch Manager may under paragraph 29 remit the penalty tax in part to an amount equal to interest at 10% per annum or, if the circumstances are such that a full remission is warranted, remit the penalty tax in full. (Page 13)
46 Paragraph 30 provides that where other circumstances are given in support of requests for the further remission of penalty tax that do not fall within paragraph 27, the request must be referred to the relevant Branch Manager with a recommendation for determination.
CP 20.2 47 Paragraph 1.1 of CP 20.2 provides that a penalty tax assessment will be issued if self-assessed (return based) tax is not paid within seven days after the due date. Paragraph 1.4 of CP 20.2 provides that the following penalty tax remission rates are to apply where payments for quarterly and monthly returns are not received within seven days after the due date: 48 Paragraph 3 of CP 20.2 provides that any further remission of late payment penalty tax will only be considered in exceptional circumstances, which may include, but are not limited to where: 3.1 payment of tax is received by the issue date of the penalty tax assessment notice, and a check of the taxpayer's history shows a good payment record; 3.2 payment of tax is received within seven days after the due date of the penalty tax assessment notice with respect to land tax and return based taxes and a check of the taxpayer's history shows no prior instances of late payment; 3.3 genuine financial difficulties caused payment to be delayed by up to seven days after the issue date specified in the penalty tax assessment notice and a check of the taxpayer's history shows a good payment history; 3.4 payment is made within seven days after the issue date specified in the penalty tax assessment notice and payment was delayed due to unforeseen circumstances beyond the taxpayer's control (e.g. the taxpayer was hospitalised, a family emergency etc.) and a check of the taxpayer's history shows a good payment record; 3.5 late payment of tax was caused by postal system delays, payment is made within seven days after the issue date specified in the penalty (Page 14)
tax assessment notice and a check of the taxpayer's history shows a good payment record; 3.6 the taxpayer is deceased and assets of the estate are frozen due to probate; 3.7 payment was inadvertently directed to the wrong authority and such payment was made within the required time; and/or 3.8 the lodging party has misappropriated client funds held on trust for the payment of an assessment. 49 Paragraph 4 of CP 20.2 provides that where other circumstances that do not fall within paragraph 3 are given in support of a request for further remission of penalty tax, the request will be referred to the relevant Principal Revenue Officer or Assistant Director with a recommendation for determination. If it is determined that further remission is warranted, the penalty tax may be remitted in full, or to such other amount that is considered appropriate in the particular circumstances.
Issue to be determined 50 The applicant only asks the Tribunal to determine whether the penalty tax should have been wholly remitted. It does not seek a review of the remissions already made by the Commissioner. The issue to be determined in this matter is therefore simply whether the Commissioner correctly exercised his discretion when he refused to wholly remit penalty tax imposed under the TA Act during the period from 1 April 2010 to 30 September 2012.
Commissioner's submissions 51 The Commissioner submits that the remission of penalty tax agreed to in its letter dated 24 May 2013 has already accounted for the factors set out by the applicant in its objection and in further submissions to the Commissioner. The Commissioner says that further remission of penalties should only be made in exceptional circumstances. The Commissioner's published practice as set out in CP 18.2 and 20.2 in the view of the Commissioner provides for a fair and transparent policy that seeks to provide equity amongst all taxpayers. 52 The Commissioner submits that the applicant's noncompliance with its pay roll tax obligations occurred over an extended period of 24 months, and did not relate to isolated periods. (Page 15)
53 Further, the Commissioner says that while Mr Cass was responsible for achieving and maintaining the rapid expansion of the applicant's business, he was not concerned with the need to maintain adequate financial and compliance systems. The applicant had a large number of recruitment staff in its office to deal with matters relating to contractors but only one member of staff to deal with administrative and financial matters. The applicant's external accountants had no involvement in dealing with the pay-roll tax obligations of the applicant. 54 The Commissioner also says that the applicant through Mr Hall was aware of its pay-roll tax obligations and that it was able to make substantial payments of pay-roll tax when required to do so. The Commissioner suggests that the reason for the applicant's failure to pay was that the applicant's business worked on tight margins and due to cash flow difficulties the applicant chose to pay other creditors as opposed to pay-roll tax. 55 The Commissioner says that neither the failure to allocate sufficient staff to deal with compliance matters nor the fact that there were cash flow problems in the applicant's business justify full remission of penalty tax. 56 Turning to Mr Hall's personal circumstances, the Commissioner accepts that personal matters were likely affecting Mr Hall's ability to carry out his duties between November 2011 and January 2012. However, the Commissioner says that although he accepts that Mr Hall was under stress due to his personal circumstances, there is no evidence that he was seriously ill. Further, the Commissioner says that in any event this does not explain why the pay-roll tax obligations were not being complied with as far back as April 2010. 57 As to Mr Cass' statement that he was unaware that the applicant's pay-roll tax obligations were not being met until September 2012, the Commissioner says that this is not a basis for further remission of penalties. 58 The Commissioner also accepts that Mr Cass was seriously ill during the period of January to April 2012. However, the Commissioner says that the person responsible for the payment of payroll tax was Mr Hall, not Mr Cass. 59 The Commissioner accordingly determined that the requirements for further remission of penalties were not satisfied. (Page 16)
60 The Commissioner says that the manner in which the penalties were remitted is a correct application of the principles set out in CP 18.2 and CP 20.2.
Applicant's submissions 61 The applicant says that the remission of the penalty tax as set out in the Commissioner's letter dated 24 May 2013 does not account for all of the factors it set out in its objection to the Commissioner. The applicant submits that the circumstances of Mr Hall and Mr Cass constitute exceptional circumstances which impeded the lodgement of pay-roll tax returns in time. 62 In particular, the applicant says that the requirements of paragraph 27.3 of CP 18.2 are satisfied in this case because of Mr Cass' illness. 63 Further, the applicant says that the Commissioner's suggestion that the applicant deliberately chose not to pay pay-roll tax, and instead paid other creditors, is incorrect. The applicant says that they had to pay contractors first because it was their social responsibility to pay wages before tax. 64 The applicant states that it paid the full amount of the pay-roll tax, and that penalising the applicant would also penalise all of the company staff, who may as a result suffer economic hardship. The applicant further states that it supports engineering jobs for the mining industry in Western Australia, and that penalising the applicant would also penalise contractors who are working in mining jobs. The applicant also contends that it is a small, self-funded business with limited resources. 65 For the above reasons, the applicant says that the penalty tax imposed should have been remitted in full.
Tribunal's findings 66 The Commissioner's practice when exercising his discretion to remit penalty tax or not is, as I mentioned earlier in these reasons, set out in CP 18.2 and in CP 20.2. CP 18.2 deals with late or nonlodgement of returns. CP 20.2 deals with late payment. 67 It is apparent that in the cases where the applicant was late in lodging a return, the Commissioner has treated these as late payment and applied the provisions of CP 20.2. For example, the August 2010 return was lodged 13 days late and the Commissioner applied penalty tax of (Page 17)
20% (s 27(1) of the TA Act, late payment) and remitted the penalty tax to 10% under CP 20.2. 68 In the cases where the Commissioner actually issued a default estimate of liability, he applied a penalty tax rate of 100% (s 26(3) of the TA Act, failure to lodge an instrument) and then remitted the penalty tax rate to 20% under the provisions of CP 18.2. For example, the Commissioner issued a default estimate of liability in respect of the May 2012 return and applied the penalty tax rate of 100%. This was then remitted to 20% under CP.18.2. 69 I consider that the Commissioner has in each case under review applied the correct section of the TA Act and the correct policy document. I do not understand the applicant to be arguing otherwise and I intend to take the same approach in this review. 70 As the Tribunal noted in Bettison and Commissioner of State Revenue [2011] WASAT 183 at [29]: The Tribunal has previously acknowledged the appropriateness of having a policy concerning the remission of penalty; Miller v Commissioner of State Revenue[2006] WASAT 336 at [16], Anderson v Commissioner of State Revenue[2008] WASAT 11 at [49]. This ensures fairness and transparency in the respondent's application of remission of penalty tax under s 29 of the TA Act and it is important that the respondent adheres to this policy so as to provide consistency in the manner in which it is applied. The policy itself provides a degree of flexibility in its application, but it would not be appropriate to extend that flexibility beyond what is contained within the policy. That would lead to an unevenness in the way in which individual taxpayers are treated. 71 I have no reason to depart from this position. 72 The Commissioner, in respect of the June 2010 and August 2010 returns, applied a penalty tax rate of 20% and then remitted that rate to 10% in accordance with CP 20.2. No exceptional circumstances have been put forward to justify any further remission and I do not consider that any further remission is therefore warranted or appropriate. 73 The same applies in respect of the returns for each of the months from December 2010 to July 2011 inclusive. Although Mr Cass was by this time experiencing personal difficulties, it is not argued that at this stage Mr Hall had health issues. 74 In respect of the applicant's failure to lodge or late lodgement of the August 2011 and September 2011 returns, the Commissioner applied a (Page 18)
penalty tax rate of 100% and remitted that to a rate of 20% in accordance with CP 18.2. The Commissioner then further remitted that penalty tax rate to 10%.He did the same in respect of the January, February and March 2012 returns. 75 It is not apparent why the Commissioner agreed to these further remissions, but these returns relate to at least part of the period when it is argued that Mr Hall was distracted by other events in his personal life and should be regarded as suffering from a serious illness in the form of a mental disability. Disregarding the Commissioner's decision that a partial remission is appropriate, namely a reduction from 20% to 10%, I do not consider that the penalty should be remitted to nil. The applicant's lodgement and payment history by that stage was at least unsatisfactory and, while Mr Hall's illness could have resulted in returns being temporarily overlooked, it does not explain, at least in the case of the August 2011, September 2011 and January 2012, February 2012 and March 2012 returns, his substantial failure to lodge those returns. 76 As far as the returns for April 2012 and May 2012 are concerned, the Commissioner applied a penalty tax rate of 100% and remitted that to a rate of 20% in accordance with CP 18.2. In respect of the returns for June 2012, July 2012 and August 2012, the Commissioner applied a penalty tax rate of 20% in accordance with CP 20.2 and remitted that to a rate of 10%. 77 The applicant's explanation for the late lodgement or failure to lodge returns centres around Mr Cass' illnesses and his personal situation. I am not without sympathy for him, but, as the Commissioner says, at least until September 2012 Mr Cass believed that the returns and payments of payroll tax were being attended to by Mr Hall. There is no evidence to suggest that, had Mr Cass been fit and well, the payroll tax returns would have been better and punctually dealt with or that he would have been aware of Mr Hall's difficulties. Once systems are in place, lodging and paying payroll tax is, essentially, a bookkeeping exercise. Mr Cass is based in Sydney, New South Wales, and his role was in the development of the applicant's business, not in the day to day running of that business. 78 There is a long history of noncompliance with the applicant's payroll obligations, which extended beyond the time one might reasonably expect the applicant to have been affected by the personal situations of Mr Hall and of Mr Cass. The penalty has been remitted from the possible sum of $1,257,693.84 to $250,822.68. I do not consider that (Page 19)
it would be appropriate to remit that penalty in full and I consider that the Commissioner's decision not to wholly remit the penalty tax is correct.
Orders |