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A computing and systems analyst who was fined for having an overall tax shortfall of $17,764 in the 2017 financial year has been denied penalty relief after he failed to prove his personal and financial circumstances would prevent him from doing so.
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Computer analyst denied $2.9k penalty relief
20 May 2021
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The Administrative Appeals Tribunal (AAT) has denied taxpayer RHXV penalty relief for a $2,965 fine issued to him for claiming $52,355 worth of ineligible work-related expenses which left him with an overall tax shortfall of $17,764 in the 2017 financial year.
The taxpayer, 45, has been filing income tax returns in Australia since the 2012 financial year, when he joined his current employer as a computing and systems analyst. He is also a partner in a wholesale textile products business.
The ATO first contacted the taxpayer in September 2017 to advise him that the processing of his 2017 return had been delayed as a result of waning evidence to support the claims of work-related expenses totalling $52,355.
In February 2018, the Tax Office notified the taxpayer that, as a result of an audit, his claimed deductions would be reduced to $47,758 for the 2017 financial year. The audit also revealed the taxpayer, at the time, had an overall tax shortfall of $17,764 for the 2017 income year.
The ATO hit the taxpayer with an $8,882 fine for recklessness, which was later reduced to $2,965 and re-attributed to demonstrating a lack of reasonable care. The taxpayer later appealed the fine.
Representing himself, the taxpayer told the tribunal that the first tax return he submitted in the 2017 financial year was submitted by mistake, when his “computer hanged and the submit button got clicked by mistake”.
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However, the ATO contended that the taxpayer’s errors weren’t limited to claiming ineligible work-related expenses, but that a substantial number of the claims made in 2017 were missing adequate records to substantiate the deductions that were eligible.
The taxpayer said that there were a number of records he had kept but lost access to after his computer crashed.
He said that he’s usually careful in keeping data back-ups and that, for many years, nothing has happened. However, in the lead-up to filing his return, he changed his laptop and “by the time [he] was thinking to transfer the data for back-up, [his] computer crashed”.
In applying for penalty relief, the taxpayer told the tribunal that the time and money he’d spent on the audit process, and his dealings with the ATO, had taken a toll on his mental health, before conceding that it was a mistake not to get professional advice.
“Considering this as my first mistake and the two years of struggle (time, mentally and financially), it is my humble request to consider my request to waive off $3,093 as penalty,” the taxpayer said.
AAT deputy president Stephen Boyle ultimately denied his appeal, noting that the taxpayer had failed to point to any particular financial or personal circumstances non-remission of the penalty unreasonable.
“As far as the tribunal is concerned, the commissioner’s decision not to exercise the discretion to remit any part of the penalty was, and still is, the correct and preferable decision,” Mr Boyle said.
“For the reasons set out above, the decision dated 5 June 2019 to disallow the applicant’s objection to an assessment of shortfall penalty for the 2017 income year in the amount of $2,965.55 and not to remit the penalty or part of the penalty or grant penalty relief is affirmed.”
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