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Decision Impact Statement

IWEC Pty Ltd v Commissioner of Taxation

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Venue: Administrative Appeals Tribunal
Venue Reference No: NT2006/90 & 315
Judge Name: Hunt J.
Judgment date: 8 February 2007
Appeals on foot:
No.

Administrative Treatment (Implication on current Public Rulings and Determinations)

Relevant Rulings/Determinations:

Subject References:
Superannuation Guarantee Charge
contributions paid to fund late
one contribution paid to financial planner on time but not received by fund within time
agency
absence of discretion to remit all or part of the Charge
decision varied and decision affirmed

This document is not a public ruling, but provides a statement of the Commissioner's position in relation to the decision and how the law will be administered as a consequence of the decision. Any proposals for changes in the law are matters for government and it is not appropriate for the Commissioner to comment.

Précis

The applicant (an employer) was negligent in making Superannuation Guarantee payments on 5 occasions. The applicant was as little as one day late, and as much as 5 days late. The applicant appealed against the imposition of Superannuation Guarantee Charge as well as the Part 7 penalties imposed

Brief Summary of Facts

The applicant (an employer) ran into financial difficulties, and was unable to make some Superannuation Guarantee Charge (SGC) payments on time. In the end, 5 payments were late, by a quantum varying from six months to 1 day.

The first payment in question was over 3 months late.

The next payment was over 6 months late.

The next payment was over 3 months late.

The next payment was one day late.

The final payment was not completed until 5 days after the due date, although part payments were received before the due date.

The applicant was audited in respect of these periods, and SGC and Part 7 penalties (10%) were imposed. The applicant lodged 2 objections (the first objection for 4 of these periods, the second objection for the remaining period).

On objection, the size and timing of the shortfalls were amended. The penalty for the payment that was one day late was remitted in full. The remaining penalties were remitted to 8%.

The applicant appealed to the AAT in respect of the SGC and the Part 7 penalties imposed.

Issues decided by the Court or Tribunal

The Tribunal noted (at para 22) that the Commissioner has no discretion to remit any or all of the SGC and so considered that it was bound to affirm the decision on that issue.

The Tribunal (at para 31) noted their agreement with the decision to remit in full the penalty on the payment made one day late.

The Tribunal then referred to the practice statement dealing with Part 7 penalties (PS LA 2006/1) and noted that the default penalty where the employer provided the information is 10%. It then referred to para 17 of the statement, which says that genuine attempts to comply as well as a high level of co-operation "may justify a higher level of remission". The Tribunal held that, on this basis, the 8% penalty for the payment made 5 days late should be remitted to zero and that for the remaining 3 periods the penalty should be reduced to 5%.

Tax Office view of Decision

This was a case on its facts. The AAT applied the Commissioner's practice statement and came to a different conclusion on the facts which it was entitled to do having also the benefit of oral submissions from the applicant.

Administrative Treatment

Implications on current Public Rulings & Determinations

None

Implications on Law Administration Practice Statements

None

Your comments

We invite you to advise us if you feel this decision has consequences we have not identified, or if a precedential decision such as a Public Ruling or an ATO ID requires reconsideration or amendment. Please forward your comments to the contact officer.

Date Issued:	28 May 2007
Due Date:	24 July 2007
Contact officer:	Grahame Tanna
Email address:	grahame.tanna@ato.gov.au
Telephone:	02 9374 2674
Facsimile:	02 9374 2002
Address:	Level 6, 100 Market Place, Sydney NSW 2000

Legislative References:
Superannuation Guarantee (Administration) Act 1992
31
32
62(3)

Superannuation Guarantee Charge Act 1992
5

Superannuation Industry (Supervision) Act 1993
117(3)

Case References:
VCJ and Commissioner of Taxation
[2006] AATA 955
64 ATR 1198

Re Pye and Federal Commissioner of Taxation
(2004) 55 ATR 1024
2004 ATC 2029

Jarra Hills Pty Ltd v. Federal Commissioner of Taxation
37 ATR 1022
97 ATC 2132

Robert Truelove and Commissioner of Taxation
[2000] AATA 276

Re Kancroft Pty Ltd (acting as trustee for Robertson Family Trust) and Commissioner of Taxation
[2004] AATA 591
2004 ATC 2126
56 ATR 1086

Re Williams and Commissioner of Taxation
(2005) 58 ATR 1298
2005 ATC 2058

Tilley v. The Official Receiver
(1960) 103 CLR 529

Other References
PS LA 2006/1 - Liability for penalties