Mr Yrorita also submitted that he had his own health problems due to the stress he has been experiencing, and suffers from severe plaque psoriasis.
Mr Scruby submitted that the penalty of 25 percent was imposed pursuant to 284-75(1) of Schedule 1 of the TAA on the basis that the Applicant or his agent made a false or misleading statement to the Commissioner by omitting to make reference to the withdrawal of the $53,000 in 2007. He contended that there were no grounds for discretionary remission of the penalty.
I have taken into account the totality of the evidence, and all the circumstances surrounding the withdrawal of the funds, and Mr Yrorita's present circumstances. I am satisfied that had he followed the correct procedures, he may well have been permitted to withdraw all or part of the $53,000, and may not have lost $14,630.
I am satisfied that the discretion to impose penalty was correctly exercised, but equally, that, for the reasons given above, it should be remitted.

Administrative Appeals Tribunal of Australia|2012-10-16

The Applicant referred in his closing to his innocence with regard to the ETK Fund, to his financial situation, and to his son's health. He submitted:

I am not contesting that I have received the amount of $38,370 from my SuperAnnuation (sic) fund but was not aware of ETK not being a legitimate Super Fund until the audit that was done on me as I was led to believed (sic) that ETK was a legitimate SuperAnnuation (sic) Fund and that I was eligible to access my retirement fund.

...

The 25% penalty on top of the $53,000 is very substantial to imposed (sic) on me.

...

I have not been part of establishing ETK scam and I am just a victim of my circumstances. My family is already in a financial difficulties and enforcing the assessment would truly put us on unbearable financial tragedy. ... It would put me on $78,247.07 in further debt on top of my Credit Card debt of over $22,000 and I do not know how I am going to repay that as I am Unemployed.

Mr Yrorita also submitted that he had his own health problems due to the stress he has been experiencing, and suffers from severe plaque psoriasis.
Mr Scruby submitted that the penalty of 25 percent was imposed pursuant to 284-75(1) of Schedule 1 of the TAA on the basis that the Applicant or his agent made a false or misleading statement to the Commissioner by omitting to make reference to the withdrawal of the $53,000 in 2007. He contended that there were no grounds for discretionary remission of the penalty.
I have taken into account the totality of the evidence, and all the circumstances surrounding the withdrawal of the funds, and Mr Yrorita's present circumstances. I am satisfied that had he followed the correct procedures, he may well have been permitted to withdraw all or part of the $53,000, and may not have lost $14,630.
I am satisfied that the discretion to impose penalty was correctly exercised, but equally, that, for the reasons given above, it should be remitted.

In coming to a decision, having taken into account the evidence, submissions, legislation and case law, I am mindful that the onus is on the Applicant to prove that the assessments are excessive. There is no onus on the Commissioner to show that the assessments were correctly made (Gauci v FCT (1975) 135 CLR 614).
In summary, I find from the evidence that by not making the appropriate inquiries, and by not declaring the superannuation withdrawn from AustralianSuper and ETK, Mr Yrorita attempted to evade paying tax on the superannuation money. Accordingly the Commissioner had the power to amend the assessment at any time.
I am also satisfied that the $53,000 should have been included in the Applicant's assessable income for the year ended 30 June 2007, and that the discretion in section 26AFB(4) of the ITAA 1936 should not be exercised in the Applicant's favour.
I am satisfied, and find that the discretion to impose the penalty was correctly exercised, but equally, that, for the reasons given above, it should be remitted.

The Tribunal varies the decision under review and remits the penalties imposed by the Commissioner of Taxation.

I certify that the preceding 63 (sixty three) paragraphs are a true copy of the reasons for the decision herein of Ms G Ettinger, Senior Member.

.........[sgd]...............................................................

Income Tax (Management) Act 1936(NSW)

Tax Assessment Act 1936

Industry (Supervision) Act 1993

Administration Act 1953

Superannuation Industry (Supervision) Regulation 1994(Cth)reg 6.19A(2)

Industry (Supervision) Regulations 1994

Yrorita and Commissioner of Taxation [2012] AATA 716 (16 October 2012)

Mason v Commissioner of Taxation [2012] AATA 133

Denver Chemical Manufacturing Co v Commissioner of Taxation (NSW) [1949] HCA 25; (1949) 79 CLR 296

'Fraud' means common law fraud. That is, the making of a statement that is false with knowledge of its falsity or reckless indifference as to its falsity: see Kajewski v Commissioner of Taxation [2003] FCA 258 at [111].

'Evasion' was described by Dixon J in Denver Chemical Manufacturing Co v Commissioner of Taxation (NSW) [1949] HCA 25; (1949) 79 CLR 296 at 313 in the following terms:

I think it is unwise to attempt to define the word 'evasion'. The context of s 210(2) [of the Income Tax (Management) Act 1936 (NSW)] shows that it means more than avoid and also more than a mere withholding of information or the mere furnishing of misleading information. It is probably safe to say that some blameworthy act or omission on the part of the taxpayer or those for whom he is responsible is contemplated. An intention to withhold information lest the commissioner should consider the taxpayer liable to a greater extent than the taxpayer is prepared to concede, is conduct which if the result is to avoid tax, would justify finding evasion.

Yrorita and Commissioner of Taxation [2012] AATA 716 (16 October 2012)

At a glance

Court

Decision date

Source

Judgment (7 paragraphs)

Legislation Cited (6)

Cases Cited (6)

Yrorita and Commissioner of Taxation [2012] AATA 716 (16 October 2012)