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ThenAdministrative Appeals Tribunal (AAT) has recently refused the applications ofntwo individuals who sought to be released from their tax debts under the taxnlaw.
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Case 1
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nAn individualnsuffering from Parkinson’s disease had received income protection policynpayments and sought to be relieved from the related tax debts, which totalled $130,416.nHe said he was unable to dispose of his home or an investment property to paynthe debts, as there were mortgages over the properties in favour of his wife. Thenindividual also argued that selling the properties would compound his illnessnand make it more difficult to meet his living needs. Although the AAT acceptednthat serious illness was a consideration, after reviewing the circumstances itnheld that the taxpayer would not suffer serious hardship if he was required tonpay his tax liability. The AAT said the taxpayer did not make proper provisionsnto meet his tax liabilities and preferred to pay his other debts. Accordingly,nrelief was not granted.
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Case 2
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nA SunshinenCoast real estate agent sought to be relieved from his tax debts, which totalledn$437,681 as at 11 August 2016. He argued he had an outstanding compliancenhistory and that his circumstances were the result of a catastrophic financialnevent in 2005, among other things. The Commissioner pointed to the taxpayer’sn“unusually high level of discretionary spending, including on holidays, diningnout and entertainment, which could be reduced”. The AAT said the taxpayer had an“poor compliance history” and agreed with the Commissioner’s description of hisndiscretionary spending. The AAT was of the view that the taxpayer “simply gavenpriority to other matters and ignored his tax obligations”. The AAT accordinglynrefused the application for relief.
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Important: Clients should not act solely on the basis of the material contained in Update. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We therefore recommend that our formal advice be sought before acting in any of the areas. This update is issued as a helpful guide to clients and for their private information.