Commissioner of Taxation v Dixon (Trustee) [2007] FCA 1079

FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation v Dixon (Trustee) [2007] FCA 1079

TAXATION – appeal from a decision of the Administrative Appeals Tribunal – Tribunal varied a decision of the Commissioner of Taxation not to remit any part of an administrative penalty imposed on the respondent by virtue of the respondent having incorrectly sought an input tax credit – Tribunal found that 25% of the penalty imposed should be remitted to the respondent – Tribunal found that no harm was done as respondent's error was identified by Commissioner before any money was refunded

TAXATION– factors relevant to the exercise of the remission discretion – whether factors relevant to the exercise of the remission discretion restricted to those relating to the conduct of a taxpayer or at least the taxpayer's circumstances – relevance of general interest charge regime in the taxation legislation – whether penalty imposed by the Commissioner or the legislation – whether the fact that a refund of the tax amount in question was never made to the taxpayer meant that no harm was done is an irrelevant consideration in the exercise of the remission discretion – whether it is necessary that there be special circumstances before the remission discretion is exercised

Held: Appeal allowed. The Act, rather than the Commissioner, imposes the penalty the subject of the remission decision and the Commissioner thereby becomes entitled to collect such penalty. Factors relevant to the exercise by the Commissioner of the remission discretion are confined to circumstances relevant to the taxpayer in question. Consideration of extraneous issues such as loss of revenue of the Commonwealth flowing from the conduct of the Commissioner is irrelevant. The fact that a refund was never made to the respondent, through no activity of the respondent, is an irrelevant consideration in the exercise of the remission discretion. Similarly, the finding of the Tribunal that a refund was never made to the taxpayer and therefore no harm was done, is an irrelevant consideration.