Weston and Commissioner of Taxation
Document type: Decision Impact Statement
Venue: Administrative Appeals Tribunal (2007/5645 and 2008/2832-2833)
Judgment date: 30 September 2008
Date published: 14 October 2009
Decision outcome: Partly Adverse

Summary of decision:
Outlines the Tax Office's response to this case, which concerned whether the applicant had a liability to Superannuation Guarantee Charge and whether an additional Superannuation Guarantee Charge should be further remitted.

Overview of facts:
1. The taxpayer engaged workers to work in his nut farming business. | 2. The Commissioner conducted a Superannuation Guarantee audit and requested the taxpayer to provide Superannuation Guarantee Statements. The taxpayer did not respond. | 3. The Commissioner determined that the taxpayer had not satisfied his employer superannuation contribution obligations and was therefore liable to a Superannuation Guarantee Charge ( "SGC" ) of $14,558.36 for the year ended 30 June 2003 and the quarterly periods from 30 June 2003 to 31 December 2005. | 4. The Commissioner imposed a penalty under subsection 59(1) of Part 7 of the Superannuation Guarantee (Administration) Act 1992 ( "SGA" ) equal to double the amount of SGC payable by the taxpayer for each period. The penalty was then remitted to a rate of 10% of the amount of SGC payable (penalty of $1,455.77). | 5. After making his objection decision, the Commissioner recalculated the liabilities for SGC and penalty and requested the Tribunal to increase the total SGC to $15,191.04 and the total penalty to $1,519.10. | 6. The taxpayer considered that he satisfied his superannuation obligations. He had telephoned Wageline, and was advised of the appropriate hourly rate for one of his employees and to add 10% to cover superannuation. The taxpayer paid that additional 10% directly to the employee to manage. | 7. The taxpayer also hired workers to perform casual labour. He claimed that the workers were contractors and that he wasn't required to make superannuation contributions on their behalf. Alternatively, he argued that he paid one worker the wage of several other workers and that if they were paid individually each worker would be under the superannuation eligibility threshold of $450 salary per month. | Issues decided by the Administrative Appeals Tribunal | Senior Member Pascoe found that: | 1. The taxpayer had not discharged the burden of proving that the amounts paid to his workers were not salary or wages under the SGA. | 2. The taxpayer was required to make superannuation contributions on behalf of his employees and he had failed to do so. | 3. The taxpayer was liable to the SGC. The Tribunal accepted the Commissioner's recalculation of the amount of SGC to be assessed for the relevant periods. | 4. The penalty should be remitted in full. The taxpayer believed that paying an additional 10% to one of his employees satisfied his superannuation obligations. It was also possible that the payments to other workers may not have attracted a liability for SGC if they had been dealt with and recorded correctly.

Issues decided:
Senior Member Pascoe found that: 1. The taxpayer had not discharged the burden of proving that the amounts paid to his workers were not salary or wages under the SGA. 2. The taxpayer was required to make superannuation contributions on behalf of his employees and he had failed to do so. 3. The taxpayer was liable to the SGC. The Tribunal accepted the Commissioner's recalculation of the amount of SGC to be assessed for the relevant periods. 4. The penalty should be remitted in full. The taxpayer believed that paying an additional 10% to one of his employees satisfied his superannuation obligations. It was also possible that the payments to other workers may not have attracted a liability for SGC if they had been dealt with and recorded correctly.

ATO view of decision:
The Tax Office accepts that the Tribunal's decision to remit the penalty in full was open to it on the facts as found. The Tribunal accepted that the taxpayer made honest mistakes in respect of his employer superannuation obligations. The Tribunal's decision recognises that issues involving the remission of penalty must be determined on the particular circumstances of each case.

Administrative treatment:
Implications on current Public Rulings & Determinations | None

Legislative references: Superannuation Guarantee (Administration) Act 1992 11 12 62
Subject references: Superannuation Superannuation guarantee charge Superannuation contributions shortfall Penalty