IWEC Pty Ltd v Commissioner of Taxation
Document type: Decision Impact Statement
Venue: Administrative Appeals Tribunal (NT2006/90 & 315)
Judgment date: 8 February 2007
Date published: 10 January 2011

Summary of decision:
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

Overview 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%.

Issues decided:
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%.

ATO 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

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
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
Other references: PS LA 2006/1 - Liability for penalties