Helbers and Commissioner of Taxation
Document type: Decision Impact Statement
Venue: Administrative Appeals Tribunal (2009/3384-87)
Judgment date: 23 September 2011
Date published: 5 December 2012

Summary of decision:
Outlines the ATO's response to this case which concerned whether administrative penalties were payable for any failure to take reasonable care.

Overview of facts:
The taxpayer was born in the Netherlands and, prior to his permanent move to Australia in October 2001, had worked in that country and became entitled to special early retirement payments (VUT) when he retired there in 2001. The taxpayer was required to contribute to the VUT during his working life, but did not receive a deduction for his contributions. During the 2003 to 2006 income years, the taxpayer did not pay income tax in the Netherlands on VUT payments into his bank account in that country. | The taxpayer said that he attended the ATO in February 2002 and was advised by a taxation officer that he would only be charged 10% tax on his Australian income as the holder of a '410 class retirement visa. | The taxpayer then wrote to the Commissioner in November 2004, asking whether overseas income was classed as Australian income. The Commissioner treated this as a request for a private binding ruling. The taxpayer included the VUT income received in his 2003 income tax return, lodged in January 2005, and claimed a deduction for the 'undeducted purchase price of a foreign pension or annuity'. | The private ruling issued to the taxpayer in April 2005, stating that the VUT was subject to income tax in Australia, but that amounts contributed to the purchase price of the VUT would be excluded as the undeducted purchase price. At the same time, the applicant lodged his 2004 income tax return, and did not include the VUT income, and lodged an amended 2003 return to delete the VUT and the deduction previously claimed. He did not include the VUT income in either of his 2005 or 2006 returns. | Following an audit, the VUT payments were assessed to the taxpayer in 2008. From the information provided by the taxpayer, it was not possible to fully determine the amounts of undeducted purchase price under section 27H of the Income Tax Assessment Act 1936 (ITAA 1936). | At issue before the Tribunal was whether the taxpayer was liable to pay shortfall penalties for a failure to take reasonable care. | Issues decided by the tribunal | The Tribunal found that the taxpayer's tax shortfalls did not result from any failure to take reasonable care. The taxpayer was confused by the difference between the private ruling and the oral advice he received from the ATO in February 2002, especially as English was not his first language, and he was not familiar with the Australian taxation system (paragraphs 27 and 29).

Issues decided:
The Tribunal found that the taxpayer's tax shortfalls did not result from any failure to take reasonable care. The taxpayer was confused by the difference between the private ruling and the oral advice he received from the ATO in February 2002, especially as English was not his first language, and he was not familiar with the Australian taxation system (paragraphs 27 and 29).

ATO view of decision:
It was reasonably open to the Tribunal, based on the particular findings of fact made, to conclude that the taxpayer's tax shortfalls did not result from any failure to take reasonable care.

Administrative treatment:
Implications for ATO precedential documents (Public Rulings & Determinations etc) | None | Implications for Law Administration Practice Statements | None

Legislative references: Income Tax Assessment Act 1997 6-5 Income Tax Assessment Act 1936 27H Taxation Administration Act 1953 284-75(1) 284-80(1) 284-90(1)
Case references: Hart v FC of T (2003) 131 FCR 203 2003 ATC 4665 53 ATR 371
Subject references: Administrative penalty Reasonable care