Innocent and not guilty are different beasts when it comes to tax. This has been highlighted recently in the case of Ward v FC of T in the Administrative Appeals Tribunal (AAT). Mr Ward was levied $209,250 excess contributions tax which virtually obliterated his superannuation savings over his lifetime. Deputy President Gary Humphreys made this closing comment.
The strict application of the law to Mr Ward's situation produces an outcome which is harsh and unfair. Setting out only to protect his and his wife's superannuation nest egg after a lifetime in low paid employment, and acting in good faith with professional advice, Mr Ward has unwittingly forfeited to the Tax Office the entire proceeds of his superannuation savings. Had the original investment in BT Super for Life been made just days earlier than it was, no excess contributions tax would have been payable. As it transpired, he has suffered a penalty of 19,527 percent of any "tax advantage" (his advisers' calculation), an outcome which cannot be regarded as conscionable.
Mr Humphreys could not change the law but he went so far as to urge the Commissioner to reconsider the fairness of enforcing the penalty. He also made a commendation to the Minister for Finance to consider an act of grace payment.
This case demonstrates once again that a taxpayer cannot rely on the fact that he is free of guilt. The full 84 page decision (which is quite interesting) can be found at Ward and Commissioner of Taxation (Taxation) (2018) AATA 1519 (7 June 2018).