In a recent decision, the Administrative Review Tribunal (‘ART’) held that a taxpayer should be released from payment of part of his tax debt on the grounds of serious hardship.
As at the 2022 income year, the taxpayer had an accumulated tax debt of approximately $528,000, comprising income tax, late lodgment penalties, PAYG instalments, and the general interest charge on the PAYG and unpaid income tax.
Much of the taxpayer’s tax debt had arisen as a result of the taxpayer deriving income protection insurance payments from his insurer (which were assessable). These payments had been made since around 2002, and arose from a serious injury the taxpayer had suffered in a fire at his restaurant business.
The ART noted that there were a number of factors which weighed against the taxpayer, including his failure to make payments to meet the tax debt and his ‘extremely poor’ tax compliance history.
However, the ART decided that some relief was justified, given the extent of hardship, concerns about the taxpayer’s health, and recoverability time for the tax debt.
The ART accordingly reduced the total tax debt (including penalties) to $250,000.