Retirement Village Scheme Deductions Wrong, but Taxpayers Took "Reasonable Care"

In a recent case, the Administrative Appeals Tribunal remitted penalties imposed on a retired couple by the Commissioner for failing to take reasonable care in preparing their tax returns. Broadly, the Commissioner disallowed some deductions claimed by the taxpayers in relation to their retirement village scheme investment. Consequently, the Commissioner issued amended assessments and imposed the penalties.

The Tribunal noted the taxpayers spoke limited English. It also noted there was evidence that the taxpayers’ solicitor had also invested in the retirement village scheme. After having regard to the circumstances, the Tribunal formed the view that the position adopted by taxpayers in their returns could be argued on rational grounds to be right (ie a reasonable arguable position). Therefore, it concluded the taxpayers had exercised reasonable care in preparing their returns.