Tackle Tax Problems Early


Some taxpayers have turned to ‘alternative’ legal arguments to contest amounts owing to the Australian Tax Office (ATO) with varying degrees of success.

In the NSW case of Deputy Commissioner of Taxation v Lamont, a Sydney taxpayer attempted to rout an application by the ATO to reclaim some $4.3m of unpaid tax debt.

His chosen tactic was a version of the anti-tax ‘sovereign citizen’ philosophy, an unusual and frequently conspiratorial theory that supposes, among other things, variants of the concept that the Australian Government (and, by association, the ATO) is unconstitutional, making taxes illegal; and that with the right combination of legal words and phrases sovereign citizens can renounce their citizenship and hence their obligation to follow the laws of Australia.

It’s much more complicated than that, but there’s the short version.

It may or may not come as a surprise that Mr. Lamont’s arguments were unsuccessful when brought into trial.

Fagan J heard none of Mr. Lamont’s claims to have not consented to the proceedings and dismissed his submissions as ‘incoherent’, ‘frivolous’, and ‘insubstantial’.

It is unclear if Mr. Lamont’s argument was a legitimate attempt to ‘beat the system’ or whether it was simply a last-ditch attempt to negotiate his way out of imminent collection proceedings.

After all, $4.3 million is a hefty sum.

Unfortunately, sticking your head in the sand until the ATO comes after you is not an effective strategy.

It is much more effective to tackle tax problems early before they become too big a problem to manage.

Faced with a $4.3m debt, anyone might be tempted to try on a conspiracy argument in court.

However, trying to run with a conspiracy theory will most likely only make your situation worse.

In many instances, the amount being sought by the ATO invariably consists of interest and penalties (in addition to the primary tax).

The Commissioner of Taxation has the discretion to remit penalties and interest.

Such an application must be carefully considered and carefully crafted.


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Related Blog – Final Notice to Lodge ATO