No grounds for summary judgment for taxpayer re default penalty assessment

A taxpayer has been unsuccessful in his application for summary judgment against the Commissioner in respect of a default assessment issued to him for $5.7m in penalties for intentional disregard of the law (re alleged omitted income of $16m). Broadly, the taxpayer argued that the Commissioner could not issue any “default” penalty assessment as there was no “shortfall amount” because the default assessments were made by the Commissioner by the formation of a judgment under s 167 of ITAA 1936, and not by the process in s 4-15(1) of ITAA 1997 (calculating taxable income). The taxpayer also argued that the Commissioner had not identified with particularity which taxation law that he intentionally disregarded.

However, the Federal Court dismissed the taxpayer’s application on the basis that it was not appropriate for the proceedings to be determined by way of summary judgment in circumstances where there were novel and important questions of law to be determined and where the taxpayer, nevertheless, still bore the onus of proving that the default assessments were excessive. The Court also said that it was not a case where the Commissioner had no reasonable prospects of successfully defending the proceedings – and that it was also appropriate to afford him more time to specify the tax law that he asserted was intentionally disregarded by the taxpayer. (Laureti v FCT [2026] FCA 1086, 10 August 2026)