Commentary on Provisions Part 5 – Enforcement of the levy and penalties Chapter 3 – Penalties Section 51 – Reasonable excuse for failure to make returns
90.This section provides that no liability to a penalty arises under sections 47 to 50 where a person who has failed to comply with the duty in section 26 has a reasonable excuse for the failure (subsection (1)). An insufficiency of funds is not a reasonable excuse (subsection (2)(a)), nor is that the person relied on another person to do things (unless the person who failed to comply took reasonable care to avoid the failure – subsection (2)(b)). Examples of things which may qualify as a reasonable excuse include serious unexpected illness, an unforeseen collapse of a third party’s IT system (meaning that a return could not be sent), or the liable person's office being destroyed by fire. Where the reasonable excuse ceases to apply, the person who failed to comply with section 26 is still able to rely on the excuse, provided the failure is remedied without unreasonable delay (subsection (2)(c)).