A taxpayer operating as a sole trader (a tiler) has been unsuccessful before the AAT in satisfying the burden of proving that amended income tax and GST assessments, plus penalties, were excessive.
- The assessments increased his income tax liability by some $21,500 and his GST payable by some $7,500, together with 50% shortfall penalties for recklessness.
- The Commissioner’s basis for amended assessments was that the taxpayer had transferred money overseas, during the relevant period, of some $70,000, which could not be explained by the income and sales disclosed for that period from his business.
- The taxpayer objected to the assessments on the grounds that these monies comprised donations he had collected from other people for distribution to needy citizens in another country (although he conceded he had personally paid $8,000 himself).
- The objections to the assessments were disallowed on the basis that the disclosed joint income of the taxpayer and his wife could not have been sufficient to cover the family outgoings or the overseas transfers and that there was insufficient evidence to verify the donations.
- It was also claimed that the taxpayer had improperly claimed private expenses as creditable acquisitions or deductions and that he could not substantiate a number of the claims.
Although the Commissioner conceded that the taxpayer had received donations from third parties, the AAT found the taxpayer had not discharged the burden of proving the assessments were excessive. In particular, the AAT found that the taxpayer was unable to properly explain the source of the money to fund his expenditure, nor the expenses claimed nor the apparent inconsistencies in his records and evidence. The AAT also found that the taxpayer failed to discharge his burden of proof in respect of penalties as he did not address the issue of their excessiveness.
(AAT Case [2014] AATA 445, Re Nassar and FCT, AAT, Ref Nos 2013/2957-2959, Redfern, SM, 4 July 2014.)
[LTN 128, 7/7/14]