The Federal Court has dismissed a taxpayer’s appeal against an earlier AAT decision that it was not carrying on an enterprise and therefore not entitled to input tax credits (ITCs).
In AAT Case [2013] AATA 40, Re Bayconnection Property Developments Pty Ltd and Ors and FCT, the AAT had held that 5 company taxpayers were not carrying on enterprise and were therefore not entitled to ITC claims for tax periods ranging from February 2005 to January 2009. It also affirmed the 75% penalty that had been imposed, with a 20% uplift for the relevant periods.
The taxpayers were all owned by one or more members of the same family, who had been involved in property development and construction activities since the early 2000s. Each of the taxpayers was registered for GST purposes and lodged BASs claiming ITCs for acquisitions, which were mostly from related parties. The taxpayers contended that the acquisitions were related to the development of a training and education centre for the relevant periods. The Commissioner contended that the taxpayers were not entitled to the ITCs claimed for the relevant periods as they were not carrying on an enterprise. He assessed the taxpayers for a total GST shortfall of some $398,689 for the relevant periods plus a 75% shortfall penalty for intentional disregard, with a 20% uplift.
Four of the applicants in this appeal were the subject of winding-up orders on 11 March 2013. The liquidator who was appointed to each of these companies reached an agreement with the Commissioner which provided for their appeals to be discontinued on the basis that there be no order as to costs. Orders giving effect to that agreement were made on 3 April 2013.
On the same date, the Court (Nicholas J) fixed the remaining appeal by Caporale Builders for hearing. Various other orders made included orders requiring Caporale Builders to file and serve any evidence upon which it intended to rely and to file a written outline of submissions. The Court said Caporale Builders did not comply with those orders.
After reviewing the evidence put before it, and the relevant legislative provisions, the Court dismissed the 9 grounds of appeal made by Caporale Builders.
(Bayconnection Property Developments Pty Ltd & Ors v FCT [2013] FCA 440, Federal Court, Nicholas J, 14 May 2013.)
[LTN 109, 7/6/13]