The AAT has upheld a GST assessment as the taxpayer was unable to prove that it was excessive.
The taxpayer operated a hardware store and then carried on a business of auctioning stamps, coins and other collectables.
Following an audit of the taxpayer’s BASs for the period from 1 July 2007 to 30 June 2010, the Commissioner determined there was a GST shortfall amount of just over $42,000 and assessed the taxpayer accordingly. The shortfall comprised understated GST of almost $27,160 and over-claimed input tax credits of just over $14,900. The Commissioner also imposed a 25% penalty of just over $10,500 on the basis that the false and misleading statements in the BASs were a result of the taxpayer failing to take reasonable care.
The audit showed that the sales figures recorded on the relevant BAS reports could not be reconciled with the MYOB accounting reports and the records used to record income from sales. As a result, the auditors resorted to an analysis of the various bank accounts used by the taxpayer, taking account of transfers between accounts, in order to establish the GST shortfall.
The taxpayer challenged the GST assessment but was unable to provide any documents or other credible explanation to show that the assessment was excessive. The AAT also upheld the 25% penalty. (Morgan and FCT [2017] AATA 811, AAT, Fice SM, AAT File Nos: 2015/5789-5791, 6 June 2017.)