The AAT has held that a taxpayer was not a resident of Australia for the years in question, but that he did derive Australian-sourced income.
The taxpayer, Robert Agius, is a citizen of Vanuatu. The Tribunal noted that, in 2008, he was arrested in Perth by Australian Federal Police officers attached to Project Wickenby. He was subsequently charged with conspiring with an accountant, the late Owen T Daniel, and others to defraud the Commonwealth and to dishonestly cause a loss to the Commonwealth between 1997 and 2006. In 2012, he was convicted and sentenced to a term of imprisonment.
By the time of his arrest, the Commissioner had issued s167 default assessments to him for the income years 1997 to 2006 inclusive, on the basis that in the Commissioner’s opinion, although Mr Agius was not a resident of Australia during that period, he had nevertheless derived Australian-sourced income. The income related to the dealings that Mr Agius had had with Mr Daniel and his clients, and the transactions that arose – according to the Commissioner – from those dealings. Additional tax for late return and an administrative penalty were imposed.
Mr Agius objected against the assessments and some objections were allowed in part, others disallowed. In some cases, the taxable income assessed by the Commissioner was increased, as a result of the Commissioner becoming aware of further amounts that were considered to represent Mr Agius’ Australian-sourced income. The Commissioner made amended assessments calculating the tax payable by reference to the non-resident tax scales. The additional tax for late return was remitted in full, but the administrative penalty was maintained. The Tribunal said Mr Agius identified his income during the relevant years as falling into only 2 categories, namely:
- His share in the net income of the Moore Stephens/PKF Vanuatu practice (which was paid to him as a regular monthly payment described as “partner salary”, plus a final allocation at year end, calculated so that his total remuneration equalled the agreed portion of the partnership’s profits); and
- Director’s fees paid to him by International Finance Trust Company Limited (IFTC), based in Vanuatu.
Mr Agius applied to the Tribunal for review of the objection decisions. The Tribunal said there were 2 areas of dispute between Mr Agius and the Commissioner:
- Was Mr Agius a resident of Australia during any of the income years?
- How much of Mr Agius’ income during the relevant years was from Australian sources?
After reviewing the evidence, the Tribunal held that Mr Agius was not a resident of Australia at any time during any of the relevant years. Although he spent time in Australia, and stayed at the family home, or at his mother-in-law’s house, or at friends’ houses, the Tribunal considered they were places he stayed but not places where he lived.
The Tribunal found however that the taxpayer did have Australian-sourced income and that was subject to tax in Australia and he should have therefore lodged a tax return for each of the relevant years (which he did not do). The Tribunal said it was not possible to quantify this amount “because of Mr Agius’ failure to provide comprehensive information about the proportion of the partnership’s net income that is attributable to sources in Australia”. The Tribunal said the taxpayer had not discharged the burden of proving that the assessments were excessive.
It also held that the administrative penalty was correctly imposed at 75% and there were no grounds for remission of that penalty.
The Tribunal therefore upheld the Commissioner’s objection decisions.
(AAT Case [2014] AATA 854, Re Agius and FCT, AAT, Frost DP, AAT Ref: 2011/3772-3781, 17 November 2014.)
[LTN 223, 18/11/4]