The AAT has held that 5 company taxpayers were not carrying on an ‘enterprise’ and were therefore not entitled to input tax credit (ITC) claims for tax periods ranging from February 2005 to January 2009. It also affirmed the 75% penalty 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 2000’s. 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.
Based on the evidence, the AAT held that the taxpayers were clearly not carrying on an enterprise. It said the taxpayers provided no concrete details of any kind as to the specific activities that were supposedly being carried on in relation to the development of the centre. Therefore, it held that the Commissioner was correct to deny the ITCs claimed. In relation to penalties, the Tribunal held that the taxpayers’ behaviour pointed towards a positive finding of intentional disregard. Hence, it affirmed the 75% penalty and 20% uplift imposed by the Commissioner and held there was no basis for remission of the penalties.
(AAT Case [2013] AATA 40, Re Bayconnection Property Developments Pty Ltd and Ors and FCT, AAT, Ref No 2011/1678, Frost DP and Lazanas SM, 29 January 2013.)
[LTN 20, 31/1/13]