The AAT has disallowed a taxpayer’s appeal against GST and s 167 default income tax assessments, although it set aside an administrative penalty for one of the years in question.
In 2008, the ATO audited the tax affairs of the taxpayer’s family and the companies they controlled. The Tribunal said the family business in question was a business of property development and construction. As a result of the audit, the Commissioner was not satisfied that all of the taxpayer’s income had been disclosed nor that he had been carrying on an enterprise for GST purposes, which had the effect of calling into question the input tax credits he had claimed on his GST returns.
In 2012, the Commissioner made assessments of GST net amounts so as to claw back the input tax credits claimed, plus default assessments under s 167 of the ITAA 1936, of the taxpayer’s taxable income for each of the income years 2003 to 2008 inclusive. He had earlier made amended assessments for the income years 2007, 2009 and 2011.
The taxpayer faced tax and penalties of almost $2m.
- The taxpayer objected against the various assessments of tax and administrative penalty.
- All of the objections relating to primary tax were disallowed, with the exception of one of the objections dealing with the 2007 income year, which was allowed in full.
- The objections relating to administrative penalty were disallowed, with the exception of the 2011 year, which was allowed in part.
The taxpayer then applied to the Tribunal for review of the objection decisions. With one exception re the administrative penalty for GST shortfall for the 2011 year (which the Tribunal set aside), the Tribunal decided in each case to affirm the Commissioner’s objection decisions relating to the income tax assessments for the 2003 to 2008 income years.
The Tribunal said the taxpayer’s case was “full of inconsistencies, contradictions, inadequate explanations and unsupported and implausible assertions”.
(Re Caporale and FCT [2015] AATA 49, AAT, File Nos: 2013/0096-0101, 2013/3536-3537, 2013/3552-3554, Frost DP, 30 January 2015.)
[LTN 23, 5/2/15]