A taxpayer has failed before the AAT to discharge the onus of proving that default assessments issued to him for the 2003 to 2006 income years for over $2m in taxable income were excessive.
In doing so, the AAT emphasised that not only did the taxpayer have to prove that the assessments were excessive but, also, what his actual taxable income for each year was. And, furthermore, this required him to, not only identify those categories of activity that generated income, but also to prove that there were no others that did. The Commissioner based his assessment for the 2003 year on a loan of $1.1m made to the taxpayer by a bank and the remaining years on unexplained deposits to the taxpayer’s bank accounts.
The AAT dismissed the taxpayer’s specific claims that some of the amounts deposited in his account were moneys that solicitors he had engaged had recovered from money owed to him under a second mortgage over a property in Western Australia. In doing so, the AAT noted that the moneys were in fact owed to a company he controlled and that, in any event, there was no evidence whether the amounts recovered represented capital or income (including interest). It also dismissed the taxpayer’s claims that other amounts represented “sundry amounts” owed to him following his acquisition of a company and in relation to the repayment of a redeemable convertible note. This too was for lack of evidence.
In relation to explanations given for other large amounts deposited in his accounts (ie that they represented exempt dividends, proceeds from the sale of shares and company reimbursements of its expenses), the AAT found that the taxpayer was unable to provide any documentation to support the claims or relevant contractual agreements that gave rise to the entitlements.
Accordingly, the AAT concluded that the taxpayer’s evidence as to his actual taxable income was “meagre” and that, as a result, it was unable to ascertain what his taxable income was.
(Re Carr and FCT [2016] AATA 638, AAT, Ref No 2014/0935-0938, Frost DP, 25 August 2016.)