The AAT has dismissed a taxpayer’s appeal against income tax and GST assessments issued following an ATO audit of her florist business.
The taxpayer conducted a GST-registered florist business and lodged BASs for the monthly tax periods from 1 July 2007 to 30 June 2008. In her 2008 tax return, she reported “Cost of sales” for the business of $259,982 and a “Total business income” of $313,971. The ATO selected the taxpayer for audit because she had reported cost of goods sold (COGS) representing 83% or her reported business income and this was outside the COGS industry benchmark percentage range of between 44% and 54%. Following the audit, the ATO advised the taxpayer that in its opinion, she had not keep adequate records, and as a result, issued default amended assessments (including penalties) based on the COGS small business industry benchmarks totalling just over id=”mce_marker”30,000. Her objection was partially allowed on the penalty issue and she appealed to the AAT.
The AAT said there was no evidence before it to support the taxpayer’s contentions. The taxpayer had failed to prove the assessments were excessive. The AAT said the evidence before it did not prove how the taxpayer calculated the gross income of the florist business, and it considered that in the circumstances, it was open to the Commissioner to exercise his discretion and apply the COGS small industry benchmark range.
(AAT Case [2013] AATA 141, Re Carter and FCT, AAT, Walsh SM, AAT Ref: 2012/3130, 14 March 2013.)
[LTN 52, 18/3/13]