The AAT has affirmed the Commissioner’s decision that a taxpayer was liable for GST in relation to a series of transactions in the period 1 January 2004 to 31 March 2007 and for a penalty for failing to lodge GST returns for the same period.
The taxpayer maintained at no time was he required personally to lodge GST returns as all activities carried out by him were done as an employee or as an agent. The matter concerned various “arrangements” in relation to a property investment scheme. The taxpayer was a real estate agent operating under a registered business name and conducted “seminars” for members of the public who wished to invest in property. Investors wishing to proceed would then enter into a “joint venture agreement”.
- The Tribunal noted that the “scheme operated on the basis that a company with whom the [taxpayer] had some association” would buy blocks of land.
- The land would then be on-sold to the investor with the profits to go the company.
- An agreement would then be made between the investor and a builder company to construct a house on the land. The builder would then pay a commission to the company. The joint venture agreement provided that 50% of the commission would go to the investor.
- On the sale of the house and land, any profit would be divided equally between the investor and company.
The Tribunal heard evidence of various companies which it said were “in some way associated” with the taxpayer. Most of the companies were either connected to the taxpayer’s wife or a “friend of the family”. The Commissioner contended that the use of the companies’ names in various documents “was done to disguise the [taxpayer’s] involvement in the enterprise and amounted to a sham”. The taxpayer, as the Tribunal understood, contended his activities were not done for reward but rather were to assist companies associated with his wife.
The Tribunal indicated a degree of uncertainty in its findings in relation to the involvement of the various companies and the parties to the scheme.
- However, it was of the view that the introduction of would-be purchasers of the builder’s services was a supply and consideration was received for that supply.
- Furthermore, the Tribunal was satisfied that consideration was passed to the taxpayer rather than to companies associated with his wife.
- Accordingly, the Tribunal held the taxpayer had not met the onus of proof in relation to the matters before it.
It affirmed the GST assessment, but allowed a small variation presented by the Commissioner reducing the overall liability. It also affirmed the penalty imposed for failing to lodge GST returns.
(AAT Case [2012] AATA 350, Re Climo and FCT, AAT, Ref No: 2009/2548, Allen SM, 13 June 2012.)
[FJM Note: This seems a bit tough unless the taxpayer just failed on onus, or there’s more than meets the eye.]
[LTN 113, 14/6]