The AAT has affirmed the Commissioner’s income tax and associated penalty decisions imposed on a taxpayer. However, it also decided to vary the GST and associated penalty decisions to reflect a reduced GST liability as conceded by the Commissioner before the hearing.
The taxpayer operated a milk bar and contended it also operated a homestay accommodation business for foreign students. Following an ATO audit, the Commissioner was not satisfied the taxpayer had reported its true taxable income for the 2010-11 and 2011-12 income years, nor was he satisfied the taxpayer had reported its true GST net amounts for the quarterly periods from 1 April 2010 to 30 June 2012. The evidence of sales and purchases manually kept in books and cash register roll totals did not reconcile to the taxable amounts reported and were less than the amounts that the Commissioner contended could be expected if industry norms or expectations were applied to the purchases reported. In this case, the Commissioner applied the tobacco retailing industry benchmarking figures to determine the taxpayer’s business income.
The AAT held the taxpayer had failed to discharge the onus of proving that the income tax and GST assessments and amended assessments were excessive. The AAT was of the view that there was a lack of evidence to prove otherwise. The AAT also affirmed the penalty imposed for failure to take reasonable care. In making its decisions, the AAT noted the outcomes of the case should not be taken as acceptance as to whether the taxpayer did (or did not) carry on a homestay business.
(Re H J International Trade Group Pty Ltd and FCT [2016] AATA 450, AAT, Ref No. 2014/4360, O’Loughlin SM, 30 June 2016.)
[LTN 125, 1/7/16]