The AAT has disallowed a taxpayer’s claims for input tax credits (ITCs) and also affirmed penalties imposed by the ATO.

The taxpayer, as trustee of the PCS Global Discretionary Trust (PCS Global Trust), claimed he was entitled to $5.3m in ITCs for the period 1 January 2012 to 31 March 2012. He claimed the ITCs were claimable on purchases under an agreement or agreements he had entered with a company called Two Tribes Wine Company (Australia & New Zealand) Pty Ltd (Two Tribes ANZ). In essence, he said he purchased the right to provide what might be called IT and support services for businesses each operating a wine shop and restaurant, under a franchise agreement with Two Tribes ANZ.  The Commissioner disagreed and issued assessments accordingly plus imposed penalties. The assessment led to an amount of $5.3m being added to the Running Balance Account in relation to the taxpayer as trustee of the PCS Global Trust. The taxpayer’s objections were disallowed and he sought review before the AAT.

After an extensive review of the facts and issues, the Tribunal said it was not satisfied that any consideration had been provided by PCS to Twin Tribes ANZ. It was also not satisfied that the taxpayer as trustee of the PCS Global Trust had made a creditable acquisition within the meaning of s 11-5 of the GST Act in relation to the IT and support rights. The Tribunal therefore affirmed the Commissioner’s decisions ie issuing the GST assessment, imposing penalties, and refusing to remit the penalty. It found the information in the BAS was not correct. The Tribunal said that, as trustee of the PCS Global Trust, the taxpayer “could reasonably be expected to know that it had not entered, or purported to enter, an agreement with Twin Tribes ANZ”.

(AAT Case [2013] AATA 930, Re Harland as Trustee for the PCS Global Discretionary Trust and FCT, AAT, Forgie DP, AAT Ref: 2013/0417, 20 December 2013.)

[LTN 3, 7/1/14]