The AAT has affirmed the disallowance of objections against amended and default assessments issued against 6 taxpayers from the same family in respect of undisclosed income of family members.
The matter involved unexplained moneys flowing through family bank accounts between 2003 and 2008 years, including sums paid from an overseas business arrangement, as well as the inability to explain the source of funds to acquire various properties in the names of family members – especially given the claim that they earned little income from the various small businesses conducted by the family.
Importantly, even though the Commissioner conceded that amounts in issued assessments may not be entirely accurate because of inherent flaws in the asset betterment test (“a blunt tool”), the AAT found the taxpayers (through one of the family members chosen to represent them), failed to establish the clear onus on them that the assessments were incorrect and that also the assessments exceeded the actual substantive liability of the taxpayers.
The AAT also found that 75% shortfall penalties imposed for “intentional disregard of the law” plus the accompanying 20% uplift factor were appropriate in the circumstances (except in the case of one of the 6 family members), and that there were no grounds to remit the penalties.
(AAT Case [2014] AATA 527, Re LNNB & Ors and FCT; AAT, Ref Nos: 2011/4036 – 2011/4051; 2011/4054 – 2011/4069; 2011/4071 – 2011/4078; 2011/4079 & 2011/4086; 2012/1578 – 2012/1584; McCabe SM, 31 July 2014.)
[LTN 149, 5/8/14]