The AAT has affirmed amended assessments issued to a taxpayer for the 1999 to 2007 income years which increased his assessable income by some $25m and imposed shortfall penalties of some $5m.
The information on which the amended assessments were based was information obtained from a former employee of a Liechtenstein bank, who illegally obtained it from that bank. This indicated that the taxpayer had established a “Foundation” account at the bank which he controlled from Australia, and of which he was the primary beneficiary.
The AAT said the taxpayer had established a complex net of trusts and companies, some incorporated overseas (including his dealings with the Liechtenstein bank), through which his financial affairs had been managed. The taxpayer lodged tax returns “disclosing modest amounts of taxable income” in each of the years between 1999 and 2003. He did not lodge returns in the 2004, 2005, 2006 and 2007 income years. The returns as lodged did not disclose any income attributable to the investments with the Liechtenstein bank or income arising from the Foundation. The taxpayer also claimed that he is now, and has been from the 2007 income year, a resident of Singapore.
In upholding the assessments, the AAT dismissed the taxpayer’s claim that he was not presently entitled to any of the income of the Foundation during the years in issue.
It did so on the basis of finding that in terms of the evidence, it defied logic to think that the taxpayer would confer enormous financial benefit on the Foundation without retaining the capacity to control the trustee about the use to which those funds were to be put.
The AAT then found that the taxpayer had failed to show how the assessments were excessive and what the actual taxable income should be.
Finally, the AAT dismissed the taxpayer’s claim that he was not a resident of Australia in the 2007 year, and therefore was not assessable on the foreign sourced income for that year. Again, the AAT found that the taxpayer had not discharged the burden of showing that he was not a resident of Australia during that year.
(AAT Case [2012] AATA 557, Re Murray and FCT (No 3), AAT, Ref Nos 2009/4786, 2009/5888-5894, 2011/5622, Hack DP, 24 August 2012.)
[LTN 166, 28/8]