The AAT has largely dismissed a taxpayer’s appeal finding that he had not reported and paid GST on taxable supplies, and had understated his taxable income in certain years, although it did find that some transactions should not form part of the taxpayer’s assessable income and GST liability.
The taxpayer operated as a sole trader and sold second-hand motor vehicles. He sought review of objection decisions made by the Commissioner in respect of 2004-05 and 2005-06 amended income tax assessments, and notices of assessment of revised net amounts relating to GST for the quarterly tax periods 1 April 2005 to 30 June 2007. Following an audit for the period 1 July 2003 to 30 June 2007, the Commissioner found that the taxpayer had: (i) understated GST sales (taxable supplies) for the quarterly tax periods from 1 April 2005 to 30 June 2006, and had both understated GST sales and overstated creditable purchases (acquisitions) for the quarterly tax periods from 1 June 2006 to 30 June 2007; and (ii) understated his net business income in his tax returns in each of the 2003-04 to 2006-07 tax years and understated his taxable income in the 2004-05 and 2005-06 tax years. An administrative penalty of 75% was imposed for intentional disregard of a taxation law. As a result of the taxpayer providing further information, the Commissioner found that the GST payable with respect to the quarterly tax periods from 1 April 2005 to 30 June 2007 should be reduced, based on a further analysis of the taxpayer’s bank accounts. Amended assessments were issued.
On the evidence available, the AAT found that the taxpayer had not reported and paid the GST payable on the taxable supplies he made during the quarterly tax periods from 1 April 2005 to 30 June 2007. As a result of the tax audit, the Tribunal said it was satisfied that the additional GST liability of $93,730 had been properly calculated. The AAT was also satisfied that the methodology adopted by the Commissioner in raising the 200-005 and 2005-06 amended assessments was “logical, credible and appropriate in the circumstances”. The AAT considered the 75% penalty imposed was correct.
During the proceedings, the taxpayer submitted that certain transactions in his bank statements for the 2005-06 year should not be included as sales for GST purposes. The Commissioner accepted this and also accepted that they should not form part of the taxpayer’s assessable income and GST liability in relation to the 2005-06 tax year.
(AAT Case [2012] AATA 909, Re Parrish and FCT, AAT, Dunne SM, AAT Refs: 2010/1824, 2010/1825, 2011/1158, 21 December 2012.)
[LTN 1, 3/1/13]