The AAT has dismissed a taxpayer’s application that he was entitled to include in the cost base of a Queensland property construction costs of id=”mce_marker”78,000 he incurred under a contract he entered with his own company.

However, the AAT found the taxpayer’s claims lacked substance for several reasons including the following.

  • The construction contract was between himself and his wife (as co-owners of the property) and himself as the contractor.
  • [Some relevant] company did not have a licence under the Queensland Building & Construction Commission Act 1991 to enter into such a contract or undertake such construction.
  • The invoices from the company that the taxpayer relied on appeared to be backdated.

Accordingly, the AAT concluded there was no relevant arrangement between the taxpayer and the company, the company was not the entity that constructed the house and, as a result, the taxpayer could only include those amounts he directly incurred in the construction of the property, in the cost base of the property.

The AAT also dismissed the taxpayer’s claim that interest of $20,000 he incurred on a loan from his father to construct the property could also be included in the cost base. Instead, the AAT found there was no arrangement between the father and the taxpayer concerning the payment of interest and that, in any event, the Commissioner had allowed an amount for some $3,000 and that the taxpayer had failed to discharge the onus of proof that this was incorrect.

([2014] AATA 937 Re Pettiford and FCT, AAT, Ref No 2014/4508, Molloy DP, 5 December 2014.)

[LTN 245, 18/12/14]