A taxpayer which operated (via a unit trust) a business of repairing, maintaining and hiring motor vehicles, has been partly successful in challenging GST assessments.
The assessments related to the period from 1 July 2009 to 31 December 2010 and were issued following an audit of the taxpayer’s activity statements. The taxpayer had disclosed taxable supplies totalling id=”mce_marker”.015m, leading to a GST liability of $92,338. However, the taxpayer had claimed input tax credits totalling $212,389, resulting in a refund of id=”mce_marker”20,051.
The GST assessments adjusted the net amount so that the taxpayer allegedly owed the Tax Office id=”mce_marker”63,168. The taxpayer was also assessed to penalties of id=”mce_marker”28,355, based on recklessness or intentional disregard of the law.
After discussions with the Tax Office, it was agreed that the taxable supplies made by the taxpayer for the period from 1 July 2009 to 31 December 2010 totalled just over id=”mce_marker”.141m [close to the returned amount of id=”mce_marker”.015m].
The case before the AAT concerned the amount of input tax credits claimed by the taxpayer. This depended on whether certain acquisitions by the taxpayer were creditable acquisitions – ie whether goods and services had been acquired for a creditable purpose.
In a decision that turned entirely on the facts, the AAT concluded that the GST assessments were excessive. Some of the relevant transactions were found not to be creditable acquisitions, for example because no goods or services were acquired or because the acquisitions were “non-deductible expenses”. On the other hand, the AAT also disagreed with the Tax Office that certain other transactions were also not creditable acquisitions.
On the question of penalties, the AAT concluded that they should be based on recklessness and that it had not been established that the taxpayer had disregarded the law intentionally.
(AAT Case [2014] AATA 158, Re RV Investments (Aust) Pty Ltd as Trustee for the RV Unit Trust and FCT, AAT, Ref No 2012/3282, Forgie DP, 21 March 2014.)
[LTN 60. 28/3/14]