The AAT has held that a taxpayer had failed to discharge the onus of proving that disputed bank deposits were not the result of payments received in the course of conducting his business activities for the 2008 and 2009 income years.
In May 2010, the taxpayer was selected for a cash economy audit by the ATO, which covered the 2008 and 2009 income years. The taxpayer was a sole trader conducting an import, local purchase and export business from his home. Following an audit interview, the ATO determined there was additional GST payable of $9,262, additional income tax payable of $24,206, and penalties totalling $8,422. Broadly, the ATO contended there was a discrepancy between the BASs and income tax returns of the taxpayer and a lack of substantiation of various deposits into the taxpayer’s bank accounts.
There were 38 transactions in dispute that were categorised as follows:
(a) reimbursement of moneys expended in the course of business;
(b) loans provided to the taxpayer;
(c) cash payments of credit card debts;
(d) transactions previously recorded on BASs;
(e) deposits by cheque and cash for daily living expenses; and
(f) receipts in respect of sale of mobile phones.
The Commissioner contended the 38 items, being deposits into 3 bank accounts in the taxpayer’s name, should be treated as income.
The Tribunal found the taxpayer, who was self-represented, had not discharged the onus of proving that the 38 disputed amounts were not income.
It affirmed the imposition of a 25% tax shortfall penalty for failing to take reasonable care.
The Tribunal also refused the remission of the penalties.
However, the Commissioner conceded 7 deposits as not being taxable supplies or assessment income, totalling $20,452. Accordingly, the Tribunal affirmed the Commissioner’s objection decision as correct, save for the necessary adjustments to the amended assessments and penalties.
(AAT Case [2012] AATA 589, Re Siddiqi and FCT, AAT, Ref Nos: 2011/5274, 2011/5648, 2011/5649, Fice SM, 31 August 2012.)
[LTN 170, 3/9]