The AAT has held the taxpayer failed to discharge the onus of proof in relation to the deductibility of expenses incurred in buying, renovating, and selling properties for the income years ending 30 June 2003 and 30 June 2004.
The taxpayer was incorporated in 1995 and was in the business of buying and selling properties. In 2003, the taxpayer was placed under external administration. The Commissioner audited the taxpayer in 2009 in relation to omitted income and expenses for the 2003 and 2004 financial years. The Commissioner then issued amended assessments in relation to the sales of 2 properties as well as rental and various other income from the properties and other sources. A 50% administrative penalty for recklessness was also imposed by the Commissioner. The taxpayer objected arguing that the Commissioner had not taken into account the costs incurred in purchasing and maintaining the properties.
The Tribunal found the taxpayer failed to discharge the onus of proof arising under s 14ZZK(b) of the TAA to show that the assessments were excessive. It noted that the taxpayer was unable to produce documentary evidence for any of the expenses claimed.
Further, the Tribunal was satisfied that the taxpayer’s conduct in the case was appropriately catergorised as reckless and subject to a 50% administrative penalty.
The AAT also did not consider a remission of GIC to be justified as the taxpayer “failed to provide any grounds to substantiate its objection”. [AAT can’t remit GIC…]
The AAT therefore affirmed the amended assessments and penalties issued by the Commissioner.
(AAT Case [2012] AATA 180, Re Sobel Investments Pty Ltd and FCT, AAT, Ref Nos: 2010/5449-5450, Hughes M, 26 March 2012.)
[LTN 59, 27/3]