The AAT has affirmed amended assessments and penalties imposed on a taxpayer that were based on the Commissioner’s assessment of numerous unexplained deposits to several of the taxpayer’s bank accounts.
The taxpayer claimed that he and a friend travelled to Vietnam in 2006 and discovered a system for winning at baccarat that meant he could win 95% of the time. He said he and his friend won more than $US4m at casinos in Vietnam and Cambodia in late 2006 and early 2007. The taxpayer said he won “a lot of money” at a casino in Sydney during the 2007 financial year. Following an audit, the Commissioner issued notices of amended assessment of income tax (one for each of the 2007 and 2008 years) and shortfall penalty assessments, also relating to those years, which required him to pay almost id=”mce_marker”.15m in income tax and penalties. The amended assessments were based on numerous unexplained deposits made to several of the taxpayer’s bank accounts which the taxpayer claimed were from “windfall gambling gains”.
Based on the evidence, the AAT found that the taxpayer had gambled at a Sydney casino on a total of 228 days during the 2008 financial year, “and that he gambled very significant amounts of money in doing so”. The Tribunal said the taxpayer argued that all of the unexplained deposits were attributable to his gambling winnings. However, it said that proposition was “accompanied by an almost total lack of records kept by the taxpayer as to the frequency or the magnitude of his gambling activity”. This proposition, the AAT said, was also not supported by the records obtained from the casino. The AAT said those records showed that the taxpayer’s rate of success was “nowhere near the level that he claims it to be, or the level it would need to be if the assessments were to be undermined”. The result was that the Tribunal affirmed the assessments in question, including as to the penalties imposed.
(AAT Case [2013] AATA 243, Re The Gambler and FCT, AAT, Frost DP, AAT Ref: 2012/0085-0086, 23 April 2013.)
[LTN 78, 26/4/13]