The AAT has affirmed the Commissioner’s decision and denied a taxpayer input tax credits claimed in relation to a property development business for the period from September 2005 to September 2009.

The taxpayer was a sole trader who operated a property development business. There were a number of issues before the Tribunal in relation to the input tax credits claimed by the taxpayer in the development of a property from the period of September 2005 to September 2009. Broadly, the taxpayer attempted to claim input tax credits on construction of one of the properties as he argued that he intended it to be sold as a taxable supply even though it was not. He also attempted to claim accounting and professional fees as well as legal expenses related to litigation against another company. The taxpayer also attempted to claim input tax credits for other miscellaneous expenses incurred.

  • The Tribunal found there was no evidence to conclude that the sale of the property was improperly completed and that the sale was meant to be a taxable supply. [There was insufficient evidence of what these relatively small amounts were for.]
  • It also concluded that input tax credits claimed in relation to accounting, professional and legal expenses related to another company did not have sufficient connection with the taxpayer’s enterprise as a property developer.
  • In relation to the other expenses, the AAT denied the taxpayer input tax credits claimed as there was no evidence as to the amounts claimed.

Having denied all the input tax credits claimed by the taxpayer, the Tribunal also held that the taxpayer had been reckless in lodging the BASs and that the penalty and uplift on the penalty of 20% was appropriate.

(AAT Case [2013] AATA 867, Re VGGL and FCT, AAT, Ref No 2012/0694 and 2013/0363, Deutsch DP, 5 December 2013.)

[LTN 237, 6/12/13]


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