The AAT has held that amounts transferred by the taxpayer using a pseudonym to a trust established in Vanuatu was assessable income. In addition, it also held that furniture removal expenses the taxpayer incurred were not deductible, and affirmed the shortfall penalty imposed of 75% for intentional disregard.
The taxpayer established a trust in Vanuatu and over the 1996 to 2002 and 2004 income years he transferred 38 amounts totaling $371,430 under a pseudonym using a fake address at different bank branches. The Commissioner contends that the taxpayer transferred a further 56 amounts totaling $425,470 during the relevant period, as contained in an AUSTRAC report.
While the taxpayer admits to transferring the 38 amounts, he denies the further 56 amounts transferred and broadly argued that the AUSTRAC report was fabricated by an ATO audit officer. In addition, in relation to the 2002 year, the taxpayer claimed a deduction of $3,080 for furniture removal expenses from his home to move to another property, which was denied by the Commissioner. The taxpayer argued that the expense was incurred in the production of assessable income as he was going to rent out his home property.
The AAT rejected the taxpayer’s submission that an ATO audit officer may have been involved in the fabrication of AUSTRAC documents. It found that all the transfers shown in the documents were undertaken by the taxpayer under a pseudonym. Further, the AAT held that the taxpayer’s contention that the amounts transferred were due to repayment of loans from his juice business failed due to a lack of evidence. Therefore, it affirmed the Commissioner’s decision that the amount of $796,900 was assessable to the taxpayer.
In relation to deductibility of the furniture removal expenses, the Tribunal held that it was not deductible under s 8-1 as it is private or domestic in nature.
It also affirmed that the taxpayer was liable to an administrative penalty of 75% for intentional disregard [of the law].
(AAT Case [2013] AATA 196, Re Wray-McCann and FCT, AAT, Ref No 2008/3747-3755, Frost DP, 4 April 2013. Sydney)
[LTN 65, 8/4/13]