The AAT has upheld GST and penalty assessments against a taxpayer but held that the taxpayer’s cancelled GST registration be restored.
The taxpayer carried on what the AAT said might be called in layman’s terms a computer repair business. Following an audit of the taxpayer’s BASs for the period 31 March 2007 to 28 February 2011, the ATO issued GST net amount assessments, penalty assessments and cancelled the taxpayer’s GST registration.
The Commissioner disallowed many (although not all) of the taxpayer’s input tax credit (ITC) claims on the basis that he did not consider the taxpayer was carrying on an enterprise during the relevant tax periods, that the expenses on which the ITC claims were based appeared to be private in nature (eg certain legal and health expenses) and were considered not to have any obvious links to commercial activity, and that the taxpayer did not provide tax invoices for the expenses as claimed creditable acquisitions.
The Tribunal noted that the Commissioner reconsidered the matter in light of additional information since provided by the taxpayer, and now accepted that the taxpayer was carrying on an enterprise during the relevant tax periods and that the decision to cancel his GST registration should be set aside. For this reason, the Commissioner also accepted that some of the input tax credits claimed were properly allowable.
After reviewing the case, the Tribunal considered that the GST net amount assessments in relation to each of the 48 individual monthly tax periods ended 31 March 2007 to 28 February 2011 inclusive (as they have been made as at the date on which the application was reserved for decision) were not open to review. In addition, the AAT held that the penalty assessment made in relation to each of the shortfalls as they stood at the date the application for review was reserved for the preparation of reasons was not to be disturbed on that application. The Tribunal said the Commissioner’s decision to cancel the taxpayer’s GST registration should be set aside and a decision substituted restoring the registration.
(AAT Case [2013] AATA 777, Re Zarev and FCT, AAT, Nicholson DP, AAT Ref: 2012/0341-0345, 30 October 2013.)
[LTN 213, 4/11/13]