A taxpayer has been mostly unsuccessful before the AAT in a matter concerning deduction claims for certain business expenses which were claimed to have been omitted from tax returns lodged for the 2006, 2007 and 2008 income years.
The taxpayer was a barrister and was also involved in a number of business ventures. The taxpayer objected to tax assessments for the 2006, 2007 and 2008 income years. Essentially, the taxpayer sought to claim deductions for certain business expenses (arising from certain business ventures), which had not been claimed when he lodged his returns. Each objection was allowed in part. The partial allowance of the objection for each of 2006 and 2007 was detrimental to the taxpayer since in each case it resulted in an increase in his taxable income equal to the amount that appeared to have been disclosed as income. For 2008, and for the same reason, the taxpayer’s assessable income was also increased, but some of the deductions claimed ($266,679, in respect of interest payments) were allowed. All remaining deductions claimed for each of the relevant years were disallowed.
Before the AAT, the Commissioner acknowledged certain errors incorrectly attributing interest income, which had increased the taxpayer’s taxable income in the amended assessments, which would need to be adjusted.
The AAT said virtually all of the taxpayer’s claims have been unsuccessful. However, it noted the exception of a capital loss in relation to one of the business arrangements (but noted this would have no impact on tax payable) and also the Commissioner’s acknowledgment of errors in making the amended assessments. It considered that the appropriate decision was to disallow the objections for the 2006 and 2007 years and to allow in part the objection for the 2008 year to the extent of the acceptance of the above interest deduction. (The AAT allowed the parties 7 days to apply to it for the decision to be formulated differently.)
(AAT Case [2014] AATA 576, Re ZBVK and FCT, AAT, Ref No: 2013/2163-2165, Frost DP, 19 August 2014.)
[LTN 163, 25/8/14]