The AAT has held that a taxpayer had failed the onus of proving that assessments were excessive.
The Commissioner audited the taxpayer for the 2006 and 2008-2011 years and determined tax shortfalls of $1.5m, including penalties and interest. Amended s 167 assessments and shortfall penalty assessments were issued. During the audit, the Commissioner formed the opinion that the taxpayer had avoided the imposition of tax by evasion during each income year, but that the avoidance of tax was not due to fraud. In disallowing the taxpayer’s objection, the Commissioner determined that the taxpayer: (i) had not provided sufficient evidence to identify the source of certain funds; (ii) had not declared rental income; and (iii) had an undeclared capital gain from a property disposal (the Commissioner had applied the market value substitution rule here). The Commissioner did however accept that the taxpayer had provided sufficient evidence to support the source of just over $830,000 used to purchase one of the properties in the 2006 income year, resulting in an amended taxable income reduction for that year from nearly $946,000 to just over $100,000.
After reviewing the matter, the Tribunal concluded that the taxpayer had not discharged the onus of proof placed on him by s 14ZZK of the Taxation Administration Act 1953 that the assessments were excessive. It said there was nothing in the taxpayer’s evidence which provided an explanation for the source of the unexplained funds in question. In relation to the other issues, the Tribunal found the taxpayer had not provided any additional evidence in support of his claims. The penalty assessments were also upheld.
(Re Zeqaj and FCT  AATA 218, AAT, Fice SM, AAT File Nos: 2015/4353-4357, 6 April 2016.)
[LTN 67, 11/4/16]