On 15 March 2016, judgment was handed down by the Full Federal Court (Kenny, Davies and Moshinsky JJ) in the matter of Rigoli v. Commissioner of Taxation [2016] FCAFC 38  (VID 475 of 2015).  Mr Rigoli’s appeal was dismissed with costs.

This appeal concerns what Mr Rigoli is required to prove to discharge the burden of proof pursuant to s.14ZZK of the Taxation Administration Act 1953 (TAA).  In particular, whether in the remitted proceeding, he could do so by relying upon a report prepared for, and used by, the Commissioner in the formation of his opinion as to the amount upon which income tax ought to be levied for the purpose of a section 167 default assessment (the Kompos Report).

The primary judge dismissed the taxpayer’s appeal from the Tribunal’s decision finding that the Tribunal had considered the evidence but had rejected the report as probative evidence of Mr Rigoli’s true taxable income.

The taxpayer appealed on the following two grounds:

  • The first was that the AAT had failed to exercise its review function and left that process incomplete by denying the taxpayer the opportunity to rely on the Commissioner’s Kompos Report (or in s39B speak, the primary judge erred in finding that the AAT had not let him rely on that report).This was grounded in a submission that the Tribunal had excluded consideration of the Kompos report because it was not evidence led by the Taxpayer [19, 21].
  • The second was that the s14ZZK onus did not extend to having to prove the amount of all assessable income and allowable deductions (or, again, in s39B double negative terms, the primary judge had erred by not overruling the AAT’s strict approach – going back to the Dalco case). [19, 24].

In rejecting the Taxpayer’s appeal, the Full Court held that the Tribunal’s reasons should be read as a whole and in context (see paragraphs 25, 29, 31 and 33).

In rejecting the first ground of appeal, the Full Court found that the Tribunal’s reasons are to be understood as saying, “not that the taxpayer could not rely on the Kompos report because it was not evidence led by the taxpayer, but rather that it was insufficient to discharge the burden on the taxpayer of establishing his actual taxable income.” [29].

In rejecting the second ground of appeal, the Full Court found that at [34] and [35] that “the Tribunals’ conclusion that the Kompos report was insufficient to establish the taxpayer’s actual taxable income from all sources was a finding of fact which it was open to the Tribunal to make”, that the Tribunal’s approach was consistent with the relevant authorities, and that it had “not been shown that the Tribunal adopted an incorrect approach as to what the taxpayer needed to prove to discharge his burden of proof.” In other words, the Full Court did not overrule Dalco.

The last date to lodge an appeal 13 April 2016.

[ATO LPR 16/3/16]


The Full Federal Court has unanimously dismissed the taxpayer’s latest appeal in a long-running saga arising from default assessments for the 1994 to 2001 income years. The matter has already been the subject of 2 AAT decisions, 2 appeals to the Federal Court and a previous Full Federal Court appeal.

In the latest decision (on appeal from the second AAT decision and second Federal Court appeal), the Full Federal Court rejected the taxpayer’s claim that the AAT wrongly excluded consideration of an expert report because the evidence was not led by the taxpayer. The report had been prepared for the Commissioner from the incomplete business records of a partnership of which the taxpayer was a partner. Both the AAT (in Re Rigoli and FCT [2015] AATA 169) and the Federal Court (in Rigoli v FCT [2015] FCA 803) found that the report lacked probative value due to the partnership’s failure to keep basic business records, including not properly recording large cash payments.

In dismissing the taxpayer’s appeal, the Full Federal Court examined the AAT’s reasons as a whole. It concluded that the AAT’s reason for excluding the report was not because it was put into evidence by the Commissioner, but because it was insufficient to discharge the taxpayer’s burden of proving that the default assessments were excessive. The Full Court also held that the AAT’s conclusion that the report was insufficient to establish the taxpayer’s actual taxable income from all sources was a finding of fact, which was open to it to make.

(Rigoli v FCT[2016] FCAFC 38, Full Federal Court, Kenny, Davies and Moshinsky JJ, 15 March 2016.)

[LTN 51, 16/3/16]