TZSX v CofT – AAT upholds Commissioner’s decision to not issue a further ‘departure authorisation certificate’ – security offered was too little and uncertain compared with the $33m tax debt (in dispute)

The AAT has refused a taxpayer’s application for review of the Commissioner’s decision not to issue an extension of a departure authorisation certificate (DAC).

On 21 September 2017, the Commissioner issued amended assessments to the taxpayer for the income year ended 30 June 2007 totalling $33.33 million.

• The Commissioner assessed the tax liability based on the transfer of US$21 million directed from a Singapore Registered Company to, a company incorporated in the British Virgin Islands (the First BVI Company).
• The amount had not been disclosed in the taxpayer’s 2007 tax return.
• The Commissioner issued a departure prohibition order (DPO), but subsequently, on request, issued a DAC (extended several times) to the taxpayer allowing him to return to Australia by the dates sought.
• However, the taxpayer’s last request for a further extension of the DAC was refused.

The Tribunal concluded that the security that had been offered by the taxpayer was sufficient to secure his return to Australia, if a DAC on the security proposed was issued.  This was especially so taking into account a number of factors:

1. the size of the tax liability compared to the value of the security offered;
2. the lack of certainty as to the value, either to the taxpayer or the Commissioner if the Commissioner had to realise the security, of all but the $170,000 held in trust;
3. that the taxpayer and his wife are residents of the UK;
4. that the taxpayer’s assets and business are outside Australia; and
5. the taxpayer has, or is in the process, of divesting himself of his Australian assets.

(TZSX v CofT  [2018] AATA 1348, AAT, Boyle DP, AAT File No: 2018/1780, 24 May 2018.)

FJM 14.8.18

[LTN 141, 25/7/18; Tax Month – July 2018]

Comprehension questions (answers available)

1. Did the applicant want to leave Australia?
2. Would the Commissioner issue a further ‘departure authorisation certificate’ to allow him to depart?
3. Did the applicant offer security for his return (if the DAC was issued)?
4. Had the Applicant been assessed to over $30m in tax?
5. Was the security offered enough, compared with the tax?