Barrow and Commissioner of Taxation
Document type: Decision Impact Statement
Venue: Administrative Appeals Tribunal (2011/5391)
Judgment date: 21 September 2012
Date published: 9 November 2012

Summary of decision:
Outlines the ATO's response to this case which concerned substantiation of claims for energy grants and fuel tax credits, and whether a 25% penalty for failure to take reasonable care should be further remitted.

Overview of facts:
The taxpayer claimed energy grants for the period before 30 June 2006, for diesel fuel and the use of that fuel "in fishing operations" for the purposes of the Energy Grant (Credits) Scheme Act 2003 . He also claimed $31,372 in fuel tax credits under the Fuel Tax Act 2006 , in respect of diesel fuel allegedly acquired between 1 July 2006 and 30 September 2009 for use in fishing operations. | Initially when audited, the taxpayer was unable to produce any documentary evidence to substantiate the purchase/acquisition of the fuel in question. Prior to the hearing, he produced some receipts of fuel purchases and WA Department of Fisheries "trap and line; catch and effort returns" lodged by him in relation to the period up to May 2007. On that basis, the Commissioner conceded the energy grants claims and the fuel tax credits claims in respect of fuel acquired on or before 30 June 2007. | At the Tribunal hearing, the taxpayer's registered tax agent gave evidence that he (the tax agent) had prepared the relevant BASs and that in relation to BASs for the tax periods up to and including 31 December 2008, had sighted and added up the relevant invoices himself. The tax agent also testified that the invoices in question had since been destroyed as a result of flooding of the tax agent's storage facility. The tax agent further testified, however, that in relation to tax periods from 1 January 2009, the taxpayer tallied the invoices himself and merely presented him with a total in respect of each period. | Issues decided by the tribunal | The Tribunal decided: 1. The taxpayer discharged the burden of proof in relation to his fuel tax credit assessments and the penalty for the period up to 31 December 2008, and accordingly these were set aside. This was because his oral testimony was corroborated by the evidence of his tax agent; 2. The taxpayer failed to discharge his burden of proof in relation to assessments for tax periods from 1 January 2009 to 30 September 2009. There was a conflict between the evidence of the taxpayer and his agent in respect of this period as to whether the agent had sighted and tallied the relevant invoices. The Tribunal was not prepared to accept the taxpayer's uncorroborated oral testimony that the tax agent had done so or that the taxpayer had acquired the relevant fuel. 3. The taxpayer failed to discharge his burden of proof in relation to the tax shortfall penalty for the tax periods 1 January 2009 to 30 September 2009. | 1. The taxpayer discharged the burden of proof in relation to his fuel tax credit assessments and the penalty for the period up to 31 December 2008, and accordingly these were set aside. This was because his oral testimony was corroborated by the evidence of his tax agent; 2. The taxpayer failed to discharge his burden of proof in relation to assessments for tax periods from 1 January 2009 to 30 September 2009. There was a conflict between the evidence of the taxpayer and his agent in respect of this period as to whether the agent had sighted and tallied the relevant invoices. The Tribunal was not prepared to accept the taxpayer's uncorroborated oral testimony that the tax agent had done so or that the taxpayer had acquired the relevant fuel. 3. The taxpayer failed to discharge his burden of proof in relation to the tax shortfall penalty for the tax periods 1 January 2009 to 30 September 2009.

Issues decided:
The Tribunal decided: 1. The taxpayer discharged the burden of proof in relation to his fuel tax credit assessments and the penalty for the period up to 31 December 2008, and accordingly these were set aside. This was because his oral testimony was corroborated by the evidence of his tax agent; 2. The taxpayer failed to discharge his burden of proof in relation to assessments for tax periods from 1 January 2009 to 30 September 2009. There was a conflict between the evidence of the taxpayer and his agent in respect of this period as to whether the agent had sighted and tallied the relevant invoices. The Tribunal was not prepared to accept the taxpayer's uncorroborated oral testimony that the tax agent had done so or that the taxpayer had acquired the relevant fuel. 3. The taxpayer failed to discharge his burden of proof in relation to the tax shortfall penalty for the tax periods 1 January 2009 to 30 September 2009. 1. The taxpayer discharged the burden of proof in relation to his fuel tax credit assessments and the penalty for the period up to 31 December 2008, and accordingly these were set aside. This was because his oral testimony was corroborated by the evidence of his tax agent; 2. The taxpayer failed to discharge his burden of proof in relation to assessments for tax periods from 1 January 2009 to 30 September 2009. There was a conflict between the evidence of the taxpayer and his agent in respect of this period as to whether the agent had sighted and tallied the relevant invoices. The Tribunal was not prepared to accept the taxpayer's uncorroborated oral testimony that the tax agent had done so or that the taxpayer had acquired the relevant fuel. 3. The taxpayer failed to discharge his burden of proof in relation to the tax shortfall penalty for the tax periods 1 January 2009 to 30 September 2009.

ATO view of decision:
The decision was one that the Tribunal was entitled to make on the evidence before it and accords with the Commissioner's views on substantiation.

Administrative treatment:
Implications for ATO Precedential documents (Public Rulings & Determinations etc) | None | Implications for Law Administration Practice Statements | None

Legislative references: Taxation Administration Act 1953 14ZZK(b) Subdivision 284-B of Schedule 1 298-20 of Schedule 1 Energy Grants (Credits) Scheme Act 2003 56 Fuel Tax Act 2006 41-5 Fuel Tax (Consequential and Transitional Provisions) Act 2006 Part 3 of Schedule 3
Case references: McCormack v Federal Commissioner of Taxation [1979] HCA 18 143 CLR 284 at 314 per Jacobs J Gauci v Federal Commissioner of Taxation [1975] HCA 54 136 CLR 81 at 89 per Mason J Galea v Federal Commissioner of Taxation [1990] FCA 456 90 ATC 5060 at 5067 per Hill J Federal Commissioner of Taxation v Dalco [1990] HCA 3 168 CLR 614 at 624 per Brennan J Imperial Bottleshops Pty Ltd & Egerton v Federal Commissioner of Taxation [1991] FCA 276 91 ATC 4546 at 4,552 Federal Commissioner of Taxation v Burness [2009] FCA 1021 2009 ATC 20-135 Federal Commissioner of Taxation v Dixon [2008] FCAFC 54 2008 ATC 20-015
Subject references: Burden of proof Energy Grants (Credit) Scheme Fuel Tax Credits Administrative Penalty