Taxpayer and Commissioner of Taxation
Document type: Decision Impact Statement
Venue: Administrative Appeals Tribunal (2011/2206-2209)
Judgment date: 21 December 2012
Date published: 28 February 2013

Summary of decision:
Outlines the ATO's response to this case, which concerned whether the taxpayers have discharged the burden of proving that their income tax and penalty assessments were excessive.

Overview of facts:
In July 2002, Mr X was paid amounts after the sale of real property owned by a related company. In October 2002, a business associate of Mr X deposited amounts into the taxpayers' bank accounts. A further amount was credited to one of Mr X's foreign bank accounts in October 2006. The taxpayers testified that the amounts were loans, or transfers from other accounts which the Commissioner had already assessed. There was no evidence that there had been any repayments of the purported loan principals. | Issues decided by the tribunal | The Tribunal found that there was insufficient evidence to demonstrate that the amounts received during the 2003 income year were not assessable income of the taxpayers (paragraphs 53-5). The evidence established that the deposit in October 2006 originated in balances held in accounts earlier than the start of the 2007 income year, and, if income, was income of an earlier year (paragraphs 68-9). The taxpayers did not demonstrate that penalties for recklessness were excessive (paragraphs 65-6).

Issues decided:
The Tribunal found that there was insufficient evidence to demonstrate that the amounts received during the 2003 income year were not assessable income of the taxpayers (paragraphs 53-5). The evidence established that the deposit in October 2006 originated in balances held in accounts earlier than the start of the 2007 income year, and, if income, was income of an earlier year (paragraphs 68-9). The taxpayers did not demonstrate that penalties for recklessness were excessive (paragraphs 65-6).

ATO view of decision:
The ATO accepts that the finding of the Tribunal in relation to the 2007 year was properly open to it on the evidence before it.

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 284-20 of Schedule 1
Case references: FC of T v SNF (Australia) Pty Ltd [2011] FCAFC 74 2011 ATC 20-265 (2011) 82 ATR 680 Davis v FC of T (2000) 171 ALR 654 [2000] FCA 44 (2000) 44 ATR 140 2000 ATC 4201 FC of T v Dalco (1990) 168 CLR 614 (1990) 20 ATR 1370 (1990) 90 ATC 4088 Galea v FC of T 90 ATC 5060 (1990) 21 ATR 1108 Gauci v FC of T (1975) 135 CLR 81 (1975) 5 ATR 672 75 ATC 4257 George v FC of T (1952) 86 CLR 183 [1952] HCA 21 Imperial Bottleshops Pty Ltd & Egerton v FC of T 91 ATC 4546 (1991) 22 ATR 148 McAndrew v FC of T (1956) 98 CLR 263 [1956] HCA 62 Moreau v FC of T (1926) 39 CLR 65 [1926] HCA 28 Pascoe v FC of T (1956) 30 ALJR 402 Tisdall v Webber [2011] FCAFC 76 (2011) 193 FCR 260 Trautwein v FC of T (1936) 56 CLR 63 [1936] HCA 77 Vu v C of T [2006] FCA 889 2006 ATC 4387 (2006) 63 ATR 341
Subject references: Bank deposits Burden of proof Penalty payable