Re Applicant for an Australian Business Number and Registrar of the Australian Business Register
Document type: Decision Impact Statement
Venue: Administrative Appeals Tribunal (W2005/192)
Judgment date: 20 February 2007
Date published: 5 June 2007

Summary of decision:
Cancellation of an Australian Business Number (ABN) with effect from an earlier date where it was considered that the taxpayer was not carrying on an enterprise because there was never any expectation of making a profit.

Overview of facts:
The applicant was audited by the Registrar who considered that the applicant was not carrying on an enterprise and that what he did do never had any likelihood of making a profit. His ABN was cancelled with effect from 1 July 2000. | The applicant attended the Tribunal with a DVD containing hundreds of photographs showing items that he constructed and sold and he gave oral evidence in relation to these. The Tribunal allowed the applicant to present this evidence and accepted that he carried on manufacturing and selling operations on a reasonably large scale and that he had a reasonable expectation of making a profit. | The applicant gave evidence that he ceased his business in late 2004. | Issues decided by the tribunal | The Tribunal decided that: 1. The applicant was carrying on an enterprise; 2. Viewed objectively, the applicant had a reasonable expectation of making a profit despite the fact that hindsight shows that he never actually achieved a profit. | 1. The applicant was carrying on an enterprise; 2. Viewed objectively, the applicant had a reasonable expectation of making a profit despite the fact that hindsight shows that he never actually achieved a profit. | The Tribunal set aside the decision under review and substituted a decision cancelling the ABN from 31 December 2004.

Issues decided:
The Tribunal decided that: 1. The applicant was carrying on an enterprise; 2. Viewed objectively, the applicant had a reasonable expectation of making a profit despite the fact that hindsight shows that he never actually achieved a profit. 1. The applicant was carrying on an enterprise; 2. Viewed objectively, the applicant had a reasonable expectation of making a profit despite the fact that hindsight shows that he never actually achieved a profit. The Tribunal set aside the decision under review and substituted a decision cancelling the ABN from 31 December 2004.

ATO view of decision:
The decision was open to the Tribunal on the basis of the evidence presented at the Tribunal hearing.

Administrative treatment:
None

Legislative references: A New Tax System (Australian Business Number) Act 1999 8 18 38
Subject references: ABN Carrying on an enterprise Reasonable expectation of profit or gain