Private ruling: Substantiation
Published: February 2015
Ruling period: Year ended 30 June 2006 | Year ended 30 June 2007 | Year ended 30 June 2008 | Year ended 30 June 2009 | Year ended 30 June 2010 | Year ended 30 June 2011 | Year ended 30 June 2012 | Year ended 30 June 2013
Date scheme commenced: 1 July 2005

Ruling: Q1: Will the commissioner provide substantiation relief and accept the estimates provided for the purposes of lodging your tax returns? | A1: Yes.


Relevant legislative provisions: Income Tax Assessment Act 1936 Section 262A . | Income Tax Assessment Act 1997 Division 900 .

Reasons for decision: Summary: Subsection 262A(1) of the Income Tax Assessment Act 1936 (ITAA 1936) imposes an obligation on a person carrying on a business to keep records that record and explain all transactions engaged in by them that are relevant. Taxation Ruling TR 96/7 Income tax: record keeping - section 262A - general principles provides guidelines on record keeping under section 262A of the ITAA 1936. Relevant records to be kept include documents that are relevant for the purpose of ascertaining the income and expenditure. Bank records, such as credit card or debit card statements and cheque butts can be used with other documents to support the relevant income and expenses. Division 900 of the Income Tax Assessment Act 1997 (ITAA 1997) sets out the substantiation rules that apply to work expenses, car expenses and business travel expenses. Subdivision 900-H of the ITAA 1997 provides relief from the effects of failing to substantiate in certain circumstances. However subsection 900-205(4) of the ITAA 1997 states that if the lost or destroyed document was written evidence, you must try to get a substitute document that meets all the original requirements. Taxation Ruling TR 97/24 Income tax: relief from the effects of failing to substantiate provides guidance on circumstances in which relief from the effects of failing to substantiate may apply. Although this ruling and Division 900 of the ITAA 1997 specifically relates to work, car and business travel expenses, the principals are relevant to other record keeping requirements. A bona fide attempt should be made to comply with the record keeping requirements. From the information provided, it is considered that all reasonable steps to uncover the missing information have been taken. In the specific circumstances of this case, the Commissioner will accept the amounts provided based on the available records and documents to ascertain the income and expenses of the business. These amounts can be used to lodge the outstanding tax returns.

Relevant facts: The arrangement that is the subject of the Ruling is described below. This description is based on the following documents. These documents form part of and are to be read with this description. The relevant documents are: | • the application for private ruling and | • details of income and expenses. | You have not lodged your tax returns for a few years. | During this time you were running a business. | Your documents and records were all destroyed. | The business was running on a cash basis. | You have tried to locate some documents. Rent expenses are based on the agent statements. Other expenses are based on tax invoices and receipts that have been found. | You have reconstructed details as best as you can based on the information available.