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01 Nov 07 Payments to a fictitious entity not deductible; assessable under Div 7A - 3-D Scaffolding

The AAT has upheld the Commissioner's denial of deductions claimed by the taxpayer company, a scaffolding company, in respect of lease payments purportedly made by it to the lessor of scaffolding. The Commissioner alleged that the lessor was fictitious. The AAT held that the taxpayer company failed to discharge the onus on it under s 14ZZK of the Taxation Administration Act to establish the contrary. Further, the AAT upheld assessments by the Commissioner issued to one of the shareholders of the taxpayer company, treating the payments as deemed dividends under Division 7A, on the basis that the fictitious entity and the shareholder were one and the same: 3-D Scaffolding Pty Ltd and Anor and FCT [2007] AATA 1884 (AAT, Block DP, 19 October 2007).

For a copy of the decision, go here

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