28 Jan 1515 AAT upholds GST and income tax objections - Raschta Coatings
The AAT has allowed the taxpayer's objections to GST and income tax assessments which were issued by the Commissioner as follows:
- an assessment of GST net amount for the period 1 July 2008 to 31 March 2011 in the amount of $336,165;
- an assessment of GST shortfall penalty in the amount of $170,528;
- an assessment of taxable income for the 2009 income year in the amount of $383,805;
- an assessment of taxable income for the 2010 income year in the amount of $665,042;
- an assessment of shortfall penalty (income tax) for the 2009 income year in the amount of $89,234.65; and
- an assessment of shortfall penalty (income tax) for the 2010 income year in the amount of $154,622.25.
The taxpayer, the corporate trustee of a trust, was represented by the "controlling mind" of the trustee, Mr Thomas. Mr Thomas produced a document – Exhibit 7 – that sought to demonstrate that amounts totalling $1,934,863.75 recorded as credits on the trustee's bank accounts (and included by the Commissioner in the total of taxable supplies and assessable income) were not taxable supplies and could not, by their very nature, amount to taxable supplies or assessable income.
In reviewing the evidence, the AAT was satisfied that the shortfalls upon which the Commissioner based his assessments were (except for $273,000) were neither taxable supplies nor assessable income.
The AAT said, at para 51:
"I have already observed that Mr Thomas struck me as being obstinate. That was my impression both during the hearing and during the case management stages leading up to the hearing. In the case management stages Mr Thomas showed little respect for the processes of the Tribunal and, throughout the process of the application, even less respect for the Commissioner’s officers. He ignored or put off their requests for information and I suspect his approach may have engendered a similarly unhelpful approach on the part of the Commissioner. In that regard I note that the Commissioner, when presented with Exhibit 7, or earlier manifestations of it, was apparently not able, or not prepared, to undertake the tedious exercise that I have undertaken and look past the evident shortcomings in the Company’s material to examine whether what Mr Thomas was saying was supported by contemporaneous and apparently reliable accounting records."
Raschta Coatings Pty Ltd as trustee for the Raschta Coatings Trust and FCT  AATA 34 (AAT, Hack SC DP, 23 January 2015).