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15 Nov 12 Decision Impact Statement - Re Siddiqi

The ATO has released a Decision Impact Statement on the decision of the AAT in Re Siddiqi and FCT [2012] AATA 589. The case concerned whether the taxpayer could satisfy the onus of proving that various cash receipts were not income from a business activity or not consideration for GST taxable supplies.

The AAT found that, with the exception of the amounts conceded by the Commissioner, the taxpayer had not discharged the onus of proving that the various cash deposits into the his bank accounts were not assessable income from his business and/or consideration from taxable supplies.

While it is not unlawful to conduct a business in an environment where transactions are not documented, and payment is frequently made by cash, there is a high duty placed upon a taxpayer under the self-assessment system to keep business records to substantiate income and expenditure. For the purposes of the penalty provisions, a failure to keep such records speaks clearly of a failure to take reasonable care. No remission of penalty was warranted.

In the ATO’s view, subject to seven amounts conceded by the Commissioner during the hearing, the taxpayer was not able to discharge the onus of proving that the various cash deposits were not income from his business activities, nor consideration from taxable supplies. The AAT was not prepared to accept the largely oral evidence of the taxpayer in the absence of any proper business records.


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