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19 Mar 14 Full Court dismisses taxpayer's appeal on s 167 assessment - Rigoli

The Full Court of the Federal Court has dismissed the taxpayer's appeal from the decision of Pagone J in FCT v Rigoli [2013] FCA 784. Pagone J held that the taxpayer had not discharged the onus of proof that an assessment raised by the Commissioner under s 167 ITAA 1936 was excessive, and upheld the Commissioner's appeal from the AAT.

At the commencement of the hearing in the AAT, counsel for Mr Rigoli stated that the amounts which had been identified by the Commissioner as Mr Rigoli’s assessable income were no longer challenged by Mr Rigoli. However, he maintained that he was entitled to claim deductions by way of depreciation allowance for a variety of items which the Commissioner had not allowed. The claim for deductions for depreciation were upheld by the AAT but not by Pagone J.

In endorsing the approach taken by Pagone J, the Full Court said at para 25:

"The task Mr Rigoli sought to carry out was to simply identify some errors in the Commissioner’s approach so that the matter might be remitted on the basis of those errors for reconsideration by the Commissioner. This is the very picking and choosing which the authorities make clear is impermissible. The taxpayer’s choice is to pay tax according to the Commissioner’s assessment under s 167 or to establish, as a matter of evidence, what was 'the amount upon which ... income tax ought to be levied'. An intermediate course, which involves elements of the Commissioner’s calculations and facts which the taxpayer chooses to lead in evidence, is not an available option."

Pagone J had also directed that the matter be remitted to the AAT without conditions. The Commissioner cross appealed this direction, arguing that Pagone J should have affirmed the objection decision, as there was nothing further for the AAT to decide. The Full Court held that Pagone J was empowered to make such a direction but that it should be conditional upon no further evidence being adduced before the AAT, and amended Pagone J's remittal order accordingly.

Rigoli v FCT [2014] FCAFC 29 (18 March 2014).


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