12 May 1414 GST input tax credits disallowed for lack of evidence - Yates
A taxpayer who claimed a broad array of input tax credits in his business activity statements, but was unable to substantiate the claims, whether by means of tax invoices or other documentation, has had those claims dismissed on review by the Administrative Appeals Tribunal.
The taxpayer was the subject of an audit, and was asked to provide certain details in support of his claims for input tax credits. The taxpayer was at first reluctant to provide the details required but subsequently provided a number of invoices and credit card statements which detailed in many cases the individual creditable acquisition items that the taxpayer asserted on the relevant BASs. However, a number of items remained outstanding some of which were conceded by the Commissioner at the hearing as a result of additional information provided by the taxpayer.
A significant number of items remained outstanding, for which the taxpayer was unable or unwilling to provide evidence.
In the event, the Tribunal varied the Commissioner’s decision by allowing the input tax credits conceded by the Commissioner at the hearing and directing the Commissioner to recalculate the penalties based on 50% penalty for recklessness in respect of the remaining shortfall amounts.
The Tribunal made the following remarks about adducing evidence to support input tax credit claims:
“18. In those instances where there is a lack of tax invoices in relation to the disputed items that is a problem but not one that in and of itself is insurmountable. It has been confirmed by a delegate of the Commissioner of Taxation that the lack of a Tax Invoice is not necessarily fatal (see A New Tax System (Goods and Services Tax) Act 1999 Waiver of Tax Invoice Requirement Determination (No 1) 2004, Statement by Mr Bruce Quigley as a delegate of the Commissioner 24 February 2004) and there is broad acceptance of this view in Bayconnection Property Developments Pty Ltd and Ors v Commissioner of Taxation  AATA 40. In my view the structure of the relevant legislation makes it clear that the lack of a tax invoice is not fatal and other evidence can make up for the deficiency constituted by the missing invoices.
19. The absence of tax invoices is one thing but a total lack of any evidence of what the specific amounts refer to is another. The Applicant must at the very least provide detail as to who the payment was made to and some indication of what it was paid for.”
Re Yates and FCT  AATA 279 (Prof R Deutsch DP, 30 April 2014).