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29 Apr 13 Taxpayer unable to demonstrate unexplained deposits were gambling wins

The AAT has held that the taxpayer, a regular gambler at The Star casino in Sydney, had not discharged the onus of proof in his attempt to demonstrate that unexplained deposits made to the taxpayer's bank accounts were attributable to his gambling activities, such that they did not form part of his assessable income for the relevant years.

The Commissioner had issued notices to the taxpayer which required him to pay almost $1.15 million in income tax and penalties.

In rejecting the taxpayer's submissions about the success of his gambling, the AAT said, at paras 22-24:

"The proposition that the taxpayer has put forward is that all of the unexplained deposits are attributable to gambling winnings. That proposition is accompanied by an almost total lack of records kept by the taxpayer as to the frequency or the magnitude of his gambling activity.

This proposition is also not supported by the records obtained from The Star. Although these records show that the taxpayer has gambled on a consistent basis, and at a high level, they also show that his rate of success (at least by reference to the transactions recorded on his membership card) is nowhere near the level that he claims it to be, or the level it would need to be if the assessments were to be undermined.

The taxpayer’s proposition is also underpinned by the inherently improbable notion that he and his friend discovered a system for winning at baccarat up to 95 per cent of the time. He claims that their system is based on mathematical science, but it seems to me that one needs more than mathematical science to turn the sow’s ear of complete randomness into the silk purse of virtual certainty."

The Gambler and FCT [2013] AATA 243 (AAT, Frost DP, 23 April 2013).


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