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Tribunal: Senior Member Theodore Tavoularis

This review was about the applicant’s income tax returns for the years ending 30 June 2014 and 30 June 2015. The applicant declared a taxable income of $19,255 for the first of those years and he did not lodge a return for the second because he claimed he met the non-lodgement criteria.

The Commissioner of Taxation (The Commissioner) was not satisfied with the figure declared as taxable income for the first year and, further, was not satisfied that the applicant met the necessary criteria favouring non-lodgement of the 2015 return. The Commissioner audited the applicant’s tax affairs and obtained additional evidence about the sources of the applicant’s income such as payroll records from the applicant’s employer, bank statements, mortgage statements and a loan application. With this information, the Commissioner issued amended assessments of the applicant’s taxable income for the two years of income. 

The applicant objected to this decision and the Commissioner disallowed the objection. The applicant applied to the AAT for a review of this decision.

The issue was about a number of third party payments that the applicant received over the two financial years in question. The applicant claimed that the payments were not assessable income. He claimed that a portion of the various transfers was made up by payments made in error by his former employer even though he was not working because of his physical and mental condition. He claimed that he could not engage in any work because of these conditions.

The applicant claimed the remaining third party payments were transfers between his various bank accounts, withdrawals from his superannuation account and transfers from the account of his late mother, for whom he had been caring. 

The applicant produced various pieces of evidence to support his claims and the AAT’s main issue in the review involved assessing the veracity of this evidence. In its decision, the AAT explained in detail what the law required from the applicant to prove the assessments were excessive and therefore wrong. In matters such as this, it is the applicant’s responsibility to meet the required threshold.[1] The AAT explained that this threshold requires the applicant to convince the AAT – on the balance of probabilities - that his evidence should displace the Commissioner’s methodology for arriving at the amended assessments.[2] The AAT explained that simply presenting evidence for comparison is not enough; he must, to the reasonable satisfaction of the AAT, demonstrate that what he claimed to be his assessable income was more likely than not the correct assessment and should thus be preferred over the Commissioner’s amended assessments.[3]

The AAT was not satisfied that the applicant had met this threshold. The AAT stated that the applicant failed to produce independent and verifiable evidence to support his claim that the Commissioner’s revised assessments were excessive, and therefore wrong. The AAT found that the applicant’s evidence about how and why he received the payments lacked plausibility and credibility. A significant reason for this conclusion was the notable absence of contemporaneous documentary evidence supporting the applicant’s version of how he received the funds. 

The AAT found that the applicant failed to establish, on the balance of probabilities, that the Commissioner’s revised assessments for the relevant years of income were excessive and thus wrong.

The AAT affirmed the Commissioner’s decision.

Read the full decision on AustLII.


[1] See the discussion about the ‘onus of proof’ in paragraphs 9 and 10 of the full decision

[2] See paragraphs 11 and 12 of the full decision

[3] See paragraph 13 and 14 of the full decision