Ahmad and Commissioner of Taxation (Taxation) - [2025] ARTA 1907

Ahmad and Commissioner of Taxation (Taxation) [2025] ARTA 1907 (26 September 2025)
Applicant/s:  Latifah Ahmad
Respondent:  Commissioner of Taxation
Tribunal Number:                2022/10508; 2022/10509, 2022/10510, 2022/10511, 2022/10512, 2022/10513, 2022/10514, 2022/10515
Tribunal:General Member M Abood
Place:Sydney
Date:26 September 2025
Decision:The Tribunal affirms the decision under review.

…………SGD…………………..
General Member M Abood
Catchwords
TAXATION – income tax default assessments – administrative penalty assessments – whether the taxpayer could satisfy the onus of proof by establishing that the assessments were excessive and what they ought to have been – whether applicant was reckless as to the operation of a taxation law – whether remission of administrative penalty appropriate – objection decision affirmed
Legislation
Administrative Appeals Tribunal Act 1975, s 33
Administrative Review Tribunal Act 2024, s 52
Income Tax Assessment Act 1936 (Cth) ss 6(1), 161, 166, 167, 170, 175A, 262A
Taxation Administration Act 1953 (Cth) ss 14ZU, 14ZY, 14ZZ, 14ZZK, Schedule 1, 280-100, 280-105, 284-75, 284-80, 284-90, 284-220, 298-220
Cases
Bosanac v Commissioner of Taxation [2018] FCA 946
BRK (Bris) Pty Ltd v Federal Commissioner of Taxation [2001] FCA 164
Buzadzic v Commissioner of Taxation [2024] FCAFC 50
Commissioner of Taxation v Cassaniti [2018] FCAFC 212; 266 FCR 385
Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146
Commissioner of Taxation v Ross [2021] FCA 766
Federal Commissioner of Taxation v Dalco (1936) 168 CLR 615
Federal Commissioner of Taxation v SNF (Australia) Pty Ltd (2011) 193 FCR 149
Gashi v Commissioner of Taxation [2013] FCAFC 30
Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81
HWFX and Commissioner of Taxation (Taxation) [2025] ARTA 680
Imperial Bottleshops Pty Ltd v Federal Commissioner of Taxation (1991) 22 ATR 148
Kais v Commissioner of Taxation [2021] AATA 16
McPartland v Commissioner of Taxation [2025] FCAFC 23
Sanctuary Lakes Pty Ltd v Commissioner of Taxation [2013] FCAFC 50
Secondary Materials
MT 2008/1 Miscellaneous Taxation Ruling - Penalty relating to statements: meaning of reasonable care, recklessness and intentional disregard
PSLA 2012/5 Administration of the false or misleading statement penalty - where there is a shortfall amount
Statement of Reasons
INTRODUCTION

The Applicant in this matter, Ms Latifah Ahmad seeks review of an objection decision made by the Commissioner of Taxation (the Respondent or the Commissioner) on 3 November 2022 (the Objection Decision). The Applicant had objected to:
(a)amended assessments of income tax (Amended Assessments) issued by the Respondent in respect of the income years ending 30 June 2013 to 30 June 2016 (inclusive) (the Relevant Years); and
(b)administrative penalty assessments (Penalty Assessments) issued by the Respondent for each of the years covered by the Amended Assessments.
The Amended Assessments and Penalty Assessments were raised by the Respondent at the conclusion of an audit during which it formed the view that the Applicant, who had reported only very modest amounts of income across the Relevant Years, had not declared the full extent of her taxable income.
In the course of the audit the Respondent had identified that during the Relevant Years the Applicant:
·controlled a number of bank accounts into which significant funds had been deposited (and thereafter been used for a range of private expenses and purchases) and
·had increased her overall net assets year on year to a degree that could not be explained or could have been funded by the income she reported.
The Respondent determined that the Applicant’s Taxable Income over the 4 years should be increased from $83,891 to $1,651,795 and that the Amended Assessments and that Penalty Assessments should be raised in respect of the resultant shortfall. Combined the Amended Assessments and the Penalty Assessments led to an increase of the Applicant’s taxation liability of more than $1,442,534[1].
[1] Inclusive of amounts of Shortfall Interest Charge calculated under s280-105 of Schedule 1 of the Taxation Administration Act 1953
The Applicant thereafter lodged an objection to the Amended Assessments and the Penalty Assessments in which she broadly claimed that:
·Her Taxable Income across the Relevant Years was consistent with the returns she had lodged;
·Any unexplained deposits in her accounts had been made by her husband, an individual engaged in both organised crime and legitimate business who also directed the family finances and controlled her access to her accounts; and
·That to the extent that her husband had paid amounts on her behalf or facilitated loans which were then used to acquire assets these were amounts that had been gifted to her.
The Objection was partially allowed such that it resulted in modest reductions to the Applicant’s amended taxable income in each of the four years and a reappraisal of the applicant’s conduct in the context of Penalty Assessments[2] however the Applicant’s primary claims as outlined above were rejected.
[2] With a consequent reduction in the Applicant’s overall taxation liability to $1,106,066
The Applicant now seeks review of the Objection Decision and asks that the Tribunal either set it aside or vary it in a more favourable fashion.
To be successful in this application the Applicant is required to discharge the statutory onus imposed by section 14ZZK(b)(i) of the Taxation Administration Act 1953 (TAA 1953) which requires her to establish not only that the Amended Assessments raised by Respondent are excessive but also what they should be. Put another way, it is not good enough for the Applicant to simply show the Tribunal that the amounts the Respondent has arrived at in calculating her revised taxable income are wrong - she must go further and establish, on the balance of probabilities, the true extent of her income for each of the Relevant Years.
In relation to the Penalty Assessments the Applicant must demonstrate that either no false or misleading statements were made to the Commissioner that resulted in a shortfall of tax, or, if she accepts that such statements may have been made, that they were not made by the Applicant being reckless as to the operation of a taxation law[3]. The Penalty Assessments may also be the subject of remission, in whole or in part, if the Tribunal can be satisfied that it is appropriate in circumstances to do so.[4]
[3] Per s 284-75 and 284-90 of Schedule 1 of the TAA 1953
[4] Per s298-20 of Schedule 1 of the TAA 1953 and Sanctuary Lakes Pty Ltd v Commissioner of Taxation [2013] FCAFC 50
For the reasons that follow I have determined that the Applicant has been unable to establish those matters in relation to either the Amended Assessments or Penalty Assessments and there is no basis for any remission of the latter.
BACKGROUND
The Applicant, Mrs Latifah Ahmad, was born in Australia in 1978 to recently migrated parents of Lebanese heritage. In 1999 she married Mr Ahmad Ahmad and together they had four children. According to an affidavit she swore on 26 July 2023 the family are part of the “Muslim community and adherents of Sharia Law”.
At some point around 2006 Mrs Ahmad began to have unexplained seizures and by 2007 she had been diagnosed with epilepsy but explained that “because of my religious beliefs, I could not take medication, which led to my condition getting worse”.
Mrs Ahmad had previously worked for the (presumably NSW) Department of Community Services however ceased employment around the time of her marriage before going on to become a full-time mother. Mrs Ahmad further explained that shortly after she was married her (then) husband became the family’s sole provider and undertook “self-employed work in the security industry” before later involving himself in various businesses about which he was “usually vague” as to “what he did or where he did it”.
By 2010 Mrs Ahmad had decided to engage in some commercial activity herself and in her affidavit explained that:
16.I had an interest in fashion and just after the birth our fourth child in 2010, I started to source, at discounted prices, brand-name designer handbags for family and friends which, initially, I did just a hobby.
17.I received enquiries from people who had been referred to me by satisfied purchasers and thought I might be able to turn my interest into a small business that I could run from home.
18.At that time I was a full-time mother and my children were between 2 and 12 years of age.
19.In late 2012, I was given permission by Ahmad to start a business, which is a requirement under Sharia law.
Mrs Ahmad explained that by late 2012 Mr Ahmad had arranged to take her to see his accountant, Mr Steve Vlahos, for the purpose of setting up a company to conduct her business, in addition to setting up a company through which to conduct a frozen yoghurt business he wished to start himself.
Mrs Ahmad understood that her company was to be called Laamaj Investments Pty Ltd (Laamaj) and Mr Ahmad’s company was to be Moochi (Liverpool) Pty Ltd (Moochi Liverpool). However, according to Mrs Ahmad’s affidavit, on the day and upon arrival at Mr Vlahos’ office she was told by Mr Ahmad to wait in the waiting room whilst he and one of his friends engaged in what she understood to be business discussions with Mr Vlahos before:
26.Documents were put before me in the waiting room, which I was told to sign. I was not permitted to read the documents and nothing in any of the documents was ever explained to me. I duly signed the documents where I was told to.
Mrs Ahmad states in her affidavit that Mr Ahmad then took her to Westpac at Bankstown in Sydney where she was told to open an account for Laamaj (under apparent instructions from Mr Vlahos) however once this had occurred Mrs Ahmad was required by Mr Ahmad to hand over all the bank cards related to this account as well as the debit card to a personal account she held with the Commonwealth Bank of Australia (CBA). She claims that from then on:
·she was not entitled to use the Lamaaj account unless Mr Ahmad told her it was ok to do so, including from time to time when he directed her to make deposits;
·Mr Ahmad “began depositing money into the account and withdrawing funds from it that were unrelated to the business for which Laamaj had been incorporated”; and
·Mr Ahmad would deposit funds from the Laamaj account to Mrs Ahmad’s personal CBA account for her living expenses.
Mrs Ahmad deposes that by mid-2012 she began developing an awareness that Mr Ahmad and his older brother had begun using illicit drugs and by 2015 she had developed a “strong suspicion” that he was both selling drugs and engaging in organised criminal activity. Those suspicions were confirmed once Mr Ahmad’s brother “was killed in a gang-related shooting” in 2016 closely followed by his own arrest in “August 2017 in connection with his illegal activities”.
On 15 October 2024 Mrs Ahmad swore a further affidavit to which she annexed a range of newspaper reports which featured Mr “Ahmad, his relatives and associates, who were involved in, or alleged to be involved in, drug related activities and violence”. Without needing to descend beyond the superficial those reports conveyed that between 2016 and 2022 at least two of Mr Ahmad’s brothers as well as his nephew had been killed in gang related violence and that Mr Ahmad himself had been arrested in 2017 as part of a broad NSW Police Operation targeting a large-scale drug importation operation.
It is worth pausing at this point to acknowledge that although Mr Ahmad’s links to organised crime are not in question much of what has been described in paragraphs ‎12 to ‎17 above remains well and truly in contest between the parties. This is particularly the case so far as those paragraphs describe:
(i)the circumstances in which Laamaj and various other companies, owned and controlled by one or the other of Mr & Mrs Ahmad, were created,
(ii)who had access and control over various bank cards and accounts at various stages; and
(iii)the extent to which Mrs Ahmad may or may not have been aware of activities relating to Laamaj and the derivation of funds entering and being disbursed from its accounts.
What is not in contest however is that from its incorporation on 31 October 2012 and throughout the Relevant Years Mrs Ahmad was registered as the sole director, secretary and shareholder of Laamaj and that Laamaj had a bank account for which she was a signatory.
Audit & Objection
The Applicant came to the Respondent’s attention as part of a broader referral from the NSW Police in respect of the ‘Ahmad Group’ amidst familial links to organised crime.
An audit into Mrs Ahmad’s financial affairs was commenced and statutory notices were issued under powers contained within the TAA 1953 to a range of 3^rd party banks which required the production of information and documents. From responses to those notices, as well as from other material in the possession of the Respondent, it became apparent that Mrs Ahmad maintained a number of bank accounts into which significant amounts of funds were being deposited and either withdrawn or expended upon personal items. It also identified that during the Relevant Years she had accumulated a range of assets in her name, including an unencumbered residential property and a new car which seemed, to the Commissioner of Taxation, as unlikely to have been attained from the income she had declared as having earnt in each of her income tax returns.
The Respondent was therefore not satisfied that the returns represented the true depiction of Mrs Ahmad’s taxable income and undertook an asset betterment calculation in order to arrive at what they reasonably believed might be her taxable income over the course of the relevant years. This approach involved (rather broadly) working out the net value of Mrs Ahmad’s assets at the commencement of the Relevant Years and then for each year thereafter calculating any increase in the net value of her assets at each year’s end before excluding any non-assessable receipts. The resultant difference was considered to represent the “correct taxable income” for each year.
The Respondent concluded that over the Relevant Years funds that had been deposited and then either spent or withdrawn from accounts, either in Mrs Ahmad’s name or that of Laamaj (given that Mrs Ahmad was its sole director and shareholder and an account signatory), were to be considered in the calculation of Mrs Ahmad’s net asset worth.
Also included was an amount of $470,000 which in November 2014 formed part of amounts received and applied towards the purchase of a residential property in Punchbowl. This amount had been initially claimed to stem from a loan provided from a family friend of the Ahmad’s who had signed a statutory declaration saying as much however given the lack of surrounding documentation or evidence of any flow of funds the Respondent was unconvinced that such a loan arrangement existed.
The Respondent concluded that:
5.51Based on the results of the asset betterment calculation…the Commissioner considers that the returns furnished by you for the years ended 30 June 2013 to 30 June 2016 are not satisfactory and that you derived undeclared assessable income. For these income years, the Commissioner may therefore make assessments of the amounts upon which in his judgement tax ought to be levied.
5.52The asset betterment methodology represents the Commissioner’s genuine attempt to calculate your taxable income for the income years ended 30 June 2013 to 30 June 2016, taking into account your particular circumstances. This is considered to be a reasonable basis and in line with the requirements of paragraph 66 of PS LA 2007/24.
…..
5.54The Commissioner has formed the view that you have failed to include assessable income in the tax returns lodged for the years ended 30 June 2013, 30 June 2014, 30 June 2015 and 30 June 2016. As a result of this finding the Commissioner is not satisfied with the return as furnished by you.
5.55Accordingly your assessments will be amended to include the amounts of:
- $81,892.64 for the year ended 30 June 2013
- $402,038.20 for the year ended 30 June 2014
- $859,059.60 for the year ended 30 June 2015
- $224,915.89 for the year ended 30 June 2016
…..
5.56To rectify your lodgment faults, the Commissioner will amend your assessments for the years ended 30 June 2013 to 30 June 2016 pursuant to paragraph 167(b) of the ITAA 1936.
On 28 September 2017 the Respondent raised Amended Assessments to account for the consequent tax shortfalls in each of the years identified in the paragraph above.
The Respondent also formed the view that the Applicant had intentionally understated her income and imposed an administrative penalty under s 284-75 of Schedule 1 of the TAA 1953, which covered the Relevant Years, at the base level of 75% of the tax shortfall. The Respondent then imposed:
·an uplift to the administrative penalties for the years ending 30 June 2014 to 2016 pursuant to s 284-220(1) of Schedule 1 of the TAA 1953, on the basis that the Applicant had an imposed penalty in a prior year (i.e. in the 2013 Year) increasing the liability for those penalties; and,
·a further liability for Shortfall Interest Charge pursuant to s 280-100 of Schedule 1 of the TAA 1953, for each of the Relevant Years to account for the period from when the Applicant would have been liable if she had returned the additional amounts of income.
As part of its audit decision the Respondent provided a summary of the adjustments it made to the Applicant’ income tax affairs and resultant penalties as follows:
In September 2021 the Applicant, with the assistance of her accountant Ms Marianna Lina Candy (whom Mr & Mrs Ahmad had initially engaged during the period of the Australian Taxation Office’s audit to act for Mrs Ahmad and Laamaj), lodged an objection to the Amended Assessments and Penalty Assessments. The objection sought to set aside the Amended Assessments and Penalty Assessments with Mrs Ahmad continuing to deny that she had ever understated her taxable income. In her objection Mrs Ahmad maintained that:
·Her taxable income was as stated in the income tax returns which had been lodged with the Respondent;
·She had, with the permission of Mr Ahmad, conducted what she believed at the time to be a hobby rather than a business of buying and selling luxury goods (which included luxury handbags);
·This ‘hobby’ which she now accepted was a small business was conducted through the corporate entity Laamaj using its accounts whenever Mr Ahmad “who had total control over the deposits and withdrawals from this account” gave her permission to do so;
·For the majority of the Relevant Years she had limited to no awareness of what activities her husband may have been engaging in (legal or otherwise) and was rarely if ever permitted to attend his places of business;
·She was now aware that Mr Ahmad had frequently used the Laamaj account for matters beyond the operation of her small luxury handbag selling activities; and
·to the extent the Respondent had identified significant deposits made to her and Lamaaj’s accounts then they were likely to have emanated from her husband whose affairs she was not entitled to ask about.
Mrs Ahmad’s objection stated that Mr Ahmad generally controlled her and the family’s affairs and that “under Sharia law [she was] required to obey her husband and she was not allowed to work or undertake any other activity without asking for his permission. She was not allowed to be unaccompanied unless accompanied by Ahmad, or a male or female relative. She was required to ask permission to be accompanied only by a female relative”.

Mrs Ahmad’s objection further explained that her husband (as he was up until 2021 before they divorced) had identified for Mrs Candy the transactions made using the Laamaj account which had no relation to Mrs Ahmad’s affairs or the small enterprise that she was conducting and argued that these deposits should be disregarded in any appraisal of her taxable income.
On 3 November 2022, the Respondent issued a notice of Objection Decision in which it explained why it only partially allowed the Applicant’s objection, in effect by:
·marginally reducing the Applicant’s taxable income in each of the Relevant Years,
·recasting the conduct that led to the Applicant’s false and misleading statements as stemming from recklessness as to the operation of tax laws rather than her intentionally disregarding those laws (and thereby reducing the base penalty amount from 75% to 50%); and
·remitting the 20% uplift which had been imposed on the administrative penalties for the years ending 30 June 2014 to 2016.
In determining the objection the Respondent rejected, for the most part, the Applicant’s suggestions that the amounts deposited in the Laamaj account were unrelated to the company’s business as this explanation was only borne from what Mr Ahmad had told Mrs Ahmad’s accountant and was seemingly unsupported by anything more tangible.
Given the lack of any supporting documentation, the sparsity of explanation about her affairs generally and the extent to which the funds received into the Laamaj account appeared to be generally available and had been applied for the Applicant’s use the Respondent did not accept that the asset betterment calculation required anything other than minor adjustments.
Application & Issues for review
On 15 December 2022 the Applicant, assisted by her current accountant, lodged an application for review with the Tribunal in which she claimed that the Objection Decision was wrong because it attributed additional taxable income which was “in excess of the taxable incomes disclosed by me in my assessed income tax returns…when the Commissioner knew that any additional income, was not derived by me but was derived from the income-earning activities of my ex-husband”.
The Applicant went on to file a Statement of Facts Issues and Contentions (SFIC) which took umbrage with the Respondent’s approach to the asset betterment valuation and the attempts to ascertain her taxable income without contemplation of the burden of proof contained under s14ZZK of the TAA 1953.
The Respondent for its part lodged a SFIC and later an Amended SFIC which sought to identify the following 2 issues as being before the Tribunal:
Has the Applicant has discharged the onus of proving that the default assessments for the years in dispute are excessive or otherwise incorrect and what the assessment for each of the years in dispute should have been. That is, has the Applicant proved what her ‘actual taxable income’ in each of the years in dispute.
(Issue 1)
Is the Applicant liable to pay administrative penalties pursuant to Division 284 of Schedule 1 to the TAA for making, in an income tax return in each of the years in dispute, a false or misleading statement.
(Issue 2)
In an Amended SFIC lodged by the Applicant she accepted the formulation of the issues as described by the Respondent and, in particular, that she bore the “burden of proving, on the balance of probabilities, both that each assessment is excessive and, also, what that assessment should have been”.
Legislation & the Statutory Onus
The Applicant will succeed in this review in relation to each of the Relevant Years if she can successfully discharge her statutory burden to show that on the balance of probabilities the Amended Assessments raised by the Respondent were excessive and what they should have been. This burden is imposed amidst a statutory and legal framework[5] the provisions of which I have previously set out in HWFX and Commissioner of Taxation (Taxation) [2025] ARTA 680 at [38]-[44] and which provides for a predominately self-reporting taxation system.
[5] I have previously set out many of those provisions in HWFX and Commissioner of Taxation (Taxation) [2025] ARTA 680 at [38]-[44]
Under this framework (and at a high level) an Australian resident taxpayer is obligated to lodge annual tax returns disclosing the entirety of their assessable income and “from the returns and from any other information in the Commissioner’s possession”[6] the Respondent will make an assessment[7] of a taxpayer’s Taxable Income, the amount of tax payable upon that Taxable Income and the total of any tax offset refunds they may be otherwise entitled to.
[6] Section 166 of the Income Tax Assessment Act 1936 (Cth)
[7] ‘assessment’ is defined in section 6(1) of Income Tax Assessment Act 1936 (Cth)
Importantly, under s 167 of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936), where a Taxpayer has not lodged a return, or the Commissioner is dissatisfied with the return as lodged, the Commissioner is entitled to use his judgment based on material in his possession to make an assessment for the purpose of s 166. Such an entitlement extends to allowing the Commissioner to amend previous assessments[8] however under s 175A of the ITAA 1936, a dissatisfied taxpayer can thereafter dispute such an assessment (be it amended or original in nature) by objecting to “it in the manner set out in Part IVC of the TAA 1953”.
[8]Subject to the timing limitations contained under s 170(1) of the Income Tax Assessment Act 1936 (Cth)
Part IVC in the TAA 1953 sets out a range of provision which:
·Provide for the making & lodgement of an objection with the Respondent (under s14ZU);
·Require the Respondent to determine to either allow the objection, in whole or part, or disallow the objection (under s14ZY) and
·Where dissatisfied with the objection decision made then either seek review in the Tribunal or appeal to the Federal Court of Australia (under section 14ZZ).
Where an application for review is made to the Tribunal, s 14ZZK(b) of the TAA 1953 imposes a statutory burden of proof that an applicant must discharge in order to succeed in their case. Section 14ZZK relevantly provides, as follows:
14ZZK Grounds of objection and burden of proof
On an application for review of a reviewable objection decision:
(a)….
(b)the applicant has the burden of proving:
(i)if the taxation decision concerned is an assessment—that the assessment is excessive or otherwise incorrect and what the assessment should have been; or
(ii)in any other case—that the taxation decision concerned should not have been made or should have been made differently.
As is clear from the text of s 14ZZK(b)(i), on review, the taxpayer is tasked with discharging the burden of proof. This task is twofold – firstly to show that those assessments are excessive and secondly, and somewhat crucially, to show what their actual liability to taxation ought to have been in each of those years in dispute.[9] These matters are to be established by the Taxpayer on the “civil standard of the balance of probabilities”.[10]
[9] The statutory burden that applies in tax appeals to the Federal Court is contained in s14ZZO of the TAA 1953 which is expressed in equivalent language to that contained in s14ZZK; see McPartland v Commissioner of Taxation [2025] FCAFC 23 at [12] and [13].
[10] See Buzadzic v Commissioner of Taxation [2024] FCAFC 50.
It is important to remember that where the Commissioner, as he has done in this case, exercises his power under s 167 of the ITAA 1936 to raise (or amend) assessments, the task of a taxpayer to discharge the burden contained in s 14ZZK(b)(i) of the TAA 1953 is “necessarily different” to the one required where assessments have been made pursuant to s 166.[11] Challenges to assessments raised under s 166 may often see the burden to be discharged relate to a single particular or element of a taxpayer’s affairs, following a much more “evidence-based calculation of a person’s taxable income, tax payable thereon, and tax offset refunds”,[12] whereas an assessment made under s 167 requires a much more expansive endeavour[13].
[11] See Gashi v Commissioner of Taxation [2013] FCAFC 30 at [51]-[54] (‘Gashi’).
[12] See Commissioner of Taxation v Ross [2021] FCA 766 at [40] (‘Ross’).
[13] See for example Bosanac v Commissioner of Taxation [2019] FCAFC 116 at [57] (‘Bosanac’)
As Derrington J explains in Ross, the task of the Commissioner in a s 167 assessment context is less evidence-based than the process of assessing under s 166 and involves more the exercise of a judgment as to the amount of tax that ought be levied based on the Commissioner’s knowledge of the Taxpayer’s affairs. As one might expect, and as noted in Gashi at [55] this means that the amount assessed under s 167 “is necessarily a guess to some extent and almost certainly inaccurate in fact”.[14] As Derrington J further explained in Ross at [48](8) when properly applied, the principles pertaining to the statutory onus “can result in a situation where the default assessment can be assumed to be inaccurate in some respects but, in the absence of the taxpayer establishing what their actual taxable income was, it must nevertheless stand”.[15]
[14] Gashi at [55].
[15] At [48](8).
It thereby follows that, having regard to the nature of the assessments raised under s 167, there is no obligation imposed upon the Commissioner on review in the Tribunal to “show that the assessments were correctly made. Nor is there any statutory requirement that the assessments should be sustained or supported by evidence”.[16] The Commissioner is entitled to simply rely on deficiencies in an Applicant’s case in their attempt to prove what their actual liability to taxation ought to have been in each of the years in dispute (that is, absent any express concessions or agreements between the parties to limit or confine the scope of the review – see Gashi at [61]).
[16] See Federal Commissioner of Taxation v Dalco (1936) 168 CLR 615 at [624] (‘Dalco’); Citing with approval Mason J’s dissenting judgment in Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81 which is now the prevailing view.
While the statutory burden I have just described may seem to place a heavy onus upon a taxpayer, it is essential to remember that “the facts in relation to [their] income are facts peculiarly within the knowledge of the taxpayer”.[17]To put it plainly, in a self-reporting tax system no one can be expected to know the affairs of a taxpayer quite like the taxpayer themselves.
[17] See Trautwein v Federal Commissioner of Taxation (1936) 168 CLR 614 at [87].
Critically, in discharging the burden where an assessment has been raised under s 167 of the ITAA 1936, the following must be held in mind:
·What is required of an Applicant taxpayer will vary with the circumstances of their case.[18]
·It is insufficient to simply demonstrate that the Commissioner was wrong or has come to an incorrect amount.[19]
·In order to positively prove their actual taxable income for the purpose of s 14ZZK(b)(i), an applicant must “demonstrate that the amount of tax levied by the assessment exceeds their actual substantive liability…..by, in effect, furnishing a return of actual income which involves establishing both sides of the equation”.[20]
[18] Dalco at [624].
[19] Dalco at [624]; Ross at [48].
[20] See Ross at [48] and the authorities cited therein by Derrington J; see also Bosanac v Commissioner of Taxation [2019] FCAFC 116 at [57] .
The Respondent has as part of these proceedings lodged an initial and an amended SFIC, together with two supplementing sets of written submissions. It is apparent from those documents, that the Respondent makes no express concessions and puts the Applicant to proof on “all facts on which the Applicant seeks to rely to establish that the assessments the subject of these proceedings are excessive or otherwise incorrect and what the assessment should have been”.[21]
ISSUES TO BE DECIDED
Issue 1 – Has the Applicant discharged her burden of proof
[21] Respondent’s Amended Statement of Facts, Issues and Contentions dated 23 February 2024.
The Applicant’s Case
In her Amended SFIC the Applicant claimed to have discharged the burden under s14ZZK because she:
(i)has identified the nature and source of her assessable income;
(ii)has identified her deductions;
(iii)has positively proved her actual taxable income;
(iv)has demonstrated that each assessment exceeds the actual substantive liability;
(v)has identified the nature and source of funds to finance her unexplained wealth; and
(vi)has demonstrated her unexplained wealth was from non-income sources;
The Applicant explained in her Amended SFIC that she was a “stay-at-home mother with four (4) children who, at the start of the 2013 financial year, were aged between one (1) and twelve (12) years of age, two of whom were preschoolers” and that she “conducted, at home, part-time sales [of luxury goods] though social media (e.g., Instagram), on behalf of Laamaj”.
At a very high level, as alluded to in the paragraphs above, Mrs Ahmad’s case, as conveyed by her SFIC, was that:
·her income was as reported,
·her only additional and potentially income producing activity was the purchase and resale of various luxury items which were conducted through a corporate entity Laamaj;
·that whilst she may have had a company opened on her behalf, been the signatory of its bank account and maintained direct or indirect interests in a range of other corporate entities and trusts she had no control or access to those entities or accounts and for the most part was unaware of their financial receipts or conduct;
·Mr Ahmad frequently transacted using the Laamaj accounts and any deposits in those accounts which might be unexplained or of an income character were deposited by or earnt by him.
·Where amounts were deposited in the Laamaj accounts & were then applied in respect of her or her family’s private expenses (or for her to acquire assets) those amounts were income of Mr Ahmad and to be seen as gifts in her hands.
In support of her application the Applicant swore and lodged 2 affidavits, the first sworn 26 July 2023 (1^st affidavit) and a second affidavit sworn 15 October 2024 (2nd affidavit) annexing a number of documents which have been reproduced in the Hearing Book.
The Applicant lodged 3 further supporting affidavits being from her:
·son, Mr Mohammad Ahmad sworn 25 July 2023;
·former husband, Mr Ahmad Ahmad sworn 31 May 2023; and
·accountant, Ms Marianna Lina Candy sworn 28 July 2023.
In addition to the affidavits the Applicant had provided to the Respondent a number of document tranches on 28 July 2023, 7 December 2023, 20 August 2024 and 27 September 2024. Each of these tranches made their way into the Hearing Book but were only sparingly referred to. The Applicant also provided a number of what appeared to be working spreadsheets created by Mrs Candy which also were included but which were more in the nature of submissions rather than evidence in any strict or clear sense.
The Respondent’s Case
The Respondent argued that to succeed in respect of each contested year the Applicant would be required to “establish to the Tribunal’s satisfaction “both sides of the equation” being assessable income and allowable deductions”. They say that the Applicant’s task in achieving this is beset by a myriad of challenges which include:
·that no real attempt has been made to “set out her actual taxable income or to otherwise explain the source of her assets and that those sources are not taxable”; and
·the lack of documentary evidence to accord with each of Mr & Mrs Ahmad’s assertions that:
omany of the deposits in the Laamaj account were the income of Mr Ahmad rather than her own; and
othat Mrs Ahmad can identify the activity of her small business by merely pointing to transactions on her bank statements;
The Respondent argued that need for corroborative documentary evidence in this case was particularly pronounced due to the Applicant’s reliance on assertions made by ‘interested’ witnesses who could not be said to be impartial – including her own, the evidence of her acting accountant (Mrs Candy) and the evidence of her ex-husband with whom Mrs Ahmad shares four children.
The Witnesses
Before I turn to consider the affidavit and oral evidence of each of the witnesses it is worth making some preliminary comments about 2 matters that go to the weight to which I can afford that evidence.
Interested witnesses
The Respondent made a general submission that where witnesses had an interest in the outcome of a proceedings then their evidence should “should be scrutinised with care” (citing a range of well-known authorities including Commissioner of Taxation v Cassaniti[22] and Imperial Bottleshops Pty Ltd v Federal Commissioner of Taxation[23]), This was particularly so, they argued, where no corroborating evidence (be it documentary or otherwise) was before the Tribunal. It was argued that such an approach should be applied to the affidavits and oral testimony of each of the Applicant’s four witnesses.
[22] [2018] FCAFC 212; 266 FCR 385 at [88] (‘Cassaniti’)
[23] (1991) 22 ATR 148 (‘Imperial Bottleshops’).
In Imperial Bottleshops his Honour Justice Hill considered the weight that self-serving statements could be granted in the absence of records and concluded that whilst a self-serving statement was not necessarily to be disbelieved it must be “tested more closely and received with the greatest caution”. His Honour went on to state that “some other corroborative evidence would normally be required which makes it more probable than not” for such testimony to be believed. Justice Hill did however, acknowledge as cautionary point, that such evidence was not to be considered as ‘prima facie’ unacceptable.
In Cassaniti the Full Federal Court recognised that even though evidence given by a taxpayer requires a level of scrutiny beyond evidence given by disinterested witnesses it was important to be remain mindful that this does not mean that a decision-maker can’t accept that evidence as reliable (even if it be uncorroborated) “where it finds the taxpayer to be truthful”[24].
[24]Also see Federal Commissioner of Taxation v SNF (Australia) Pty Ltd (2011) 193 FCR 149 at [82]
I have approached the evidence given by the Applicant and her supporting witnesses with these guiding principles in mind.
Unavailable witnesses
Prior to the hearing I understood that the Respondent had put the Applicant on notice that it would require each deponent to be made available for cross-examination as part of what had been listed as a 2-day hearing. However, at the hearing’s commencement the Tribunal was informed by Mr Vincent (an accountant who appeared as the Applicant’s non-legal representative) from the bar table that, although Mrs Candy and Mrs Ahmad would be available to be cross-examined, neither Mr Mohammad Ahmad or Mr Ahmad Ahmad would be. In this regard he said as follows:
Witnesses proposed to be called included Mr Mohammed Ahmad, who is now unavailable, and there is a legitimate reason for his unavailability, … in that he has been under police protection previously. He’s been asked to relocate a number of times, and in the last couple of days, he, as the police notified Mrs Ahmad, that his life was in danger and that he should vacate the area.
Mr Ahmad Ahmad, we intended to call as a witness, and I was instructed by his solicitor, Mr Hisham Karnib, yesterday that he would not allow him to give evidence.
Mr Vincent went on to explain (again from the bar table) that Mr Ahmad Ahmad’s solicitor had referred to concerns about his further incriminating himself.

In respect of Mr Mohammad Ahmad’s non-attendance, Mrs Ahmad gave oral evidence that she and her son had previously been told by NSW homicide detectives (shortly after Ahmad Ahmad’s arrest) that he was in danger and “that’s why my son couldn’t come to here…I wasn’t going to risk him coming here”. Mrs Ahmad provided little insight into whether there was renewed concern about Mohammad’s safety and whether those concerns had arisen afresh after the date on which he had sworn his affidavit or “in the last couple of days”.
Beyond Mr Vincent’s comments from the bar table and Mrs Ahmad’s oral evidence described above there was no further evidence led addressing such matters. No applications for adjournments were brought and no correspondence or documents were produced to the Tribunal.
The question then arises – in Tribunal proceedings where an affidavit’s maker is unavailable to be cross-examined should a Tribunal admit the affidavit into evidence and, if so, what weight should be afforded it. Such questions were addressed by the Tribunal in Kais v Commissioner of Taxation [2021] AATA 16 (‘Kais’) where it was determined that an affidavit, whose maker had passed away prior to an opportunity being granted to a respondent to cross-examine as to its content, should nonetheless be allowed into evidence subject to a consideration of the weight to be afforded. It was then held that a Tribunal “not bound by the rules of evidence but [that] may inform itself on any matter in such manner as it thinks appropriate”[25] should[26]:
[14]….look to the provisions of the Evidence Act 1995 (Cth) (“Evidence Act”), and more particularly their underpinning principles, for guidance, without formally adopting the rules and practices set out in those provisions.
[15]The rules of evidence are consistent with the approach …. that the Tribunal should weigh the probative value of the Statement against the danger that it would be unfairly prejudicial to the Commissioner in circumstances where Mr Ibrahim is not able to be cross-examined.
[25] Per s33 of the Administrative Appeals Tribunal Act 1975 which is in identical terms to s 52 of the Administrative Review Tribunal Act 2024
[26] Kais at [14] – [15]
The Tribunal in considering the impact of a range of relevant authorities in that case concluded that they “support the approach of admitting the Statement but with the understanding that the weight to be attributed to it must be affected by the absence of an opportunity for it to be tested in cross-examination”[27]. I propose to adopt such an approach and will consider what weight ought be afforded to each of Mr Ahmad Ahmad’s and Mr Mohammad Ahmad’s affidavits further below.
[27] Kais at [19]
Turning next to the 2 witnesses who were available to be cross-examined, Mrs Candy and Mrs Ahmad. I will address them in the order their evidence was led in the course of the hearing.
Mrs Ms Marianna Lina Candy
Mrs Candy swore an affidavit on 28 July 2023 in support of the Applicant’s case. That affidavit (in a somewhat superficial fashion) explained how in late 2016 she had been approached by Mr Ahmad Ahmad to prepare tax returns for his wife and her company Laamaj in respect of the Relevant Years. She then held a series of meetings, firstly with Mr Ahmad alone, then from about January 2017 with Mr and Mrs Ahmad together before finally, after Mr Ahmad was incarcerated in late 2017, with just Mrs Ahmad alone. In the course of these meetings Mrs Candy was provided with copies of Laamaj’s bank statements and was told by Mr Ahmad that he controlled and used the Laamaj bank account for his own business purposes in addition to it being used for Mrs Ahmad’s business purposes. Mr Ahmad went on to tell Mrs Candy that he could identify which of the transactions in the bank statements related to his affairs rather than his wife’s.
At some point Mrs Candy had also written to Mr Ahmad’s accountant, Mr Vlahos and had received a range of documentation including some working notes but by no means a comprehensive production.
In late 2016 and early 2017 Mrs Candy then prepared and lodged Laamaj’s and Mrs Ahmad’s returns for each year after undertaking something of what she described as an ‘audit’ of Laamaj’s accounts through a process of recording:
·the amounts which Mr Ahmad identified on the bank statement as being non-Laamaj transactions as ‘loans’ in the company accounts; and
·any transactions that Mrs Ahmad could identify on the Laamaj bank statements as being related to Laamaj’s core business as either sales or expenses (as the case may be).
Mrs Candy was aware that Mr Ahmad used another accountant for his affairs and that Mrs Ahmad had at some point, in years gone, by signed a range of documents relating to companies set up at the behest of Mr Ahmad which she claimed to have little or no knowledge about.
In addition to her affidavit Mrs Candy gave further oral evidence at the hearing which provided greater detail about her initial meetings with Mr Ahmad and the extent to which he explained to her the conduct of Mrs Ahmad’s business. This additional evidence was given in response to what was largely leading or suggestive questions put to her by Mr Vincent.
The additional oral evidence sought to emphasise that it was Mrs Candy’s view that Mrs Ahmad was unaware of much of what was transacting on the Laamaj accounts or of other corporate interests and holdings in Mrs Ahmad’s name which appeared in documents that Mrs Candy had obtained either from Mr Ahmad’s accountant or from Mr Ahmad himself.
In response to further leading questions Mrs Candy explained that:
·other than some payments received from ‘Centrelink’ in the earlier part of the Relevant Years, Mrs Ahmad, in Mrs Candy’s view seemed genuinely unaware that she had made any income over that period; and
·In determining what Mrs Ahmad’s income was for each of the Relevant Years she went through a process of identifying ATO ‘pre-filled’ amounts, accounting for some dividends and directors’ fees which appeared attributable to Mrs Ahmad from her corporate and trust responsibilities and interests before considering the bank statements of Laamaj to calculate Mrs Ahmad’s likely income from the operation of the business.
Mrs Candy further explained that when she looked at what Laamaj was making she was initially reliant on “information with regards to the sales and the debits and deposits into Laamaj which were provided to me by [Mr] Ahmad” but that later when she analysed some of the bank statements she was able to make further adjustments based on who was involved in particular transactions and the likelihood that they would not be connected to Mrs Ahmad’s ‘luxury handbag’ business. Mrs Candy explained that through this process she came to ascertain Mrs Ahmad’s “actual taxable income in those four years that was lodged with the Tax Office”.
In addition to her oral evidence about this process Mrs Candy had prepared and the applicant had lodged with the Tribunal a number of spreadsheets which purported to represent the calculations which had been undertaken through the re-engineering of the Applicant’s and Laamaj’s affairs. These spreadsheets were provided as an aide-memoire rather than evidence and were marked MFI 1 to 4 in the course of the hearing. They purported to set out Mrs Candy’s determinations and calculations about various matters and amounts contained within the accounts of Laamaj and Mrs Ahmad and the income position which formed the basis of the returns which were lodged by Mrs Candy.
Under cross-examination counsel for the Respondent asked Mrs Candy about the approach she had taken in forming an understanding of Mrs Ahmad’s income producing affairs and the deposits in Laamaj’s banks statements. In response to questioning Mrs Candy acknowledged that an ‘audit’ of Mrs Ahmad’s accounts, as she had described the process earlier, simply amounted to comparing amounts between bank statements without reference to any underlying primary documentation.
Mrs Candy again acknowledged that Mr Ahmad Ahmad had given her instructions generally about deposits in the Laamaj account but that she had also independently identified other deposits that weren’t from Mrs Ahmad’s business by drawing inferences from surrounding material, this included comparisons between the names of individuals in the bank statement notations to what she understood about the Ahmad family company structures and interests.
The reliability and basis of Mrs Candy’s approach to identifying Mrs Ahmad’s income and non-income was tested in cross-examination. At one point she was asked how she determined that a deposit of $50,000 in the Laamaj account in the 2013 income year was unrelated to Mrs Ahmad’s income when the bank statement simply noted ’16 APR DEPOSIT STRATHFIELD NSW…. $50,000”. In response she explained that she formed the view that it related to an individual who was unlikely to have transacted with Mrs Ahmad as he was a business associate of Mr Ahmad and she became aware of this association as follows:
Mrs Candy:If you go back to the Tax Office questions that were sent to me….It’s in the documents. It was one of the questions that I had to answer that the Tax Office had actually specifically identified that deposit, and said do you know this deposit on this date by Euman Bae. And at the time I had replied that it was part of the sales, because that was said to me. Now, it’s in a Tax Office question ‑ ‑ ‑
Counsel:…so you didn’t get it from this bank statement?
Mrs Candy:No.
Counsel:…so you drew a conclusion from the Tax Office letter to you, which said that there was a $50,000 deposit to the effect that it was from Euman Bae?
Mrs Candy:From Euman Bae?‑‑‑Yes.
Counsel:And then you have done some searches, and you have determined that he was connected to Moochi. Is that right?
Mrs Candy:Yes.
Counsel:And so you have made a conclusion, then, that this isn’t income of Laamaj based on those steps; is that right?
Mrs Candy:Based on those steps, plus the fact that the company had only been operating for short period of time, and the purchases don’t weigh up with the sales. If that was a sale, then there would be a lot more purchases….
Counsel:When you say the purchases didn’t weigh up with the sales, you didn’t have access to the actual records for Moochi, though, did you?
Mrs Candy:No. I didn’t have the records for Moochi. That was – if you have a look on Steve Vlahos’ invoice, he has actually invoiced Ahmad for the work on Moochi. But I did not have – no.
Counsel:That’s my point, though. So you didn’t have the Moochi records?
Mrs Candy:No.
In the above exchange “Moochi” was a reference to Moochi (Liverpool) Pty Limited and when it was put to Mrs Candy that the $50,000 referred to above could just have readily been a dividend payment given that Mr Bae was a director of that company and Laamaj was a shareholder she responded:
Mrs Candy:The accounts for Moochi Liverpool were done by Steve Vlahos, and I have never seen those accounts. So I can’t come to any conclusion about that, other than what was told to me by Mr Ahmad, that it wasn’t income of Laamaj.
At various points Counsel pressed Mrs Candy about the instructions received from Mr Ahmad Ahmad and the absence of underlying records:
Counsel:When Ahmad indicated to you each of these deposits of this nature here, he didn’t provide you with any supporting documents, did he??
Mrs Candy:No. He did not.
….
Counsel:you can see a deposit of $5,000 on 12 April. And I take it, again, that’s one of the deposits that doesn’t have any description around it to tell you what it was, so you relied on the word of Mr Ahmad. Is that right?
Mrs Candy:Yes.
….
Counsel:you weren’t given any documents about these; you just simply had to take the word of Mr Ahmad about what each of these were?
Mrs Candy:Yes.
Over the course of Mrs Candy’s cross-examination it became apparent that her re-creation of Mrs Ahmad’s and Laamaj’s financial affairs was borne out of extensive oral instructions provided by Mr Ahmad Ahmad, limited instructions from Mrs Ahmad, some notes and documents provided to her by either Mr Ahmad or Mr Vlahos (in response to correspondence requests) and her own inferential conclusions about what might likely have happened.
Mrs Candy presented as a willing, earnest and honest witness who appeared to have the best interests of her client (which Mrs Ahmad undoubtably is) at heart. Her evidence sought to provide what in her view was a satisfactory basis for the Tribunal (on the balance of probabilities) to conclude that the amount returned by Mrs Ahmad represented a complete and comprehensive reflection of her taxable affairs. However, as was contended by the Respondent, in their written submissions provided after the hearing, much of Mrs Candy evidence had a flavour of submission rather than evidence.
Unfortunately, as is evident from the exchanges with the Respondent’s counsel at the hearing, some of which I have extracted above, Mrs Candy’s evidence was based upon little by way of independent knowledge about Mrs Ahmad’s financial circumstances and was extensively reliant on oral instructions and assertions provided to her by Mr and Mrs Ahmad. Mrs Candy’s evidence in respect of her knowledge sources was clear and transparent and she made no attempt to disguise those matters.
To the extent that Mrs Candy then prepared returns based on her knowledge and understanding of Mrs Ahmad’s (and by extension Laamaj’s) affairs her efforts in this regard simply can’t overcome the inadequacy of those foundations. Her evidence in that context must be seen as unreliable and should not be held to be satisfactorily corroborative or independently supportive of any conclusions that might be drawn about Mrs Ahmad’s taxable income or the characterisation of a range of unexplained deposits in accounts of which Mrs Ahmad owned and used for her own purposes.
As is apparent, I have formed the view that the reliability of Mrs Candy’s evidence as to what Mrs Ahmad’s taxable income in each relevant year is wholly dependent on the extent to which I accept the veracity and reliability of Mr and Mrs Ahmad’s evidence given the paucity of what might be otherwise corroborative documentation.
Mrs Latifah Ahmad
As mentioned, in support of her application the Applicant herself swore and lodged 2 affidavits. I have provided a summary of the bulk of the contents of the 1st affidavit in the course of paragraphs ‎13 to ‎18 above and touched upon other matters they cover in paragraphs thereafter.
In addition to those matters Mrs Ahmad’s 1st affidavit sought to address how she came (during the Relevant Years) to acquire an unencumbered property which she purchased for over $1.3 million in Punchbowl, Sydney. That property purchase was relevant because the Applicant had sought to argue at audit that part of the unexplained deposits and withdrawals from the Laamaj account in the 2015 income year should be reduced to account for proceeds of a $470,000 loan arranged by Mr Ahmad from an individual who had been described as a family friend, Mr Nicholas Agar. Mr Agar had claimed to have sourced those funds from an entity called DBN Holdings Aust Pty Ltd.
Mrs Ahmad explained that prior to the Punchbowl purchase she had also previously purchased and sold a number of properties in various Sydney suburbs, the last of these being a property in Yagoona, which she had sold for $700,000 in October 2014 after having acquired it from a family member in 2009 for an amount of $1. She then deposed that:
76.Ahmad controlled all of the proceeds from the sale of the Yagoona property and made all purchase and financing arrangements for the purchase of the Punchbowl property.
77.The additional finance to complete the purchase of the Punchbowl property comprised money that Ahmad either earned illegally or was arranged by Ahmad to be provided by his associates.
78.The financed component of the Punchbowl property purchase comprised amounts that are non-taxable receipts in my hands, which the Commissioner failed to take into account.
The 2^nd affidavit annexed a number of documents which have been reproduced in the Hearing Book and sought to correct a number of matters that Mrs Ahmad had deposed to about properties owned prior to the Relevant Years. As it turned out rather than Mrs Ahmad being registered on the title of the Yagoona property (and indeed the property purchased prior to that) as the owner it was her brother. From her affidavit she now alleged that he was simply holding that property on trust for her. The Yagoona property was ultimately transferred to Mrs Ahmad for $1 in 2009, on Mrs Ahmad’s evidence, to ensure her brother did not become liable to land tax as he sought to purchase another property for himself.
The 2^nd affidavit also sought to explain that Mrs Ahmad had been misled by Mr Ahmad as to where he had sourced funding for the Punchbowl property purchase and that she now understood the statutory declaration signed by Mr Agar about the $470,000 loan was false. She now understood that the funds must have been derived by Mr Ahmad from other business dealings. She explained that because significant deposits in the Laamaj accounts appeared to come from either associates of Mr Ahmad or from sources she didn’t necessarily know then those deposits ought to have been recorded in the Laamaj accounts as loans to either Mr Ahmad or other associates of his.
In addition to her affidavits Mrs Ahmad sought to lead further oral evidence at the hearing. For the most part this was done responsively to highly suggestive leading questions put to her by her accountant representative, Mr Vincent. She was granted some indulgence in this regard as she was not legally represented and the Respondent helpfully refrained from taking objections as to form of those questions.
For the most part this additional evidence did not go much beyond emphasising and restating matters already addressed by her affidavits, particularly around her lack of knowledge of Mr Ahmad’s affairs generally and the extent to which she had no access to her and Laamaj’s accounts without Mr Ahmad’s express approval. She also explained how her epilepsy contributed to her having a poor memory and often caused concentration lapses and “brain fog”.
Amongst other matters Mrs Ahmad explained that she was not involved in the purchase or arranging of finance for the purchase of a car acquired during the Relevant Years although accepts it was registered in her name. She also acknowledged that it was her that signed the contracts for the purchase of the Punchbowl property.
Under cross-examination Counsel for the Respondent drew the Applicant’s attention to a number of inconsistencies between her first affidavit and second affidavit and then to some of the evidence she provided orally at the hearing. Counsel noted that there were significant changes of positions and corrections including going to matters about who had owned particular properties prior to Relevant Years and also, somewhat critically, as to whether she had ever operated a small business through an incorporated entity which she had opened a bank account for.
That Mrs Ahmad’s evidence evolved over the course of her two affidavits and oral evidence was incontrovertibly true. An example arises when one compares paragraphs in Mrs Ahmad’s 1^st affidavit to some of her evidence at the hearing about whether her luxury goods vending was ‘a business’. For example in her 1^st affidavit on whether she was operating a business through Laamaj and had set up its account for that purpose she stated as follows:
12.In late 2012, I was given permission by Ahmad to start a business which is a requirement under Sharia law.
….
24.The company Lamaaj…..was also incorporated for my business, on the same day that we attended on Mr Vlahos.
38.Mrs Candy, has attested to the fact that the transactions performed by Ahmad on the Laamaj bank account, were unrelated to the small amount of sales I was making through Laamaj…
39.I subsequently attended Mrs Candy’s office in the company of Ahmad and identified sales proceeds from the sale of merchandise deposited by direct credit to Laamaj’s bank account, or deposited by me to the company account. Payments were made from the bank account for the purchase of goods and for operating expenses.

However, when the matter came up during cross-examination the following exchange occurred:
Counsel:Mrs Ahmad, you’ve given some evidence that you had an interest in fashion, that’s right, isn’t it?
Mrs Ahmad:Yes
Counsel:And your evidence is in about 2010 you started to source brand name designer handbags for family and friends, that’s right?
Mrs Ahmad:I think it was 2010 yes. 2011 maybe.
Counsel:And you said it was initially a hobby, that’s right?
Mrs Ahmad:It was always a hobby
Counsel:And it became a business though?
Mrs Ahmad:No. It wasn’t a business; it was just a hobby.
Counsel:You’ve given some evidence that in 2012 you were given permission by Ahmad to start a business?
Mrs Ahmad:It wasn’t a business. Well, it wasn’t my business. But I did sell bags yes.
Counsel:Well, might the witness be shown page 87 of the tribunal book. This is your first affidavit?...do you see that your evidence is that you were given permission by Ahmad to start a business
Mrs Ahmad:Yes
Counsel:Now, I just asked you that question before and you said it wasn’t a business?
Mrs Ahmad:Yes, I was given permission, but I never opened a business.
Counsel:So you now say that you never opened Laamaj Investments at all? And that it didn’t generate any income?‑‑‑
Mrs Ahmad:I had no idea what income it made or anything about Laamaj. I just – Ahmad looked after everything; he did everything. I just signed a piece of paper that I was asked to sign.
Mrs Ahmad attempted to remain steady in her assertions that Mr Ahmad controlled the entirety of her finances and that she had no ability to transact without his express approval however this position became progressively more untenable. She professed to know nothing about what occurred with the Laamaj accounts although she did, in her first affidavit acknowledge that Mr Ahmad would deposit “funds to my personal bank account for living expenses from the Laamaj account”. She gave oral evidence at the hearing that the delineation in the Ahmad household was for her to deal with all things relating to the house, the household, the children and “the handbag stuff” whereas Mr Ahmad controlled the finances and the paperwork. Under cross-examination in relation to the Laamaj bank account Mrs Ahmad acknowledged that:
·She had opened the account and she was the signatory (although she maintained it was at Mr Ahmad’s bidding who was the true controller);
·There were a great number of deposits which she said was sourced from Mr Ahmad but that she didn’t know where he had sourced funds from;
·Whilst she did buy and sell handbags she didn’t know that Laamaj had been set up to operate a business for her.
A lengthy period of cross-examination ensued where Mrs Ahmad acknowledged that she was familiar with the “brands Chanel and Gucci and Burberry and those kinds of brands” and that she was primarily responsible for shopping for the children’s needs. Counsel for the Respondent then took Mrs Ahmad to a large range of transaction that appeared on the Laamaj bank account statements across each of the Relevant Years which appeared to be purchases of luxury handbags and designer children’s clothes. Examples of such exchanges were as follows:
Counsel:If you just go across the page to 974, you’ll see that there’s another transaction there at the Children Salon and that’s again another transaction that you would have undertaken?
Mrs Ahmad:Ahmad could have made those transactions because he also bought clothing for the children.
Counsel:And an earlier purchase just above that on 12 February at Kido Store at Clovelly? Another purchase for the children?
Mrs Ahmad:Yes
Counsel:And that’s a purchase that you would have undertaken for the children?
Mrs Ahmad:I’m not – I don’t remember going to Clovelly but yes could have either been me or Ahmad.
Counsel:You can see that there’s a variety of purchases there at Myer and at Chanel and at Pandora and they’re purchases you could have undertaken as well, aren’t they?
Mrs Ahmad:Anything from Chanel I know for sure was probably an item that I would have sold for Ahmad. But the rest
Counsel:Well, this is a purchase from Chanel so it’s something brand new? Yes? You sell brand new items that are limited seasonal pieces. Well, it’s a purchase you probably undertook?
Mrs Ahmad:Yes, possibly.
It was then put to Mrs Ahmad that she had unrestricted access to the Laamaj account to use freely as she thought appropriate. She responded to say that “When I asked Ahmad for something he would give me the card when I needed it, or if I asked him and he agreed… I wasn’t allowed to just buy whatever I want”.
As Mrs Ahmad’s oral evidence continued the discrepancies between what she had deposed to in her affidavits and what she was stating in oral evidence became increasingly pronounced and her positions on key matters became more and more confused and confusing. At one point she was taken to paragraph 24 of her 2^nd affidavit where in October 2024 she had deposed that:
24.I recently reviewed the deposits made to the Laamaj…bank account for the 2013 and 2014 years with Mrs Candy and Mr Vincent, who pointed out to me that several deposits which Mrs Candy had included as sales income in Laamaj, on Ahmad’s instructions, were clearly related to the business activities of Ahmad, largely involving Moochi…
The following exchange then occurred:
Counsel:I asked you some questions before about the business that Laamaj operated. And I asked you whether it bought and sold handbags?
Mrs Ahmad:Yes.
Counsel:And is it still your position that you weren’t running a business using Laamaj Investments?
Mrs Ahmad:Yes, I wasn’t
Counsel:So you weren’t generating any sales income using Laamaj Investments, is that your position?
Mrs Ahmad:Yes. I wasn’t using Laamaj.
Counsel:So if that’s the case you wouldn’t be in a position to identify what sales income was income generated by Laamaj and what wasn’t, would you?
……
Mrs Ahmad:Well, I wasn’t the one that noticed the deposits or whatever it was.
Counsel:Well, that’s right, isn’t it. So you aren’t really in a position to say these deposits are, or not, are you?
Mrs Ahmad:No
Counsel:So what you’ve really put here is just speculation isn’t it?
Mrs Ahmad:Yes, I’d need to ask Mrs Candy or John.
Counsel:And that’s the point because even if you were buying and selling handbags, you didn’t keep any records of those transactions, did you?
Mrs Ahmad:I can remember most of them or some of them but
Counsel:But you didn’t keep records, did you?
Mrs Ahmad:No
Counsel:So you didn’t have any invoices?
Mrs Ahmad:No.
Counsel:And no receipts?
Mrs Ahmad:There were receipts from the store.
Counsel:When you actually purchased handbags brand new?
Mrs Ahmad:Well, Ahmad would give me the bag or whatever item – the belt, the shoes – and the receipt with it.
By the conclusion of her oral evidence I had formed the view that Mrs Ahmad was not a witness whose evidence I could rely upon. Her evidence changed from affidavit to affidavit and then again during her oral evidence and cross-examination.
Mrs Ahmad confessed to having a poor memory which could conceivably be attributable to both her medical condition and, as she alluded to, traumatic life experiences that she had endured and which I accept as having likely and reasonably impacted upon her (although I note there was no documentary evidence of that medical condition and her likely symptoms before the Tribunal other than what she told the Tribunal). In any event, this poor memory was on display both during her own oral evidence in chief where she appeared to often need prompting by way of leading questions as well as when Counsel for the Respondent cross-examined her over matters of significance. Many of the matters that she deposed to in her affidavit, for example statements she made relating to the purchases of properties and who effectively owned them at given times, she confessed that she simply was not able to remember.
As is evident from the extracts of her cross-examination above her evidence was often confused, full of sweeping generalisations about the conduct of her affairs over the Relevant Years, contained significant inconsistences and for a large part was reliant on an obviously fallible memory. For these reasons I formed a view that the evidence of Mrs Ahmad was generally unreliable.
As to whether she engaged in a business of selling handbags her explanations about such matters remained unclear to me albeit there seemed to be a general repudiation of having engaged in any sort of a small business undertaking. This was a hard proposition to believe in circumstances where her 1^st affidavit had categorically stated that she had, in fact, operated a small business and was crystal clear about Laamaj being set up for exactly that purpose and where the Laamaj bank statements appeared to identify a range of transactions consistent with such activity being undertaken.
Critically, no satisfactory reasons were provided by Mrs Ahmad to explain why her position about a range of matters had moved so diametrically between the swearing of her affidavits and the hearing itself and there was no sensible reconciliation between such contradictory assertions.
Witnesses not made available for cross-examination
I have already outlined at paragraphs ‎66 to ‎71 the approach that I intend to take in relation to 2 witnesses who not did not appear at the hearing and who were not available to be cross-examined.
Mr Mohammed Ahmad
As mentioned above Mr Mohammad Ahmad (Mohammad) is the now 25 year-old eldest son of Mrs and Mrs Ahmad. At the commencement of the Relevant Years he was approximately 13 years of age and in an affidavit of 25 July 2023 he recalls what his parents did during that period at a fairly superficial level. This included that his father “went to work each day and provided for his family” and that his “mother would drive us to school and collect us after school”.
He recalls that his mother operated her business from home and that it made her “happy to be able to work again” and that “occasionally when we got home from school, or during the school holidays we would see ladies collecting items that my mother had sold to them”. He also concludes that his mother didn’t earn the income that the Respondent suggests she did but offers no explanation as to how he formed such a view.
At the hearing when the question of Mohammad’s unavailability was addressed the Applicant acknowledged that his evidence did not greatly advance the matters that the Tribunal would be required to decide upon. The Respondent, for its part, advised the Tribunal that Mohammad wasn’t going to be cross-examined anyway. This, they said, was because his evidence contained within the affidavit was “not probative of the facts” and “was not evidence he can give” (ie in terms of whether his mother should be assessed and for what amounts).
Having regard to positions expressed by the parties - no weight is to be given to Mohammad’s affidavit.
Mr Ahmad Ahmad
Turning to Mr Ahmad Ahmad. In an affidavit of 31 May 2023 Mr Ahmad deposed to his working history during the Relevant Years, Mrs Ahmad’s and his involvement with Mr Vlahos and the creation of Laamaj of which he claims to be a “de-facto director” of, his use of the Laamaj accounts for his own purposes, his engagement of Mrs Candy to attend to Mrs Ahmad’s and Laamaj’s tax affairs and the increasing police pressure around his alleged involvement in the drug trade. He deposed that he “personally attended at Mrs Candy’s premises to identify for her, those transactions that were not related to the Laamaj business”.
As already noted at paragraphs ‎66 and ‎67 above, Mr Ahmad did not attend the hearing to give evidence.
As regards to what weight Mr Ahmad’s affidavit should be afforded the Respondent submitted that any deficiencies in the explanation as to why Mr Ahmad was not being made available to give evidence should ensure that the affidavit and the Applicant don’t benefit from exceptions to the hearsay rule which might otherwise apply where the maker of an affidavit is unavailable (although its acknowledged that the proceedings is before a tribunal where formal evidentiary rules don’t apply).
The Respondent then submitted that little or no weight should be given to Mr Ahmad’s affidavit in circumstances where:
·he was not available to be cross-examined;
·he has an underlying interest in the proceedings; and
·where even if weight were given to his statement it would be concluded that they amount to “nothing more than assertions” which are “unsupported by any objective, contemporaneous and corroborating records and/or documents”.
The Applicant argued that despite Mr Ahmad’s non-attendance his affidavit evidence should be given significant weight because Mr Ahmad’s affidavit was not “entirely self-serving” noting that he was not married to Mrs Ahmad at the time of its making. It was argued that Mr Ahmad’s evidence was corroborative of Mrs Ahmad’s and Mrs Candy’s testimony and his non-attendance had been adequately explained.
It is uncontroversial to say that Mr Ahmad’s evidence fills an important part of the ‘evidentiary puzzle’ in this case. In respect of the Laamaj bank account much of what we are asked to accept about the source of deposits is to be ascertained through either Mrs Ahmad’s recollections about transactions relating to the buying and selling of luxury items or Mrs Candy’s recreation of the activities of Laamaj which, in itself, was heavily reliant upon instructions provided to her by Mr Ahmad. Mr Ahmad’s affidavit deposes to the provision of those instructions and their validity.
As we heard from Mr Vincent from the bar table, Mr Ahmad’s solicitor Mr Hisham Karnib, had called him to advise that he would not allow Mr Ahmad to give evidence as he was concerned that under cross-examination he might further incriminate himself. Neither Mr Ahmad or Mr Karnib had put on any affidavit explaining why Mr Ahmad was not being made available or providing the Tribunal with any further details about which issues might raise the relevant concerns. The only source of information before the Tribunal was Mr Vincent’s recount of the telephone conversation with Mr Karnib.
Whilst I don’t doubt Mr Vincent’s recollection of the phone call he received from Mr Karnib I am not satisfied that it provides a satisfactory basis for Mr Ahmad’s non-attendance such that I would then go on to afford his affidavit any significant weight. I note that the Tribunal was not asked to adjourn the hearing so that evidence about such matters could be lodged nor was it asked to issue any summons requiring any individual to attend to give evidence under compulsion.
Mr Ahmad’s concerns of self-incrimination under cross-examination were before the Tribunal on a hearsay basis only and, from Mr Vincent’s communication of those expressed concerns, were only put in a very generalised manner. I can’t imagine that every issue that may have been raised in Mr Ahmad’s cross-examination by the Respondent’s counsel would have elicited necessarily self-incriminating responses. It is also unclear to me why any concerns about self-incrimination could not have been overcome by Mr Ahmad attending and simply refraining from answering questions where the answers may have wandered into that territory.
Turning to the nature of Mr Ahmad’s affidavit evidence, he has deposed to attending Mrs Candy’s office and providing oral instructions to help her “identify many of the deposits and withdrawals which were well in excess of the sales that Latifah had indicated to her, were to do with the designer handbags she was selling”. There is no suggestion that anything beyond bank statements (and a few other peripheral documents) was provided to Mrs Candy to corroborate these instructions and to that extent they amount to mere assertions. It is likely that had Mr Ahmad made himself available he would have been exposed to similar challenges to his reliability that Mrs Ahmad faced. Whether he may have been able to satisfy the Tribunal that his assertions were reliable is somewhat conjectural and beside the point.
As to whether Mr Ahmad has an interest in the proceedings that would require one to apply the cautionary approach articulated by Justice Hill in Imperial Bottleshops. These proceedings involve challenges to assessments for significant amounts of tax raised against his ex-wife and the mother of Mr Ahmad’s four children – in that context and at least vicariously through the interests of his children I am satisfied that he is not a disinterested or impartial witness.
Lastly, this is not a situation where a deponent of an affidavit sought to be relied upon has died between the making of an affidavit and a hearing or otherwise become unavailable due to intervening events that were beyond their control. At the time that Mr Ahmad swore his affidavit and made it available for Mrs Ahmad’s case, presumably, the same concerns about self-incrimination would have been ‘live’ at that stage. It is not clear to me why the concerns cited now would not have been present at the time the affidavit was sworn and then again at the point Mr Ahmad provided his sworn affidavit to Mrs Ahmad for lodgement with the Tribunal. I also can’t help but notice that the solicitor who communicated to Mr Vincent his concerns about Mr Ahmad’s affidavit and his vulnerability under cross-examination (on the day before the hearing) was the same solicitor who witnessed its making back in May 2023.
In these circumstances and, where the Respondent is deprived of an opportunity to test the assertions made by Mr Ahmad, I am disinclined to place any weight upon Mr Ahmad’s affidavit.
Closing Submissions and conclusions
At the conclusion of the hearing and as requested by the parties I made a timetable for the filing of written closing submissions.
The Applicant broadly submitted that she had discharged her onus of proof by virtue of the evidence provided by Mrs Candy as to Mrs Ahmad’s taxable income in each year of the Relevant Years which identified “the nature of the income; the source from which the income components were derived; the nature of the deduction and the entity to which the deduction was incurred”. She had then provided sufficiently reliable calculations in the form of the four spreadsheets that the Tribunal marked for identification which set out the Applicant’s “exempt income, and other amounts that are from non-income sources of the Applicant, together with a summary spreadsheet (#MFI 4) identifying the difference between the Applicant’s taxable incomes and the Respondent’s amended assessments”.
In the Applicant’s submission Mrs Candy had given “her evidence freely and candidly and there is no reason why she should not be believed” and the “erroneous notion contained in Mrs Candy’s affidavit that Ms Ahmad was conducting a small business from home, is attributed to what she was told by Mr Ahmad at the first meeting, and subsequently, by what Mrs Ahmad was told to tell her by Mr Ahmad”.
The Applicant further submitted that any argument that suggests deposits in the Laamaj account are said to be income attributable to Mrs Ahmad fails to understand that Laamaj is its own separate legal entity and does not account for Mrs Ahmad’s evidence that she was not operating a business through it.
The Respondent for his part argued that “put simply, between 2013 and 2016, the Applicant had considerable deposits into her bank accounts which are unexplained” and that the “Tribunal can only be satisfied that the Applicant’s contended taxable income is correct if it is satisfied of the following propositions”:
a. the amounts identified as income by the Applicant are assessable to her as income;
b. the amounts identified as not income by the Applicant are not assessable to her as income; and
c. the Applicant received no income which is not reflected in her bank accounts.

The Respondent argues that the Tribunal can’t be satisfied as to any of these matters or the amount of Mrs Ahmad’s taxable income in each of the Relevant Years because:
·the evidence of the Mrs Candy was mostly reliant on the evidence of Mrs Ahmad and Mr Ahmad, otherwise speculative and not based on “first-hand knowledge”;
·the evidence of Mrs Ahmad was ‘fluid’ in regards to a range of key matters including whether she conducted a business through Laamaj and limited to assertions mostly unsupported by underlying documents;
·the evidence of Mr Ahmad was unacceptable given it was limited to assertions upon which he was not available to be cross-examined; and
·There is an absence of objective and contemporaneous documentary evidence which might have otherwise corroborated the basis of the evidence that each witness sought to lead about the economic affairs of Mrs Ahmad over the Relevant Years.
As mentioned earlier, the task before the Applicant in these proceedings was to show that the amounts assessed to her in each of the Relevant Years exceeds her actual substantive liability and in doing that, establish “both sides of the equation” of her taxable income. Mrs Ahmad’s attempts to do so rely on the evidence of Mrs Candy who provides what she believes to be a sound basis to satisfy the Tribunal as to what her taxable income was year on year.
However, as we have seen, Mrs Candy’s approach given the wholesale absence of contemporaneous transactional records was to piece together, from instructions provided to her by Mr and Mrs Ahmad or from speculative conclusions that she formed when considering the limited number of documents that she did have, a picture of what Mrs Ahmad’s taxable income might have been in each of those years.
Unfortunately, as the Respondent has submitted and as is apparent from my findings and observations about the reliability of and the weight that ought be afforded to the evidence of Mrs Ahmad and Mr Ahmad respectively, such an approach is unsustainable. Without being able to rely on the assertions of Mr and Mrs Ahmad to characterise the nature of deposits and withdrawals from the Laamaj account Mrs Candy in her calculations has no other satisfactory basis to establish that amounts were not attributable to Mrs Ahmad.
Having considered both the oral and documentary evidence before the Tribunal I am reasonably satisfied that:
·Mrs Ahmad had engaged over each of the Relevant Years in the buying and selling of luxury items including handbags of which she kept little or no record of;
·Many of these transactions were conducted using the Laamaj account but may have extended beyond that to cash transactions; and
·Mrs Ahmad had, at least, a degree of access to the Laamaj account such that she was able to use funds held within it (be that either with or without Mr Ahmad being present at any given time) to undertake transactions involving the buying and selling of luxury items as well as other private purchases for the benefit of herself and her children.
Where the Applicant submits that deposits in the Laamaj account are to be treated as income of that entity separately to any income attributable to Mrs Ahmad personally I accept that it is indeed a different entity to Mrs Ahmad herself. However, it is a company, on any realistic view of the evidence before the Tribunal, that was owned by Mrs Ahmad who also access to its bank account into which unexplained deposits were made and funds were thereafter used to buy items of a personal and domestic nature and to support her family’s lifestyle.
I am not persuaded that the Applicant has discharged the burden to show that the Amended Assessments are excessive or what each of those Amended Assessments ought to have been.
Issue 2 – Administrative Penalties
On 28 September 2017, the Respondent raised the Penalty Assessments under s 284-75 of Schedule 1 of the TAA 1953 covering the Relevant Years after he concluded in his reasons for decision dated 19 September 2017 that:
· In lodging returns that understated her income the Applicant had made a statement to the Commissioner that was false or misleading in a material particular;[28] and
· The Applicant had a shortfall amount which resulted from that false or misleading statement.[29]
[28] See s 284-75(1) of Schedule 1 of the TAA 1953.
[29] See s 284-80 of Schedule 1 the TAA 1953.
That Penalty Assessment was calculated at the base level of 75% of the tax shortfall because, in the Respondent’s view, the Applicant knew that she was understating her income in her tax returns and in lodging those knowingly incorrect returns she was intentionally disregarding a taxation law.[30] A 20% uplift was imposed upon these amounts for the years ending 30 June 2014 to 2016.[31]
[30] Section 284-90(1) of Schedule 1 of the TAA 1953.
[31] Section 284-220 of Schedule 1 of the TAA 1953.
Section 284-90(1) of Schedule 1 of the TAA 1953, provides for base penalty amounts to be calculated at a level referential to the conduct of a taxpayer in making the false or misleading statement. That provision provides that the base penalty is to be calculated at the highest level (i.e. 75% of the relevant shortfall) in circumstances where the shortfall “resulted from intentional disregard of a * taxation law … by you or your agent”.
In late 2021, as part of her objection to the Amended Assessments, the Applicant pressed an objection to the Penalty Assessments. On 3 November 2022, the Respondent, as explained at paragraph ‎6 above, partially allowed that objection such that the Penalty Assessments were reduced to account for:
·modest reductions the asset betterment calculation and to the consequent shortfall amount;
·the Respondents’ reappraisal of the Applicant’s conduct that led to the taxation shortfall; and
·a remission of the 20% uplift which had been applied for the years ending 30 June 2014 to 2016 in accordance with PSLA 2012/5 Administration of the false or misleading statement penalty - where there is a shortfall amount on the basis that Mrs Ahmad was notified about the Penalties concurrently.
In her objection the Applicant had argued that there should be no shortfall and that she had not engaged in “systematic non-compliance” with her tax obligations by deliberately omitting assessable income from her returns citing, amongst other factors, a lack of awareness of her (then) husband’s affairs.
The Respondent in reappraising her behaviour as reckless rather than intentional disregard accepted that “there were many aspects of the business arrangements in which [she] was involved that [she] did not fully understand” and that it appeared that there was “no evidence that [she] understood the effects of income tax legislation on [her] income tax affairs and made a deliberate choice to ignore the law”. However, the Respondent explained that there were clear deficiencies in her reporting and that her and her tax agent’s reliance on Mr Ahmad’s recollections was reckless and went beyond simply failing to take reasonable care. The Penalty Assessments were then re-calculated at 50% of the tax shortfall rather than 75% in accordance with Item 2 of s 284-90(1) of Schedule 1 of the TAA 1953.
The Applicant now seeks to challenge the Penalty Assessments and to do so successfully, as with the review of the Amended Assessments, she must prove on the balance of probabilities that the Penalty Assessments are excessive or otherwise incorrect and what those assessments should have been.[32] In material or practical terms, in order to convince this Tribunal to reduce or set aside the Penalty Assessments, the Applicant must show that her actions in underreporting her income amounted to something less than recklessness in relation to a taxation law.
[32] Section 14ZZK(b)(i) of the TAA 1953.
The Applicant hadn’t made express contentions about why the Penalty Assessments should be amended in its SFIC but confirmed in her Amended SFIC lodged 7 December 2023 that she pressed contentions “as stated in grounds of objection and the issue of administrative penalty is dependent on the degree of success in Item 1 of the [Respondent’s] SFIC”[33]. This reliance on the principal findings as grounding an argument for reductions of the Penalty Assessments seems confirmed by the absence of written submissions dealing directly with penalty on behalf of the Applicant.
[33] I will infer that “Item 1” is a reference to its challenge to the underlying Amended Assessments which is identified as “Issue 1” in the Respondent’s SFIC.
In her objection the Applicant had argued that the Penalty Assessments should be set aside because the Respondent had incorrectly concluded that she had made a false and misleading statement which was reliant on its unfounded conclusions that amounts flowing to accounts she controlled should be characterised as her income and that assets she had accumulated were inexplicably obtained when compared with her reported income. She then further argued that if there was a shortfall, which she denies, then that shortfall was inadvertent rather than arising through reckless conduct. These matters, she argues, can be explained by firstly, the Applicant’s limited control over her own affairs and secondly, her naivety around whether what she was undertaking was a hobby or something more commercial (until advised otherwise by Mrs Candy).
Other arguments contained in the objection focused on an alleged improper motivation or purpose on the Commissioner of Taxation’s part in raising the assessments. These are seemingly not pressed in the Tribunal which is fortunate given it is well settled that such arguments are futile in the context of applications brought under Pt IVC of the Taxation Administration Act 1953[34]
[34] see Commissioner of Taxation v Futuris Corporation Ltd (2008) 237 CLR 146
The Respondent, for his part, has argued that the Penalty Assessment should remain as imposed because “If the Commissioner is wholly or partly successfully in respect of the finding that the Applicant has not discharged the burden placed on her to explain the deposits in her accounts then it follows that the Tribunal should conclude that the Applicant was reckless when stating her income”.
Whereas behaviour that would amount to ‘intentional disregard’ requires subjective intention on the part of a particular taxpayer the behaviour that would satisfy the concept of ‘recklessness’ for the purpose of s284-90(1) of Schedule 1 of the TAA 1953 is adjudged objectively. As the Commissioner has explained in its public ruling MT 2008/1[35] recklessness is characterised by “conduct that falls short of the standard of a reasonable person in the position of the entity”. It is distinguished from the lower penalty imposed upon those acting without taking reasonable care by the degree to which the conduct falls short of such expected standards.
[35] MT 2008/1 Miscellaneous Taxation Ruling - Penalty relating to statements: meaning of reasonable care, recklessness and intentional disregard at [99] – [108]
As Cooper J explained in BRK (Bris) Pty Ltd v Federal Commissioner of Taxation [2001] FCA 164 at [77]:
… Recklessness in this context means to include in a tax statement material upon which the Act or regulations are to operate, knowing that there is a real, as opposed to a fanciful, risk that the material may be incorrect, or be grossly indifferent as to whether or not the material is true and correct, and a reasonable person in the position of the statement-maker would see there was a real risk that the Act and regulations may not operate correctly to lead to the assessment of the proper tax payable because of the content of the tax statement. So understood, the proscribed conduct is more than mere negligence and must amount to gross carelessness.
As I have described at paragraphs ‎140 and ‎141 above, from an overall consideration of the evidence that has been put before the Tribunal I have held that it is more likely than not that the Applicant was engaging in the buying and reselling of luxury goods and handbags. Many of these transactions were conducted through the accounts of Laamaj which seemingly (on the balance of Mrs Ahmad’s affidavit evidence and in spite of her oral alienation of that position) was created expressly to facilitate Mrs Ahmad’s commercially flavoured activity.
Whilst I accept that Mr Ahmad then also transacted on that account to a significant degree it does not change the fact that Mrs Ahmad engaged in that activity using a corporate entity whilst creating or retaining virtually no records of her transactions other than the odd receipt. A reasonable person in equivalent circumstances must be expected to have known that the operation of a company carrying on such trade would require the creation and retention of at least basic transactional records to establish how much income may have been derived by it. This expectation must exist even putting to one side the more formal record keeping obligations which address such matters under various tax legislation[36].
[36] See for example s262A of the Income Tax Assessment Act 1936
Further, to the extent that the Applicant used the funds in the Laamaj account to pay for a range of obviously private expenses (including airline tickets and hotels which she acknowledges were used as part of family holidays) a reasonable person in those circumstances must be expected to anticipate that amounts drawn down in that fashion would likely be assessable income in her hands.
To put this another way, this failure to keep the most basic level of records or appreciate that money drawn from those accounts and used for personal purposes might be taxable shows a gross indifference to the “operation of a taxation law” in manner that I would describe as reckless. It follows that the Applicant has not discharged her burden to show that the Penalty Assessments were excessive
Should the Penalty Assessments be the subject of remission
The final question is whether the Tribunal, standing in the shoes of the Commissioner, should remit all or part of the Penalty Assessments under s 298-20 of Schedule 1 of the TAA 1953.
The discretion provided under that provision is “unconstrained, according to its terms. It must, however, be exercised for a proper purpose; in accordance with the objects of the Administration Act; and according to law”.[37]The question to be considered is “simply whether the decision-maker is satisfied having regard to the taxpayer’s particular circumstances that it is appropriate to remit the penalty in whole or in part”.[38]
[37] See Sanctuary Lakes Pty Ltd v Commissioner of Taxation [2013] FCAFC 50 at [193].
[38] Ibid at [249].
The Applicant has made no direct submissions asking the Tribunal to exercise its power of remission.
The Respondent for its part explained in its written closing submissions that the uplift which had initially been applied under s284-220(1) of Schedule 1 of the TAA 1953 had already been remitted at objection. It saw no further basis upon which there should be remission beyond that. I accept that submission. Whilst I have some sympathy for Mrs Ahmad, given the trials and tribulations she has endured over the years, and whilst I can appreciate the efforts of Mrs Candy to attempt to reconstruct her affairs after the fact, I see no basis upon which further remission of the Penalty Assessments is warranted as a matter of law.
As the Commissioner correctly identifies in its published guidelines (provided to his officers who administer the penalty regime and the remission power),[39] “[t]he penalty provision aims to achieve a level playing field, ensuring fairness and equity for all entities and for there to be consequences for failing to take reasonable care, or not making a reasonable effort to comply correctly with their reporting obligations”.
[39] PSLA 2012/5 Administration of the false or misleading statement penalty - where there is a shortfall amount
One final matter, on 14 April 2025, a date well after the directed timetable for the parties to lodge their written submissions had passed, the Applicant’s accountant wrote to the Tribunal referring to previous provisions of Mr Ahmad’s amended income tax returns and advising that:
Mr Ahmad’s solicitor, Mr Hisham Karnib, has now provided me with copies of the notices of amended assessment for Mr Ahmad for the years ended 30 June 2013 to 2015 which issued on the 17 December 2024 that confirm Mr Ahmad was assessed in respect of his business income for those years, in the amounts disclosed in the income tax returns provided to the Tribunal.
Noting that evidence and submissions were well and truly closed by the date of this correspondence and that the matter by then stood reserved I have not taken this correspondence into account. That being said, it is not apparent to me how such developments impact upon the matters that I have had to consider and decide as part of this review.
CONCLUSION & DECISION
The Applicant has not discharged her burden to show that the Amended Assessments and Penalty Assessments were excessive and what they ought to have been. Nor am I satisfied that the Penalty Assessments should be the subject of any remission.
Pursuant to s 105 of the Administrative Review Tribunal Act 2024, the reviewable objection decision is affirmed.

Date(s) of hearing:
27 November 2024
4 December 2024

Date final submissions received: 13 March 2025

Representative for the Applicant: Mr John Vincent (Accountant)

Counsel for the Respondent: Ms Shelley Scott

Solicitors for the Respondent: Ms Winnie Tai, AGS

Date(s) of hearing:	27 November 2024 4 December 2024
Date final submissions received:	13 March 2025
Representative for the Applicant:	Mr John Vincent (Accountant)
Counsel for the Respondent:	Ms Shelley Scott
Solicitors for the Respondent:	Ms Winnie Tai, AGS