Ariss and Commissioner of Taxation (Taxation)

The Administrative Appeals Tribunal considered the case of Ariss and the Commissioner of Taxation. The dispute concerned amended income tax assessments issued to the Applicant for the 2010, 2012, and 2013 income years, which disallowed certain deductions and re-characterised trust distributions. The Applicant sought a review of the Commissioner's decision to disallow objections to these amended assessments.

The Tribunal was required to determine several legal issues, including whether trust distributions received by the Applicant were ordinary income or personal services income, and whether Part IVA of the *Income Tax Assessment Act 1936* applied to the arrangements. Further issues included the Applicant's entitlement to various income tax deductions, such as clerical deductions for income attributed to his spouse, deductions for payments made to a related person or associate, personal superannuation contributions, and travel expenses where reimbursement had already been made. The Tribunal also had to consider whether the Commissioner was out of time to amend the assessments, given the limited amendment period.

The Tribunal's reasoning focused on the characterisation of the Applicant's income and the nature of his business arrangements. The Applicant, a highly skilled IT specialist, engaged ARMS to manage his invoicing and distributions. The Tribunal found that the Applicant and his wife were honest and credible witnesses. The core of the dispute involved trust distributions from ARMS, which were attributed in a 70% to 30% ratio between the Applicant and his wife. The Commissioner issued amended assessments, treating the entire distributions as salary and wage income of the Applicant and disallowing certain deductions, including superannuation contributions. The Tribunal noted that the Applicant's wife did not receive any direct payments from these distributions, with funds being deposited into the Applicant's business bank account. The Tribunal also considered the timeliness of the Commissioner's amendments and the Applicant's objections.