Bayconnection Property Developments Pty Ltd v Commissioner of Taxation
[2013] FCA 440
FEDERAL COURT OF AUSTRALIA
Bayconnection Property Developments Pty Ltd v Commissioner of Taxation [2013] FCA 440
Citation: Bayconnection Property Developments Pty Ltd v Commissioner of Taxation [2013] FCA 440 Appeal from: Bayconnection Property Developments Pty Ltd and Commissioner of Taxation [2013] AATA 40 Parties: BAYCONNECTION PROPERTY DEVELOPMENTS PTY LTD (ACN 103 848 862), CATARINA GARDENS PTY LTD, VOCA PTY LTD, MIRA INVESTMENTS PTY LTD and CAPORALE BUILDERS CORPORATION SYDNEY PTY LTD v COMMISSIONER OF TAXATION File number: NSD 266 of 2013 Judge: NICHOLAS J Date of judgment: 14 May 2013 Legislation: A New Tax System (Goods and Services Tax) Act 1999 (Cth)
Taxation Administration Act 1953 (Cth)Cases cited: Bayconnection Property Developments Pty Ltd and Commissioner of Taxation [2013] AATA 40
HP Mercantile Pty Ltd v Commissioner of Taxation (2005) 143 FCR 553Date of hearing: 13 May 2013 Place: Sydney Division: GENERAL DIVISION Category: No catchwords Number of paragraphs: 48 Counsel for the Fifth Applicant: Ms R Caporale appeared on behalf of the fifth applicant Counsel for the Respondent: Mr A O’Brien Solicitor for the Respondent: ATO, Legal Services Branch
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 266 of 2013
ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL
BETWEEN: BAYCONNECTION PROPERTY DEVELOPMENTS PTY LTD (ACN 103 848 862)
First ApplicantCATARINA GARDENS PTY LTD
Second ApplicantVOCA PTY LTD
Third ApplicantMIRA INVESTMENTS PTY LTD
Fourth ApplicantCAPORALE BUILDERS CORPORATION SYDNEY PTY LTD
Fifth ApplicantAND: COMMISSIONER OF TAXATION
Respondent
JUDGE:
NICHOLAS J
DATE OF ORDER:
14 MAY 2013
WHERE MADE:
SYDNEY
THE COURT ORDERS THAT:
1.The notice of appeal, in so far as it relates to the fifth applicant, be dismissed with costs.
Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
NSD 266 of 2013
ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL
BETWEEN: BAYCONNECTION PROPERTY DEVELOPMENTS PTY LTD (ACN 103 848 862)
First ApplicantCATARINA GARDENS PTY LTD
Second ApplicantVOCA PTY LTD
Third ApplicantMIRA INVESTMENTS PTY LTD
Fourth ApplicantCAPORALE BUILDERS CORPORATION SYDNEY PTY LTD
Fifth ApplicantAND: COMMISSIONER OF TAXATION
Respondent
JUDGE:
NICHOLAS J
DATE:
14 MAY 2013
PLACE:
SYDNEY
REASONS FOR JUDGMENT
(Revised from transcript)
INTRODUCTION
This is an appeal from a decision of the Administrative Appeals Tribunal (the Tribunal) dated 29 January 2013. Although called an appeal, it is not an appeal in the strict sense, but is a proceeding in the original jurisdiction limited to a question of law: HP Mercantile Pty Ltd v Commissioner of Taxation (2005) 143 FCR 553 at [3] per Hill J.
Before the Tribunal, five different companies, Bayconnection Property Development Pty Ltd (Bayconnection), Catarina Gardens Pty Ltd (Catarina), Voca Pty Ltd (Voca), Mira Investments Pty Ltd (Mira) and Caporale Builders Corporation Sydney Pty Ltd (Caporale Builders) challenged assessments issued by the respondent (the Commissioner) against which those companies had unsuccessfully objected. In each matter the Commissioner’s objection decision was affirmed by the Tribunal.
Ms Rosa Caporale previously appeared on behalf of all applicants before the Tribunal. When this matter was before the Court on 3 April 2013 for directions I gave Ms Caporale leave to appear on behalf of Caporale Builders. I also gave her leave to appear on behalf of Caporale Builders at the hearing of the appeal.
The first, second, third and fourth applicants in this appeal – Bayconnection, Catarina, Voca and Mira – were the subject of winding-up orders on 11 March 2013. The liquidator who was appointed to each of these companies reached an agreement with the Commissioner which provided for their appeals to be discontinued on the basis that there be no order as to costs. I made orders giving effect to that agreement on 3 April 2013. On the same date I fixed the remaining appeal by Caporale Builders for hearing. Various other orders were made with a view to ensuring that the matter was ready for hearing. These included orders requiring Caporale Builders to file and serve any evidence upon which it intended to rely and to file a written outline of submissions. Caporale Builders did not comply with those orders.
At the commencement of the hearing Ms Caporale applied for an adjournment. This was refused by me for reasons previously given.
The only material that was before me for the purposes of the appeal was the Tribunal’s reasons for decision, the notice of appeal, a written submission filed by the Commissioner in accordance with previous orders, and a number of documents to which I will later refer that were tendered by Ms Caporale.
FACTUAL BACKGROUND
The factual background to this matter is explained by the Tribunal in its reasons for decision (Bayconnection Property Developments Pty Ltd and Commissioner of Taxation [2013] AATA 40). The following account of the factual background is drawn from the Tribunal’s reasons for decision.
Each of the five companies that were applicants in the proceeding before the Tribunal was first registered for GST purposes in the years 2003 to 2006. Each of them lodged business activity statements (BASs) in which they claimed input tax credits (ITCs). The applications to the Tribunal related to ITC claims made by them between February 2005 and January 2009.
The Commissioner subsequently took the view that none of the five companies, including Caporale Builders, was entitled to any of the ITCs it claimed. The Commissioner made assessments in order to recover the refunds that were paid. In the case of Caporale Builders, the Commissioner issued a notice of assessment dated 15 December 2008 in respect of the monthly tax periods February 2005 to November 2006 for a tax shortfall in the amount of $37,018. He also issued Caporale Builders with a notice of assessment of penalty dated 15 December 2008 on the basis of an administrative penalty of 75% of the shortfall, increased by 20%. The Commissioner imposed the 75% penalty on the ground that the relevant shortfall resulted from an intentional disregard of a taxation law. He imposed the additional 20% on other grounds including, it would seem, action taken by the taxpayer to prevent or obstruct the Commissioner from finding out about the shortfall amount and the taxpayer’s knowledge of the shortfall amount.
RELEVANT STATUTORY PROVISIONS
A New Tax System (Goods and Services Tax) Act 1999
A taxpayer is only entitled to input tax credits if it satisfies the requirements of Div 11 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST Act). Division 11 of the GST Act provides that a taxpayer is entitled to input tax credits for creditable acquisitions.
Section 11-5 states:
You make a creditable acquisition if:
(a) you acquire anything solely or partly for a creditable purpose; and
(b) the supply of the thing to you is a taxable supply; and
(c) you provide, or are liable to provide, consideration for the supply; and
(d) you are registered, or required to be registered.
Section 11-15(1) states:
You acquire a thing for a creditable purpose to the extent that you acquire it in carrying on your enterprise.
Section 11-25 states:
The amount of the input tax credit for a creditable acquisition is an amount equal to the GST payable on the supply of the thing acquired. However, the amount of the input tax credit is reduced if the acquisition is only partly creditable.
An enterprise is relevantly defined in s 9-20 as “an activity, or series of activities, done … in the form of a business”. Further, the expression “carrying on” is defined in the Dictionary (s 195-1) as follows:
carrying on an enterprise includes doing anything in the course of the commencement or termination of the enterprise.
As a result of these provisions, a taxpayer which is not carrying on an enterprise as defined is not entitled to input tax credits.
Taxation Administration Act 1953
Division 284 of Schedule 1 of the Taxation Administration Act 1953 (Cth) (Taxation Administration Act) sets out the administrative penalty regime. At the relevant time, s 284-75(1) of the Taxation Administration Act provided that:
You are liable to an administrative penalty if:
(a)you or your agent makes a statement to the Commissioner or to an entity that is exercising powers or performing functions under a taxation law; and
(b)the statement is false or misleading in a material particular, whether because of things in it or omitted from it; and
(c) you have a shortfall amount as a result of the statement.
Section 284-90 sets out a table for determining the base amount penalty as a percentage of the shortfall amount, which is contingent on behaviour of the taxpayer at the time the shortfall occurred.
Section 284-220 states:
Increase in base penalty amount
(1) The base penalty amount is increased by 20% if:
(a)you took steps to prevent or obstruct the Commissioner from finding out about a shortfall amount, or the false or misleading nature of a statement, in relation to which the base penalty amount was calculated; or
(b) you:
(i)became aware of such a shortfall amount after a statement had been made to the Commissioner about the relevant *tax-related liability; or
(ii)became aware of the false or misleading nature of a statement made to the Commissioner or another entity after the statement had been made;
and you did not tell the Commissioner or other entity about it within a reasonable time; or
(c)the base penalty amount was worked out using item 1, 2 or 3 of the table in subsection 284-90(1) and a base penalty amount for you was worked out under one of those items previously; or
(ca) the base penalty amount was worked out using item 3A, 3B or 3C of the table in subsection 284-90(1) and a base penalty amount for you was worked out under one of those items previously; or
(d)the base penalty amount was worked out using item 4, 5 or 6 of that table and a base penalty amount for you was worked out under that item previously; or
(e)your liability to a penalty arises under subsection 284-75(3) and you were previously liable to a penalty under that subsection.
(2) The base penalty amount for your scheme shortfall amount, or for part of it, for an accounting period is increased by 20% if:
(a)you took steps to prevent or obstruct the Commissioner from finding out about the scheme shortfall amount or the part; or
(b)a base penalty amount for you was worked out under section 284-160 for a previous accounting period.
Section 298-20 grants the Commissioner discretion to remit all or part of an administrative penalty.
Section 14ZZK, which is in Division 4 of Part IVC of the Taxation Administration Act, establishes the burden of proof in an application for review of a reviewable objection decision before the Administrative Appeals Tribunal. Subsection 14ZZK(b)(i) states that the applicant has the burden of proving that the assessment is excessive.
THE TRIBUNAL’S DECISION
To a large extent the Tribunal’s reasons for decision concern the ITCs made by the four companies which have abandoned their appeals. These companies were all involved in a project said to concern the establishment of a training and educational institution to be known as the Illawarra Employment & Teaching Centre (IETC) at Dapto in New South Wales. However, the Tribunal found that none of the four companies was carrying on an enterprise. The Tribunal said:
[68]None of the first four applicants had any involvement with the promotion, marketing or development of either the IETC project, or any part of its establishment. None of the applicants had any interest in the Dapto property the subject of the purchase contracts. None of the applicants had entered into any agreements for the training activities that they had been allocated to conduct or done anything to advance the training programs.
[69]In our view, Ms Caporale has merely formulated a structure as to where the first four applicants will “sit” within the structure if the IETC project materialises. Accordingly, we are of the view, and accordingly find, that the first four applicants had not commenced any activities by the time they became registered for GST, and still had not done so at any time during the relevant period.
[70]It follows, in our view, that these applicants were not carrying on an enterprise at all during the relevant period, even allowing for the extended definition of “carrying on” which includes doing anything in the course of commencement of the enterprise. This is because the first four applicants have done nothing (including with respect to the proposed businesses which they have been allocated in the areas of agriculture, hospitality, landscaping and plasterboard) to suggest that they “intend [to] generate sales in the future”, as was argued by Ms Caporale. [Applicant’s Supplementary Statement of Facts Issues and Contentions dated 27 February 2012 re Bayconnection, paragraph 7]
The Tribunal dealt with Caporale Builders separately. It noted (at [42]) that Caporale Builders accounted for GST on a cash basis. It also noted (at [43]) that Caporale Builders has no employees, and (at [44]) had not lodged tax returns covering the tax periods in question. The Tribunal said:
[64]The evidence of Ms Caporale with respect to Caporale Builders, the fifth applicant, was that it provided administration services but not for the IETC project. In fact, it was unclear for which entities Caporale Builders was doing the administration work, if in fact it was doing this or anything else. In describing the administration services, Ms Caporale stated that her brother, Mr Tommaso Caporale, used his personal credit card to pay for third party expenses such as, for example, “Easy Living Elevators” in the order of $8000. It was noted that some of the third party tax invoices had been addressed to Caporale Designs but, for some unexplained reason, Mr Tommaso Caporale had paid the invoices and Caporale Builders had claimed the ITCs. [Transcript 23 August 2012 P-65]
…
[81]As for Caporale Builders, there is no evidence of the activities, if any, that it conducted. It was not clear to us why payments being made by Mr Tommaso Caporale with his credit card should be treated as relating to administration services that Caporale Builders was providing to other entities (whoever they might be). Accordingly, we find that it, too, was not carrying on an enterprise. Furthermore, the Commissioner was also correct in cancelling its GST registration.
Having determined, in effect, that Caporale Builders was not entitled to any of the ITCs claimed, the Tribunal then turned to the question of penalties. The Tribunal identified (at [98] of its reasons) the following matters relevant to penalty:
(a)Ms Caporale has been the authorised representative of the applicants (and a director and shareholder of some of the applicants). She is an experienced businesswoman in the property industry. She understood the GST obligations of the applicants, having previously undergone other GST reviews and audits in relation to the prior developments and other current taxation investigations.
(b)Ms Caporale retained tax agents to assist her in relation to the preparation of the income tax returns but always prepared and lodged all the BASs, sometimes with the assistance of her brother, Mr Tommaso Caporale. She also prepared all of the “tax invoices” that were issued by Caporale Designs.
(c)She represented to the tax agents that the applicants were not trading while she lodged BASs claiming that the applicants had made significant non-capital purchases of services in order to claim ITCs.
(d)She caused the applicants to claim ITCs which she probably knew, or at least ought to have known, they were not entitled to claim because they were not carrying on an enterprise, they had not purchased any taxable supplies and, in addition, they did not hold tax invoices.
(e)She resisted repeated requests to provide comprehensive information and documents, especially the tax invoices. One of the explanations that she gave was that she did not want to do this in a piecemeal fashion. Another explanation that emerged only during the hearing was that she no longer had the tax invoices as they had been seized by the tax officers when they accessed the home of the Caporales on 1 September 2009. This explanation had not been advanced when the Tribunal made orders in April 2012, at the request of the Commissioner, for the applicants to produce the tax invoices for forensic examination.
The Tribunal’s conclusion with respect to the matter of penalties was as follows:
[99]Having regard to those factors, we are not satisfied that the applicants’ ITC claims did not result from intentional disregard of the GST law. In fact, those factors point towards a positive finding of intentional disregard although, because of s 14ZZK(b)(i) of the TAA (which casts upon the taxpayer the burden of proving an assessment excessive), it is unnecessary for us to make such a finding. The same applies to the 20% uplift arising from s 284-220: we are not satisfied that the uplift is excessive, and so we uphold the penalty at 90% of the shortfall.
[100]Furthermore, in all the circumstances, there is no basis for the Tribunal to exercise its discretion to remit any part of the penalties. There is nothing harsh about the imposition of penalties in this situation, particularly taking into account our concerns that the applicants sought to generate refunds on an unfounded basis.
THE NOTICE OF APPEAL
There are 10 questions of law postulated in the notice of appeal which are said to arise out of the Tribunal’s decision. These are as follows:
1.Whether the Tribunal erred in law in ignoring the extending effect of the words “in the form of” in paragraph 9-20(l)(a) of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (“the GST Act”).
2.Whether the Tribunal erred in law by failing to properly identify and apply the extended meaning of the “carrying on” definition in s 195-1 of the GST Act.
3.Whether the Tribunal erred in law by not recognising that related companies engaged in a composite business each need to be considered in relation to each other, and not in isolation, to determine whether any of them is “carrying on” an “enterprise” for GST purposes.
4.Whether the Tribunal erred in failing to consider that under the GST Act an input tax credit can be attributable to a tax period in which, “before you provide any consideration, an invoice is issued relating to the acquisition”, within the meaning of s 29-10(1).
5.Whether the Tribunal erred in considering that an increasing (bad debt) adjustment under Div 21 of the GST Act – and presumably s 21-15 – could arise for tax period even though there was no debt that was either “overdue for 12 months or more”, or at all, or written off “as bad” by the supplier.
6.Whether the Tribunal erred in considering that any increasing adjustment under Div 21 of the GST Act operates to eliminate an input tax credit entitlement ab initio as opposed to itself being attributable to a particular tax period under s 29-20 of that Act.
7.Whether the Tribunal erred in considering that a penalty involving “intentional disregard of a *taxation law”, under s 284-90 of Sch 1 to the Taxation Administration Act 1953 (Cth) (“the TAA”) (as applied by s 3AA(1) of that Act) could arise in the absence of an actual finding that there was an intentional disregard of a taxation law when claiming input tax credits, because, according to the Tribunal, it was sufficient that: (i) the taxpayers “at least ought to have known ... they were not entitled to the claim”; and / or (ii) s l4ZZK(b)(i) not only presumes the correctness of the amount of an assessment but also every reason, contention, view of the facts and assertion concerning the law that the Respondent may advance to justify the assessment.
8.Whether the Tribunal, because of the matters in the previous paragraph, misunderstood and misapplied the evidential burden imposed on the Applicants by the TAA.
9.Whether the Tribunal erred in the exercise of the discretion to remit penalties under s 298-20 of Sch l to the TAA, leading to its miscarriage, on the basis that it misunderstood the provisions leading to the substantive tax liability and also the basis for the imposition of penalty in the first place.
10.Whether the Tribunal adopted a manner of decision-making which failed to discharge its obligations according to law, particularly concerning the fact that it did not consider relevant evidence and refused unrepresented litigants the opportunity to present fresh, recently made available evidence.
The notice of appeal raises nine grounds of appeal. None of the grounds of appeal distinguish between the grounds relied upon by Caporale Builders and the four other companies on behalf of which the notice of appeal was originally filed.
The grounds of appeal are as follows:
1.The Tribunal failed to give effect to the words “in the form of” in the expression “an activity, or series of activities, done ... in the form of a *business” in s 9-20(1)(a) of the GST Act, interpreting the expression as if they did not exist.
2.While identifying that the words “carrying on” in s 195-1 of the GST Act have a meaning that extends the notion of “in *carrying on your *enterprise” in s 11-15(1), the Tribunal failed to properly construe that expression, particularly so far as it concerns “anything done in the course of the commencement ... of an enterprise”, as interpreted in cases such as Cssr of Taxation v Swansea Services (2009) 72 ATR 120 and HP Mercantile v Cssr of Taxation (2005) 143 FCR 553.
3.The Tribunal ought to have considered how provisions in the GST Act such as those concerning GST groups (Div 48) and associates (Div 72), as well as the general law (eg, FCT v Suttons Motors (Chullora) Wholesale Pty Ltd (1985) 157 CLR 277), required consideration of the collocation of an entity amongst its related parties to precisely ascertain whether it was carrying on an enterprise.
4.The Tribunal misunderstood the operation of the attribution rules in the GST Act, particularly in how taxpayers not accounting on a cash basis can attribute input tax credits to tax periods in which they have issued to them invoices and tax invoices in particular.
5.The Tribunal misunderstood the bad debt adjustment provisions, which require a debt which was due and unpaid and in any event only are attributed to tax periods subsequent to those in which there may have been an initial claim of input tax credits.
6.The Tribunal ought to have understood that there is no basis for the imposition of a penalty for intentionally disregarding taxation laws in the absence of a finding that the requirement of the law was in fact known by the taxpayer and also disregarded.
7.The Tribunal did not understand the operation of the evidential burden in s 14ZZK(b)(i) of the TAA, applying it as if the presumption as to correctness of the amount in the assessment extended to a presumption of the correctness of the contentions (if any) in support of it.
8.The Tribunal purported to exercise a discretion to remit penalty in circumstances where it misconceived the operation of the penalty provisions and in the absence of findings concerning culpability for the penalty in the first place.
9.The Tribunal failed to discharge its obligation to provide the Applicants with a fair hearing that took into account the evidence they wished to rely on.
It is not necessary for me to say anything as to the strength of the grounds of appeal in so far as they relate to the appeals that were brought by Bayconnection, Catarina, Voca and Mira.
The Tribunal found (at [81]) that Caporale Builders was not carrying on an enterprise. It is apparent that this finding was based upon a lack of any specific evidence as to what administrative services, if any, Caporale Builders provided. The circumstances of Caporale Builders were considered by the Tribunal to be quite different to those of the other four companies. In particular, the Tribunal found that there was no evidence to indicate what its activities were and concluded that it was not carrying on an enterprise.
DOCUMENTS RELIED UPON BY THE FIFTH APPLICANT
At the hearing of the appeal Ms Caporale sought to rely upon a number of documents in support of Caporale Builders’ appeal.
The first of these (Ex A) consisted of a chart and explanatory material relating to the IETC project which counsel for the Commissioner accepted was in evidence. The chart refers to Bayconnection, Catarina, Voca and Mira and suggests that each of those companies was involved in some way in the IETC project.
The chart also refers to a company by the name of “Caporale Builders Pty Ltd”. However, the Commissioner submitted, and Ms Caporale ultimately accepted, that this is not the same corporate entity as the fifth applicant, Caporale Builders. Accordingly, the document does not advance Caporale Builders’ case. On the contrary, it tends to support the Tribunal’s view that even if Caporale Builders did provide administrative services (as Ms Caporale suggested in her evidence to the Tribunal) this was not for the purposes of the IETC project.
The second document relied upon by Ms Caporale (Ex B) was a transcript of proceedings in the Local Court at the Downing Centre, Sydney, heard on 3 October 2012 (the Local Court proceedings) between the Commissioner of Taxation and Sappia Investments Pty Ltd (Sappia). Sappia is not a party to this proceeding and was not a party to the proceedings before the Tribunal. This transcript was received by me subject to an objection as to relevance.
The hearing before the Tribunal took place in August 2012. The Local Court proceeding was heard in October 2012. Ms Caporale said that she sought to put the transcript into evidence before the Tribunal but that the Tribunal declined to receive it.
I have reviewed the parts of the transcript which are relied upon by Ms Caporale. Of some sixty pages of transcript, there were six particular pages upon which she relied. The pages in question are said by her to record admissions by the Commissioner that the various companies with which Ms Caporale was associated (including the first to fifth applicants) were at relevant times carrying on an enterprise involving the promotion, marketing and development of the IETC project.
There are a number of difficulties with Ms Caporale’s reliance upon the transcript. The principal difficulty is that nowhere in the transcript is there any reference made to Caporale Builders.
CONSIDERATION
It is necessary to return to the question of law and grounds set out in the notice of appeal. Unfortunately, the notice of appeal does not distinguish between the different applicants even though it is apparent that some of the questions of law posed are not relevant to Caporale Builders.
I will deal with each of the postulated questions of law and associated grounds individually.
Question 1, Ground 1
Ms Caporale did not make any submission in relation to this point. The Commissioner submitted that none of the companies advanced any submission based upon the words “in the form of” in s 9-20(1)(a) of the GST Act before the Tribunal. I am not satisfied that the Tribunal ignored the words “in the form of” as asserted by Caporale Builders. That the Tribunal does not single out these words for the purposes of discussion is understandable if no specific point was raised below based upon them.
The Tribunal did not make the error attributed to it in ground 1.
Question 2, Ground 2
The Tribunal referred to s 195-1 of the GST Act and set out its relevant terms. There is nothing in the Tribunal’s reasons to suggest that it did not properly construe the words of s 195-1. In the case of Caporale Builders, the Tribunal was not satisfied that it was carrying on any activity. In particular, it was not satisfied that Caporale Builders was involved in the IETC project.
The Tribunal did not commit the error referred to in ground 2.
Question 3, Ground 3
So far as Caporale Builders is concerned, there is nothing to suggest that the Tribunal did not give proper consideration to that company’s involvement with the related parties with a view to determining whether it was carrying on an enterprise. On the contrary, the Tribunal was not satisfied that Caporale Builders had any role in what it referred to as the IETC project.
Question 4, Ground 4
This point is of no relevance to Caporale Builders which, according to the Tribunal’s finding, did not carry on any enterprise.
Questions 5 and 6, Ground 5
What I have said in relation to Question 4, Ground 4 applies here. Further, the bad debt adjustment provisions in Div 21 of the GST Act could not apply to Caporale Builders for so long as it accounted for GST on a cash basis.
Question 7, Ground 6
The Tribunal did not find that Caporale Builders (or any other applicant) “intentionally disregarded taxation laws”. What the Tribunal’s reasons make clear is that it was not satisfied that there had not been an intentional disregard of the taxation laws.
Question 8, Ground 7
There is no reason to think that the Tribunal misunderstood or misapplied s 14ZZK(b)(i) of the Taxation Administration Act. It was for Caporale Builders to satisfy the Tribunal that the Commissioner’s assessment was excessive. It failed to do so.
Question 9, Ground 8
This point proceeds on the assumption that the Tribunal misunderstood the penalty provisions. There is nothing in the Tribunal’s reasons to suggest that it misunderstood the penalty provisions.
Question 10, Ground 9
I have referred to the documentary evidence which Ms Caporale says the Tribunal declined to receive, and which she says resulted in Caporale Builders being deprived of a fair hearing.
The documentary evidence concerned, which consists of the transcript of the Local Court proceedings, does not prove, or even tend to prove, that Caporale Builders carried on an enterprise. In this regard, Ms Caporale’s arguments wrongly assume – contrary to the findings of the Tribunal – that Caporale Builders was involved in the IETC project. The evidence which Ms Caporale says the Tribunal should have received was, at least so far as Caporale Builders is concerned, not relevant to its review.
DISPOSITION
In the result, the notice of appeal, in so far as it relates to the fifth applicant, is dismissed with costs.
I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment herein of the Honourable Justice Nicholas. Associate:
Dated: 7 June 2013
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