Bourne and Commissioner of Taxation (Taxation)

This matter concerned an appeal by the Applicant against a default income tax assessment and an administrative penalty for the income year ended 30 June 2015. The Applicant had failed to lodge an income tax return for that year. The Commissioner of Taxation (the Respondent) issued a default assessment based on a payment summary issued by the Applicant's company, Promotional Directories Group Pty Ltd, which reported gross payments of $390,000 and total tax withheld of $187,638. The Applicant objected to this assessment and the associated administrative penalty.

The primary legal issues before the court were whether the default assessment issued by the Respondent was excessive, and consequently, whether the Applicant had discharged his burden of proving what his correct taxable income should have been. Additionally, the court was required to determine if the administrative penalty had been correctly imposed and whether there were grounds to exercise discretion to remit all or part of that penalty.

The court reasoned that under section 167 of the *Income Tax Assessment Act 1936* (Cth), the Respondent had the power to issue a default assessment when a taxpayer failed to lodge a return. The court affirmed that the burden rested with the Applicant to prove that the default assessment was excessive or incorrect, and to establish his correct taxable income. Despite the Applicant's efforts to provide evidence and his candid testimony, the court found that the Applicant had not discharged this onus. The Applicant's financial position for the year in question had been progressively reconstructed, even up to the day before the hearing, indicating a lack of finalised records. Regarding the penalty, the court found it was correctly imposed under section 284-75(3) of Schedule 1 to the *Taxation Administration Act 1953* (Cth), and the Applicant had not presented circumstances warranting the exercise of discretion under section 298-20 of Schedule 1 to remit the penalty.

Accordingly, the court affirmed the decision under review, finding that the Applicant had not proven the default assessment to be excessive or incorrect, and that the administrative penalty was correctly imposed and should not be remitted.