Commissioner of Tax v Ryan

The Commissioner of Taxation (Commissioner) appealed to the High Court of Australia against a decision of the Full Federal Court, which had allowed an appeal by Mr Ryan (the taxpayer) against a notice of assessment issued by the Commissioner. The dispute concerned the Commissioner's assessment of additional income tax and penalties against the taxpayer, arising from the Commissioner's view that the taxpayer had failed to disclose certain assessable income.

The central legal issue before the High Court was whether the taxpayer had discharged his onus of proof under section 149 of the *Income Tax Assessment Act 1936* (Cth) (the Act) to show that the Commissioner's assessment of additional income tax was excessive. This involved determining whether the taxpayer had provided sufficient evidence to displace the prima facie correctness of the assessment, particularly in relation to the Commissioner's reliance on a 'prescribed amount' calculated under section 167 of the Act.

Gummow and Callinan JJ found that the taxpayer had failed to discharge the onus of proof. Their Honours reasoned that the taxpayer's evidence was insufficient to demonstrate that the Commissioner's assessment was excessive. The taxpayer had not provided a satisfactory explanation for the discrepancies or demonstrated that the income assessed was not in fact his assessable income. The court affirmed the principle that an assessment made by the Commissioner is presumed to be correct, and the taxpayer bears the burden of proving it to be excessive.

The High Court allowed the Commissioner's appeal, setting aside the order of the Full Federal Court and reinstating the Commissioner's assessment.