Kong and Commissioner of Taxation (Taxation)

This matter concerned an appeal by the Applicant, Mr. Sam Kong, against default amended assessments issued by the Commissioner of Taxation for the income years ended 30 June 2008 to 30 June 2014. The dispute centred on unexplained bank deposits, the Commissioner's formation of an opinion regarding evasion, and the imposition of administrative penalties and shortfall interest charges. The Administrative Appeals Tribunal (AAT) was required to determine whether the Applicant had discharged his onus to prove that the Commissioner's opinion regarding evasion was wrongly formed, that the amended assessments were excessive or incorrect, and that penalties and interest charges should be remitted.

The legal issues before the Tribunal were multifaceted. Firstly, the Tribunal had to consider whether the Applicant had discharged his onus to prove that the Commissioner's opinion of evasion for the years 2008 to 2014 was not justified. Secondly, it was required to determine if the amended assessments for the disputed years were excessive or incorrect, and if so, what the Applicant's correct taxable income should have been. Thirdly, the Tribunal had to assess whether the Applicant should be liable for administrative penalties imposed under section 284-75(3) of Schedule 1 to the *Taxation Administration Act 1953* (Cth), including any increased base penalty, and whether the discretion to remit these penalties under section 298-20(1) should be exercised in his favour. Finally, the Tribunal had to consider whether the Applicant should be liable for shortfall interest charges and whether the discretion to remit these charges under section 280-160 should be exercised.

The Tribunal's reasoning focused on the Applicant's failure to discharge his onus of proof. Despite the Applicant's representatives' attempts to explain certain deposits and offset amounts, the Tribunal found that the Applicant had not provided sufficient clear and reliable evidence to establish his true taxation position or to demonstrate that the Commissioner's amended assessments were incorrect. The Tribunal noted that an attempt to "chip away" at default assessments by identifying mere errors or showing only that some moneys treated as income are not in fact income does not discharge the Applicant's onus. The Tribunal concluded that the Applicant had not proven, on the balance of probabilities, his actual income in any of the subject years to its satisfaction, and that the asset betterment statements relied upon by the Commissioner were correct, with the Applicant failing to establish they were wrong by adequately dealing with the items identified by the Commissioner.

Consequently, the Tribunal affirmed the Commissioner's objection decision. It found that the Applicant had not discharged his onus to prove that the amended assessments were excessive or incorrect, that the administrative penalties were correctly imposed, and that the discretion to remit either the penalties or the shortfall interest charges should be exercised in his favour. The Tribunal was left with an incomplete picture of the Applicant's taxation affairs and found no evidence that refusing to remit the penalties would result in a harsh or unjust outcome.