Kwan and Commissioner of Taxation (Taxation)

The Administrative Appeals Tribunal considered the appeal of Ms. Kwan against the Commissioner of Taxation's decision to disallow her objection to an amended assessment for the 2019 income year. The Commissioner had determined that Ms. Kwan was not entitled to claim business losses because she was not carrying on a business during that income year. Ms. Kwan, a certified practising accountant who had taken a redundancy from the Australian Taxation Office, had obtained an Australian Business Number and registered a business name in June 2019, lodging her tax return later that year claiming a significant net business loss.

The Tribunal was required to determine whether Ms. Kwan was carrying on a business in the 2019 income year, whether she was entitled to deduct the expenses claimed, and whether she had discharged her burden of proving that the amended assessment was excessive or incorrect. Ms. Kwan contended that she had decided to start a business as a property developer and also intended to engage in direct sales of discounted items, and that she had conducted business activities in preparation for these ventures. She argued that she used the accrual accounting method and that the claimed expenses were necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income.

The Tribunal considered the totality of the circumstances in determining whether a business was being carried on. While acknowledging Ms. Kwan's stated intentions and her emotional desire to establish a business to pass on to her son, the Tribunal found that she had failed to provide adequate independent corroborating evidence or contemporaneous records to support her claimed business activities. Consequently, the Tribunal concluded that Ms. Kwan had not demonstrated that she was carrying on a business as either a property developer or in direct sales during the 2019 income year.

Based on the evidence presented, the Tribunal found that Ms. Kwan had not satisfied her onus to prove that the amended assessment was excessive or incorrect. Accordingly, the Tribunal affirmed the Commissioner's decision under review.