Managed Contracts Pty Ltd and Commissioner of Taxation (Taxation)
[2023] AATA 3581
•3 November 2023
Managed Contracts Pty Ltd and Commissioner of Taxation (Taxation) [2023] AATA 3581 (3 November 2023)
ReviewNumber: 2021/1705, 2021/1706
Division: SMALL BUSINESS TAXATION DIVISION
File Numbers: 2021/1705-1706
Re:Managed Contracts Pty Ltd
APPLICANT
AndCommissioner of Taxation
RESPONDENT
DECISION
Tribunal:Senior Member R Olding
Date:3 November 2023
Place:Melbourne
The respondent’s objection decision dated 22 January 2021 is varied such that the net amount for each tax period becomes:
Tax period for the quarter ending … Net amount 31 March 2015 $5,570 CR 30 June 2015 $4,380 CR 30 September 2015 $2,532 CR 31 December 2015 $165 CR 31 March 2016 $528 CR 30 June 2016 $1,687 CR 30 September 2016 $2,038 CR 31 December 2016 $36,962 CR 31 March 2017 $318 DR 30 June 2017 $1,404 DR 30 September 2017 $5,059 CR ....................................[SGD]....................................
Senior Member R Olding
CATCHWORDS
TAXATION – GOODS AND SERVICES TAX – where applicant did not maintain a schedule of sales and purchases for each tax period instead relying on bank statements – whether applicant discharged burden of proving assessments excessive – decision varied
LEGISLATION
A New Tax System (Goods and Services Tax) Act 1999 (Cth), ss 29-10(4), 93-5
Taxation Administration Act 1953 (Cth), s 14ZZK; Sch 1, s 382-5
CASES
Anglo American Investments Pty Ltd v Commissioner of Taxation [2022] FCA 971
Melbourne Corporation of Australia Pty Ltd v Commissioner of Taxation [2022] FCA 972
REASONS FOR DECISION
Senior Member R Olding
3 November 2023
WHAT IS THIS CASE ABOUT?
This case concerns the applicant’s liability for GST and entitlement to input tax credits (‘ITCs’) in the quarterly tax periods from 1 January 2015 to 30 September 2017 (‘the Relevant Periods’).
The applicant’s principal business is project management in the building industry. There are no GST technical issues involved. It is simply a case of whether the applicant has proved it is entitled to a more favourable outcome, after allowing for amounts now conceded by the Commissioner of Taxation.
SOME PRELIMINARY OBSERVATIONS
Burden of proof
It is apparent the applicant’s sole director, Mr Stewart Purvis, is aggrieved the Commissioner has not accepted his claims. However, as I explained to Mr Purvis, the matter now falls to the Tribunal to determine afresh by reference to the evidence before the Tribunal and in accordance with the governing legislation.
The legislation provides that taxpayers who apply to the Tribunal for review of taxation decisions have the burden of proving not just that the assessments are excessive but what the correct amounts should be.[1] The legislation puts this burden of proof on taxpayers because it is the taxpayer who knows about the relevant transactions and, as required by law, is expected to have maintained records that enable their liabilities and entitlements ‘to be readily ascertained’.[2]
[1] Taxation Administration Act 1953 (Cth), s 14ZZK.
[2] Taxation Administration Act 1953 (Cth), Sch 1, s 382-5.
Commissioner’s confinement of issues in dispute
As a matter of law, the Commissioner was entitled to take the position that the applicant must prove the amount of its taxable supplies and ITC entitlements for each tax period. Given the state of the applicant’s records, as discussed below, that would not have been an unreasonable stance.
Fortunately for the applicant – though I doubt Mr Purvis sees it this way – the Commissioner has taken a more generous approach. After considering material filed in these proceedings, the Commissioner has accepted various amounts credited to the applicant’s bank account were not consideration for taxable supplies and various payments from the account were for purchases that entitled the applicant to ITCs. The Commissioner confined the issues in dispute to the remaining amounts he had assessed to GST and disallowed as ITCs. Because the Commissioner has confined the issues in dispute in this way, it is only these amounts that remain to be considered.
That statement, however, masks the complexity of the task. The Tribunal has before it some thousands of pages of copies of documents, statements, schedules, revised schedules and submissions. I have considered these below, but first set out some observations regarding the applicant’s records and some procedural and other background.
The applicant’s records
Accounting for GST for most businesses involves bringing to account GST on sales and claiming ITCs on eligible purchases. That requires a record of sales and purchases to be maintained along with supporting documents such as tax invoices provided by suppliers.
Mr Purvis gave evidence that he prepared the applicant’s business activity statements (‘BAS’) from the applicant’s banking records. However, he did not keep even a list of sales and purchases during each tax period. Mr Purvis says he was not told he needed to keep such records. Be that as it may, I was, with respect, surprised Mr Purvis did not consider even basic records of that kind would be required to substantiate ITCs that, over the Relevant Periods, involved claims in the order of $2.5M upon the Commonwealth Treasury.
In any case, the absence of proper records has made the applicant’s task of proving it is entitled to a more favourable outcome challenging. So, too, have the changing amounts claimed by the applicant in the course of the proceeding, including in some cases duplicated ITC claims.
The evidence of Mr Purvis
Mr Purvis was not a helpful witness and advocate. He repeatedly referred to matters that I had explained were not relevant to the Tribunal’s task and responded to questions from Ms Lim, who appeared for the Commissioner, with questions or by referring back to matters he considered relevant, but which were, in truth, unhelpful.
Having said that, I did not form the impression Mr Purvis was dishonest. Rather, my impression was that, in his own way, Mr Purvis was attempting to provide a truthful account. It was just that he was seemingly unable or unwilling to accept that the applicant was not going to succeed by constantly referring back to the audit and needed to instead focus upon the basic foundation on which GST compliance rests – sales and purchases for each tax period.
Cash vs non-cash (accruals) accounting
The applicant accounted for GST on a cash basis – that is, by extracting the consideration for supplies and acquisitions from debits and credits to its bank account in the Relevant Periods. After conducting an audit, the Commissioner issued amended assessments as discussed further below. Those assessments were said to have been made on the basis that GST payable and ITCs for each tax period were calculated on an accruals or non-cash basis.
This was a particular point of contention for Mr Purvis leading up to and in this hearing, which is curious since in its Statement of Facts, Issues and Contentions dated 30 November 2022 the applicant asserted its ITCs were attributable on an accruals basis. Mr Purvis contended the applicant had never chosen or been advised to account for GST on an accruals basis.
On the second day of the hearing the Commissioner produced copies of the BASs filed by the applicant. The BASs were completed in hard copy, not electronically, and in Mr Purvis’s handwriting. Prominently displayed on each of the BASs is a notation that the accounting method is ‘non-cash (accruals)’. Accordingly, I proceed on the basis that GST and ITCs are attributable on the accruals basis.
I am not convinced the difference between cash and accrual accounting is as significant in this case as the applicant seems to believe. In relation to GST payable, the applicant says, and I accept, that its BASs were prepared on a cash basis. The Commissioner’s assessments were based on bank account entries which for practical purposes results in a cash basis calculation of GST payable. In relation to ITCs, I understand the assessments were based on tax invoices received in the tax period. Given that the applicant has quarterly tax periods and ITCs are not claimable under either method unless the taxpayer is in possession of a tax invoice, again the difference between cash and accrual accounting for ITCs may be less significant than Mr Purvis perceives it to be. In any case, for the reasons set out below, I do not have sufficient confidence in the applicant’s assertions regarding its ITC entitlements to accept that, on either basis, the applicant would discharge the burden of proving it is entitled to ITCs in amounts additional to those now conceded by the Commissioner.
The Commissioner’s and the Tribunal’s decision-making powers
The applicant appears to continue to be under the misapprehension the Tribunal is empowered to direct the Commissioner to pay specified amounts to it. The Tribunal is only empowered to make decisions provided for under a statute.
In the context of reviews of taxation objection decisions, that means the Tribunal’s power is limited to making a decision that either affirms, varies, or sets aside the decision made by the Commissioner in relation to the taxpayer’s objection against an assessment. The Commissioner is then required to issue whatever further amended assessments, if any, may be necessary to give effect to the Tribunal’s decision. Such further amended assessments will in turn will be reflected by the Commissioner in the amounts owing by or to the taxpayer.
Related to this issue, the applicant also appeared to be aggrieved that its account record at present continues to be based on liabilities assessed by the Commissioner after the audit and had not been adjusted to account for items accepted by the Commissioner during the course of the proceedings. That is normal practice reflecting that, once an application for review is on foot, it is for the Tribunal, not the Commissioner, to determine whether any change to the objection decision, and hence the assessments, is to be made.
It is only when the Tribunal has made its decision, after the hearing of the review, that the Commissioner can and must issue amended assessments (if necessary) to give effect to the Tribunal’s decision. Once the Tribunal’s decision is delivered, the Commissioner will give effect to it by issuing amended assessments and adjusting the applicant’s account record accordingly. There is no need for the Tribunal to make any orders for those steps to be taken – the Commissioner is required by statute to give effect to the Tribunal’s decision – nor is it empowered to make any such order.
DECISION UNDER REVIEW
Objection decision
The decision before the Tribunal for review is the Commissioner’s decision of 22 January 2021 disallowing the applicant’s objection dated 26 July 2019 against amended assessments of net amounts for the tax periods from 1 July 2014 to 30 September 2017.[3]
[3] The applicant’s notice of objection was apparently prepared without professional assistance. On one reading, its stated grounds might not be regarded as setting out in detail grounds up which it the net amounts assessed for each period were excessive. The Commissioner did not submit that the applicant’s grounds of objection limited the applicant’s grounds for review. Lest there be any doubt, if it is necessary for the grounds to be extended the Tribunal extends the grounds of review to include the applicant’s contentions in the review proceeding.
September 2014 and December 2014 tax periods
A controversy arose regarding the September 2014 and December 2014 tax periods. It appears the Commissioner originally sought to assess further amounts – that is, in excess of the amounts returned by the applicant – for these two tax periods. Purported notices of assessment were issued but withdrawn when the Commissioner formed the view he was out of time to issue amended assessments.[4] A notice of assessments covering the period from January 2015 to September 2017 then issued. In other words, there were no adjustments to the amounts returned by the applicant for the September 2014 and December 2014 tax periods.[5]
[4] Respondent’s closing submissions dated 21 September 2023 [39]-[40].
[5] Documents lodged at the Tribunal under s 37 of the AAT Act (‘T Documents’), T2: Notice of objection dated 22 July 2021, [9].
The applicant’s notice of objection purported to cover these two periods. At objection, the Commissioner decided the objection was, so far as it related to deemed assessments for these two periods, outside the statutory time for objecting against the assessments and declined to extend the time for objection.
The applicant stated in its Further Amended Statement of Facts, Issues and Contentions dated 30 November 2022, when the applicant was represented by solicitors and counsel, that it no longer disputed the Commissioner’s decision to extend the time to object against these assessments. That is where the matter sat until, in its Further Amended Statement of Facts, Issues and Contentions dated 8 August 2023, the applicant seemed to endeavour to re-agitate issues concerning these two tax periods even though the net amounts for these tax periods were not adjusted after the audit.
I do not propose to consider these two tax periods. As already noted, the applicant formally abandoned any issues regarding these periods in November 2022 and did not seek to re-agitate them until less than 10 days before the hearing listed to commence on 17 August 2023. Aside from this, there are two reasons why it is not appropriate to consider these periods. First, the applicant offered no explanation for why it had not objected earlier and put forward no reason why it would be appropriate for the Tribunal to extend the time for objecting at this late stage. Secondly, so far as the applicant seeks to re-agitate these periods for the purpose of claiming further ITCs, that would be futile. Taxpayers cease to be entitled to ITCs not taken into account in an assessment of net amount within four years of the relevant BAS due date.[6] That time has long passed and had before the audit concluded.
[6] A New Tax System (Goods and Services Tax) Act 1999, s 93-5.
AMOUNTS IN DISPUTE
After completing an audit, the Commissioner advised the applicant that, relative to the BASs filed by the applicant over the Relevant Periods:
(a)GST payable had been increased by $15,309; and
(b)ITCs had been reduced by $123,068.[7]
[7] T8: ATO audit finalisation letter dated 31 May 2019.
No penalties were assessed.
These decisions were reflected in the amended assessments issued after the audit.
As a result of concessions following consideration of evidence produced in these proceedings, the amounts the Commissioner now maintains are payable are:[8]
(a)GST – shortfall in the total amount of $6,354; and
(b)ITCs – overclaimed by the total amount of $27,074,
amounting to a total of the shortfalls in the net amounts for the Relevant Periods of $33,428 ($6,354 plus $27,074).
[8] Respondent’s response to applicant’s closing submissions dated 5 October 2023, [6].
The Tribunal’s task is to determine whether the applicant has proved the amended assessments of net amounts (that is, for current purposes, GST minus ITCs) for each period are excessive and, if so, what the correct amounts should be. Appendix 1 to these reasons sets out, by tax period, the GST and ITCs returned by the applicant; and as amended in the amended assessments; along with the amounts now accepted by the Commissioner.
As already indicated, to what extent the applicant has proved the assessments are excessive requires consideration of the net position – GST minus ITCs – for each tax period. However, since the parties approached the case in this way, it is convenient to first consider the GST and ITC integers separately, and then determine the impact of decisions in respect of those integers on the net amount for each tax period.
AAS THE APPLICANT PROVED THE SHORTFALL IN REPORTED GST IS LESS THAN THE COMMISSIONER’S CONTENDED AMOUNTS?
The disputed GST amounts by tax period
Analysis of Appendix 1 reveals the following disputed GST amounts:
Tax period (quarter): Returned GST amount
($)GST amount now accepted by Commissioner
($)Difference
($)Jun 2015 16,415 16,780 365 Mar 2016 11,278 12,187 909 Jun 2016 25,046 26,862 1,816 Sep 2016 23,505 24,414 909 Mar 2017 2,909 4,318 1,409 Sep 2017 3,272 4,218 946 Total: 82,425 88,779 $6,354
At audit, because of the absence of appropriate records, the Commissioner calculated taxable supplies and GST payable for the Relevant Periods at $1,859,687.87 and $169,063 respectively. It appears these calculations were based on credits to the applicant’s bank account in each tax period. The credits the Commissioner treated as subject to GST at the audit, and reflected in amended assessments, are listed in Appendix A to the Respondent’s Further Amended Statement of Issues, Facts and Contentions dated 3 August 2023.
Where the total of these entries was less than the amount returned as sales in the applicant’s BAS for the tax period, the Commissioner did not adjust the GST component of the net amount for that period. However, the assessments for all of the Relevant Periods were amended at least in relation to ITCs and the applicant objected against all of the assessments. I have therefore considered the GST integer for all of the assessments. This is consistent with the conduct of the case which included evidence and cross examination in relation to periods for which the GST integer was not adjusted by the amended assessments.
Subsequently, the Commissioner accepted items 63, 64, 70, 71, 79, 81, 83, 85 and 97 in the Commissioner’s Appendix A were not consideration for taxable supplies.[9] Thus, it emerged on the first day of the hearing that the Commissioner’s Appendix A, but excluding the highlighted items, encapsulated remaining credits to the bank account the Commissioner considered to be taxable supplies, or at least not proved to be otherwise.
[9] Respondent’s closing submissions dated 21 September 2023, [15].
Given the burden of proof borne by the applicant and the previous opportunities for the applicant to file evidence, the usual practice would have been to continue the hearing to completion on the basis that the applicant had been given a fair opportunity to put forward the evidence on which it proposed to rely. However, I adjourned the hearing to enable the applicant to provide a witness statement and supporting evidence addressing why any of the remaining items were not consideration for taxable supplies. That approach may be regarded as erring on the side of assisting the applicant, but I was conscious the applicant was, by that stage, no longer legally represented.
The applicant provided additional information although not in the form of a witness statement. The Commissioner, having reviewed the additional material, through his counsel, Ms Lim, advised at the resumed hearing that the Commissioner now accepted some further items in his Appendix A – items 72, 78, 88 and 90 – were not consideration for taxable supplies.[10]
[10] Transcript, P-83, lines 31-36.
Ms Lim also confirmed that, to the extent, if any, the applicant proved additional items in Appendix A were not consideration for taxable supplies, the Commissioner accepts the applicant would have discharged the burden of proving the assessments were to that extent excessive. The Commissioner did not put the applicant to proof that its taxable supplies did not include other transactions not listed in Appendix A. It follows that, to the extent the applicant satisfies the Tribunal any items in Appendix A are not consideration for taxable supplies, the assessment of the GST integer for the relevant tax period should be reduced. In other words, the GST payable would be 1/11th of the total of the listed entries for the period, less those accepted by the Commissioner or proved by the applicant to be not consideration for taxable supplies.
Accordingly, I now proceed to consider whether the applicant’s evidence proves any other items in the Commissioner’s Appendix A are not consideration for taxable supplies by reference to the matters detailed in the applicant’s oral testimony, the material provided after the first day of the hearing, and the parties’ closing submissions.
Respondent’s Appendix A, items 3, 15 and 21
These items are credits to the applicant’s bank account as follows:
Item no. Date Amount
($)Description 3 19.01.15 48,000 Partial drawdown Sulemanovs R 15 06.03.15 48,000 Partial drawdown Sulemanovs R 21 14.04.15 32,000 Partial drawdown Sulemanovs R
Mr Purvis explained that the Sulemanovs were owner builders. The applicant supervised construction under a contract with them but on a pro bono basis. As the Sulemanovs’ bank drew down amounts against their mortgage, the bank paid the amounts to the applicant who in turn paid them to the Sulemanovs.[11] Thus, these payments were received from the Sulemanovs’ bank and transferred on to the Sulemanovs’ by the applicant.
[11] Transcript, P-125, lines 22-45.
The Commissioner says the applicant has not substantiated this account by producing the contract. Mr Purvis says the applicant no longer has the contract. The Commissioner’s point is valid. Although the entries are now quite some years in the past, the time for keeping business records had not expired by the time of the audit.
On balance, though, I accept the applicant has proved these amounts are not consideration for taxable supplies. In reaching that conclusion, I have taken into account that the bank entries are consistent with Mr Purvis’s explanation and my assessment of Mr Purvis as a witness as outlined earlier.
Accordingly, I accept the payments listed as items 3, 15 and 21 are not consideration for taxable supplies.
Respondent’s Appendix A, items 93, 94, 95
These items are credits to the applicant’s bank account as follows:
Item no. Date Amount
($)Description 93 10.07.17 20,000 Internet Transfer loan builders haus 94 17.07.17 10,000 Internet Transfer loan builders h 95 18.07.17 2,500 Internet Transfer repayment Builders Haus
Mr Purvis explained[12] that he set up a company called Builders Haus with the intention his son would operate the company when he completed his apprenticeship and put it in funds by way of a loan from the applicant. However, when the applicant faced financial difficulty caused by two clients cancelling contracts, it was necessary to return the funds to the applicant. These entries are, I understood Mr Purvis to say, repayments of amounts loaned by the applicant to Builders Haus.
[12] Transcript, P-122-124.
The Commissioner noted no loan agreement had been produced. Mr Purvis said, and I accept, that is because no written loan agreement was created. The funds were, after all, on Mr Purvis’s account, effectively loaned to his son.
In considering this matter, I am mindful of the observations of Logan J in Melbourne Corporation of Australia Pty Ltd v Commissioner of Taxation [2022] FCA 972 noting that informality can and often does attend the formation of legal relations in small businesses. As his Honour noted in Anglo American Investments Pty Ltd v Commissioner of Taxation:[13]
Even more this is so where the relevant corporate actors are or are represented by the same individual acting in different capacities or by individuals who are close family members or business associates. Sometimes the only documentary manifestation of that legal relationship may be a transaction recorded in a ledger or perhaps just an annually prepared profit and loss account and accompanying annotations. There may then, in a taxation appeal, be related oral evidence of the individual(s) concerned that the transaction was as so recorded . . .
[13] [2022] FCA 971, [54].
That is not to say there is any special or lesser standard of proof for a small business. Where informality is present, “much can depend on the credibility one affords the accounts given by participants and, where they exist, representations in business records created under their supervision or with their approval”.[14]
[14] Melbourne Corporation of Australia Pty Ltd v Commissioner of Taxation [2022] FCA 972, [47].
In this case, the business records are less than ideal. However, Mr Purvis’s account is consistent with the description in the bank records. I accept Mr Purvis’s evidence regarding these items.
Accordingly, I accept items 93, 94 and 95 are not consideration for taxable supplies.
Respondent’s Appendix A, item 96
Similar considerations apply in relation to item 96 where the description of a $400 entry on 19 July 2017 is ‘Internet Transfer Loan NAB Transfer’. I have no reason to suspect this description was falsified. I accept this item is not consideration for a taxable supply.
HAS THE APPLICANT PROVED THE EXCESS ITC CLAIMS ARE LESS THAN THE COMMISSIONER’S CONTENDED AMOUNTS?
The disputed ITC amounts by tax period
As noted above, the total of the ITCs the Commissioner now says were overclaimed, or not proved to be claimable, is $27,074. However, comparison of the applicant’s contended ITC entitlement against the Commissioner’s contended amounts in Appendix 1 reveals there is less divergence between the parties:
Tax period (a) Reported amount
($)(b) ITC entitlement applicant now claims[15]
($)(c) Amount accepted by Commissioner
($)(b) – (c) Mar 2015 21,076 10,926 10,926 nil Jun 2015 18,250 20,272 19,287 985 Sep 2015 12,674 9,908 9,842 66 Dec 2015 14,022 20,875 20,308 567 Mar 2016 12,715 16,728 15,192 1,536 Jun 2016 26,731 39,022 37,773 1,249 Sep 2016 25,542 48,375 46,396 1,979 Dec 2016 59,070 9,684 8,902 782 Mar 2017 7,645 3,863 3,818 45 Jun 2017 3,684 6,058 2,667 3,391 Sep 2017 7,144 7,424 6,368 1,056 Totals: $208,553 $193,135 $181,479 $11,656 [15] Applicant’s Further Amended Statement of Issues, Facts and Contentions dated 8 August 2023.
The difference between the amount reported and the amount now accepted by the Commissioner is $27,094 ($208,553 – $181,479 = $27,074).[16] The difference between the amount claimed by the applicant and the amount now accepted by the Commissioner is $11,656 ($193,135 - $181,479 = $11,656).
[16] Counting the September 2014 and December 2014 tax periods, the applicant claims to be entitled to total ITCs of $206,124. This makes no difference to the outcome because the amounts claimed by the applicant for these periods are the same as the amounts returned and there have been no adjustments to those returned amounts.
In other words, the disputed ITC amount is a total of $11,656. It follows that the applicant accepts the ITCs returned were excessive to the extent of $15,418 ($27,074 – 11,656 = $15,418).
The remaining question is therefore whether I am satisfied the applicant is entitled to ITCs in any tax period, in excess of those now conceded by the Commissioner, up to the amounts now claimed by the applicant. I need not concern myself with the March 2015 tax period since the same amounts are now claimed by the applicant and conceded by the Commissioner.
The short answer is that I am not satisfied the applicant has proved any further ITC entitlement beyond that conceded by the Commissioner. My reasons fundamentally come down to this: I do not have sufficient confidence in the applicant’s records and the materials put before the Tribunal to be satisfied there is any further ITC entitlement.
Why do I not have confidence in those materials?
First and foremost, the applicant failed to keep the most basic contemporaneous records – that is, a list of sales and purchases for each tax period.
Secondly, the applicant has not been consistent in the ITCs to which it has claimed it is entitled. For instance in the applicant’s Further Amended Statement of Facts, Issues and Contentions dated 30 November 2022, the applicant claimed ITCs totalling $163,384.09, whereas in the applicant’s statement with the same title but filed shortly before the hearing on 8 August 2023, the applicant claimed ITCs of $193,135. Mr Purvis now says the numbers in the former were “provisional”. Mr Purvis continued to produce revised schedules during the hearing, long after the time directed for filing evidence.
Thirdly, although numerous copies and schedules have been provided, it is clear the applicant does not have in its possession tax invoices for all the ITCs it has claimed. Some of the missing tax invoices it says were retained by the Commissioner’s officers. Why the applicant handed over original invoices without keeping copies or did not invoke the Tribunal’s formal processes to retrieve invoices said to have been retained was not explained. Additionally, some of the invoices were unreadable. Further, various payments were said to have been made by credit card or by third parties. The schedules of such payments attached to the applicant’s closing submissions identify invoice numbers for some but not all such payments.
Fourthly, Mr Purvis acknowledged that some of the amounts claimed in the course of the proceedings were duplicated.
Accordingly, I am not satisfied the applicant is entitled to ITCs for any of the Relevant Periods in excess of the amounts now conceded by the Commissioner.
CALCULATION OF NET AMOUNTS
In light of the Commissioner’s concessions and my acceptance of some of the applicant’s submissions regarding GST payable, the objection decision must be varied. The adjusted GST, ITC and net amounts are set out in the final three columns in Appendix 1. These are explained further below.
I have calculated the GST payable by deducting from the total of the bank credits for each tax period, listed in the Commissioner’s Appendix A, the items conceded by the Commissioner or accepted by the Tribunal. The resulting amount for each tax period is the consideration for taxable supplies in those periods and the GST payable is 1/11th of that amount.
The items conceded by the Commissioner or accepted by the Tribunal are:
Tax period Item no. Amount
($)Total for tax period
($)Mar 2015 3
1548,000
48,00096,000 Jun 2015 21 32,000 32,000 Sep 2015 - Dec 2015 - Mar 2016 - Jun 2016 63
64
70
71
721,500
1,000
1,500
1,000
20,00025,000 Sep 2016 78
7910,000
90,000100,000 Dec 2016 81
83
85135,000
90,000
4,000229,000 Mar 2017 88 2,000 2,000 Jun 2017 90 1,000 1,000 Sep 2017 93
94
95
96
9720,000
10,000
2,500
400
2,50035,400
The GST for each tax period is then calculated as follows:
Tax period (a) Bank credits treated as taxable[17] (b) Items accepted by Commissioner/Tribunal (c) = (a) – (b) GST
(c)/11Mar 2015 154,924 96,000 58,924 5,357 Jun 2015 184,575 32,000 152,575 13,870 Sep 2015 80,412 - 80,412 7,310 Dec 2015 152,427 - 152,427 13,857 Mar 2016 134,056 - 134,056 12,187 Jun 2016 300,490 25,000 275,490 25,045 Sep 2016 358,553 100,000 258,553 23,505 Dec 2016 379,000 229,000 150,000 13,636 Mar 2017 47,500 2,000 45,500 4,136 Jun 2017 18,850 1,000 17,850 1,623 Sep 2017 48,900 34,500 14,400 1,309 [17] Respondent’s Further Amended Statement of Issues, Facts and Contentions dated 3 August 2023, Appendix A.
There is no adjustment to the total ITCs claimed other than those conceded by the Commissioner. However, where the Commissioner conceded ITCs in excess of those returned by the applicant in a particular tax period, these have been allocated to the December 2016 tax period.[18]
[18] In accordance with s 29-10(4) of the A New Tax System (Goods and Services Tax) Act 1999 as submitted by the Commissioner.
The objection decision will be varied to reflect the revised net amounts in accordance with the final column in Appendix 1. [19]
[19] The resulting assessments, being largely credit assessments, imply the applicant outlaid more than it received over the Relevant Periods. That is not uncommon in the building industry. As already indicated, Mr Purvis explained that the applicant suffered financially because of the cancellation of two contracts. In any case, the outcomes are a consequence of the Commissioner’s concessions and confining of the issues in dispute, and the Tribunal accepting additional items listed in the Commissioner’s Appendix A were not consideration for taxable supplies. The Commissioner also submitted there was an unexplained shortfall in the applicant’s funding over the Relevant Period; however, that submission related to ITCs which I have accepted only to the extent conceded by the Commissioner.
I certify that the preceding 69 (sixty-nine) paragraphs are a true copy of the reasons for the decision herein of Senior Member R Olding
.............................[SGD] .............................
Associate
Dated: 3 November 2023
Dates of hearing: 17, 31 August 2023 Date final submissions received: 5 October 2023 Advocate for the Applicant: S Purvis, Director Counsel for the Respondent: K Lim Solicitors for the Respondent: ATO Legal Services & Litigation APPENDIX 1: NET AMOUNT CALCULATIONS
Returned in applicant’s BASs Amended assessments Respondent’s position on review [20] Calculated by Tribunal Tax period GST ITCs Net amount GST ITCs Net amount GST ITCs Net amount GST ITCs Net amount Mar 2015 17,062 21,076 (4,014) 17,062 4,803 12,259 17,062 10,926 6,136 5,356 10,926 (5,570) Jun 2015 16,415 18,250 (1,835) 16,780 9,113 7,667 16,780 18,250 (1,470) 13,870 18,250 (4,380) Sep 2015 8,778 12,674 (3,896) 8,778 3,497 5,281 8,778 9,842 (1,064) 7,310 9,842 (2,532) Dec 2015 15,865 14,022 1,843 15,865 6,506 9,359 15,865 14,022 1,843 13,857 14,022 (165) Mar 2016 11,278 12,715 (1,437) 12,187 8,320 3,867 12,187 12,715 (528) 12,187 12,715 (528) Jun 2016 25,046 26,731 (1,685) 27,317 19,138 8,179 26,862 26,731 131 25,044 26,731 (1,687) Sep 2016 23,505 25,542 (2,037) 32,596 17,254 15,342 24,414 25,542 (1,128) 23,504 25,542 (2,038) Dec 2016 51,150 59,070 (7,920) 51,150 8,927 42,223 51,150 50,598 552 13,636 50,598 (36,962) Mar 2017 2,909 7,645 (4,736) 4,318 1,366 2,952 4,318 3,818 500 4,136 3,818 318 Jun 2017 1,623 3,684 (2,061) 1,714 1,920 (206) 1,623 2,667 1,044 1,263 2,667 1,404 Sep 2017 3,272 7,144 (3,872) 4,445 3,841 604 4,218 6,368 2,150 1,309 6,368 (5,059) [20] The returned, amended and conceded amounts were confirmed by email from the respondent dated 1 November 2023.
Key Legal Topics
Areas of Law
-
Tax Law
-
Statutory Interpretation
-
Administrative Law
Legal Concepts
-
Appeal
-
Standing
-
Procedural Fairness
-
Judicial Review
-
Statutory Construction
-
Remedies
0
2
0