Meakins and Commissioner of Taxation (Taxation)

This matter concerned applications for review of objection decisions made by the Commissioner of Taxation. The applicants, Ms Meakins and Intaglio, sought to claim deductions for expenses incurred in relation to a property they held. The core dispute revolved around whether these holding expenses were deductible under section 8-1 of the *Income Tax Assessment Act 1997* (Cth), which allows for deductions for expenses incurred in gaining or producing assessable income or in carrying on a business. The applicants also challenged the imposition of administrative penalties. The decisions were made by Deputy President Boyle of the Administrative Appeals Tribunal.

The primary legal issues before the Tribunal were: (1) whether the applicants had the requisite intention to develop the property for the purpose of producing assessable income, such that the holding expenses were deductible under section 8-1 of the ITAA 1997; and (2) whether the administrative penalties applied by the Commissioner were correctly imposed and whether they should be remitted, in whole or in part.

The Tribunal considered the applicants' reliance on the High Court's decision in *Steele*, which concerned the deductibility of outgoings. The applicants argued that their intention for the property was commercial, aiming to generate rental income from a residence and later a commercial office, and potentially acquiring adjacent land to facilitate this. However, the Tribunal found that over a period of 17 years, there was insufficient "meaningful action" to evidence this intention. The Tribunal concluded that the applicants did not demonstrate the necessary degree of commitment to an income-producing activity, distinguishing their situation from that in *Steele*. Regarding the penalties, the Tribunal found no basis to remit them, concluding that the applicants had failed to establish that they were incorrectly applied or should be remitted.

Consequently, the Tribunal affirmed the Commissioner's objection decisions. The applicants failed to discharge the onus of proof under section 14ZZK of the *Taxation Administration Act 1953* (Cth) to demonstrate that the assessments were excessive or incorrect, and they also failed to establish grounds for remitting the administrative penalties.