QFP Professional Tomato Project 98 and Ors and Commissioner of Taxation - [2010] AATA 864

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2010] AATA 864

ADMINISTRATIVE APPEALS TRIBUNAL )

) No: 2008/1565; 2008/1566;

TAXATION APPEALS DIVISION ) 2008/1567
ReQFP Professional Tomato Project 98; and
QFP2 Tomato Project 99; and

The All Farm Windsor Mushroom Project

Applicants

And Commissioner of Taxation

Respondent

DECISION

TribunalThe Hon B Tamberlin QC, Deputy President
Date4 November 2010
PlaceSydney
DecisionThe decision under review is affirmed.
.............[sgd].................................
The Hon B Tamberlin QC
Deputy President

CATCHWORDS

TAXATION – Goods and Services Tax – creditable acquisition – management and other services provided for an agricultural scheme – input tax credit claimed – no evidence of consideration being paid within 12 months of the invoice – increasing adjustment required to be made – no increasing adjustment made by applicant – amended notices of assessment increasing the amount of GST owing issued by Commissioner – applicant failed to prove the debts had been discharged – GST owed - decision affirmed

TAXATION - penalties – recklessness - misleading statement – no reasonable explanation - 50% rate applied – decision affirmed

RELEVANT ACT/S

A New Tax System (Goods and Services Tax) Act 1999 (Cth)

Taxation Administration Act 1953 (Cth)

CITATIONS

Hua – Aus Pty Ltd v Federal Commissioner of Taxation (2010) 184 FCR 430

Vale Press Pty Ltd v Commissioner of Taxation (1994) 53 FCR 92

REASONS FOR DECISION

4 November 2010

The Hon B Tamberlin QC, Deputy President

These three matters concern applications for review of objection decisions of the Commissioner disallowing the Applicants’ objections to Notices of Assessment of GST in respect of various periods together with Notices of Assessment of penalties for tax shortfall amounts.
The Notices of Assessment in each case concern “increasing adjustments” made by the Commissioner pursuant to s 21.15 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (the GST Act) for claims for input tax credits made by the Applicants in earlier tax periods.

issues

A primary issue in each application is whether the amounts claimed as the basis for the input tax credit, have been paid in the prescribed period. The second issue concerns penalties.
There are strong similarities between the facts which fall for consideration in each of the applications. I will deal firstly with QFP Professional Tomato Project 98 (2008/1565) as showing the nature of the factual context.

QFP Professional Tomato Project 98 (Project 98)

The present application is now limited to the Notices of Assessment issued for tax periods ended 31 December 2003 and 31 December 2004, and associated penalties imposed in respect of shortfall amounts for these periods. The amount of revised net GST payable in each case is $118,600 and $50,380 respectively.
The Commissioner also issued a GST shortfall penalty assessment in each of the periods at 50 percent of the relevant shortfall amount. The Applicants' objections in relation to the shortfall penalty were disallowed.

background

Project 98 is a registered partnership for GST purposes comprising participants in the QFP Professional Tomato Project established on…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

AGLC: QFP Professional Tomato Project 98 and Ors and Commissioner of Taxation [2010] AATA 864
Case: [2010] AATA 864
Decision Date: 4 November 2010

CaseChat Overview and Summary

In the case of QFP Professional Tomato Project 98 and Others v Commissioner of Taxation, the dispute centred on the applicant's claim for input tax credits in relation to goods and services tax (GST) for an agricultural scheme. The matter was heard and determined in the Administrative Appeals Tribunal of Australia (AAT). The applicants, who were involved in an agricultural scheme, sought to claim input tax credits for management and other services rendered. The Commissioner of Taxation issued amended notices of assessment, increasing the amount of GST owing due to the applicants' failure to make the required increasing adjustments. The applicants also faced penalties for recklessness and providing misleading statements, as they failed to provide a reasonable explanation for their actions.

The central legal issues the AAT had to address were whether the applicants were entitled to the input tax credits they claimed and whether the penalties imposed by the Commissioner were justified. The AAT examined whether the applicants had provided evidence of consideration being paid within 12 months of the invoice, as required by the A New Tax System (Goods and Services Tax) Act 1999 (Cth). The AAT also considered the applicants' conduct in relation to the penalties, specifically whether the applicants were reckless or provided misleading statements, and if so, whether they had a reasonable explanation for their actions under the Taxation Administration Act 1953 (Cth).

In its reasoning, the AAT found that the applicants did not provide sufficient evidence to substantiate their claim for input tax credits. The AAT held that the applicants had not proven that debts had been discharged within the 12-month period, as required by the relevant legislation. Consequently, the applicants were not entitled to the input tax credits they claimed. Regarding the penalties, the AAT determined that the applicants' conduct warranted a 50% rate of penalty as they failed to provide a reasonable explanation for their actions. The AAT affirmed the Commissioner's decision in both respects, finding that the applicants had not discharged their burden of proof in relation to the input tax credits and that the penalties were justified.

The AAT's final orders affirmed the Commissioner's decision regarding the GST owed by the applicants and the penalties imposed. The applicants were required to pay the increased amount of GST, and the penalties were upheld as justified. The AAT's decision was based on the lack of evidence provided by the applicants to support their claims and the absence of a reasonable explanation for their conduct in relation to the penalties.

Orders