Ross and Commissioner of Taxation (Taxation)

This matter concerned appeals by Mr Shane Ross and Mrs Alexandra Ross against default assessments and administrative penalties issued by the Commissioner of Taxation. The Commissioner had conducted a covert audit of the appellants' affairs, concluding that Mr Ross had failed to disclose approximately $843,989 in assessable income and Mrs Ross approximately $466,080. This led to amended assessments and the imposition of penalties, which the appellants objected to, with their objections being disallowed. The proceedings were heard together by Deputy I R Molloy P.

The primary legal issues before the court were whether the appellants had discharged their onus of proving that the Commissioner's default assessments of their taxable income were excessive, and whether the administrative penalties imposed were appropriate. Specifically, the court had to determine if the evidence presented by the appellants was sufficient to establish their true taxable income and to disprove the Commissioner's findings, particularly in light of the Commissioner's Asset Betterment Statement. The court also considered the Commissioner's reliance on the "fraud or evasion" exception under s 170 of the Income Tax Assessment Act 1936 (Cth) for amended assessments made outside the statutory time limit.

The court found that the onus remained on the appellants to prove their case on the balance of probabilities, and this onus was not satisfied by merely demonstrating flaws in the Commissioner's calculations or by making concessions. For Mrs Ross, the court found her evidence insufficient to establish that the bank accounts analysed were her only accounts, and therefore could not infer that all transfers to her were not assessable income. For Mr Ross, the court found his evidence to be inherently implausible and unacceptable due to a lack of sufficient and reliable contemporary documentation, leading to the conclusion that his evidence could not be accepted for any of the years in question.

Ultimately, the court concluded that Mrs Ross had not discharged her onus of proof regarding the default assessments for 2013 and 2014, nor had she established that the penalty for 2013 should not be affirmed. However, the penalty for 2014 was varied to 50% of the shortfall amount due to recklessness. Mr Ross had not discharged his onus of proof in relation to the amended assessments, and his evidence was found to be unacceptable. The court did not find sufficient grounds to remit any of the penalties or assessments.