Royal Lion Capital Pty Ltd and Commissioner of Taxation (Taxation)

The Administrative Appeals Tribunal considered a dispute between Royal Lion Capital Pty Ltd (the Applicant) and the Commissioner of Taxation (the Respondent) concerning Goods and Services Tax (GST) assessments. The reviewable decision under consideration disallowed the Applicant's objection to assessments of net GST amounts for the period of 1 April 2018 to 31 December 2018. The Applicant, incorporated in December 2017 and describing its main business activity as 'management consulting service', had not registered for GST. The Respondent conducted a covert audit using a bank account methodology, concluding that the Applicant had exceeded the GST registration turnover threshold and was carrying on an enterprise of providing investment services.

The Tribunal was required to determine two primary legal issues: first, whether the Applicant was required to be registered for GST during the relevant tax periods; and second, if so, whether the Applicant had discharged its burden of proof to demonstrate that the issued GST assessments were excessive or otherwise incorrect, and what the correct assessments should have been.

The Tribunal applied the principle that the taxpayer bears the onus of proving, on the balance of probabilities, the extent to which an assessment is excessive. It noted that a failure to retain or create records evidencing business activities significantly hinders this proof, a difficulty the Applicant faced in this case. The Tribunal agreed with the Respondent's summary of the Applicant's evidence, finding it lacking and unreliable. Specifically, the Applicant failed to provide a clear description of its business activities, lacked formal documentation for significant transactions, and provided supporting bank statements that were merely undated records already known to the Commissioner. Furthermore, the Applicant failed to supply crucial information such as loan agreements, evidence of loan repayments, and complete bank statements, and provided inconsistent explanations for certain deposits.

Consequently, the Tribunal affirmed the reviewable objection decision. It found that the Applicant was required to be registered for GST and had failed to discharge its onus to prove that the assessments for the tax periods were excessive or incorrect. The assessments made on 3 April 2019 were therefore to be varied to the extent outlined in the Respondent's informal review decision.