Skourmallas and Commissioner of Taxation (Taxation) - [2019] AATA 5535

Skourmallas and Commissioner of Taxation (Taxation) [2019] AATA 5535 (20 December 2019)
Division:TAXATION AND COMMERCIAL DIVISION
File Number: 2018/6259
Re:Anastassios Skourmallas
APPLICANT

AndCommissioner of Taxation
RESPONDENT

DECISION
Tribunal:Senior Member R J Olding
Date:20 December 2019
Place:Brisbane

The decisions under review are set aside and substituted with decisions wholly allowing the objections.
..............................[Sgd].........................................
Senior Member R J Olding
Catchwords
TAXATION – Goods and Services Tax (GST) - input tax credits - creditable acquisitions – whether applicant carrying on business as a motor dealer – whether acquisition of a luxury motor vehicle in the course of an enterprise – whether of a private or domestic nature – whether applicant acquired the vehicle – Luxury Car Tax (LCT) – whether vehicle acquired and used only as trading stock – time for testing intention and use as trading stock - burden of proof discharged – decisions set aside.
Legislation
A New Tax System (Goods and Services Tax) Act
1999 (Cth), ss 9-20, 11-5, 11-`15
1999 (Cth), ss 15-30, 27-1

A New Tax System (Luxury Car Tax) Act
Income Tax Assessment Act1936 (Cth)
Taxation Administration Act 1953 (Cth), s 14ZZK
Cases
Bayconnection Property Developments Pty Ltd and Commissioner of Taxation [2013] AATA 40
Cyonara Snowfox Pty Ltd v Commissioner of Taxation [2012] FCAFC 177
Davsa Forty-Ninth Pty Ltd as Trustee for the Krongold Ford Business Unit Trust and Commissioner of Taxation [2014] AATA 337
Federal Commissioner of Taxation v Cassaniti [2018] FCAFC 212
Imperial Bottleshops Pty Ltd and Egerton v Commissioner of Taxation (1991) 22 ATR 148
Melbourne Car Shop Pty Ltd v Commissioner of Taxation [2010] FCA 573
REASONS FOR DECISION
Senior Member R J Olding
20 December 2019
INTRODUCTION

In his activity statement for the quarterly tax period ending 30 September 2017,
Mr Skourmallas claimed a Goods and Services Tax (GST) input tax credit (ITC) of $19,809 and a Luxury Car Tax (LCT) decreasing adjustment of $45,843 in relation to the acquisition of an Audi R8 Coupe (‘the Audi R8’) for $263,750.01.
Mr Skourmallas says he is entitled to the ITC and decreasing adjustment because he acquired the Audi R8 as trading stock for his motor dealer business.
The Commissioner of Taxation (‘the Commissioner’) does not accept that Mr Skourmallas is a motor vehicle dealer or that the Audi R8 was acquired for business purposes. In any case, the Commissioner says, it was Mr Skourmallas’s company, Zakynthos Trading Pty Ltd (‘Zakynthos Trading’), not Mr Skourmallas, that acquired the Audi R8.
For these reasons, the Commissioner assessed the net amount for the tax period disallowing the claimed ITC and decreasing adjustment, resulting in a total shortfall of $65,652. The Commissioner also assessed an administrative penalty of $16,413, calculated at the rate of 25% of the alleged shortfall on the basis that the shortfall arose out of failure by Mr Skourmallas to exercise reasonable care in relation to his activity statement. No part of the penalty was remitted by the Commissioner.
Mr Skourmallas objected against both assessments. The Commissioner wholly disallowed the objections. Mr Skourmallas seeks reviews of these objection decisions.
BURDEN OF PROOF
Mr Skourmallas has the burden of proving on the balance of probabilities that the assessments were excessive or otherwise incorrect and what the assessments should have been.[1]
[1] Taxation Administration Act1953 (Cth), s 14ZZK.
I approach consideration of whether Mr Skourmallas has discharged this burden with the following principles in mind:
(a)Facts may be found on the basis of oral evidence alone. There is no barrier to a fact being found on the uncorroborated evidence of an applicant. There is no requirement that direct evidence by oral testimony or affidavit may only be accepted if corroborated.
(b)However, self-serving statements should be given close scrutiny.
(c)Nevertheless, evidence of the taxpayer is not to be regarded as prima facie unacceptable.[2]
(d)If the taxpayer succeeds in ‘weighing down [the] scales ever so slightly in his favour then he has discharged the burden he carries’.[3]
(e)In respect of GST, production of a tax invoice may provide evidence that an acquisition has been made by an entity. However, a tax invoice does not create a taxable supply to an entity; it only records one, and does not of itself create an entitlement to an ITC. Scrutiny of the actual transaction is required.[4] The same may be said when considering whether a taxpayer satisfies the requirements for a decreasing adjustment.
[2]     For this and the preceding propositions, see, for example: Imperial Bottleshops Pty Ltd and Egerton v Commissioner of Taxation (1991) 22 ATR 148, 155; and FederalCommissioner of Taxation v Cassaniti [2018] FCAFC 212.
[3]     FederalCommissioner of Taxation v Cassaniti [2018] FCAFC 212, [88].
[4]     Bayconnection Property Developments Pty Ltd and Ors and Commissioner of Taxation [2013] AATA 40.
I deal separately with the issues arising in relation to the ITC (GST), the decreasing adjustment (LCT) and penalty. However, before doing so, I record some agreed facts and then make some observations about the Commissioner’s closing submissions regarding Mr Skourmallas’s credit.
SOME AGREED FACTS
The following facts are not in contention:
(a)9 November 2015 - Mr Skourmallas was issued a Statement of Attainment by Fusion Business College for completion of nine units of competency relating to motor vehicle trading.
(b)23 November 2015 - Mr Skourmallas was issued an Australian Business Number (ABN) and became registered for GST.
(c)24 November 2015 – The Queensland Office of Fair Trading issued a Motor Dealer Licence to Mr Skourmallas.
(d)1 June 2016 - Mr Skourmallas became registered for LCT.
(e)Apart from the Audi R8, between 7 December 2015 and 31 March 2017 Mr Skourmallas purchased and resold seven luxury vehicles. However, three of the sales were sales back to the dealer from which the vehicles were purchased.
(f)12 July 2017 - a contract for the purchase of the Audi R8 from Audi Centre Perth for $263,001 (later adjusted to ($263,750.01) was entered into and the vehicle was subsequently transported to Audi Centre Gold Coast for collection by Mr Skourmallas. (The identity of the purchaser is controversial, as discussed below.)
(g)21 August 2017 – Westpac approved a loan to Zakynthos Trading to help fund the purchase of the Audi R8.
(h)29 August 2017 – Purchase of the Audi R8 was completed.
(i)31 August 2017 – Westpac registered a security interest granted by Zakynthos Trading over the Audi.
(j)The Audi Centre Perth recorded the Audi R8’s odometer reading at 2,610 kilometres at the time of sale.
(k)9 October 2017 - The Audi was registered in the name of Mr Skourmallas, who subsequently affixed the personalised number plate ‘TASO’ which is his nickname.
(l)1 November 2017 – The Commissioner’s officers observed the Audi R8 at
Mr Skourmallas’s home, with no number plates attached, and recorded the odometer reading at 2,778 kilometres.
(m)The Audi R8, and other vehicles of which Mr Skourmallas took delivery, were garaged at his home at all relevant times.
(n)Mr Skourmallas did not have:
(i)a car yard;
(ii)signage;
(iii)business cards;
(iv)a website;
(v)a logbook or other record of test drives or other use of the Audi or other vehicles; and/or
(vi)a record of prospective purchasers or their contact details.
(o)The Audi R8 was sold on 22 October 2018 for $225,000.
(p)At the time of the sale, the Audi’s odometer reading was 7,008 kilometres.
MR SKOURMALLAS’S CREDIT
Mr Brennan, who appeared for the Commissioner, in further written closing submissions filed after the hearing, submitted that Mr Skourmallas was ‘not a credible witness’ and that his evidence should not be accepted ‘unless it is otherwise corroborated by contemporaneous documents from a verifiably independent source’.
I do not accept the characterisation of Mr Skourmallas as not a credible witness. Given the importance of his evidence, I should explain why.
I am mindful of the limitations upon the ability to form an accurate impression of the truthfulness or otherwise of a witness on the basis of their demeanour when giving evidence. That is especially important where a witness, as in the case of

Mr Skourmallas, while relatively fluent, does not speak English as his first language.
Listening to Mr Skourmallas responding to cross-examination, I could understand how an impression of belligerence might be formed. His responses were certainly agitated and argumentative at times, but that has to be considered against the background already mentioned and the context in which the questions were asked. Mr Skourmallas would not be the first witness to respond emotionally to questions that directly asserted that he fabricated a document or, in one series of questions, baldly stated: ‘Mr Skourmallas, you’re lying? . . . I’m telling you that you’re lying’.[5] An animated or argumentative response may not be helpful but in that context does not necessarily indicate absence of truthfulness.
[5] Transcript, 71, lines 25-27.
Hence, my rejection of the characterisation of Mr Skourmallas as not being a credible witness is based rather more on dispassionate analysis of his answers than on impressionistic responses to their delivery. Further, I have tested the view I tentatively formed by examining the examples highlighted in the Commissioner’s submissions. Those submissions pointed to six purported reasons for characterising Mr Skourmallas’s evidence as not credible, which I address below.
The first is that Mr Skourmallas:
(a)tended to volunteer self-serving answers rather than answer the questions asked of him. This was particularly noticeable when
Mr Skourmallas (consistently) interrupted the examiner before a question had even been asked.
I have examined each of the footnoted references to the transcript in relation to this part of the submission. It is true that there are examples of Mr Skourmallas needing to be reminded to allow the questioner to finish the question, and while these could be seen as evidencing a tendency to volunteer self-serving answers, the examples did not strike me as suggesting any tendency to avoid answering the question posed. It suffices to give one example of an exchange[6] that the submissions list in support of this assertion:
[6] Transcript, 20 – 21, lines 42-45; 1-11.
MR BRENNAN: This company here, Inparallel Australasia Pty Ltd? ---
MR SKOURMALLAS: That’s the buyer.
MR BRENNAN: That’s the buyer? ---
MR SKOURMALLAS: Correct.
MR BRENNAN: Do you – are you a director of that company? ---
MR SKOURMALLAS: No, there was no association whatsoever.
MR BRENNAN: Just listen to the questions, please. You’re not a director of the company? ---
MR SKOURMALLAS: No.
MR BRENNAN: Are you a shareholder of the company? ---
MR SKOURMALLAS: No.
MR BRENNAN: Do you have any relationship with that company at all? ---
MR SKOURMALLAS: No.[7]
[7] This extract includes some preceding questioning to provide context to the impugned exchange.
Certainly the exchange may reveal an eagerness by Mr Skourmallas to respond to the direction signalled by the question, rather than to confine himself to answering the question actually asked. But I cannot see how Mr Skourmallas’s response indicates any tendency to avoid answering questions, nor in any other way points to him being a dishonest witness. Impatience with a witness should not be mistaken for witness dishonesty.
The next allegation is that Mr Skourmallas:
(b)was evasive in many of his answers.
No attempt was made to substantiate this allegation with examples drawn from the transcript.
The next allegation was that Mr Skourmallas:
(c)initially sought to resist propositions with which he was subsequently forced to agree.
The following exchange was footnoted in support of this allegation:
MR BRENNAN: Okay. Now you didn’t advertise as a dealership, did you? ---

MR SKOURMALLAS: Yes, I did. It’s on (indistinct) those two ads. It says the dealer’s number and the fact that I’m a dealer.

MR BRENNAN: Okay. Now, just listen to the question again. I’m not asking you about advertising for individual cars. You understand that? ---

MR SKOURMALLAS: M’mm.

MR BRENNAN: I’m asking you whether or not you advertised for the dealership. Do you understand that? ---

MR SKOURMALLAS: So you’re asking me if I’ve advertised that -

MR BRENNAN: That you were a dealer? ---

MR SKOURMALLAS: I don’t – I don’t understand the question.
MR BRENNAN: Okay. So there’s a dealership on the north coast called Mike Brennan’s Cars. Okay. I know about it because a distant relative. And he advertises in various – on – you know, on the internet and things like that, for Mike Brennan’s Cars. What I am asking you is did you ever advertise in a similar way for your dealership? ---
MR SKOURMALLAS: I advise individually the cars that I had in stock at the time. I did not advertise my personal name as if I’m something bigger than I am.[8]
[8] Transcript, 23, lines 24-42.
I cannot see how that exchange could fairly be characterised as Mr Skourmallas initially resisting a proposition and then being forced to accept it. On a fair reading, it seems to me that Mr Skourmallas first responded fully to the question he thought he was being asked and his initial interpretation of the question was not unreasonable. Once he understood the question properly, he gave a straightforward answer. I cannot accept that the exchange in any way reflects poorly on Mr Skourmallas. Without any criticism of

Mr Brennan, the nature of the exchange says more about the clarity of the question and the inherent ambiguity of language, than it does about Mr Skourmallas’s tendencies as a witness in this proceeding.
The next allegation is that Mr Skourmallas:
(d)revealed that he was prepared to lie, at least to carsales.com, in order to avoid the higher costs of telling the truth.
This allegation relates to Mr Skourmallas being registered with carsales.com.au as a private seller rather than a dealer. Mr Skourmallas gave evidence, which I accept, that he had been registered with carsales.com.au as a private seller ‘years and years’ before listing the Audi R8 and other vehicles for sale.[9] He explained that if he registered as a dealer he would be charged $500/month so he didn’t change the registration to dealer status while he was generally holding only one vehicle at a time.[10]
[9] Transcript, 59, lines 1-2.
[10] Transcript, 58, lines 23-43.
The exchange which the Commissioner says reveals Mr Skourmallas was prepared to lie to avoid the higher costs of telling the truth was:
MR BRENNAN: So you were actually telling Carsales an untruth, weren’t you? ---
MR SKOURMALLAS: I wasn’t telling Carsales an untruth. I was trying to avoid high costs starting up a new business.[11]
[11] Transcript, 59, lines 13-15.
Again, this needs to be considered in context. It was preceded by the following exchange:
MR BRENNAN: And then how long after you originally had it as a – a private seller did you change it to a dealer? ---
MR SKOURMALLAS: I never change it on Carsales as a dealer because I didn’t want to pay $500 a month. So when I was told, “You’re not allowed to do this”, I just pulled it back – the ad back – out of online.
MR BRENNAN: But that’s important information for a seller to know, isn’t it, that they’re buying from a - - - ? ---
MR SKOURMALLAS: Yes. Well, like I said before, I – in the description of the car, I clearly said trade-ins included, finance available, interstate freight, which anyone who reads the ad would know straight away this is an ad – this is an ad from a – from a dealer. So I was just trying to cut costs down. That’s why - - -[12]
[12] Transcript, 58, lines 33-43.
As can be seen from this exchange, there was no attempt by Mr Skourmallas to hide his alleged status as a dealer. It is to be expected that any reader would infer from the reference to trade-ins, finance and so on that the vehicle was not being advertised by a person selling their private vehicle. Indeed, it appears this is what occurred with the Carsales organisation itself.
Again, once considered in its context, the characterisation of the nominated exchange as evidence that Mr Skourmallas was prepared to lie to avoid the higher costs of telling the truth is not a fair description of what occurred. Mr Skourmallas expressly rejected the proposition put to him that he was telling an untruth.
The next allegation in the Commissioner’s submissions is that Mr Skourmallas:
(e)argued with the cross examiner
No examples were cited for this allegation, but I accept that Mr Skourmallas did often answer questions in an argumentative way. However, I do not accept that indicates his answers were dishonest.
The final allegation is that Mr Skourmallas:
(f)gave evidence which was inconsistent with common sense.
No examples were cited by the Commissioner in support of this allegation in his general submissions on Mr Skourmallas’s credit. However, the allegation is also made in relation to Mr Skourmallas’s evidence regarding the use of a Maserati, discussed further below. Mr Skourmallas, while maintaining that greater use of this vehicle occurred because his private vehicle was unavailable for a period, nevertheless somewhat doggedly insisted that the Maserati was used for business purposes.[13] The same allegation is made in relation to evidence in respect of tax invoices for the Audi R8, which I examine further below. While Mr Skourmallas’s evidence again was somewhat dogged, it was given in response to cross examination which included the direct assertion that he was lying. I consider that any inconsistency is more likely to have arisen out of confusion and an emotional response to vigorous cross examination than deliberate attempts to mislead the Tribunal.
[13] Transcript, 38, lines 1-29.
Overall, I do not accept that the allegation that Mr Skourmallas was not a truthful witness is made out.
ISSUES – GST
To be entitled to the ITC, Mr Skourmallas must show that he acquired the Audi R8 for a ‘creditable purpose’ which relevantly means that he acquired the vehicle in carrying on an enterprise and that the acquisition was not of a private or domestic nature.[14]
[14] A New Tax System (Goods and Services Tax) Act 1999 (Cth), ss 11-5, 11-15.
Accordingly, the following issues arise in relation to the ITC:
(a)Did Mr Skourmallas acquire the Audi R8?
(b)Was Mr Skourmallas carrying on an enterprise?
(c)Did Mr Skourmallas acquire the Audi R8 in carrying on an enterprise?
(d)Was the acquisition of the Audi of a private or domestic nature?
To be entitled to the ITC, Mr Skourmallas must establish that the answer to questions (a), (b) or (c) is ‘yes’ and the answer to question (d) is ‘no’.
(a) Did Mr Skourmallas acquire the Audi R8?
Mr Skourmallas maintains that he acquired the Audi R8. That position was accepted at objection. However, in the Tribunal, the Commissioner argued it was Zakynthos Trading that acquired the vehicle. There are indications in support of both contentions.
Consistent with Mr Skourmallas’s position:
(a)The contract with Audi Centre Perth records Mr Skourmallas as the purchaser.
(b)Mr Skourmallas paid the deposit for the vehicle.
(c)Mr Skourmallas registered the vehicle with the Department of Transport in his own name.
(d)Mr Skourmallas insured the vehicle in his own name.
(e)
The invoice for the subsequent sale of the vehicle issued in the name of

Mr Skourmallas as seller and the proceeds directed to his bank account.

On the other hand, the Commissioner points to these factors:
(a)Westpac Bank, from whom Mr Skourmallas obtained finance to complete the purchase of the vehicle, loaned funds to Zakynthos Trading, not Mr Skourmallas.
(b)A security given to the Bank to secure this loan was granted by Zakynthos Trading.
Additionally, during cross-examination of Mr Skourmallas, a controversy emerged regarding the tax invoice for the purchase of the vehicle, as discussed further below. This issue is intertwined with the finance being provided to Zakynthos Trading and the security for repayment of the financed amount being granted to Westpac by that company rather than Mr Skourmallas, since the Bank asked for the tax invoice to be made out in the name of the company as purchaser.
Mr Skourmallas gave evidence, which I accept, that Westpac offered a more favourable interest rate if the loan was made to Zakynthos Trading. No explanation was offered for why the Bank imposed that requirement. It may be that Westpac held other securities over the assets of that company, although in that case one wonders why a separate charge would be required; in any case, this is mere speculation and I make no finding regarding Westpac’s motives.
More importantly, there was no evidence why Westpac accepted a charge purportedly given by Zakynthos Trading rather than Mr Skourmallas, when the contract, vehicle registration and insurance were all in the name of Mr Skourmallas. It can only be that Westpac understood that company to be the owner of the vehicle and certainly the granting of the charge by the company is inconsistent with ownership by Mr Skourmallas.
Mr Skourmallas also put into evidence a loan agreement between himself and his wife, as borrowers, and Zakynthos Trading, as lender. The agreement does not relate specifically to Zakynthos Trading lending money to Mr Skourmallas for the purchase of the Audi R8. It is an agreement to cover borrowings from time to time, of the type commonly entered into by taxpayers to evidence that a payment by a company should not be treated as a dividend for the purposes of Part III, Division 7A of the Income Tax Assessment Act1936 (Cth) (‘ITAA36’).
Mr Brennan’s submissions sought to dismiss the relevance of this document to whether Zakynthos Trading or Mr Skourmallas purchased the Audi R8, and in particular whether any purchase by the company was on behalf of Mr Skourmallas, in part on the basis that the agreement names both Mr Skourmallas and his wife as ‘borrower’. Given its express purpose of preventing loans being treated as dividends for tax purposes, it may be the case that the agreement, properly construed, would be treated as covering a loan to either one or both borrowers. It would be surprising if the Commissioner disregarded it for Part III, Division 7A, ITAA36 purposes. I do not need to determine this question because, even if it would cover a loan to Mr Skourmallas alone, the general nature of the agreement means that it would be of little assistance in determining the true purchaser of the Audi R8.
However, this does not mean that I reject the contention that the company in turn loaned money to Mr Skourmallas to enable him to complete the purchase of the Audi R8.

Mr Skourmallas gave direct evidence to that effect. Having formed a more favourable view of his honesty as a witness, I see no reason not to accept that evidence.
Registration of the vehicle in the name of Mr Skourmallas does not establish that he is in fact the owner. It is not a case of ‘title by registration’. However, nor is the registration irrelevant. It is evidence of the intention of Mr Skourmallas that he would be the owner of the vehicle, an intention further supported by Mr Skourmallas insuring the vehicle in his own name – an important consideration in view of the value of the vehicle – and ultimately selling it in his own name.
A tax invoice duly issued showing the company as purchaser as Westpac, and in turn

Mr Skourmallas, had requested. But there was also a tax invoice, styled a ‘Reprint’ and showing Mr Skourmallas as purchaser. It was put to Mr Skourmallas that he fabricated this tax invoice, which he strenuously denied. I observe that it would have been a poor attempt at fabrication, since the ‘Reprint’ bears the date 20 September 2017, rather than the date of the transaction. A more likely explanation is that it is indeed a reprint which bears the date on which it was reprinted. This questioning was, it is to be assumed, premised on an email from a staff member at Audi Centre Perth, also in evidence, advising that only the one tax invoice, in the name of the company, had issued. However, it was not clear that the writer had personal knowledge of what other staff members may or may not have done.
There was some cross-examination regarding another email from Audi Centre Perth which Mr Skourmallas maintained attached the tax invoice naming him as purchaser, which seemed inconsistent with a later email in which Mr Skourmallas asked for his personal ABN to be included. Why would that be necessary if the tax invoice had already issued to Mr Skourmallas? It may be that Mr Skourmallas was mistaken in this regard – he did say that he was dealing with this matter while overseas, so it would not be particularly startling if he were to mistakenly ask for his ABN to be added when an invoice which included his ABN had already been sent.
Having regard to these matters, I am satisfied on balance that Mr Skourmallas did not fabricate the second tax invoice. Quite aside from the actual document, Mr Skourmallas’s request for his personal ABN to be added is in any case consistent with his assertion that the Audi R8 was to be purchased in his own name and not by the company.
On balance, I am persuaded that the Audi R8 was purchased by Mr Skourmallas. Aside from the granting of the charge by the company, which I accept is a strong contrary indicator, and the tax invoice issue which with it is inextricably connected, the objective evidence points to the intention being that Mr Skourmallas would be the purchaser. That is consistent with Mr Skourmallas’s own evidence of his intentions and with his actions in registering, insuring and selling the vehicle in his own name, and with the sale proceeds being directed by the invoice to an account in his name.[15]
[15] Transcript, 88, lines 1-9.
The alternative that Mr Skourmallas intended that the company would purchase the vehicle is inherently improbable and does not sit comfortably with the Commissioner’s hypothesis that the vehicle was acquired for private purposes. Why would Mr Skourmallas purchase a vehicle for private purposes in the name of a company, while at the same time maintaining the vehicle was acquired as trading stock in a business he conducted as a sole trader? Additionally, it would be surprising if Mr Skourmallas would put at risk insurance cover on a high value vehicle of this kind by insuring it other than in the name of the owner of the vehicle.
(b) Was Mr Skourmallas carrying on an enterprise?
This issue comes down to whether Mr Skourmallas was carrying on a business. It is not suggested that any other element of the definition of ‘enterprise’ is relevant.[16]
[16] A New Tax System (Goods and Services Tax) Act 1999 (Cth), s 9-20.
The principles to be applied in deciding whether a business is carried are well known.
Mr Brennan helpfully drew attention to the reasons for the decision of a Senior Member of this Tribunal in Davsa Forty-Ninth Pty Ltd as Trustee for the Krongold Ford Business Unit Trust and Commissioner of Taxation[17] (‘Davsa’) where the principles are comprehensively captured as follows:
[17] [2014] AATA 337.
12. There is a non-exhaustive definition of business in s 195-1 of the GST Act. It mirrors the income tax legislation definition. However, on its own, it offers little guidance as to what constitutes a business.
13. Whether an activity or series of activities constitutes carrying on a business and whether a particular activity forms part of any business:
(a) is a question of fact and degree;
(b) requires examination of a number of indicators including:
(i) whether:
(1) the actor has a commercial and/or profit making purpose;
(2) the transactions have a commercial character;
(3) the activities are systematic and organised or are undertaken in a business-like manner. In this regard whether adequate books and records are maintained and whether a systematic approach is adopted to the conduct of the activities are relevant and necessary enquiries;
(4) ordinary commercial principles, typical of the kind of business said to be being pursued are applied in undertaking the activities under review;
(5) the activities are undertaken on a continuous and repetitive basis; and
(6) the scale of the activities. Whether the scale of activities, including the amount of capital employed in the activities, was substantial assists in distinguishing between a business and activities constituting a hobby; and
(c) requires the scope of the business contended for to be identified.
14. In undertaking the examination and characterising the activities in question:
(a) a wide survey and an exact scrutiny of the activities under review is required;
(b) no one of the factors to be examined is necessarily decisive;
(c) all factors to be considered are to be taken into consideration in combination as a whole;
(d) it is not necessary that relevant profits are intended for a particular year, or, for some businesses, at all; and
(e) activities may constitute a business even where carried on in a limited way in preparation for larger scale operations, or when carried on with a lack of business efficiency making mistakes along the way;
(f) activities that have a commercial character ordinarily involve predominantly consensual business transactions or predominantly contractual business relationships and activities that lack these features lack the essence of commercial activities;
(g) it is neither the Commissioner's nor the Tribunal's role or function to dictate to a taxpayer how to conduct business or what business to conduct, and that principle applies notwithstanding that viewed in hindsight the taxpayer's decisions were poor, or, worse, profligate; and
31. while the required test has regard to objective matters and facts, because intentions and purposes are matters to be examined subjective matters can also be relevant to the enquiry. In the ordinary course, matters of characterisation are determined by applying objective tests to objectively observed facts and reference to subjective intentions, purposes and/or motives is not part of the analysis required – particularly where the outcome is clear by reference to those objective factors. Not having regard to subjective matters is not a reflection of the role they play, rather it is because it is not seen as necessary in particular circumstances. Where a clear answer is not given by reference to objective matters alone, subjective considerations have a role to play. Potentially colourable circumstances in which the events to be characterised occur, disproportion between income received and expenditures, or an absence of income of any description invite consideration of subjective matters. Moreover, those considerations may be decisive in a particular case.
(Footnotes omitted)
As this extract makes clear, the question is one of fact and degree, with no one factor being determinative. Scale is but one factor and it is well established that a business may exist on a small scale.
Additionally, it is important to bear in the mind the nature of the business said to be conducted when considering the presence or otherwise of the indicia of a business. For example, the absence of a formal business plan might be striking in some contexts, but I would give that factor little weight in the context of the type of business Mr Skourmallas described: a sole proprietorship, starting on a small scale and operating from home. As

Mr Skourmallas noted, he did in fact have a plan, as he articulated, albeit not of a sophisticated kind reduced to writing in the way that might be expected in other contexts.
Similarly, for a business being operated at minimal expense, on a small scale using contacts, word of mouth and online advertising to attract sales, it is not particularly startling that Mr Skourmallas has not at his point incurred the expense of establishing and maintaining a website. There are many businesses that market their products or services through social media and/or word of mouth, but do not have websites. As Mr Skourmallas said in evidence:
Well, last time I checked no one looks at newspapers, and at business cards. People take – on the internet when they want to purchase a car. Or they go by, you know, word of mouth. So my advertising – I had the biggest (indistinct) in Australia in three websites, so why would I need to do anything more than that. Putting a website in my name will get no hits whatsoever. So being on the three most prominent websites in Australia, it’s enough . . .[18]
[18] Transcript, 25, lines 3-10.
It is true that Mr Skourmallas does not have a show room, car yard or other such indicia of a conventional motor vehicle dealership. But the Commissioner’s officers who visited his home on 2 November 2017 found that the Audi R8 was:
. . . housed on its own to the left hand side in a pristine double garage.[19]
[19] ST8, page 570.
Again, it is important to remember that Mr Skourmallas says he has not set out to establish a conventional motor dealership but rather a business involving low volume, high value sales, operated at low cost from his home and targeting a niche market. The large number of enterprises in contemporary Australia operated by individuals from their homes, engaging the services of Ebay and promoting their goods and services through social media, demonstrates that modern businesses may take many forms. The features of businesses operated in this way are markedly different from those operated in the traditional way from retail premises, but they are certainly businesses. It would be a mistake to give significant weight to the absence of features of traditional businesses, such as showrooms and premises for storage, that are not necessary or appropriate for an entirely different business model or stage in the development of an alleged business.
As reference to the appendix to these reasons indicates, Mr Skourmallas has established a pattern of acquiring and re-selling vehicles, albeit on a small scale. No rational reason for doing so, other than for business purposes, is suggested by this pattern of activity.
It does not, for example, suggest that Mr Skourmallas bought and re-sold the eight vehicles listed in the appendix over the period of about 20 months as private vehicles or, as the Commissioner suggests, to indulge a hobby. Mr Skourmallas and his wife each had their own private vehicles. If the intention was to indulge in a hobby of acquiring luxury vehicles, it has turned out to be an expensive hobby indeed, with significant losses incurred from relatively short periods of ownership.
On the other hand, consistent with this professed intention, Mr Skourmallas has managed to generate a profit on the sale of at least one vehicle and also, if he is successful in this review, on the sale of the Audi R8, albeit that profit is dependent upon Mr Skourmallas obtaining the benefit of the decreasing adjustment and may be impacted by a subsequent liability for increasing adjustments, as noted in my observations below.
Mr Skourmallas provided a coherent explanation of his plans for generating a profit. As he described them, his plans are not inherently unlikely to generate a profit. Whether that will ultimately occur in an enduring way remains to be seen, but it is not for me or the Commissioner to substitute our judgement regarding the merits or otherwise of

Mr Skourmallas’s plans.
Having regard to these matters, I accept Mr Skourmallas’s evidence that he intended to generate a profit from purchasing and reselling luxury vehicles. In addition to the pattern of purchases and sales, Mr Skourmallas going to the trouble and expense of undertaking nine subjects in the course of study for which he was awarded a Statement of Attainment, and obtaining a motor dealer’s licence, is consistent with his professed intention of operating a motor dealership, albeit on small scale, at least in the beginning.
None of these factors is, of course, conclusive but they are consistent with

Mr Skourmallas’s case. It was not put to Mr Skourmallas that undertaking the course of study, and obtaining a dealer’s licence and a dealer’s profile at the Department of Transport,[20] was part of some elaborate ruse to defraud the tax system, which is implicit in the Commissioner’s suggestion that the vehicles were acquired to indulge a hobby.
[20] Transcript, 89, lines 1-3.
In that regard, with two main exceptions, the vehicles travelled relatively low kilometres during their periods of ownership by Mr Skourmallas. One exception is the Audi R8, but, as discussed below, it did not travel longer distances until well after the dispute with the Commissioner emerged.
The other exception is vehicle 4 in the appendix, a Maserati, which travelled almost 5000 kilometres over a period of five months. It may be that there would be a question regarding whether that vehicle was purchased or used as ‘trading stock’, but that arises only in the context of LCT; a vehicle may be purchased for sale in a business context and still travel significant kilometres or even be used significantly for private purposes.

Mr Skourmallas gave evidence, which I accept, that this vehicle was used to a greater extent because his private vehicle was unavailable for a period due to a car accident.
Nor are the vehicles of a type that suggests they might have been acquired as collectors’ items, and in any case the relatively short periods of ownership would be inconsistent with that hypothesis also.
None of this is to say that a failure to make out the alternative hypotheses would be fatal to the Commissioner’s case. It is for Mr Skourmallas to prove his case on the balance of probabilities and to disprove the alternative hypotheses.
However, taking into account all of these matters, and also the discussion of the ‘private’ insurance and advertising below, on balance I am satisfied that Mr Skourmallas was carrying on a business, and therefore an ‘enterprise’.
(c) Did Mr Skourmallas acquire the Audi R8 in carrying on an enterprise?
(d) Was the question of the Audit of a private or domestic nature?
These two questions raise similar issues and may be conveniently dealt with together.
In accordance with the principles outlined earlier, the evidence of Mr Skourmallas that the Audi R8 was not purchased for private purposes, being self-serving, warrants careful scrutiny, but is not to be approached from the perspective that it is prima facie unacceptable. It is also important that such objective evidence as is available, and

Mr Skourmallas’s explanation of it, is examined in its context. Decisions made in the context of a small, unsophisticated business seeking to minimise costs may bear a different complexion than if they were taken in a more professional context.
Value of the vehicle
The Commissioner points to what his submissions described as the ‘dramatic’ increase in the value of the Audi R8 relative to the other vehicles purchased and resold by

Mr Skourmallas.
While this does set the vehicle apart from the others, I do not accept that it amounts to significant evidence that, contrary to Mr Skourmallas’s evidence, the acquisition of the vehicle was of a private or domestic nature. Mr Skourmallas explained his rationale for considering that he could make a profit on a sale of this vehicle.
I note also that the Audi R8 was held by Mr Skourmallas for 420 days, considerably longer than the other, less expensive vehicles. At first glance, this may seem inconsistent with an intention of sale. However, the long period in stock is, I infer, a function of the relatively higher price, as I note that this vehicle was previously in stock at Audi Centre Perth for an even longer period of 450 days.[21]
[21] ST3, page 128, Email from Audi Centre Perth dated 18 May 2018.
Actual use of the vehicle

If Mr Skourmallas cannot establish that he did not acquire the Audi R8 for private or domestic rather than business purposes he will not discharge the burden of proof that falls upon him in this review in relation to the ITC.
In that regard, the subsequent actual use of an acquisition may cast light on its intended use at the time of acquisition. The Audi R8 was ultimately used to a not insignificant degree for purposes other than holding it for resale. However, this did not occur until a few weeks before it was sold.[22] The kilometres travelled prior to that time were relatively minimal - the odometer read only 2778 kilometres when the Commissioner’s officers inspected it on 1 November 2017 and it was advertised much later with only 2822 kilometres - bearing in mind Mr Skourmallas’s evidence that he drove the vehicle from Audi Centre Gold Coast to Brisbane, which does not seem to be contested, and also to enable repairs to be carried out. This is consistent with Mr Skourmallas’s evidence that the acquisition of the Audi R8 was not used for private purposes.
[22] The Commissioner’s submissions summarised Mr Skourmallas’s oral evidence relating to the use of the Audi R8 in the final few weeks of his ownership in these terms: ‘because he was apparently disillusioned with the Commissioner’s investigation and decision-making process’. That rather prosaic summary does not do justice to Mr Skourmallas’s evidence. I do not share the Commissioner’s sentiment that Mr Skourmallas’s ‘evidence should be rejected as being so implausible that it defies any common sense’ and accept that a protracted investigation and dispute resolution process that effectively required Mr Skourmallas’s business to be put on hold pending resolution of the tax issues would be productive of considerable stress and despair.
Although the advertising of the vehicle for sale was limited, Mr Skourmallas gave evidence, which I accept, that he also marketed the vehicle by contacting a number of dealers in luxury vehicles and was able to name several in the course of cross-examination. While only one customer, who ultimately purchased the Audi R8, undertook a test drive, I accept Mr Skourmallas’s evidence that he did not offer test drives for others who inspected the vehicle but did not seem sufficiently serious in their interest in purchasing. Mr Skourmallas’s explanation is rational and not improbable.
Motor vehicle insurance
On 30 August 2017, Mr Skourmallas obtained an insurance quote from Shannons. The quote is notable for these features:
(a)Mr Skourmallas is named as the insured.
(b)The ‘Usage’ is described as:
Usage
Private Use

Extreme Limited Use
(c)The listed drivers are Mr Skourmallas and his wife.
The listing of only Mr and Mrs Skourmallas as drivers – and not, for example, prospective customers undertaking test drives - and the use as ‘Private Use’ is at face value inconsistent with the vehicle being held only for resale and not for private use. On the other hand, ‘Extreme Limited Use’ is consistent with the vehicle not being intended to be driven to a significant degree.
In his witness statement of 28 July 2019, Mr Skourmallas declared:
21. The motor vehicle was insured with Shannons as a private vehicle with myself and my wife, Katherine Skourmallas, as nominated drivers. I firmly believed at that point in time, and still believe, that I am entitled to insure certain stock items as private vehicles albeit that they are available for sale in my business. My belief is that once my business takes on a critical mass perspective, a comprehensive umbrella insurance will be provided for all my stock.
The belief to which Mr Skourmallas declared may or may not be soundly based, nor a approach prudent, but it is not an irrational or implausible explanation. It is broadly analogous with, for example, use of a home office for the purposes of a small side business without taking out additional insurance on one’s home.
Mr Skourmallas was cross-examined at some length about the insurance being listed as ‘private’ although not specifically about the belief to which he declared as outlined in the statement. Unfortunately, the cross-examination questions did not make clear whether

Mr Skourmallas was being cross-examined about the Shannons’ insurance or a subsequent policy taken out with MB Insurance Group.
Essentially, Mr Skourmallas agreed that he did not tell the insurer that he was a ‘dealer’ but maintained that he told the insurer that he wanted the vehicle covered for test drives:
MR BRENNAN: So, when you got the insurance - - - ? ---
MR SKOURMALLAS: Yes.
MR BRENNAN: - - - and you filled out ‘private’ - - -? ---
MR SKOURMALLAS: I didn’t fill out private. They asked me what – what are you doing with it, and I said very limited use, and it’s (indistinct) to sell, actually, the insurance for that year have (indistinct) maybe insurance says, allows test drives as well. Because I actually told them this is what I am doing - - -[23]
[23] Transcript, 83, lines 18-24.
The evidence that Mr Skourmallas did not fill out an application but rather provided information orally is consistent with common understanding of modern insurance practice. Mr Skourmallas went on to say that in his view it did not make any difference whether he used the word ‘dealer’ as the risk would be the same.
As with his evidence regarding the Carsales advertising, Mr Skourmallas’s evidence here has to be understood in the context of the type and stage of the business which I have accepted that he is undertaking and its operation by a relatively unsophisticated proprietor. In this regard, he explained that he did not want to incur the high cost of the type of blanket cover of stock that a conventional motor dealer would take out. Again, this evidence is not inherently improbable and is consistent with Mr Skourmallas’s mode of operation at the relevant time.
The MB Group insurance taken out in January 2018 also provided only ‘Low Kilometres’ cover, consistent with Mr Skourmallas’s assertion that the Audi R8 was not purchased for private use. Mr Brennan argued that a notation allowing only 2% use by drivers other than Mr Skourmallas was inconsistent with an intention to hold the vehicle only for sale and, if that were the case, the nominated use percentage would be inverted; that is to say, it would be expected that most use would be by prospective customers undertaking test drives.
I do not accept that this points strongly against the vehicle being purchased as trading stock. It is, after all, only ‘Low Kilometres’ or ‘Extreme Limited Use’ that would be permitted under either policy. It is not unreasonable to think that a vehicle held for sale might be demonstrated with Mr Skourmallas as the driver or, again in the context of the particular type of small-scale dealership with no showroom or car yard, might be used for other purposes consistent with being held only for sale, such as being taken to prospective buyers or dealers who may have interested buyers or for any necessary attention to the vehicle itself. It is, in my view, something of a long bow to suggest that the terms under which the low kilometres were permitted, examined in hindsight in this microscopic way, support the allegation that Mr Skourmallas was untruthful in his evidence. It may have been prudent to be more careful with nominating projected use percentages, but it is not for me to second-guess Mr Skourmallas’s business judgement.
Mr Skourmallas was also cross-examined about the insurance being for a period of 12 months, with it being suggested that this indicates he always intended to hold the vehicle for at least 12 months:
MR BRENNAN: And the insurance you took out was for 12 months insurance, wasn’t it? ---
MR SKOURMALLAS: It was 12 months insurance paid in monthly instalments. They only do 12 months.
MR BRENNAN: Because at the time you got the insurance you were intending, at that stage, to actually keep it for at least 12 months, weren’t you? ---
MR SKOURMALLAS: I was intending to sell the vehicle, it was (indistinct) the very first time I put my hands on it. But even the car yard insurances, they have big blanket covers us for a year, that doesn’t mean they need to keep the stock for a year.[24]
[24] Transcript, 85, lines 24-32.
Again, the explanation Mr Skourmallas provided for the insurance arrangements is rational and not implausible. I accept his evidence in this regard.
Overall, having regard to the context in which the arrangements were entered into, I do not accept that the insurance arrangements support the allegation that Mr Skourmallas was an untruthful witness.
Personalised number plate
The use of the personalised number plate, ‘TASO’ is, in my view, a neutral matter. There is nothing inconsistent with the use of such a number plate, on the limited occasions the Audi R8 was driven, and it being acquired for sale.
Finally in this regard, I note that even if there were some private use of the vehicle this does not mean that the vehicle was acquired for private purposes. The GST law contemplates that an acquisition may be made for business purposes but later be used for private purposes, with provision for appropriate adjustments, and that acquisitions may be made partly for business and partly for private purposes and ITC’s apportioned accordingly.[25]
[25] A New Tax System (Goods and Services Tax) Act 1999 (Cth), ss 11-30, 19-70.
Having regard to my assessment of Mr Skourmallas’s credit, and the discussion above of the various matters raised by the Commissioner in that regard, I am persuaded on balance that Mr Skourmallas acquired the Audi R8 in the course of his enterprise and the acquisition was not of a private or domestic nature.
Conclusion – GST
Mr Skourmallas is entitled to the ITC.
ISSUES – LCT
To be entitled to the decreasing adjustment, Mr Skourmallas must show that he was supplied with the Audi; he intended to use it only for a ‘quotable purpose’; and he only used it for a quotable purpose.[26]
[26] A New Tax System (Luxury Car Tax) Act1999 (Cth), s 15-30.
‘Quotable purpose’ relevantly means the intention of holding the car as trading stock and for no other purpose.[27]
[27] A New Tax System (Luxury Car Tax) Act1999 (Cth), s 27-1.
Accordingly, the following issues arise in relation to the decreasing adjustment:
(a)Was Mr Skourmallas supplied with the Audi R8?
(b)Did Mr Skourmallas intend to hold the Audi R8 as trading stock and for no other purpose?
(c)Did Mr Skourmallas use the Audi R8 other than as trading stock?
To be entitled to the decreasing adjustment, Mr Skourmallas must establish that the answer to questions (a) and (b) is ‘yes’ and the answer to question (c) is ‘no’.
(a) Was Mr Skourmallas supplied with the Audi R8?
For the reasons discussed in relation to whether Mr Skourmallas acquired the vehicle for GST purposes, I conclude that it was also supplied to Mr Skourmallas.
(b) Did Mr Skourmallas intend to hold the Audi R8 as trading stock and for no other purpose?
The expression ‘trading stock’ is not defined for LCT purposes. It is uncontroversial that trading stock means goods held by a trader for sale or exchange in the ordinary course of its trade.[28]
[28] Melbourne Car Shop Pty Ltd v Commissioner of Taxation [2010] FCA 373, [23].
I have concluded that Mr Skourmallas was carrying on a business of trading, albeit in a small way, in luxury motor vehicles and that he acquired the Audi R8 in the course of that business. I have also concluded that the vehicle was acquired for sale and not for private or domestic purposes. It follows that I accept that the vehicle was acquired as trading stock. For Mr Skourmallas to be entitled to the decreasing adjustment, I must, though, be satisfied that he intended to hold the vehicle for no other purpose.
The LCT law is silent as to when the intention to hold the vehicle only as trading stock must be held and my attention was not drawn to any relevant authority that might cast light on this. It is clear that it would not be appropriate for me to test Mr Skourmallas’s intention at the time of the hearing, as the LCT law contemplates adjustments upon subsequent changes of use occurring.[29] Arguably, it could be inferred that it is sufficient if the intention is held at the time the vehicle is acquired.
[29] A New Tax System (Luxury Car Tax) Act1999 (Cth), s 15-30.
However, it is clear that in any case the time for testing the intention must be no later than the time at which the entitlement to the decreasing adjustment is required to be determined; that is, when the return of the net amount for the tax period in which the issue arises for consideration is required to be lodged.[30] As I would be persuaded on balance that Mr Skourmallas held the requisite intention when he acquired the vehicle and maintained that intention when he lodged or was required to lodge his return, it is not necessary for me to decide precisely when the intention is required to be tested.
[30] This is broadly analogous with the requirement to make the choice to apply the margin scheme for GST purposes by the time the GST needs to be worked out to prepare a return, although the contextual indicators for that view are stronger: Cyonara Snowfox Pty Ltd v Commissioner of Taxation [2012] FCAFC 177, [95].
In the ordinary course, I would have expected the return to have been due by late October or early November 2017.[31] However, an activity statement lodgement print out in evidence states that the return was due on 27 November 2017,[32] although it was in fact lodged early, on 28 September 2017.[33] It is clear that the vehicle had travelled no more than 168 kilometres after its purchase by the time the return was lodged. If it matters, given that it was advertised much later with 2,900 kilometres, I infer that the vehicle did not travel significantly further between 1 November 2017 when the Commissioner’s officers inspected it and 27 November 2017. For the reasons already given, I accept that this small amount of driving of the vehicle is not inconsistent with an intention to hold the vehicle for sale in the context of the particular type of dealership operated by Mr Skourmallas.
[31]    The Commissioner at this time allowed a short extension for taxpayers lodging electronically.
[32]    T3, page 11, BAS.
[33]    ST1, page 4, Audit decision.
Also for the reasons already outlined, I do not accept that the matters relating to insurance and the personalised number plate indicate that Mr Skourmallas intended to use the vehicle for private purposes inconsistent with it being held only for sale.
As already mentioned, the actual use of the vehicle may be indicative of its intended use. For the reasons already explained, I accept that the relatively low kilometres travelled by the vehicle for most of the period that Mr Skourmallas held the vehicle are not inconsistent with an intention to hold it only as trading stock. The only substantial use came much later; that the vehicle travelled a more significant distance but not until almost a year after it was acquired does not persuade me that it was intended, when it was purchased or when Mr Skourmallas claimed the decreasing adjustment or the later time by which his return was required to be lodged, to be used other than for trading stock.
For these reasons, I am persuaded on the balance of probabilities that Mr Skourmallas intended to hold the Audi R8 as trading stock and for no other purpose as he stated in his evidence.
(c) Did Mr Skourmallas use the Audi R8 other than as trading stock?
This element refers to the actual, rather than intended, use of the vehicle.
The LCT law is also silent on when the actual use of the vehicle is to be tested. For the reasons explained in relation to intended use, I consider that this must be no later than the due date for the relevant return. And for the reasons given in relation to intended use, I accept that Mr Skourmallas did not use the vehicle other than as trading stock before the date on which he was required to lodge his return. He may well have done so much later when the vehicle travelled more substantial kilometres, but this is not relevant to whether he had used the vehicle other than for trading stock at the relevant time.
For completeness, I note that written submissions filed on behalf of Mr Skourmallas drew attention the conclusion in the Davsa case that the vehicles there under consideration were used only for trading stock notwithstanding what the Senior Member described as ‘minimalist use’ of the vehicles,[34] which exceeded the distance travelled by the Audi R8 in the months immediately after Mr Skourmallas purchased it. Of course, this is not conclusive or even particularly persuasive because each matter turns on its own facts, but it is notable that the Senior Member did not find the amount which the vehicles had been driven to be remarkable for trading stock.
[34] Davsa Forty-Ninth Pty Ltd as Trustee for the Krongold Ford Business Unit Trust and Commissioner of Taxation [2014] AATA 337 [55], [60]
Conclusion – LCT
Mr Skourmallas is entitled to the decreasing adjustment.
ISSUES – PENALTY
Because I have accepted that Mr Skourmallas is entitled to both the ITC and the decreasing adjustment, he has no shortfall for the tax period and therefore no liability for an administrative penalty.
DISPOSITION OF THE APPLICATIONS FOR REVIEW
Because Mr Skourmallas has persuaded me that the assessments are excessive in not allowing the ITC and decreasing adjustment in full, and the Commissioner accepts that there are no other issues with the net amount as returned by Mr Skourmallas, the objection decisions must be set aside and substituted with decisions wholly allowing the objections.
OBSERVATIONS
The difference between the submissions made on behalf of the Commissioner in this case and my own reaction to the evidence of Mr Skourmallas underlines, with respect, the care needed in concluding that a taxpayer is dishonest. Several of the examples cited by the Commissioner as suggesting dishonesty, upon close examination took on a more benign complexion, especially when considered in the light of Mr Skourmallas speaking English as his second language, his communication style, and the nature of his activities as he explained them.
Having said that, I consider the evidentiary issues concerning the ITC and decreasing adjustment to be finely balanced. Regrettably, notwithstanding earlier standard directions made before the hearing for the production of evidence on which the parties intended to rely, Mr Skourmallas produced several items of documentary evidence for the first time during the hearing, which I admitted, helpfully without objection by Mr Brennan. Additionally, and in particular, I note that Mr Skourmallas’s case was not assisted by the absence of contemporaneous records regarding his use of the vehicles, such as for test drives or in marketing the vehicles to dealers. Rather than being emboldened by his success in this review, Mr Skourmallas might prudently improve his record-keeping by, for example, maintaining complete and accurate logbooks of the use and marketing of any vehicles purchased for sale.
It may also be the case that Mr Skourmallas’s success in this review has to an extent a Pyrrhic quality. In his evidence, Mr Skourmallas advised that, pending resolution of the dispute and consistent with the Commissioner’s position, he had not accounted for GST on the sale of the Audi R8. Further, the use of the vehicle in 2018, amounting to over 4,000 kilometres, may evidence use other than for creditable and quotable purposes and may give rise to increasing adjustments for GST and LCT purposes in another tax period or periods. But these issues are not before the Tribunal. They are matters for the Commissioner.
I conclude by recording my appreciation of the helpful written submissions lodged on behalf of Mr Skourmallas and the Commissioner.

I certify that the preceding 117 (one hundred and seventeen) paragraphs are a true copy of the reasons for the decision herein of Senior Member R J Olding

...........................[Sgd]......................................
Associate
Dated: 20 December 2019

Date of hearing:

29 July 2019

Date final submissions received: 16 September 2019

Representative for the Applicant: Mr F Allen

Counsel for the Respondent: Mr V Brennan

Solicitor for the Respondent: ATO Review & Dispute Resolution
APPENDIX: Vehicle transactions[35]
[35] The sale and purchase prices and profit/loss figures in this appendix differ somewhat from those presented by both Mr Skourmallas and the Commissioner. This is because, consistent with conventional accounting treatment and to present a more accurate reflection of profits/losses, where the information could be identified I have adjusted them to GST-exclusive prices. The kilometre readings and other information are mainly based on a schedule prepared by the Commissioner’s auditors and invoices in evidence.

#	Vehicle	Purchase	Sale	Kms travelled	Days held	Profit/ (Loss)
1.	Porsche	*Date:* Price: Kms:	7/12/15 $159,0906427	6/6/16 $147,27 6,500	73	181	(11,817)
2.	Mustang[36]	*Date:* Price: Kms:	10/5/16 $71,000 198	5/7/16 $71,000 789	591	56	0
3.	Maserati	*Date:* Price: Kms:	23/6/16 $108,000 19,168	5/7/16 $108,000 20,155	987	12	0
4.	Masterati	*Date:* Price: Kms:	23/6/16 $149,619 2,451	28/11/16 $172,727 7,420	4,969	158	23,108
5.	Audi RS5	*Date:* Price: Kms:	5/7/16 $124,000 7,201	22/7/16 $113,500 7,201	0	15	(10,500)
6.	Audi A5	*Date:* Price: Kms:	1/12/16 $69,044 79	31/3/17 $60,000 90	11	120	(9044)
7.	Audi (2008)	*Date:* Price: Kms:	12/12/16 $139,000 6244	21/2/17 $120,000 7,033	789	70	(19,000)
8.	Audi R8	*Date:* Price: Kms:	28/8/17 $243,941 2,610	22/10/18 $204,545 7,008	4,398[37]	420	6,447[38]

[36] Vehicles 2, 3 and 6 were sold back to the dealer from which they were all purchased.

[37] Most of these kilometres were travelled late in the period of Mr Skourmallas’s ownership. This vehicle had travelled only 2778 kilometres at the time the Commissioner’s officers inspected it on 1 November 2017 after the ITC and decreasing adjustment were claimed.

[38] A profit arises if Mr Skourmallas is entitled to the decreasing adjustment, subject to any subsequent increasing adjustments. If not, there is a loss of $39,396.

Date of hearing:	29 July 2019
Date final submissions received:	16 September 2019
Representative for the Applicant:	Mr F Allen
Counsel for the Respondent:	Mr V Brennan
Solicitor for the Respondent:	ATO Review & Dispute Resolution