VTBL and Commissioner of Taxation (Taxation)

The Administrative Appeals Tribunal (AAT) considered four applications for review of objection decisions made by the Commissioner of Taxation. The applicant sought to challenge assessments and shortfall penalties imposed by the Commissioner, disputing whether certain properties were held on trust or for her own benefit, and questioning the validity of assessments and the imposition of penalties. The proceedings were heard in private at the applicant's request, and the Tribunal was required to ensure the applicant's identity was not disclosed in its reasons.

The primary legal issues before the Tribunal were whether the Commissioner's assessments were excessive or otherwise incorrect, and consequently, what the correct assessments should have been. This included determining the beneficial ownership of properties, the application of the "betterment principle" in the context of default assessments, and whether shortfall penalties were correctly imposed and should be remitted. The Tribunal also considered whether assessments for the 2009 and 2010 income years were validly issued under section 170(1) item 5 of the *Income Tax Assessment Act 1936* (Cth), and if the Commissioner had formed an opinion of fraud or evasion.

The Tribunal applied the principles established in *Commissioner of Taxation v Ross* and other authorities regarding the burden of proof under section 14ZZK(b)(i) of the *Taxation Administration Act 1953* (Cth). This section places the onus on the taxpayer to prove, on the balance of probabilities, that an assessment is excessive and to demonstrate what the assessment should have been. The Tribunal noted that for default assessments, particularly those based on the asset betterment method, a taxpayer must positively prove their actual taxable income, accounting for unexplained accumulated wealth by demonstrating it was derived from non-income sources. The Tribunal also considered the admissibility of unstamped deeds and the potential for adverse inferences from a failure to call witnesses.

The Commissioner's objection decision partially allowed the applicant's objections, accepting that some properties were held on trust. This resulted in amended taxable incomes for the 2009, 2010, and 2011 income years, and corresponding reductions in shortfall penalty assessments. The Tribunal's final orders varied the reviewable decisions, reflecting these adjustments.