The AAT has upheld tax assessments which included “unexplained” bank deposits totalling $133,579 in a taxpayer’s assessable income.

Facts

The taxpayer lodged a return for the income year ending 30 June 2014 but did not lodge a return for the income year ending 30 June 2015. The Commissioner was not satisfied with the amount declared as taxable income in the 2014 return or the non-lodgement of the 2015 return and obtained payroll records from the taxpayer’s employer and financial records from banking institutions. From these records, the Commissioner identified “unexplained” bank deposits of $88,627 for the 2014 income year and $44,952 for the 2015 income year. The Commissioner subsequently issued assessments including these amounts in the taxpayer’s assessable income for the relevant years. After the Commissioner disallowed his objections the taxpayer applied for a review of the objection decision.

The taxpayer claimed that he had ceased remunerative employment for the entity responsible for payments recorded in the payroll records and could not have derived the income asserted by the Commissioner. Further, he was not capable of engaging in remunerative employment during the relevant years due to his physical and mental condition. The taxpayer said that the payments comprised either: (a) transfers from the account of his late mother; (b) transfers between his various bank accounts; or (c) withdrawals from his superannuation account.

Decision

The AAT held that the unexplained deposits received by the taxpayer were of a periodic, recurring and regular nature and took on the character of income. It said the taxpayer’s evidence purporting to justify the origin and characterisation of the subject funds lacked plausibility and credibility and ought to be rejected. In particular, there was a marked and incurable absence of contemporaneous documentary evidence supporting the taxpayer’s version of how the additional funds were received by him.

The AAT concluded that the taxpayer had failed to discharge the onus of proving that the assessments were excessive and affirmed the Commissioner’s objection decision.

McMullen v FC of T [2018] AATA 4481 (Theodore Tavoularis, Senior Member), 4 December 2018, Brisbane.