In Raschta Coatings Pty Ltd as trustee for the Raschta Coatings Trust and Commissioner of Taxation [2015] AATA 34 the Tribunal has found that the applicant discharged its onus of showing that default GST assessments were excessive.

During the audit, the Commissioner treated all deposits into the applicant’s bank accounts as taxable supplies unless it was plain that they were not. After some adjustments at the objection stage, the Commissioner concluded that the applicant’s taxable supplies totalled an additional $2,151,231 over the amounts returned in the BAS.

The decision illustrates the difficulties that are faced by taxpayers in discharging their onus of showing that an assessment is excessive. This is reflected in the following observation of the Tribunal (at [16]):

The Company presented a case which, at first blush, appears unpromising. It does not produce original documents and advances its case by relying on the evidence of Mr Thomas, a person whose reliability was the subject of considerable challenge by the Commissioner. The essence of that challenge was that Mr Thomas had failed to produce relevant documents and that he could not, and should not, be believed when he asserted that all the documents of the Company had been lost in the floods in 2010/2011. Additionally, the Commissioner points to unrelated historical matters that he says cast doubt on Mr Thomas’ credibility.

The Tribunal observed that there was considerable force in the Commissioner’s submissions, but nevertheless found for the applicant, principally it appears because the applicant was able to produce a complete printout of its general ledger plus some bank statements. Using those documents, the applicant produced a document that sought to demonstrate that none of the amounts recorded as credits on the bank accounts (and included by the Commissioner) were not taxable supplies. The Tribunal was satisfied that this evidence showed that the amounts were not taxable supplies, but were payments such as loans, transfers from related entities, non-taxable deposits, reversal entries. This decision illustrates the value of contemporaneous documents.

The Tribunal found that the applicant had substantiated exclusions of $1,878,462, leaving a difference of about $273,000. The Tribunal then considered the question whether the applicant had done enough to entitle it to the setting aside of the assessments and replace them with the amounts in the BAS originally lodged. The Tribunal found that it had, noting that it was a pity that the Commissioner did not use the general ledger to reconstruct the accounts, preferring to require the applicant to produce source documents.