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Automotive Invest Pty Limited v FCT [2023] FCAFC 129 – Cars on display at a museum not solely held as trading stock
The Full Federal Court upheld that cars displayed in a car museum for sale were considered both exhibits and trading stock. As a result, the taxpayer was liable for luxury car tax and subject to input tax credit limits. The majority considered that displaying cars as part of the museum experience went beyond a standard showroom and as such, the cars were held as more than trading stock.
Tawfik v FCT [2023] AATA 2541 – Delayed bonus payment assessable upon receipt
This case involved a taxpayer who became entitled to a bonus payment when he was a non-resident of Australia, working in Kuwait. The employer was unable to pay the bonus at the time and proposed a payment by 3 instalments. In the years of receipt, the taxpayer was an Australian tax resident. The AAT determined that the bonus payments were assessable in Australia on the basis that employee remuneration is derived upon receipt.
Buzadzic v FCT [2023] FCA 954 – Burden of proof for unexplained deposits and credits
The Federal Court has dismissed an appeal against a decision of the AAT, upholding default assessments and penalties for unreported income. The appellant had failed to meet the burden of proof for unexplained deposits and credits. The court ruled the AAT had not applied too high of a burden of proof. The AAT’s findings were considered reasonable and aligned with established principles.
TKYY v FCT [2023] AATA 2497 – Deductions denied for interest on loan funds expended on a scam
The AAT ruled against a partner of an accounting firm who invested over $18 million in a non-existent “casino junket” business promoted by his then girlfriend. The AAT denied deductions for interest payable on the loans used to fund the ‘investment’ on the basis that there was no income-producing structure. This issue arose in the context of an audit of the taxpayer in the course of which the ATO issued assessments including $6m of personal services income in the taxpayer’s assessable income with 75% shortfall penalties based on an intentional disregard of the law.
Appeal Update
The taxpayer has lodged an appeal against the NSW Civil and Administrative Tribunal’s decision in Zhang v Chief Commissioner of State Revenue [2023] NSWCATAD 181 (covered in the Birchstone Brief for the week ended 28 July 2023). The Tribunal held that section 50 of the Duties Act 1997 (NSW) (which deals with cancelled agreements) did not operate and as a result, duty paid on a contract which was later rescinded was not refunded. The appeal is listed for hearing on 13 October 2023. |
