The Administrative Appeals Tribunal (AAT) has affirmed the ATO’s decision, based on the taxpayers modest income when compared with a high volume of money passing through various accounts.
The taxpayer was employed as a beauty technician.
Her pay varied every week to reflect her working hours and she was always paid in cash without receiving pay slips.
While the Commissioners’ analysis of bank accounts, records of international money transfers and casino data suggested the applicant spent 44% in one year and 73% in another year more than the declared income.
In cases like this, the Commissioner is effectively making an informed guess as to the taxpayers income.
Provided there is a rational basis for the estate, the Commissioners assessment will stand, unless the taxpayer is able to:
- demonstrate the assessment was excessive; and
- establish what the correct (or more nearly) correct figure is.
In examples like this, the Commissioner nearly always wins.