The importance of record keeping

When disputing the ATO you need to have evidence, and evidence is in your record keeping.
Recently in a case before the Administrative Appeals Tribunal (AAT), amended assessments issued to a taxpayer by the ATO have been largely upheld. These assessments were upheld based on the amounts of unexplained deposits to the taxpayer’s bank accounts, in some years there were hundreds of thousands of dollars, in others, millions.
The total further tax claimed by the ATO was almost $4 million, and, this meant that they imposed an administrative penalty of almost $2 million (which was imposed at the rate of 50% for recklessness).
In the case the taxpayer was partially successful in proving that some of the amounts deposited into bank accounts held in his name were not assessable income. In particular, the taxpayer was able to demonstrate that some of the deposits were reimbursements of amounts he paid in relation to a group of companies of which he was an investor, and some were transfers from one of his bank accounts to another.
However, in relation to many of the deposits to his bank accounts, he had no corroborative evidence as to what they represented.
Therefore, he failed to discharge his onus to prove the amounts should not have been included in his assessable income.
This shows that yet again the AAT has provided taxpayers with a reminder as to the importance of documentation and good record-keeping.

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