No enterprise, so GST credits refused
The AAT has affirmed a decision of the Commissioner denying input tax credits (ITCs) claimed by a taxpayer on the basis that the taxpayer did not carry on an enterprise.
The taxpayer was registered for GST on 10 January 2006 to report quarterly on a cash basis. The taxpayer contended that she had attempted to conduct a services business that comprised an "enterprise" within the meaning of s 9-20 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act). The taxpayer claimed ITCs totalling almost $74,000 in respect of various purchases in the relevant review periods (ie the tax periods ending 31 March 2009, 30 June 2009, 31 December 2009, 31 December 2010, 31 March 2011, 31 December 2011 and 31 March 2012). The Commissioner issued an assessment of GST net amount for each of the review periods, denying the ITCs claimed.
The AAT noted that the evidence led by the taxpayer was "imprecise" and limited to her personal testimony, and that there was a lack of corroborating evidence. It also stated that the taxpayer was given various opportunities before the hearing to provide substantiating evidence.
Broadly, the taxpayer's evidence was that before she was required to serve a term of imprisonment, she tried to start a services business that involved use of a motor vehicle. In attempting to start the business, she said she bought two motor vehicles, a computer, printer, fax, desk, filing cabinet, business cards and promotional material for distribution. She said she distributed that material, and made phone calls and door knocks. However, the attempts straddled her term of imprisonment and did not succeed. The taxpayer said her ex-husband ransacked her house twice and any records she had of the purchases she had made for her business were lost or destroyed. One of the ITCs claimed was for her home, though she claimed she had not been asked to produce documentation for it. The taxpayer claimed she had been advised that she could claim the ITCs for her home if she ran her business from it.
The AAT was not satisfied that the evidence led demonstrated that there was an "enterprise". Among other things, the AAT was not satisfied that in the circumstances it could form the requisite view as to "reasonable expectation of profit or gain". It said that a taxpayer, on review of an objection decision, does not satisfy the burden of proving that an assessment is "excessive" by giving personal testimony of an "imprecise nature and detail without any corroborating evidence of either the activities undertaken, or of the reasons why the corroborating evidence of those activities is not available". It also held that the taxpayer was not entitled to the ITCs claimed. It found there was insufficient evidence that the purchases leading to the ITCs claimed by the taxpayer were "taxable supplies" made by the vendors of the goods. The AAT noted that even if it had found that there was an enterprise, it would have denied some of the ITCs claimed, such as the ITCs claimed for the house, as it said the house was “purchased at least principally if not wholly for private use". In conclusion, the AAT affirmed the Commissioner's decision.
AAT Case [2013] AATA 701, www.austlii.edu.au/au/cases/cth/AATA/2013/701.html.
