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The Simple Solution to Solve the Budget

I have had an epiphany.

I can solve the budget shortfall for the Federal Government by showing the Treasurer how to raise unlimited revenue. My plan is simple. The legislation is already in place and the Courts and the AAT have shown us that it is possible.

We are going to tax dead people.

I am not talking about an estate tax, or death duty. That would be politically unpopular.

No, what I am proposing is that the ATO issue default assessments under s167 of the ITAA 36 to every single person who has died in Australia since 1936. How can the Government do this, you wonder? That’s the beautiful part of my plan – all the ATO has to do is to make a determination under s170 that every deceased tax payer avoided tax due to fraud or evasion. Then the ATO can go as far back as it likes and raise new assessments.

The Courts have said time and again in cases like Rigoli and Futuris that the ATO does not even need to try very hard to come up with a figure. They just need to have a bit of an educated guess and then it’s up to the taxpayer to prove that this figure is wrong.

So each deceased taxpayer can get a tax assessment for, say, $10m. Section 177 means that’s proof they owe the tax. And the proof of tax evasion? Well, the ATO doesn’t need to prove that either. That’s up to the taxpayer too. If a figleaf of justification was required (and it’s not, according to the Courts) the ATO will say what it always does in such cases – any taxpayer who owed such a large amount of money must have known they had more tax to pay. Ergo they deliberately understated their taxable income, ergo tax evasion.

Cheating non-taxpaying bastards. We’d lock them up if they weren’t already dead. On the otherhand, fortunately for the Government, being dead makes it hard for the taxpayer to prove their case. If there is a material witness to a question of fact, Jones v Dunkel says you have to produce them to give that evidence or risk an adverse factual finding. And no-one is more material to a question of tax evasion by a taxpayer than the taxpayer him or herself.

The plan is foolproof. Naturally it’s extremely unlikely any money will be collected from estates that have already been distributed and finalised, but quite alot of people will probably cough up a couple of million each to save the cost and expense of having to fight a losing battle against the ATO, with their unlimited litigation budgets.

This was right in front of our eyes the whole time. The Courts and the AAT have already sanctioned it, as recently as last week. Check out this if you don’t believe me.

Well, that’s that problem solved. I’m off to the middle east next to solve that little pickle by introducing effective Workplace Health and Safety Laws.
  

Posted in: Tax & ATO News Australia at 09 July 15

Section 264 notices

I have blogged previously about the ATO’s powers to force taxpayers to hand over documents and give evidence*. Recently I have applied the very narrow limitations imposed by the ANZ case in a number of s264 notices.

 

The powers of the ATO to issue these notices are very wide, but the ATO must get the wording of the notices right.  If the notice is vague, or uncertain, or in the words of the Full Federal Court if the notice “leaves too much of its meaning and application to be worked out by [the recipient]” then the notice will be invalid.
 
Objecting to a s264 notice on these grounds is not a final remedy.  The ATO can always re-issue a notice, even assuming that they agree with your argument that the notice is too unclear.  Furthermore, you must have very strong grounds because if you are wrong the ATO has the option to prosecute you for failing to comply.  Multiple offences can lead to imprisonment.
 
The broader issue is one of a recurring nature. The government has handed the ATO with an extremely large stick for investigating taxpayers, and for that matter, their advisers and service providers such as banks. The ATO can, and often does, use s264 notices for fishing expeditions. They are specifically allowed to do so. Because of their virtually unfettered power, in some cases the ATO officers are sloppy and lazy when drafting s264 notices.  The ANZ case makes it clear that because of the seriousness of the consequences of failing to comply with a s264 notice (ie jail time) the ATO must make the notices clear.  If the recipient has to guess at the ATO’s meaning, this is not good enough.
 
This is particularly so where the ATO is asking information of an accountant or lawyer with respect to their clients. If the adviser has to guess at the meaning of the s264, and guesses wrong (i.e. gives more information than the notice intended to the client’s detriment), it is likely the client would have a claim against the adviser for breach of express or implied duties of confidentiality.
 
If you receive a s264 notice and you are concerned as to its meaning and your duty to respond to it, please feel free to get in contact with me to discuss it.

* under section 264 of the Income Tax Assessment 1936 and section 353-10 of the Taxation Administration Act 1953
 

Posted in: Tax & ATO News Australia at 22 March 13

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Author: David Hughes

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