The Administrative Appeals Tribunal (AAT) has held that an employee of a suburban tax practice who had client funds improperly paid into his personal bank account by his employer was not assessable in respect of those as he was not beneficially entitled to them.
Facts
The taxpayer was assessed on deposits made into his bank account in very strange circumstances.
The deposits were made by way of cheques originally drawn in favour of the ATO by clients of the accounting practice in respect of business activity statement liabilities. These cheques were improperly altered so that the payee was shown to be the taxpayer rather than the Tax Office. Further, the BAS of the client was then altered without the client’s knowledge, giving effect to a lower liability. A cheque for the lower amount would be sent to the ATO, with the balance remaining in the taxpayer’s account.
The taxpayer submitted that it was his employer who was responsible for these improper activities and the employer told the taxpayer to hand over, in cash, the money that was left over after making payments to the ATO.
AAT decision
Despite the fact that the taxpayer was unable to account for all the moneys that were deposited into his bank account, the AAT held that the taxpayer was not assessable on the portion of the client funds that remained in his bank account as he was not beneficially entitled to the funds and should not be assessed on it.
Documenting the going concern exemption on the sale of commercial property. SDI Group Pty Ltd v Federal Commissioner of Taxation
The AAT held that the sale of a commercial property was a GST-free supply of a going concern – even though the requirement that the parties agree in writing that the supply is of a going concern was satisfied by a combination of documents, rather than by the particulars of sale.
Facts
The vendor taxpayer had leased a property on a monthly basis after the 12-month lease had expired. The taxpayer entered into a contract to sell the property and the contract specified that the sale of the property would be subject to the lease.
The particulars of sale did not include GST and there was no reference to the sale of the property as being the supply of a going concern.
The taxpayer was assessed for GST on the basis that the going concern exemption did not apply because the parties had not agreed in writing that the supply was of a going concern as required by section 38-325(1)(c) of the GST Act. The taxpayer argued that the combination of a number of documents, collectively, constituted an agreement in writing. The documents relied on were: (a) correspondence from the purchaser’s solicitor to the taxpayer’s solicitor; (b) a tax invoice provided in anticipation of settlement; and (c) general correspondence between the vendor and purchaser.
AAT decision
The AAT was satisfied, on the evidence presented to it, that it was the mutual intention of the parties, when the contract was signed, that the sale of the property was the supply of a going concern. Collectively, the contract of sale, the tax invoice and a goods statutory declaration exchanged at settlement constituted an agreement in writing to apply the going concern exemption.
