According to current Australian taxation legislation, the onus of proof falls on the taxpayer to prove their exact taxable income.
Failure to do so will result in the Commissioner’s assessment being upheld – and in many circumstances – leaving the taxpayer liable for back-taxes.
As is standard practice, evidence in Court and Tribunals is given by appearing in person. Under certain circumstances, arrangements may be made for witnesses to give evidence via telephone or by video link. The willingness of people to personally appear in court in Australia to defend charges relating to tax assessment is diminishing.
Recently, one of our clients was faced with a $36M tax bill after investigations by Operation Wickenby unravelled information linking many prominent business figures to bank accounts in Liechtenstein. The liability arose from amended assessments issued by the Commissioner of Taxation.
Our client, a retired doctor, had heard about Paul Hogan’s experience in 2010 in which the ATO had banned the movie star from leaving Australia until his tax bill had been settled. With just cause, he feared a similar punishment would be imposed upon him.
The taxpayer’s concerns on returning to Australia not only stemmed from a fear of imprisonment, but also due to the inherent risk of leaving his international home, his current physical condition and the serious health issues associated with flying long distances. On numerous occasions, the taxpayer brought applications to give evidence via video link, relying upon the circumstances in which infamous movie producer Roman Polanski was given permission by the House of Lords to provide evidence via video link due to a fear of deportation or imprisonment should he return to England.
Unfortunately, Australia’s Administrative Appeals Tribunal declined to follow the House of Lords’ decision, and his initial application seeking leave to give evidence by video link was denied. A second application was made citing health concerns as the primary reason for leave and – once again – the application was rejected.
In a final attempt to sway the Tribunal’s decision, the client offered to fly the entire AAT and the ATO team to Singapore for the hearing. Included in this proposal were arrangements for business class tickets, 5 star hotels, transport and general expenses for which our client agreed to pay in full. This application was also refused. When the AAT hearing finally took place, the Commissioner’s tax assessment was not set aside primarily on the basis that the client was not in Australia to give evidence.
Interestingly, other taxpayers faced a similar impossible dilemma last week when three international businessmen were arrested in a $30 million fraud investigation. Amongst these men was a Belgian national – arrested at the airport and prevented from returning home to his the base of his business operations.
The trio of businessmen were arrested on Tuesday night facing charges that attract jail terms of up to 25 years. One wonders if this aggressive investigative tactic employed by government authorities such as the ATO will only decrease international businessmen’s desire to be involved in the Australian economy.