Australian Taxation Law

Australian Taxation Law

Answer the question based on Australian Taxation Law, cite cases wherever necessary

Question 20.1

Joan and Bruce own a small café. They do not keep very good records because they prefer paper to computers. Instead, they put receipts into a drawer and then give them in a bundle to their tax agent at the end of the year. They are not registered for GST, They are subject to an audit as part of the cash economy task force special project for cafes and restaurants, Two auditors from the ATO spend half a day with Joan and Bruce looking at their records and lifestyles, The auditors decide that Joan and Bruce are keeping about S1,500 per week in cash and issue a default assessment under Section 167 of the ITA 1936, including that amount in their assessable income. Joan and Bruce object to their assessment on the basis that the ATO has not considered the deductions they are entitled to for the purchase of the food sold in café, as well as the cost of laundering the tablecloths used in Café, Discuss.

Question 20.2

Roger and Elizabeth are auditors with the ATO task force attached to pubs and clubs. They are investigating George who owns a pub in a country town in Victoria because they are sure he is skimming a lot of undeclared cash. When they issue a notice under Section 264 of the ITAA 1936 George does not attend at the scheduled time. He fails to attend at any of the other appointments the ATO makes for him. What options are available to the ATO?

Question 20.5

A taxpayer who is refused an extension of time in which to lodge his annual return complies with the Commissioner’s demand and lodges it by the specified date. The taxpayer notifies the commissioner that he will lodge an amended return when further information relating to the partnership in which the taxpayer is a member becomes available. Three months later the taxpayer lodges a second amended return calming a large loss from trading activities incurred by the partnership. The taxpayer receives a notice of assessment and an adjustment sheet stating that the assessment will be reviewed when the partnership losses have been confirmed. The commissioner subsequently issues an amended assessment disallowing the partnership losses.

Can the commissioner record tax owing under the first assessment? What arguments can the taxpayer raise?
Question 20.19

(1) A notice under s 264 of the ITAA 1936 is served on Gillian Williams as trustee of the William Family Trust. The notice requires her to produce within seven days:
a. All the accounting records relating to the office block which is owned and leased by the William family trust. The trust had owned the block for 7 years and the original of most documents where retained at the offices of the ABC bank. Gillian had photocopies of most of them; and
b. Annual returns lodged by the trust for the last 15 years
(2) When Gillian fails to comply with the notice, two officers from ATO arrive at Gillian’s office at 10zm on Monday morning and request they be shown the specified documents. At the same time two officers go to the ABC bank and make the same request.
(3) Hoping they will disclose relevant information, the ATO sends two auditors to the William’s family home. No search warrant is obtained prior to the arrival.

Discuss the position of both Gillian and the ATO in relation to the above.
Question 20.20

The ATO believes that the accounting firm, Smithers and Jones, has been encouraging its clients to invest money in tax haven countries and claim a large deduction for management fees paid to the offshore financial institutions. The ATO issued serval notices under Section 264 of the ITAA 1936 requesting that both Smithers and Jones attend its Sydney office to answer questions in relation to the matter. Both refuse to attend. In frustration, the ATO sends ten officers unannounced to the firm’s premises. When requested to leave, the officers instead insist that the firm’s employees leave for 3 hours while they copy various files from the hard disks of the employees. Several of the officers scan the directories and assess what they think will be the most relevant before copying them.
Advise all the parties.