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Cash-skimming businessman sees penalty appeal rejected

A businessman who skimmed money off his three businesses to reduce his taxable income has had his appeal against ATO penalty assessments rejected by the Administrative Appeals Tribunal.

Business Jotham Lian 09 April 2021
— 1 minute read

The Perth businessman’s actions were uncovered after he was found with $2,200 in cash and a firearm in his car at a police stop in 2014, leading to a house search that revealed a total of $79,545 in cash.


Suspecting of dealing with proceeds of crime, Western Australia police detained and questioned the man, leading to his admission that he had taken earnings from his businesses to reduce his taxable income. He admitted to the police that he believed he earned $150,000 in a year.

The police then tipped off the ATO, leading to an audit of his tax affairs between 2011 and 2014.

The man, who owned a tattoo shop, a business selling encrypted BlackBerry mobile phones and a hairdressing business, was found to have declared just $54,972 in earnings between 2012 and 2013, while failing to declare his income for 2011 and 2014.

The ATO then relied on his $150,000 income estimate to reveal a tax shortfall of $202,950 for the four income years and imposed penalties of $122,950.

Garnishee notices were then issued by the ATO, leading the police to hand over the $79,545 in cash and a further $212,406 taken directly from the man’s bank account.

The businessman appealed to the AAT, arguing that the Tax Office’s assessments and its administrative penalties were excessive, and sought to provide his own calculations to show what he thought his taxable income was.

However, his failure to keep any accounting records for his three businesses worked heavily against him, with the tribunal ruling that his bank transactions alone were insufficient to substantiate his taxable income claims, particularly when his cash activities could not be accounted for.

“It is evident… that the applicant did not account for the $79,545 cash found by the police in his car and home in his income calculations,” said AAT senior member Dr Michelle Evans-Bonner. “He conceded during cross-examination that the cash was from his three businesses and that he did not keep records of his cash activities.

“Thus, it is unclear how much cash related to each business. It is also unclear as to what his taxable income should have been for each of the income years if the cash is considered.”

The AAT also dismissed his claims of excessive penalties being imposed on him, with a cross-examination revealing that he had acknowledged making false declarations to the ATO when lodging his tax returns.

“In the applicant’s case, there was no honest or unintentional mistake by him that contributed to the false statements in his income tax returns for the 2012 and 2013 income years,” Dr Evans-Bonner said.

“Indeed, the tribunal found above that the applicant knowingly made false statements in those returns.”

Cash-skimming businessman sees penalty appeal rejected
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Jotham Lian

Jotham Lian

Jotham Lian is the editor of Accountants Daily, the leading source of breaking news, analysis and insight for Australian accounting professionals.

Before joining the team in 2017, Jotham wrote for a range of national mastheads including the Sydney Morning Herald, and Channel NewsAsia.

You can email Jotham at: This email address is being protected from spambots. You need JavaScript enabled to view it.