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ATO returns focus to ‘burden of proof’


A mid-tier accounting firm is urging small businesses to ensure their record keeping methods are up to scratch as the ATO’s crackdown on the cash economy reinforces the notion that the burden of proof lies solely with the taxpayer when rejecting an assessment made by the Commissioner.

By Lara Bullock11 minute read

While the onus has always been on the taxpayer to prove that an assessment made by the Commissioner is excessive or otherwise incorrect, HLB Mann Judd tax consulting director Daryl Jones told Accountants Daily that the government’s crackdown on the cash economy through its Black Economy Taskforce has put it back in the spotlight.

“It has been a long-established principle, confirmed by several cases in the High Court, so it is not a new concept. However, the increased crackdown by the Commissioner has brought it back into focus with challenges by taxpayers to assessments or amended assessments, made by the Commissioner,” he said.


“Put more simply, it is not enough for a taxpayer to simply object to an assessment, but rather, the taxpayer must establish evidence that the assessment is excessive.”

Mr Jones also emphasised the ATO’s increased data gathering capabilities as a further driver to this focus.

“With the greater data gathering and data matching capabilities of the Commissioner, greater resources are being directed to target such industries where there is greater avoidance due to the cash basis upon which a lot of these types of businesses operate,” he said.

Accountants should be meeting with their clients to reiterate the importance of record keeping and documentation in the face of this ramped up focus according to Mr Jones.

“Accountants can assist their clients running these businesses by providing timely advice and offering bookkeeping services as well as providing recommendations for an accounting software solution, training staff or business owners on maximising its capabilities, and ongoing support,” he suggested.

“This will in turn provide appropriate record keeping and record retention.”

Earlier this week the Black Economy Taskforce released a consultation paper of potential policy ideas to address issues in the cash economy. Its final report is due in October 2017.


ATO returns focus to ‘burden of proof’
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