1. The Applicant was subjected to 2 audits by the Respondent. An audit of the Applicant's tax returns prepared and filed by the Applicant for the 2019 and 2020 years, referred to as "pre-issue compliance action" (the audit) and an audit without notice (covert audit) for the relevant years. Regrettably, the Respondent's decision in relation to both audits were provided to the Applicant within approximately three weeks of each other. It was apparent during the hearing that the findings of the auditor conducting the pre-issue compliance action were quite different from the findings of the auditor conducting the covert audit in relation to the 2019 year.
2. It was common ground that on 4 May 2021, the Applicant filed his income tax return for the year ended 30 June 2019 which the Applicant had prepared. From the Respondent's reasons for decision at [86] it appeared the Applicant's tax return filed in that year reported taxable income of $312,850.[17] A copy of the original return did not appear to be included in the Tribunal Documents. It appeared from the answers given by the Applicant during his cross examination that after various deductions, primarily associated with the Applicant's rental properties, the Applicant's taxable income on the notice of assessment issued on 29 July 2021, was stated as $26,459.[18] The calculation of the assessable income remained something of a mystery throughout the hearing because in none of the Respondent's five iterations of their Statement of Facts Issues and Contentions was the original return identified, copies of the 2019 tax return that were included all had the comment "Audit Adjusted" or "adjusted at audit" on the copies of the return.
3. Following the audit of the 2019 income tax year the assessable income allegedly reported by the Applicant was adjusted by the auditor (not by the Applicant) to $40,000 and tax payable was determined as $1,569.21.[19] Curiously, the notation in the reasons for decision dated 17 August 2021 states "adjusted as a result of pre-issue compliance action".[20] This error on the part of the Respondent had a snowballing effect. Firstly, the Applicant was subject to administrative penalties of $43,119.35 under section 284-90 item 2 of the TAA because a "shortfall amount" resulted from the Applicant's recklessness as to the operation of a taxation law. As improbable as that sounded and notwithstanding the Tribunal's scepticism, the reasons for decision included in the Tribunal documents recorded an administrative penalty of $43,119.35 as did the Account Statement prepared by the Australian Taxation Office (ATO) that clearly showed a shortfall penalty relating to recklessness for the income tax year ended 30 June 2019 of $43,119.35 was debited on 22 July 2021.[21]
4. The Applicant's evidence, that the Tribunal accepts, was he attempted to object to the audit of the 2019 and 2020 years but was informed by the Australian Taxation Office that he was unable to do so because the results of a second audit had already been issued.[22] The second audit, the covert audit, unsurprisingly adjusted the Applicant's amended assessable income from $40,000 to $440,326. The Respondent glossed over this error and simply struck out the $40,000 entry that appeared in the table at [6] of the Respondent's fourth further amended Statement of Facts, Issues and Contentions with a double Asterix beside the figure and under the table, a notation "**adjusted as a result of pre-issue compliance action".
5. As a result of the covert audit, the Respondent imposed a base penalty amount on the shortfall amount for intentional disregard of a taxation law at 75% that was calculated on the difference between the pre-issue compliance action adjusted income of $40,000 and the amended taxable income of $440,000. The Respondent imposed a shortfall penalty for the 2019 year of $161,422.80[23] that was in addition to the shortfall penalty for reckless already imposed for the 2019 income tax year.
6. At the conclusion of the hearing the Tribunal made an order that the Respondent provide an explanation for the outcome of the pre-issue audit. The Respondent made it very clear the initial penalty for recklessness did not form part of the reviewable objection decision and therefore did not from part of these proceedings. Although undoubtably correct, the findings of the pre-issue compliance action are not the subject of these proceedings, the reasons for decision of the audit are contained in the Tribunal Documents as are the Respondent's requests for further information in relation to Applicant's income tax returns for the 2019 and 2020 years[24] **(**The penalty for the 2019 year debited on 22 July 2021, appears not to have been reversed and is highly relevant to these proceedings.
7. The explanation provided by the Respondent in the "Statement of Facts pursuant of the Tribunal's directions received on 7 July 2025", left the Tribunal none the wiser as to what had occurred. Those submissions stated that:

[2] "on 4 May 2021 the applicant filed his income tax return, for the year ended 30 June 2019 which disclosed a taxable income of $139,189. This income tax return also indicated that there was $38,996.93 tax payable on the taxable income. A copy of the income tax return is enclosed at tab A (page 4)". > > Unfortunately, the return behind tab A was a return that had been adjusted as a result of audit.

8. The Respondent sent a letter on 20 May 2021 notifying the Applicant that the processing of his income tax return year ended 30 June 2019 had been delayed and he was required to provide further information. Apparently, the notification letters issued on 20 May 2021 for the 2019 income tax return and in June 2021 for the income tax year ended 30 June 2020 commenced the pre-issue audit. The covert audit having been commenced on 14 February 2020.
9. The Respondent issued the notice of assessment for the income year ended 30 June 2019 on 29 July 2021, which indicated a taxable income of $26,459[25]. On the same day the Respondent issued a notice of assessment for shortfall penalty for that year for $43,119.35[26].
10. As a result of the pre-issue audit, it was determined that the taxable income for the income year ended 30 June 2019 was $1,569.21.
11. On finalisation of the covert audit on 17 August 202, the Respondent issued a notice of amended assessment for the income year ended 30 June 2019 which was dated 19 August 2021[27] and "indicated a taxable income of $440,326.00"... "A notice of assessment shortfall penalty was also issued on 19 August 2021, imposing a base penalty amount 75% of the shortfall amount for intentional disregard of a taxation law pursuant to item 1 section 284 - 90 (1) of schedule 1 to the TAA 1953 resulting in a penalty $161,422.80" [28](emphasis added).
12. The Respondent stated at [13] of its 7 July Statement of Facts that "as a result of the covert audit it was determined that the tax payable for the income year ended 30 June 2019 was $171,243.70" and at "[14] the Respondent accepts that the shortfall amount for the purposes of penalties should be recalculated by reference to the taxable income included in the Applicant's tax return for the income year ended 30 June 2019 and the tax thereon (i.e. $38,996.93)."[29] The tax assessed was $26,459 and penalties were imposed at the 50% rate of $12,537.93, so the amount owing was $38,996.
13. The Tribunal finds the imposition of both penalties extremely odd for the following reasons:

Firstly, there is no rational explanation for the imposition of penalties on an amount greater than the Respondent had determined was the Applicant's adjusted income for the 2019 year.

Secondly, in respect of the penalties imposed for the same year following the covert audit, as the Applicant was told he could not object to the amended assessments issued as a result of the pre issue compliance audit for the 2019 and 2020 years because amended assessments and penalty assessments had already been issued, it appeared the amended assessments and penalty assessments were clearly intended to replace the assessments issued after the audit of the 2019 and 2020 income years. It was not apparent on the face of the penalty assessments that the penalties were imposed for two separate shortfall amounts.

1. In response to the Tribunals queries sent to the parties on the 28 of January 2026, the Respondent replied on the 16 February 2026, advising the Tribunal that, among other things, "the Respondent considered the two penalties to be separate incidences of two distinct behaviours and believes they should be maintained". "The initial penalty for recklessness does not form part of the reviewable objection decision and is therefore not under review in these proceedings".
2. The Tribunal gleaned from this somewhat cryptic explanation that the penalty in relation to the pre issue audit was determined "on reckless" for those behaviours set out in the response "due to the scale of the false statements made". The penalty imposed under the second audit was imposed because the assessments had been made under section 167 (a) in relation to the 2019 year". Obviously, the base penalty amount of 75% is automatically imposed by section 284-90 item 7 of the TAA if subsection 284-75 (3) ITAA applies. However, that explanation is at odds with the explanation provided in the Respondent's Statement of 7 July 2025 that the penalty of 75% was imposed under item 1 of s 284-90 Sch 1 TAA not under item 7 of that section. In other words, the penalty imposed after the pre-issue audit and the covert audit relate to the same shortfall amount not "separate incidences of two distinct behaviours" in the same income tax year.
3. Putting to one side the Tribunal's findings that the section 167 (a) assessments should not have been made for the income years ending 30 June 2019 and 2020, in light of the Respondent's statement of 7 July 2025, it is difficult to conclude that the 75% penalty was indeed imposed for a separate and distinct behaviour. The Respondent's response to the Tribunal's queries dated 28 January 2026, in relation to the penalty issue is extracted below:

"Until May 2021, the Applicant had not lodged his 2019 and 2020 income tax returns. Upon filing his 2019 and 2020 income tax returns, the Applicant was due for a refund of over $90,000 resulting from significant amounts claimed with a large portion of the Applicants tax liabilities being reduced by the negatively geared properties owned by the Applicant. A pre-issue audit was undertaken in relation to these years and the refunds were retained under s 8AAZLGA of the Taxa_tion Administration Act 1953_ (Cth) after the Commissioner determined that:

a) there was no commercial rent arrangement in place for the properties available for rent at the time; and

b) the PAYG withholding values declared were from associated companies controlled (or formerly controlled) by the Applicant have not declared or paid the requisite W2 values."

Taking the above into consideration, the Commissioner removed the rental deductions and income and removed the income from the entities where the W2 amount had not been paid. Accordingly, a penalty based on recklessness was applied for those behaviours due to the scale of the false statement made.

Around the same time, the Applicant was subject to a second audit for the income years ended 30 June 2016 to 30 June 2020. The audit issued assessments as follows:

The Notices of Amended Assessment issued in relation to this second audit were as a result of significant amounts of undeclared income deposited into the Applicant's personal accounts. At this time a further penalty was applied for 75% pursuant to the Fraud and Evasion opinion formed relating to specifically the scale of income that was not declared by the Applicant.

In summary, the Commissioner considered the two penalties to be separate instances of two distinct behaviours and believes they should be maintained.

The initial penalty for recklessness does not form part of the reviewable objection decision and is therefore not under review in these proceedings."[30]

1. The Respondent is correct the objection decision following the covert audit is before the Tribunal. However, the Tribunal is charged with the responsibility of arriving at the correct or preferable decision for the relevant years which includes the penalty assessments for the income tax years ended 30 June 2019 and 2020. On the facts before the Tribunal, it is apparent the shortfall penalty imposed in 2019 was calculated on the figure of $40,000 a figure arrived at by the auditor conducting the pre-issue compliance audit and not a figure that appeared in the original return filed by the Applicant.
2. It is difficult to see how the two penalties can be maintained, because on the facts and the Respondent's submissions the two penalties appear to deal with the same shortfall amounts in both the 2019, and 2020 income tax year not "two and distinct behaviours".
3. In Ziegler v Commissioner of Taxation[31] the Court (Bromwich, Thawley and Jackmann JJ) held:

"Assessments of administrative penalties flow from assessments of primary liabilities to tax, including assessments under section 166 and 167 of the ITAA 36". > > "It is the amended assessments that lead to the "shortfall amount" or change in shortfall amount arising from an amended assessment of the primary tax on which the administrative penalty is calculated". > > ..."given the statutory context and practical operation of the assessment and objection provisions, s.298-30(1) must be construed as requiring the Commissioner to make an assessment if he considers the earlier assessment incorrectly reflects the operation of the provisions imposing the penalty. The Commissioner must then notify the increased penalty liability under section 298 - 10. The taxpayer has the right to object to the underlying assessment under section 298-30 (2)". > > "The Applicant subjected to the increased penalty assessments has the right to object to as they were entitled to do by s 298-30(2). The Tribunal had jurisdiction to review the relevant objection decision".[32]

4. Based on the Tribunal's findings, the notices of administrative penalty issued after the audit of the 2019 and 2020 income tax years must have been superseded by the notices of administrative penalty following the covert audit and again replaced following the notices of amended assessment issued on 1 June 2023 for the 2019 and 2020 years.
5. Contrary to the Commissioner's position[33] that both penalties should be maintained because they are "separate incidences of two distinct behaviours", the Respondent categorically advised the Tribunal the penalty of 75% was imposed for recklessness under item 1 s 284 - 90 (1) sch 1 TAA for intentional disregard of a taxation law. That penalty surely must have replaced the penalty for recklessness imposed under item 2, s284-90.
6. Maintaining two penalties for the same year of income when the taxpayer was not entitled to object to the first penalty assessment because the second penalty assessment had already been issued is not consistent with the statutory context and practical operation of the assessment and objection provisions in s 298-30 schedule 1 TAA53.
7. Further, the Commissioner's submission that the penalty for recklessness does not form part of the reviewable objection decision and therefore not under review in these proceedings[34] cannot be correct. The Tribunal's role is to determine how the amount of the penalty for recklessness was calculated to arrive at the correct or preferable decision with respect to penalties imposed in relation to the 2019 and 2020 income tax years. If there are two distinct shortfall amounts, it is not apparent on the face of the documents filed in these proceedings.

1. The covert audit, the subject of these proceedings, was commenced on 14 February 2020 for the relevant years. Following finalisation of the covert audit on 17 August 2021 the Respondent issued its reasons for decision.[35] In its Reasons for decision, the Respondent stated it had:

(a) issued amended assessments pursuant to section 166 and 170 ITAA36 for the relevant years, > > (b) made default assessments pursuant to section 166 and 167 of the ITAA 36 for the relevant years, > > (c) formed the opinion the Applicant had failed to declare amounts received in the relevant years and "intentionally made false representations, avoided tax and committed a blameworthy act" (evasion opinion), > > (d) issued amended assessments for the income tax years ended 30 June 2016, 2017 and 2018 pursuant to section 170 TAA36, > > (e) imposed administrative penalties pursuant to Division 284 of schedule 1 of the TAA at the base rate of 75% for intentional disregard of a taxation law, (emphasis added) increased the base penalty amounts under s 284 - 90 schedule 1 TAA by 20% for the years ended 30 June 2017, 2018, 2019 and 2020; and > > (f) made the decision not to remit the shortfall interest charge for the relevant years.

2. In the reasons for decision, the Respondent described its audit methodology[36] as assessing copies of the taxpayer's bank accounts for the relevant period, identifying all amounts credited to those bank statements for example deposits, and then excluding some of those deposits where the Respondent was satisfied evidence existed to substantiate that those deposits did not have the character of income. The Respondent identified nine bank accounts opened in the name of the Applicant and used by the Applicant during the relevant period and listed those accounts in table 2.[37] In summary, notwithstanding the Respondent had clearly double and possibly triple counted a deposit in the Respondent's calculations, the Respondent concluded that the total unexplained deposits identified by the Respondent was $6,918,145, of which $6,863,098 had the character of income.
3. At the time of issuing the amended assessments, the Respondent issued garnishee notices to taxpayers the Respondent believed owed the Applicant money and obtain freezing orders against the Applicant and other orders against other taxpayers which was referred to during the hearing as the ATO litigation.
4. The relevance of the ATO litigation for these proceedings was affidavit evidence and loan documentation were filed in evidence in the Supreme Court of New South Wales, matter number 2021/00193286. These documents should have assisted the Respondent to establish the veracity of at least some of the facts relevant to the Applicant's objections to the amended assessments.[38] Further, it puts into context the letters relied on by the Applicant as part of his evidence in these proceedings.
5. A letter prepared by Mr Paul Heiler of RSM, the accountants engaged by the Applicant to prepare objections to the amended assessment,[39] referred to one of the Applicant's affidavits, dated 16 December 2021, filed in the ATO litigation. In this affidavit the Applicant apparently deposed that his net wealth was $337,500 comprising assets of $4,531,000 and liabilities of $4,193,500 including personal guarantees. Importantly, Mr Heiler's letter addressed to the Respondent states the Respondent in the ATO litigation "did not suggest the taxpayer had misrepresented his net worth_."_[40] Although this affidavit was not included in the Tribunal documents in these proceedings, the Respondent continued to maintain money lent under the loan facilities in evidence before the Supreme Court of New South Wales that formed the basis of a settlement agreement to which the Respondent was a party, remained unexplained deposits until the Applicant proved otherwise (emphasis added).
6. The Respondent in the reasons for decision determined the amount upon which tax ought to be levied was "the total amount of unexplained deposits and cash withdrawals you have taken from your bank accounts in the respective years" and set the amounts out in table 7 amended taxable income,[41] reproduced below:

1. The Respondent issued the following notices of amended assessment and shortfall penalties on 19 August 2021:[42]

1. Following the Respondent's decision on objection,[43] further notices of amended assessments were issued on 1 June 2023,[44] the adjusted amounts are set out in the table below.

The notices of assessment of shortfall penalties dated 25 May 2023, is set out in the table below:[45]

1. As an officer of the Commonwealth, the Respondent was required to act as a model litigant in the conduct of litigation to which he was a party. The model litigant obligation does not require the Respondent to concede the Applicant's claim that the amounts assessed to him were not income. However, having regard to the body of material filed in these proceedings and the oral testimony of the Applicant, it should have caused the Respondent to reflect carefully on the items that remained in contention, primarily because of the significant errors made by the Respondent during the audit that were maintained during the hearing. The Respondent, as the Commonwealth's Chief Revenue Officer, must act and be seem to act fairly.
2. In addition to the model litigant obligations section 56 ART Act imposes an obligation on decision makers and any person representing the decision maker to use their best endeavours to assist the Tribunal to make the correct or preferable decision in relation to the preceding and achieve the object in s 9 of the ART Act.
3. Regrettably this was not the case. It appears from the Respondent's response provided to the Tribunal on 16 February 2026 that the Respondent's position on the Applicant's taxable income had increased by "almost double since [the Applicant's] closing submission with no explanation of how this has occurred".[46] Further in the Evasion opinion the Respondent stated the Applicant had omitted $4,866,370.79 from his taxable income but in the Respondent's response of 16 February 2026 the Respondent stated the amount omitted from the Applicant's taxable income was $4,968,894.00.
4. Having conceded more than $1,000,000 during the objection process, and more than $1,000,000 during the hearing, it appeared from the table provided by the Respondent at b of the Respondents response to the Tribunals questions, after noting the assessments were made under section 167, the Respondent had only conceded $295,434. If that is correct then the Respondent's behaviour hardly achieves the objective of improving the transparency and quality of the government decision making, nor does it promote public trust and confidence in the Tribunal.
5. The "Gift Horse" concession the Respondent offered looked far more like a "Torgan Horse" at the conclusion of the hearing and more so after the Tribunal received the Respondent's response dated 28 January 2026.
6. The gift horse was the Applicant only had to prove the deposits were not income, which the Tribunal found on the balance of probabilities the Applicant had done during the hearing. Given the number of concessions the Respondent made during the hearing, it appeared the Respondent was also satisfied a large number of deposits were not income. Of course, the Respondent's concession only concerned the income side of the equation. Significant deductions the Applicant had included in his tax returns as interest expense for his various rental properties were not before the Tribunal.
7. On the last day of the hearing, the question of deductions came into sharp relief. In the Applicant's closing submissions, the Applicant stated:

The Applicant: "I would rely on what I've already said on page 16 and 17 about the loan facility - in regards to the loan facility. Just a couple more things, I'd like to mention that appendix A didn't have any line numbers on it until I decided to add line numbers to it when I last edited it. And therefore, this is what was a major source of miscommunication when trying to correspond with my previous (indistinct) because you're just going back [by] dates and transactions - there was no numbering or - Appendix A didn't have line numbers on it, and you were going by page numbers. And then when more transactions got moved (indistinct) page numbers (indistinct). So this is where a lot of the - as far as why - where it's stated that I haven't told them that my story had changed about lines over time, it was because there was never any like proper way of referring to which line you were referring to until I've added line numbers to Appendix A."

The Applicant: ...."as far as the rental income was concerned, of the 82 lines, the ATO needs to deduct the mortgage interest and according to the rent cost for each financial year, which was already included in my tax returns for the corresponding years. I'm not trying to claim the deductions; I'm not trying to claim the deductions (indistinct) had already agreed to in my previous tax returns".

The Applicant's mother: "That's fine. But they need to be able to deduct the mortgage interest and associated rental costs that the Applicant had already claimed in his original tax returns, they'd already been agreed upon. So [the Applicant] is happy to accept the income, but the deductions like mortgage interest is hundreds of thousands of dollars, and it had already been agreed upon in his tax returns. So he assumes those deductions will still come off".

The Applicant's mother: "Yes. So you need to take the deductions off. Because Peter was originally thinking you'd look at salary and rent in his tax return because they all match up".[47]

1. Addressing the issue in closing submissions the Respondent's counsel made the following submission:

"The seventh point is in respect of the deductions for rent. You may not recall, this was an issue that was raised back on 25 February. And it's at transcript 108-113. Mr Day said, 'Well, I'd like my deductions to be taken into account'. And said, 'Well, hang on a minute, those [this]whole case is proceeded on the basis of appendix [A] O, and you showing that assessable amounts are not assessable to you'. If you want to go down the path of claiming deductions, we'll have to be in the position of Mr Day totally reconstructing his tax affairs which is a lot more onerous than the task that he's had to perform in these proceedings because a concession that was made by the Commissioner."

"And there was a debate about that. I said something to the effect of, 'It's a matter for Mr Day, but I wouldn't look a gift horse in the mouth'. And Mr Day confirmed - this is all at pages 108-113 of the transcript of 25 February - that he was content to proceed on the basis of showing that the deposits were not assessable to him or were assessable to him."[48]

1. The rental income received by the Applicant from his rental properties during the relevant years was included in Appendix A. During the hearing, the Respondent "conceded" the rental income amounting to some $67,944.64 was no longer an unexplained deposit and apparently was content that this amount had already been declared in the corresponding income tax years. However as was apparent from the Respondent's counsel's closing submissions, the mortgage interest and other costs associated with the rental properties may not have been accepted as a matching deduction by the Respondent.
2. It was not until the Tribunal asked the Respondent to clarify what the Respondent maintained was the Applicant's assessable income after conceding more than $1,000,000 was not assessable income that the Torgan horse was revealed.
3. The Tribunal requested the Respondent provide a similar table to the table the Respondent had provided on the 7 July 2025 that had only dealt with the Applicant's shortfall amount and penalties. It was apparent from the Respondent's answer that the amounts conceded did not alter the Respondents s 167 assessments in any meaningful way. The Respondent's answer to the Tribunal's question is illuminating and is set out in full below:

" a. As a result of the Updated Appendix A, please provide a table of what the Commissioner now says is the Applicant's Assessable and Taxable income in each of the relevant years - similar to the table provided at [45] of fifth further amended Statement of Facts Issues and Contentions.

Please note s 167 assessments do not provide for the Commissioner to determine assessable income, deductions and taxable income in the ordinary way a s 166 assessment does. Instead, the Commissioner adopted a rational approach in his genuine attempt to arrive at the amount that ought to be substituted as a taxpayer's taxable income in the relevant years. The Commissioner notes that during objection, certain amounts were accepted as ordinarily deductible and were ultimately applied to reduce the s 167 taxable income amounts in applicable years."

1. The amounts conceded during the hearing are not reflected in the above table or indeed anywhere else in the Statement provided to the Tribunal on 16 February 2026.

Evidence and comments on credibility of witness

1. The Tribunal's duty is not to speculate about evidence that might possibly have been called but rather to consider the evidence of the Applicant and any other evidence that forms part of the Tribunal documents and then decide whether, having regard to the whole of the evidence the Applicant has discharged the duty imposed on the Applicant under s14ZZK(1)(b)(i) TAA.[49]
2. As Justice Logan stated in Commissioner of Taxation v Cassaniti[50] (Cassaniti) "In determining whether a case has been proved to the civil standard, demonstration that other evidence could have been called but was not called could , in certain circumstances, of which Jones v Dunkel offers an example, be relevant".[51] Like Cassaniti, this is not such a case, for the reasons set out below it was not opened for the Tribunal to draw any adverse inference against the Applicant because he failed to file witness statements from various people, in deciding whether the Applicant had proved the case to the required standard. The Applicant's documentary evidence did not need to be corroborated by third parties.
3. In respect of the evaluation of the Applicant's credibility, after considering in detail the entirety of the evidence filed in these proceedings, including the documents produced to the Respondent by the nine financial institutions the Applicant held accounts with pursuant to section 353-10 Schedule 1TAA, the opportunity to examine and reflect upon the 4888 pages of evidence that comprised the Tribunal Documents and Supplementary Tribunal Documents and to draw conclusions from them, by reason of the inferences available from the evidence as a whole, the Tribunal believed the evidence of the Applicant.
4. The Tribunal found the Applicant's evidence to be truthful. The documentary evidence that was available was consistent with the facts that were ultimately agreed by the Respondent and with the report of the forensic accountant and the bank statements and receipts that formed part of that report.
5. The detailed amended Appendix A prepared by Applicant with references to the relevant line in each of the relevant bank accounts allowed the Tribunal to follow the debits and credits into and out of the various bank accounts.
6. The Respondent relied on the insufficiency of the evidence before the Tribunal to raise doubts as to the credibility of the Applicant's evidence. In relation to the brief narrations that appeared next to various transactions entered in the original bank statements, counsel for the Respondent contended the Applicant couldn't possibly remember what the transaction was for and the brevity of the narration was not of assistance putting to the Applicant during cross examination "you would have no idea sitting here in the absence of keeping any proper ledger or any proper set of accounts whether these amounts were loans or some other cash deposit, be it a deposit from your parents, a deposit from your friend, a deposit from your business." However, when taken to a particular bank[52] transaction with a narration beside it, the Applicant's memory was prompted, and he was able to recall what the transaction related to with sufficient detail to satisfy the Tribunal that he could in fact recall the transaction in question. By way of example only, the Applicant responded to the above question as follow: " I can tell you by that (indistinct) [entry] that I know I was stuck in Victoria and couldn't pay the registration fee and you would see the rego fee, [referring to an entry below in the account] then you would see the accommodation fee, and looking at it you can logically paint a picture that - like, you reflect back to the time and go, 'Okay, I remember why that happened, like, I couldn't pay the rego. I needed money; what did I do? Okay, I borrowed it from the company'. The Applicant having previously answered "So for example if there is a cash deposit for argument's sake of $1,000 and the next line afterwards is that I've gone and paid registration to VicRoads for example - well, I can recall that. I was short the money to pay the registration fee, so I took a director's loan from the company. As in, I got the staff member running the shop to put the money into my account so it would show as a cash deposit of $1,000 or $1,500, whatever it is, then I've used that money to pay the, like rego to VicRoads. Then when I've come back, I've then paid it back to the company. So as far as cash deposits like that, I can reconcile it in my head to the fact that - by remembering, like, what lines underneath it when you look at it in the contents of the following lines".[53] There was nothing in the Applicant's demeanour to suggest he was making his answers up haphazardly.
7. The authenticity of the various statement's provided by the financial institutions with whom the Applicant banked was not in doubt. As the Applicant's narrations were on the statements produced under the compulsory notices to the Respondent, the narrations were clearly not a recent invention of the Applicant's. Further, there did not appear from an examination of the various bank statements to be a general intermingling of funds, primarily because the Applicant maintained separate bank accounts for each of his ventures or companies. Finally, the Applicant's method of keeping track of the income and expenses for each property investment or company meant the Applicant's personal financial records and business records could be recreated, as the report prepared by the forensic accountant clearly demonstrated. Having had the opportunity to observe the Applicant over the course of the hearing, the Tribunal found no inconsistencies with the evidence given by the Applicant and the various narration against certain entries in the bank statements. The statements produced by the various financial institutions, and the Applicant's entries against certain transactions were relevant to the questions for consideration before the Tribunal.
8. The Applicant's explanation for the loss of his records due to a flood for which he received government compensation was entirely feasible and the Respondent's counsel did not seek to challenge it.
9. Section 262A of ITAA36 imposes a requirement on a taxpayer carrying on a business to keep records that record and explain all transactions and other acts engaged in that are relevant for the purposes of ascertaining a taxpayer's income and expenditure. The Tribunal found the Applicant had kept records that were sufficient to explain all transactions, and those records were included in the Tribunal Documents.
10. Section 1305 of the Corporations Act 2001 (Cth) (Corporations Act) provides that a book kept by a body corporate under a requirement of the Corporation's Act is admissible in evidence in any proceeding and is prima facie evidence of any matter stated or recorded in the book. "Book" is defined in s 9 of the Corporation's Act to include "financial records". "Financial records" is in turn defined to include the following:

(g) "invoices, receipts, orders for the payment of money, bills of exchange, cheques, promissory notes and vouchers..."

11. In Australian Securities and Investments Commission v Rich, Austin J[54] held that 'financial records' extended beyond documents of prime entry, such as cash books and journal, to derivative documents which include documents that record a company's financial position or facilitate the preparation or auditing of annual or half yearly financial statements. As Justice Steward held in Cassaniti "In my view, the payslips and the PAYG payment summaries are probably 'financial records' which are required to be kept by s 286A". The same is true in these proceedings, the PAYG payment summaries, the Bank and other financial institution statements, the formal ledger prepared by Domain Plus Real Estate, and the various invoices prepared on the letterheads of the respective companies, fell within the category of documents a company must keep under the Corporations Act and for the purposes of the Income Tax Act. These documents are written financial records that correctly record and explain the transactions and financial position of a company, or in this case allowed the Applicant, to prepare true and fair financial statements. The Applicant's records were clearly sufficient to enable the forensic accountant to trace the flow of funds and prepare a detailed report, and it was opened to the Tribunal to examine that report to see what may be reasonably inferred from it. The Tribunal found the forensic accountants report was a financial record.
12. Counsel for the Respondent did not put to the Applicant that the narrations in the bank statements or the invoices from Mohammadi Enterprises or Jakka Electronics or Mobile Phone Shack Pty Ltd or Domain Plus Real Estate were false. It was opened for the Respondent's counsel to make that submission because the native spread sheets prepared by the Respondent's auditor and filed by the Respondent with the Tribunal's documents implied that was the case.
13. The various invoices appear to have been written on the letterhead of the respective companies, addressed to the Applicant's company, Mobile Phone Shack Pty Ltd (Mobile Phone Shack) or issued by the Applicant on Mobile Phone Shack's letterhead. There was no evidence to suggest that the invoices did not constitute a correct record of the terms of the supply and purchase of the mobile phones.
14. While the Applicant's record keeping was less than perfect, the Applicant's evidence was sufficient to support his contentions that he had not evaded tax in the relevant years and to establish that amounts included by the Respondent as assessable income in the Relevant years were not income of the Applicant.
15. The question of "insufficiency of evidence' was considered by the Full Federal Court in _Commissioner of Taxation v Casmatt_i[55] Justice Steward, with whom Greenwood and Logan JJ agreed, stated a taxpayer does not bear a special burden of proof:

"..., other than the necessity to scrutinise evidence given by the taxpayer him or herself with care, no such special burden exists."

16. His honour went on to summarise 5 requirements, derived from the judgement of Hunt J in in Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation,[56]that his Honour noted applied to all forms of revenue proceedings:

"(1) first, where the onus is on the taxpayer (whether pursuant to s 14ZZO of the TAA or otherwise) the degree or standard of proof required is that which ordinarily applies in civil proceedings. The direction given to a jury in civil cases aptly describes that onus by reference to a pair of scales and to the arguments of each party being placed at each end as Hunt J said in Allied Pastoral: > > ...if the plaintiff succeeds... in weighing down those scales ever so slightly in his favour then he has discharged the burden he carries...(emphasis added). > > (2) secondly, for that purpose it is not obligatory for a taxpayer, in order to discharge his burden of proof, to call all material witnesses and to produce all material documents which support her or his or its position; > > (3) fourthly, there is no requirement that evidence can only be accepted as admissible and probative if it is corroborated; > > (4) fifthly, the Tribunal of fact is free to accept the evidence of the taxpayer alone if it finds the taxpayer to be truthful; > > (5) finally, it would usually be prudent to corroborate the evidence of a taxpayer. it is also prudent to adduce contemporaneous objective evidence, but prudence should not be confused with the requirements of the law."

17. In these proceedings the Tribunal Documents included a detailed report prepared by a forensic accountant, whose independence was not called in to question by the Respondent. Included as part of that report were all banking records the Applicant was able to obtain which had narrations, even though brief, on the copies of the original statements, copies of the Applicant's PAYG payment summaries, Domain Plus Real Estate's (the managing real estate agent) rental records, the original tax returns for the income tax years ended 30 June 2016, 2017 and 2018 that had been prepared and lodged by a registered tax agent, copies of the tax returns prepared and lodged by the Applicant for the 2019 and 2020 years, and copies of invoices that had not been destroyed in a flood. These records were sufficient to enable the forensic accountant to identify deposits that were not income of the Applicant.
18. Although the Respondent did not accept all the forensic accountants' findings, the Respondent subsequently removed $1,143,006.00 from the Amended Assessments issued in August 2021 following the receipt of that report. Further, the detail inserted into Appendix A by the Applicant allowed deposits and payments going back almost 10 years to be identified against each of the entries, resulting in the Respondent conceding, during the hearing, that a further amount of $1,060,753.63 should not have been included as part of the Applicant's allegedly undeclared and assessable income.

The categories of unexplained deposits included as income in the Applicant's Amended Notices of Assessment that remained in dispute.

1. The Respondent's position in respect of the various loans that remained in dispute was essentially that the Applicant made submissions that had no evidential foundation. Counsel for the Respondent in closing submissions, said:

"I have made it very clear from the start of the case and its duration, that there's got to be parameters around when someone is making submissions on when someone is giving evidence. Much of what you've heard today is submission that lacked any evidential foundation. By way of witness statements from each of Mr Day's parents, a letter from Mr Madawala, who was available for cross examination, and a letter from Mr Zay Aung, who was not available for cross examination. Beyond the documentary record, that is the totality of the witness evidence that you have in this case. > > In my submission, you wouldn't give much weight to those narration is in the bank statements in circumstances where you have no evidence about the terms of the loan, for example, Mr Aung was not available to be cross examined about it. You simply have assertions and a narration of ''loan', in circumstances where there are a series of highly unusual and complex movements of money and transactions".

2. The Tribunal proposes to deal with each of the loan transactions below and the reasons why the documentary evidence, coupled with the Tribunal's findings that the Applicant was honest in his answers, was sufficient to satisfy the Tribunal that the unidentified deposits included in the Applicant's Amended Assessment and during the hearing characterised as Loans, were indeed loans.

Repayment of a loan made to the Applicant by a Mr Zay Aung in the amount of $26,630.

1. The Tribunal's evidence included a signed letter from Mr Zay Aung[57] The Applicant's bank statements showed 14 entries that the Applicant had identified by the relevant line item on each bank statement in Appendix A. The Applicant's evidence was "Now, if I take you to say line 19 which is on TB827, you'll see next to the $5000 deposit, it clearly states "cash deposit $5000" then the notation on the bank statement is "Loan repayment Zay",... I can go through line by line here, but every single line on there, on the original bank statement, they all indicate, Loan repayments Zay".[58] The deposit of $5,000 was the second loan payment which was made on 4 July 2016, the first repayment for $1,875 was made on the 24 December 2015. The following 12 repayments all had the same narration but varied in amounts from $1000 to $2,500. The last repayment by Zay was made on 18 July 2017,[59] well before the start of the covert audit.
2. The Applicant told the Tribunal "Zay was one of my friends, he's since moved back to Burma, but he was living here he borrowed money when he was buying a house for a deposit and then paying back over a period of the year".[60] When asked by counsel for the Respondent why there was no loan document and it was put to the Applicant that there was no loan facility, the Applicant's evidence was "he was staying here he was one of my best friends. He was living in Australia at the time. So no, there is no loan facility document done up. You'll see that one of the transactions, however, there is where I supposedly loaned him so where he transferred me about 28 grand I think it was. It was a deposit for his house at 87 Alfred Street, which is referred to in one of the transactions when he transferred me the money then I transferred it to the bank for him because he didn't at the time you couldn't do bank transfers instantly. So he was with the same bank as me, then I transferred it with the NAB connect at that time, to pay for his home loan deposit. And then you can see that I paid the repayments for him and he paid it back to me." There was nothing evasive or general in that answer. When asked why there was no correspondence, the Applicant's evidence was "I would have had text messages at the time but were talking about an event of like seven years ago. My phone doesn't go back seven years. I don't know if yours does".[61] In fact the first loan was made on the 24 December 2015 almost 10 years earlier.
3. The Tribunal asked the Applicant to explain the circumstances in which Mr Zay prepared the letter. The Applicant told the Tribunal "I phoned Zay and told him that I needed a letter or something to state that I (presumably he) had borrowed the money from him (presumably me) over that period of time. Like, I (presumably he) had made the repayments over that period of a period of time". The Tribunal accepts the errors in the above statement were probably the result of the Applicant's dyspraxia, because the Applicant went on to say "So it is the second entry from top, which is the first entry for 4 July 2016. It is a cash deposit of $5000 and underneath that in brackets you'll see Loan repayment Zay. That's an original bank statement from back in 2016. There is no way I could go back and edit the original bank statement, so I'd say that the very fact that it's got the notation on there would give some right to fact there was obviously a loan repayment from Zay there. That's why it's actually written on the bank statement. And that's the fact for every single of these loan Zay's that I got in my page 8 of my final submissions document do you want me to go line by line?" ... "It's from line 19 to line 25 in Appendix A or on TB 827 document".[62] The Applicant then took the Tribunal to each of the line items in TB documents_._ The Applicant concluded his submissions in relation to the loan repayments received by Zay by telling the Tribunal "so basically all of the transactions that I've said are for my friend Zay- relate to my loan from my friend Zay, which are referred to on page 8 my final submissions document, every single one of those transactions have the comment on there of ' Loan repayment Zay' of an actual original bank statement. So when I asked how we can relate it back so many years, what cash deposits relate to Zay, what bank statement loan repayment Zay. So that's how I can (go) back it at 10 years later or seven years later or whatever it is and be able to confirm that it is part of that loan that I lent to my friend Zay."[63]
4. The Respondent's position was the letter from Mr Aung was not a witness statement or affidavit, and Mr Aung was not available for cross examination. Counsel for the Respondent submitted:

"you wouldn't give much weight to those notations in the bank statements in circumstances where you have no evidence about the terms of the loan, for example, Mr Aung was not available to be cross-examined about it. You simply have assertions and a narration of 'loan" in circumstances where there are a series of highly unusual and complex movements of money in transactions so even in those instances where there is a reference to loan, in the absence of other evidence, that wouldn't be sufficient, on the facts of this case, for the Applicant to discharge his onus in respect of those amounts.. "[64]

5. On the contrary, and consistent with the five principles summarised by Steward J in Cassaniti, the Tribunal finds the contemporaneous objective evidence comprising copies of the original the bank statements, was sufficient to corroborate the Applicant's submission that all the deposits with a narration "Loan repayment Zay" were exactly that.

Loan Repayment to the Applicant by a Miss Naomi Croak in the amount of $500.00

1. A similar exchange occurred between counsel for the Respondent and the Applicant in relation to a deposit of $500 made on the 19 October 2016. Counsel's focus was the lack of a loan agreement between Ms Croak and the Applicant, and a failure to file any evidence such as text messages or emails referring to the loan. The Applicant's evidence was "like I said before, were going back seven years, so it would be impossible to have a text message. The only evidence I have is what's on my bank statement which says 'repayment loan Naomi.' Naomi was an ex-partner of mine. She borrowed money off me of $500 or $530 and paid it back."
2. In the Amended Appendix A, the Applicant had identified the line item in the relevant bank account that had the narration 'repayment Namoi.' For the same reasons set out above, the Tribunal was taken to the Bankwest account of the Applicant and the relevant line item on that statement and the narration against a deposit of $500 stated 'repayment Namoi'. A sufficient contemporaneous record existed, there was nothing vague about the Applicant's explanation of the deposit, and the Tribunal is satisfied the deposit of $500 made on 19 October 2016 was the repayment of a loan.

Loan repayment to the Applicant by Raj of $2500

1. A similar exchange occurred between counsel for the Respondent and the Applicant in relation to a cash deposit of $2,500 made on 11 July 2017, where the narration underneath the cash deposit stated 'Repayment loan Raj'. The Applicant's evidence was Raj was a friend whom he had lent money to when he was planning to move overseas. Raj had repaid the amount into the Applicant's account before he departed Australia. The Applicant told the Tribunal he had had no contact with Raj since he left Australia.
2. Notwithstanding the only identification for the borrower in this case was a first name Raj, the narration on the original bank statement against a deposit on the 11 July 2017 was a sufficient record to satisfy the Tribunal that the cash deposit of $2,500 was the repayment of the loan previously made to a friend.

Loans made to the Applicant by his father Mr Glennon James Day between 2017-2019 in the amount of $31,850.

1. Mr Glennon Day provided a statutory declaration in relation to loans he had made to his son in 2017, 2018 and 2019. The statutory declaration was sworn on 26 March 2024. Although brief, it reads as an honest statement by a father attempting to recall the amounts and the dates that he lent money to his son. Mr Glennon Day in the statutory declaration stated he recalled lending money to his son "in an amount of approximately $6,000 to help enable him to pay his home loan in March 2017". He recalled lending approximately $10,000 to his son over the period April to June 2017, but "after being questioned by Peter quite possibly $11,400 given to him in about four lots of $3000 or $2000 between those months". [65] Mr G Day stated he recalled [the Applicant] paying this money back to him "a week or two later." Mr G Day stated he recalled lending his son "approximately $14,000 around the middle of 2018, most likely in early July". Mr G Day stated he recalled lending "approximately $1,500 in May 2019".
2. During cross-examination by the Respondent's counsel, Mr G Day presented as a truthful witness. There was nothing in Mr G Day's evidence that suggested he had manufactured his evidence to assist his son. Mr G Day stated he discussed his evidence with his wife and his son, but he "hadn't really assisted him in too much of a way."[66] The truth of that statement was apparent from his evidence." When counsel for the Respondent put to Mr G Day that he had no recollection of the amounts or dates the money was lent and that the amount in issues was at odds with his sons, Mr G Day's evidence was "I know there was amounts of 3000, 2000, 2000 and another 3000 that's what I was aware of so that would have been 10,000 I was aware of. There could well have been other times he would come to me at certain times for certain amounts of money."[67] When counsel for the Respondent put to Mr G Day that he had an "unreliable recollection of these events." Mr G Day was very clear stating "events in 2017, the first ones, I certainly remember the $6000 and I remember a $10,000-$11,000- it says 11,400 over the next few months the following year, I certainly remember the $14,000 being repaid yes I do remember". When questioned about the repayment of the $14,000, Mr G Day's evidence was "no, the payment was in July, that I made and he would have repaid it in August approximately August, September, it was pretty soon afterwards a couple of weeks after".[68] When counsel for the Respondent questioned Mr G Day about the deposits into his son's account, Mr G Day quite honestly told the Tribunal he wouldn't have any idea because he did not make the deposit, but he then went on to say in his evidence "but that doesn't mean I didn't lend it to him before that, he's chosen to put it in on that particular day". When counsel for the Respondent asked why the Applicant had made deposits in random amounts on random days with narratives as brief as cash deposit, Mr Day's evidence was "I can only assume that that's when [the Applicant] needed to pay the money for some reason or other, for purchasing something. I don't know but that's up to him not me." Finally, when counsel for the Respondent put it to Mr G Day that he couldn't differentiate one cash deposit in the Applicant's bank account from another Mr G Day quite truthfully answered "no, why would I, no."
3. Mr G Day was a retired senior public servant with the Commonwealth Government, having worked for the Australian Government "for over 35 years, including 15 years as an onshore protection case officer in the Department of Home Affairs."[69] Mr G Day's evidence was matter of fact, and direct. Mr G Day thought there might have been a loan agreement, but when it was put to him that there was no evidence before the Tribunal "of any communication between your wife and yourself referring to the existence of a loan,"[70] he agreed.
4. In answer to the questions put to him addressing repayment of the loans, apart from the $14,000, Mr G Day in his evidence said had been repaid by his son in 2018, Mr G Day agreed there had been no other repayments. It was apparent from his evidence that when his son needed money for a reason, he would give him the money in cash which he had at his home, the cash coming out of "a punting bank that I have."[71] That evidence was consistent with the Applicant's evidence given during his cross examination. When counsel for the Respondent put to Applicant that he had not included in his evidence "any bank statements from your father to show or explain deposits made into your bank account." The Applicant answered "because if I borrowed money from my father, he would give it to me in cash. My father was a punter or bookmaker so to speak, at one stage. So I'd get it in cash because he had it in cash. It was not income from an account as such it would have been written down, like, in his little ledger book or whatever how he keeps his record".[72] When counsel for the Respondent put to the Applicant that "he had no way of knowing seven years later that the cash deposits came from any loans from your father", the Applicant responded "I have no way of proving it no," but went on to explain that (emphasis added):

"I took money from my father in a lump-sum amount and then would have used it over the next few days to pay whatever needed to be paid. When you asked me why I would have put 900 and then 400, why wouldn't I have just put a set amount in, my answer to that question is, I put the money in that was required to pay a particular bill, which money has gone in and been transferred out to pay the required bill".

5. There is nothing unusual in a family situation for a loan between a parent and a child to be undocumented. It would have been unusual given the random nature of the above loans if there had been a loan document drawn up. The same is true of text messages or emails between a parent and a child, even an adult child, when they are living under the same roof. The Tribunal accepts Mr G Day's evidence that he made loans in cash to his son during the 2017 and 2018 and 2019 years to assist his son meet various expenses from time to time. The Tribunal found nothing self-serving in any of the evidence given by Mr G Day during his cross examination.
6. On the evidence before the Tribunal, which included references in Appendix A to the relevant line items in the Applicant's bank accounts that were included in the Tribunal documents, the Tribunal finds the amount of $31,850 was lent to the Applicant by his father, and it was not assessable income of the Applicant.

A Loan made to the Applicant by Mr Glennon and Mrs Cathie Day on 29 January 2018 in the amount of $55,000

1. Mr Glennon Day provided a second statutory declaration dated 26 March 2024 on behalf of his wife Cathie Marie Day and himself. In that statutory declaration Mr Glennon Day stated that he and his wife jointly lent their son the amount of $55,000 to assist the Applicant in the purchase of another property also situated in Casula Road, Casula. The amount was deposited in cash into the Applicant's IMB account. The notation underneath that entry has the names of his parents. The notation clearly states "Loan CATHIE and Glen Day".
2. Mrs Cathie Marie Day also provided a statutory declaration on 19 March 2024, stating the same thing. Attached to the statutory declaration were copies of their bank statements with the ANZ and the CBA as evidence of where they had withdrawn the money from their bank account with the CBA and from Mrs Day's bank account with the ANZ.
3. During the cross-examination of Mr Glennon Day and Mrs Cathie Day counsel for the Respondent put many of the same questions to both of the Applicant's parents. Essentially, there was no loan agreement, there had been no evidence filed of any communication between each of them and the Applicant referring to emails or text messages, and that the loan had not been repaid.
4. During the cross-examination of Mrs Day, counsel asked Mrs Day to explain a transfer from a Netbank account ending xx568 to the CBA account in question. Mrs Day's evidence was "I'm assuming that's my husband's where his pay goes in from his retirement". "Yes, so he gets a Commonwealth Government superannuation pay every fortnight. So it goes into the net bank one and then we transfer it into one so we can use it." Counsel for the Respondent put to Mrs Day that she would have no independent recollection of what specific withdraws were made to fund the loan to their son. Mrs Day demonstrated she had a good memory of events. She recalled that $45,000 came out of one account and $10,000 from the other. When it was put to her that she would have no recollection of which specific ATM withdrawals were used to fund the loan to their son, Mrs Day's evidence was that those withdrawals were the ones highlighted in blue. When she was asked whether a $780 withdrawal from an ATM in Sylvania on 15th of January 2018 was used to fund the loan to her son Mrs Day's replied, "I don't believe it was". When pressed by counsel how she could recall whether a particular withdrawal was used to fund a loan or otherwise Mrs Day's evidence was:

"well I know [the Applicant] needed $45,000 well $55,000 plus $ 85,000 for stamp duty. So we got the 45,000 out of the CBA one. We went along to the bank, and I think you'll probably find one of the earlier ones in that couple of days was 10,000 and the teller said he couldn't do too much in one go . So he said, "why don't you go to the ATM and get some of it, and then come back another day"? So that's what we did."

5. When pressed by counsel that she had "reversed engineered by highlighting amounts that equaled $55,000 shortly before you say you given the loan". Mrs Day replied:

"I very clearly remember. I don't usually lend somebody $55,000. So I know that I was doing it, and I know it took a couple of days to get the money. Because as I said, the teller said, "we don't hold that much. Could you please just do it in a few bits" and that's what I did. So I very clearly remember because I know I drew out $45,000 from here and I was able to get the other 10,000 from the ANZ." [73]

6. When counsel again put to Mrs Day "when you've come to prepare your statement you have, in effect, because your evidence is that you had given a loan of 55,000 and you have then identified transactions which add up to $55,000?" Mrs Day answered:

"I know that I was getting 45,000 out of the CBA account, and I know the days that I would have done it. So when I looked at the bank statements, they are the ones that I marked because that's when I did it. I didn't do it over a four month period. I did it over a couple of days that I needed to get it."

7. Mrs Day went on "so it was pretty obvious when I looked at the bank statements that they were the amounts, because I was getting them out to be able to hand it to [the Applicant] because he needed the money." When counsel for the Respondent asked why it was withdrawn in cash Mrs Day answered quite candidly "well, I can't be 100% sure. But I believe when you're transferring from one to another, because [the Applicant's] bank was the IMB and it's a very weird one, and I have a feeling transferring was going to take longer than just getting out the cash." Mrs Day's evidence that the Tribunal accepted was that a transfer from the CBA or the ANZ to the IMB Building Society was difficult and transfers did not go across quickly. When counsel for the Respondent queried why, if the intent was to do it as quickly as possible, did Mrs Day go around Sydney making cash withdrawals again and again rather than simply transferring the money to her son. Mrs Day's answer was:

"well we didn't go around Sydney. Kingsgrove and Earlwood are next to each other and you'll see on the 17th that's when the man would have told me that the $10,000 is as much as he could give me. Glennon and I each have a debit card whatever they are and have a limit of $2000 so we would have each done $2000 and then we would have gone up to Earlwood and they must have only had $8,500 they would give me so then we obviously went back on the 19th they probably said don't come back until then, until they had $10,000." [74]

8. When pressed again why Mrs Day simply had not transferred $55,000 her answer was consistent "because it wasn't going to go straight away and I don't know what date [the Applicant] needed it by but he said could I start collecting it so I had it, I believe and that's what I did".[75]
9. It was very clear from the CBA bank statements annexed to the witness statement in respect of their joint account that cash had been withdrawn from ATMs from 17 January to 23 January 2018 in amounts of $10,000, $2,000, $8,500, $1,700, and $300, which was consistent with Mrs Day's evidence. Further review of the CBA bank statement,[76] except for one other ATM withdrawal referred to by counsel for the Respondent of $780 on 15 January 2018, all other transactions were payments on cards for items or direct debits.
10. Mr Day's evidence was not inconsistent with Mrs Day's evidence. When asked by counsel for the Respondent if the Applicant ever explained why he wanted to be lent money in cash as opposed to an electronic funds transfer Mr Day's answered "no I don't. I mean, the bank the statement says that 55,000 was taken out of the bank so clearly it was taken out of the bank. But I don't remember why it was cash."

A Loan made to the Applicant by Mrs Cathie Day on 30 July 2018 in the amount of $9,000

1. Mrs Day provided a second statutory declaration that she had lent the Applicant $9,000 on 30 July 2018. The deposit was made into the Applicant's IMB account and under the deposit is a notation Cathie.[77]
2. Counsel for the Respondent put to Mrs Day that because there was no loan agreement, no communication in evidence between the Applicant and his mother, or Mrs Day and her husband about this loan and there was no evidence in of any cash withdrawal that Mrs Day had "mistaken having lent her son $9000 on 30 July 2018". Mrs Day replied in clear and unequivocal terms "no because I had the cash at home. I went to the bank, and that's me putting it in. Did you see it say, Cathie next to it? But it's annotated on here with my name I deposited the money at Sylvania."
3. During his cross-examination about the loans from his parents, when it was put to him by counsel for the Respondent that there had been no communication between the Applicant and his parents about the loan, the Applicant answered

"there was a phone call to my mum at the time saying look mum, I'm desperate for this property. I need some money. I'm short on it. Can you go to the bank and organise it for me? And my mum went and deposited in at the bank which wasn't on whatever date it was that you say, states loan or deposit Cathie Day, because it was my mum that went and did it and the bank filled out the form or whatever it is put her name on it".[78]

4. The Respondent's counsel, in closing submissions, stated that the evidence of Mr Glennon Day and Mrs Cathie Day should not be accepted as evidence. The Respondent's counsel contended that Mr and Mrs Day were "unreliable witnesses" who were "clearly motivated to assist him in these proceedings" and "intimately involved in the preparation of [the Applicant's] evidence". The Respondent put to the Tribunal that "while parents would not ordinarily be considered to be independent witnesses, the Applicant's parents are much more involved in their son's litigation than what would ordinarily be the case for most parents"...[79]
5. With respect to the above comments by the Respondent's counsel, the observations of Justice Hill in Imperial Bottle Shops v Commissioner of Taxation [1991] FCA 276; (1991) 22 ATR 148 are relevant:

"A taxpayer who does not keep records of his deductible outgoings faces a very difficult task. If he goes into the witness box and swears that he has incurred the outgoings he is making a self-serving statement. That does not necessarily mean that he is not to be believed. Such a statement, like statements of purpose, or object or state of mind must, however, be "tested most closely, and received with the greatest caution": Pascoe v Federal Commissioner of Taxation (1956) 11 ATD 108 at 111. It would, of necessity, be a rare case indeed where a taxpayer, claiming to have expended a very large sum of money on trading stock and other business expenses, would succeed in satisfying the burden of proving that the assessment is excessive. Some other corroborative evidence would normally be required which makes it more probable than not that his sworn testimony is to be believed. It must, however, be borne in mind that the evidence of a taxpayer is not to be regarded as "prima facie unacceptable" (McCormack v Federal Commissioner of Taxation [1979] HCA 18; (1978-9) 143 CLR 284 at 302 per Gibbs J)

6. Although the above observations of Justice Hill relate to a taxpayer, the same is true of any family member or close friend who gives evidence on behalf of a taxpayer. Just because the witness has a close relationship with the taxpayer does not necessarily mean that they are not a credible witnesses. Their statements must be "tested most closely and received with the greatest caution" and "some other cooperative evidence would normally be required which makes it more probable than not" that the sworn testimony is to be believed. It must, however, be borne in mind that the evidence of a taxpayer is not to be regarded as prima facie unacceptable."[80]
7. Having had the opportunity to observe Mr Glennon Day and Mrs Cathie Day during cross-examination, the Tribunal could discern no bias toward the Applicant in any of their testimony. Both Mr and Mrs Day presented as honest and straightforward individuals who though motivated to assist the Applicant with the necessary preparation for the proceeding before the Tribunal, and clearly worried about their sons mental health, which was made apparent in correspondence sent by Mr Day to the Respondent on 18 May 2023, had not colluded in respect of their evidence.[81] There was nothing that suggested either parent had manufactured their evidence in order to assist their son. Further, there was corroborative evidence that Mr and Mrs Day had withdrawn a significant amount of money from their joint bank account and Mrs Day's individual bank account to help their son purchase another Casual Road property.
8. Counsel for the Respondent made much of the fact that there was no contemporaneous document making any reference to the existence of a loan between Mr and Mrs Day and the Applicant. Frankly, the Tribunal would be more likely to find the evidence "self-serving" if there had been a formal loan agreement between Mr and Mrs Day and the Applicant setting out a drawdown schedule backed up by text messages and emails when the Applicant's evidence was he was living under the same roof as his parents.[82] The fact that the loans had not been repaid, is not relevant to the question of whether the money was lent. There was no evidence before the Tribunal that suggested Mr and Mrs Day could not afford to lend their son the funds they advanced, that submission made by counsel for the Respondent lacked foundation. It was clear from Mr and Mrs Day's bank accounts that they had withdrawn $45,000 mostly from ATMs in the space of a few days, which appeared from a precursory review of their bank statements, an uncharacteristic method of transaction. Mrs Day's explanation for the method of transfer was entirely plausible. Having had the opportunity to observe the Applicant during the hearing, the Tribunal accepts the Applicant's evidence that he rang his mother and said words to the effect of "look I'm desperate for this property. I need some money can you go to the bank and organise it for me."[83] Finally, counsel for the Respondent's submission that failing to include the loans from his parents as a liability in the various applications the Applicant's mortgage broker made on behalf of the Applicant to obtain finance to purchase various properties, was not sufficient to establish the loans did not exist. It would be a rare event if informal loan arrangements between a parent and a child were included on an application to obtain finance, particularly one prepared by a mortgage broker.
9. On the totality of the evidence before the Tribunal and having the opportunity to observe Mr and Mrs Day during cross-examination, the Tribunal finds the amount of $64,000 was a loan from the Applicant's parents and that amount was not assessable income to the Applicant.

BUSINESS RELATED TRANSACTIONS IN THE AMOUNT OF $3,613,930.50

1. The table below is extracted from the Respondent's reasons for decision[84] and the Respondent's counsel's opening submissions. The table is headed 'Unexplained Deposits to the Applicant's Bank Account for the relevant years.

1. In relation to these deposits the relevant entry on the above is the amount of $3 577,710.09. deposited in the Bankwest account ended xxx8493 in 2018.
2. In the Applicant's Statement of Facts, Issues and Contentions, he set out the following facts[85]:
   1. His main business, Mobile Phone Shack Pty, consisted of the retail store at Southgate Shopping Centre Sylvania in addition to a wholesale business in mobile phones.
   2. With respect to the wholesale business, the Applicant would source stock at a certain price and then offer it to purchases with whom he transacted in the market. The Applicant stated that if a potential purchaser wanted the stock and a price was agreed he would invoice that customer. The customer would then pay for the invoice by transferring the amount of the invoice to Mobile Phone Shack's company bank account to his personal bank account.
   3. The reason for the transfer from a business account to his personal account was to avoid a "considerable charge to withdraw cash from a business account whereas no charge to withdraw from a personal account." The Applicant stated "there was a money handling fee that armguard charged the bank plus the bank charged a cash handling fee as well, which all worked out to be about 2 ½%. The wholesale business relied on a large turnover of stock to produce around 0.5% to 1% profit margin. Therefore it was only sustainable if I did not need to pay the bank cash handling fee."
   4. A transfer could take up to 72 hours to reach the receiving financial institution unless the payment had already been made to the same receiver previously. Even in the latter circumstances it still took up to 48 hours unless both parties were dealing with the same institution. However, the supplier could be immediately paid if the Applicant withdrew the cash from his personal account because if he paid the supplier immediately, he would be given preference to the stock that was available. Once payment had been made, he would then collect and deliver the stock to the purchaser.
   5. The Applicant's main purchaser was Mohammadi Enterprises.
3. The report prepared by the forensic accountant at [3.1.14] states "in my recalculation, I have determined that of the unexplained deposits identified in the ATO audit, $3,098,465 are business related transactions occurring in FY 2018 in respect of stock purchased by Mr Day's business from JAKKA Electronics, (JAKKA), Global Electronics and GSM Planet.[86]
4. The forensic accountant's methodology is set out under heading 4 of the forensic accountant's report. In that section, at [4.1.4] the report states "I conducted a comparison of the statements for each account which formed the review accounts in order to identify inter account transfer transactions, being transactions between Review Accounts owned by [the Applicant]." At [4.1.5] the report states "where available, I obtained and reconciled invoices issued by suppliers to [the Applicant's] businesses, and invoices issued to vendors of [the Applicant's] businesses to transactions in the Review Accounts." At 4.1.6 "I had meetings with [the Applicant] to clarify the nature of particular transactions and requested evidence to support representations made to me by [the Applicant]." Where the information provided to me was insufficient to form an opinion on the nature of the source of the transaction, I have characterised such transactions as unverified."[87] (emphasis added)
5. Under the heading "Review and Recalculation of Deposits Subject to Audit," under the sub heading 'Business Related Transactions' the report states "these unexplained deposits relate to the wholesale mobile phone business operated by [the Applicant] through entities he controls." [The Applicant] has represented to me that entities controlled by him carried on a wholesale phone business. These businesses sold phones during the Review Period (primarily to Mohammadi Enterprises Pty Ltd). Copies of these invoices are included in Annexure F." "[the Applicant] further represented to me that his businesses ordinarily purchased mobile phones during the review from JAKKA Electronics. Copies of these invoices are included in Annexure F." "[The Applicant] represented that it was JAKKA's normal business practice to be paid in cash. To facilitate this, [the Applicant] would arrange for funds to be transferred from his business entities (sourced from sales made by those entities to Mohammadi Enterprises) to his personal accounts. [The Applicant] would then withdraw cash from his personal accounts over-the-counter at bank branches to pay JAKKA in respect of the invoices issued by JAKKA to [the Applicant]." [88]
6. Under the heading Business Related Transactions, the report sets out a table. The narrative for the table states "The following are transactions that have been verified in the Review Accounts as business related transactions as per my reconciliation at Annexure F in respect to the purchase of stock for Mr Day's businesses"[89] (emphasis added).

1. Importantly, under the heading Conclusion at [7.1.1], the report states "My review of the ATO's audit material and further information provided by Mr Day to me, including discussion with him, has allowed me to explain the nature and source of many of the unexplained deposits identified in the ATO transaction list. However, subject to the receipt of additional information, I have not been able to explain all deposits. Where I have not been able to explain the nature and source of a transaction, I have labelled those deposits as "unverified" for the purposes of my report." The report goes on to state "I have made all enquiries which I believe are desirable and accurate. No matters of significance that I regard as relevant to my opinion have, to my knowledge, been withheld from this report."[90] (emphasis added)
2. Annexure F contains a JAKKA business transaction reconciliation prepared by the accountant from 7 August 2017 to 7 June 2018. The relevant tax invoices from JAKKA Electronics to Mobile Phone Shack Pty Ltd sit behind this business transaction reconciliation. Annexure F also includes tax invoices and from Mobile Phone Shack Pty Ltd to Mohammadi Enterprises Pty Ltd and a transaction reconciliation for GSM Planet. Annexure F runs from TB 4424 to TB 4523. The relevant Bankwest transactions are recorded in a table prepared by the forensic accountant.[91] The relevant Bankwest accounts are included in the Annexure.[92]
3. There was nothing before the Tribunal to call into question the veracity of the reconciliation conducted by the forensic accountant in relation to the table reproduced at [51] above or the independence of the forensic accountant. The Report states at [2.5.1] "I am independent of the parties. Neither I, nor my firm have or have had within the preceding 24 months any relationships with [the Applicant]". Under the heading 'Engagement' the report clearly states "I am instructed to prepare a written report detailing my review, recalculation and categorisation of the transactions in [the Applicant's] bank statements, which have been identified as unexplained deposits by the ATO in its income tax audit, in order to better explain the true nature and source of the transactions." As previously stated in these reasons the Tribunal accepts the report of Slavin Torline as a reliable record of the transactions Mr Torline was able to state he had verified.
4. In the Applicant's final submissions, the Applicant identified the line items in Appendix A for the transitions between Mohammadi Enterprises Pty Ltd and Global Electronics Pty Ltd, the narration details the relevant invoice number, Global Electronics account number and the transfer to the account ending 8493 these entries appear from line 513 to line 523.
5. The same details are provided in relation to the business-related transactions between Mohammadi Enterprises and Mobile Phone Shack. The invoice number is identified, the amount transferred, the account number the transfer is made to is identified as account ending 8493 and the relevant Tribunal document. These entries appear from line 524 to line 540, line 542 -566, 568-571, 576, 579 -582.
6. As laborious and as time-consuming as the task was, with the exception of a few incorrect TB references, the Tribunal was able to identify each of the transactions referred to by the Applicant on the relevant bank statement, confirm the transfer number matched in both the transferring and receiving bank, and the invoice number identified against the deposit matched the invoice number on either a Mobile Phone Shack invoice to Mohammadi Enterprises that itemized the goods to be supplied and where the JAKKA invoices were available, the invoice from JAKKA Electronics to Mobile Phone Shack, which matched the same description of the goods to be supplied by Mobile Phone Shack to Mohammadi Enterprises.
7. During cross-examination the Respondent's counsel put to the Applicant that he had filed no evidence to show that there was a 2.5% cash handling fee, while the Applicant conceded that was the case, in response to the question the Applicant answered "that was a known fact. The bank charges you a cash handling fee if you withdraw a certain amount of money or they won't let you draw a certain amount of money out of the account, depending on the account. Just like there's different interest rates. There are different fees on different types of accounts" ... "It's common knowledge so I didn't know I had to provide it" .... "All I could tell you is if you look at my companies, you'll see that they had accounts, for example with Westpac, that as soon as you withdraw more than 100 grand from Westpac, they close your account because they're not making money out of you because they're losing money". When pressed by the Respondent's counsel that he had filed no evidence the Applicant answered "that's what they told me they charge me so that's why I didn't do it. If you are going to lose money on something, then you're hardly going to go ahead with it so you wouldn't have any proof because you didn't go ahead with it."[93]
8. A cursory review of bank charges in 2017 in 2018 suggests the major banks did charge a fee for "staff assisted" or "assisted" transactions made in a branch. The fee was intended to encourage the use of automated services. A summary of the typical fees obtained from a Google search is set out below.
9. The Commonwealth Bank's business transaction terms and conditions published in 2018 states "the Commonwealth Bank business transaction account has zero monthly account fee option and includes unlimited free electronic transactions. However, you'll need to pay three dollars fee for each staff assisted transaction you make in a branch".
10. All the major banks appear to have charged a flat fee, but some specialised merchant accounts had percentage based fees for high-volume cash deposits and withdrawals.

1. While the Tribunal's superficial review of bank charges in the relevant period is not part of the Applicant's evidence, it assists the Tribunal when weighing up the totality of the Applicant's evidence.
2. When it was put by the Respondent's counsel to the Applicant that he had filed no evidence that the businesses operated by the Applicant only had 0.5% to 1% profit margin, the Applicant stated "you never asked for any evidence to support that and the ATO's audited me multiple times and agreed that it was only a 1.5% margin". When pressed the Applicant made it clear his case was the business operated on a fine margin of 1%.[94]
3. Whatever the position was with respect to the bank fees and profit margin, a detailed review by the Tribunal of the relevant bank statements and the invoices filed as part of the forensic accountants report show the funds coming into a business account being transferred to the Applicant's personal Bankwest account with an identifier being the transfer number and then being withdrawn almost immediately from that account in cash. In the Applicant's statement of Facts Issues and Contentions the Applicant stated he withdrew the cash to pay the supplier JAKKA Electronics to secure the supply of the items ordered by Mohammadi Enterprises. During cross-examination, the Applicant answer was he adopted this practice in order "to secure the stock and be the first to get priority, yes, if you paid cash, you got priority on the stock. Yes." [95]
4. When pressed by counsel for the Respondent that the Applicant had invented the 0.5 to 1% margin in the course of these proceedings in order to explain what he described as "business related transactions" the Applicant was adamant that was incorrect stating "100% it is true. You can look at your audits that you do on Global Electronics where it has the same amount coming -you ask why the withdrawal of cash and pay it to suppliers -and your auditor came back. Guess what? I was correct and the ATO was wrong". [96]
5. A letter from Mr Mustata Madarwala, the director of Mohammadi Enterprises, was included as an attachment with the Applicant's Statement of Facts Issues and Contentions. Although Mr Madarwala was available for cross examination, he was not called by the Respondent. The letter provided by Mr Madarwala only explained the arrangement between Mohammadi Enterprises and Mobile Phone Shack. In closing submissions, the Respondent's position was Mr Madarwala's letter provided "no evidence relevant to the Applicant's practice or the need for the Applicant to operate his business in such a peculiar way." As far as the Tribunal can discern, Mr Madarwala's company operated along normal commercial lines and payment for the stock ordered by Mohammadi Enterprises was deposited into the Mobile Phone Shack's bank by bank transfer with a bank identification number for the deposit and an invoice number against the deposit.
6. The JAKKA Business transaction reconciliation prepared by the forensic accountant, would appear to support the Applicant's contention that his business practice was to transfer funds from the Mobile Phone Shack business account to his Bankwest personal account and then withdraw funds in cash to pay JAKKA Enterprises for stock. Although incomplete, where records do exist, the forensic accountant has been able to reconcile the amount withdrawn from the Applicant's personal Bankwest account with a JAKKA Electronics tax invoice issued to the Applicant's trading entities, in this case Mobile Phone Shack. The Tribunal conducted a high-level review of the withdrawals from the Applicant's personal bank account with Bankwest against the invoices from JAKKA Electronic that were included in the Tribunal Documents, although undoubtedly an unusual business practice, the Tribunal finds that was the Applicant's business practice.
7. Included in the documents filed by the Respondent was a folder with the title "Native form spreadsheets." One of those spreadsheets was headed invoices review from POSI response that had been prepared for the income tax year that ended in 2018. It included in columns the dates of each invoice and the invoice number of the invoices from Mobile Phone Shack Pty Ltd to Mohammadi Enterprises, the ABNs for both business, confirmation the ABNs were valid, a column confirming the ABN remained valid, the amount of each invoice and a column headed note. In the note column five invoices were identified as having a hyphenated invoice number, and against one invoice addressed to GSM Planet the note said, "part of the ABN cut off looks like a cut and paste." All the other invoices between Mobile Phone Shack Pty Ltd and Mohammadi Enterprises matched and reconciled.
8. The spreadsheet continued to match the invoices from JAKKA Electronics to the invoices of Mobile Phone Shack Pty Ltd Sylvania. It was noted the ABN JAKKA Electronics was active, but no ABN had been quoted on the invoices to Mobile Phone Shack Pty Ltd Sylvania. The amount of each invoice was included. Under ABN valid for JAKKA Electronics was a comment "belongs to individual Jagadeeshwar R Jakka ICP shows departed, unreliable address in warning message no trading name shown in ICP under this ABN." In the notes column the following comment appears "the invoicing entities ACN 276123287 shows an invalid organisation result in Mascot-i.e., possibly has never been registered with ASIC. I then did a Mascot name search under JAKKA but didn't show any result for anything related to the address or electronics this confirms my thoughts that the entity doesn't/ never existed..." "Additionally, this address belongs to a block of flats that appear to be residential only and according to PR Data unit 11 was purchased by someone with the name of Niscal in 2016. Rental history shows the property was advertised for rent the day after the invoice date so possibly was empty? Rental Bond board check would probably show occupants but given we already know the entity doesn't exist in Mascot probably not necessary to check the rental occupant." The only other comment made against two invoices was "invoice date and sequence was out of whack". The note column provides a total of the invoices. It states, "total of invoices issued from Mobile Phone Shack in the June quarter is $4,500,868.06". "Total of invoices issued from JAKKA for the June quarter is $3,621,146.00. That is a differential of $384,722.06 (emphasis added).
9. This spreadsheet was not put to the Applicant either in the Respondent's Statement of Facts Issues and Contentions, the Respondent's opening submissions, during counsel for the Respondent's cross-examination of the Applicant or in counsel for the Respondent's closing submissions. If the inference to be drawn from this spreadsheet is the Applicant was involved in some nefarious business dealings with Mr Jakka that was never put to him in these proceedings.
10. With respect to the failure to include on the invoice to Mobile Phone Shack Pty Ltd Sylvania that companies ABN during cross-examination in answer to a completely different question put to the Applicant that he had not filed any evidence from his suppliers that they needed to be paid in cash the Applicant answered "I didn't know it was about my company. I thought we were in regard to my personal affairs. My company is already audited multiple times".[97]
11. When asked by the Tribunal about the audits the Applicant had referred to during his cross-examination the Applicant answered:

"Yes, well, Global Electronics for example that they bought up (referring to a question put by the Respondent to the Applicant in cross examination) that company was audited multiple times and every time I would receive my refunds because that company as such -we exported mobile phones overseas so when we bought them here we obviously paid GST, when we exported them overseas we were able to claim the GST back on the export. So's oftentimes because they're such large amounts of money in tax withdrawals, they always audited the companies and every time the audit outcome was we had done nothing wrong and received our refunds, as we should." [98]

12. The Tribunal notes counsel for Respondent formally made an objection to the Tribunal asking the above question as "none of it arose during cross-examination of the material" put in evidence by the Respondent. On the contrary, the Native Spreadsheet was filed by the Respondent as part of the Tribunal documents. Further, much was made of the Applicant's unusual business practice of withdrawing cash to pay the supplier of the phones, JAKKA Enterprises. The native spreadsheet contained a valid ABN for Jakka Enterprises, and if some adverse inference was to be drawn from the fact the Applicant's companies had been conducting business with Mr Jakka's company, an entity not registered with ASIC that possibly conducted its business from a residential block of flats, that question should have been put directly to the Applicant. It was never put to the Applicant that the JAKKA invoices were recent inventions, to justify the large cash withdrawals. The Applicant was not cross-examined on his relationship with Mr Jakka, nor was it put to the Applicant that he had not used the cash he had withdrawn from the Bankwest account to pay JAKKA Enterprises. The Applicant was not given the opportunity to deal with the inference that he had taken money belonging to the corporate entities he controlled for his own private purposes. These matters were only indirectly hinted at by counsel for the Respondent. The Applicant should have been given the opportunity to contradict the inference that he had taken company money for his personal use. It follows in the Tribunal's view that the rule in Brown v Dunn,[99] was not complied with and the Applicant was not given the opportunity to deal with the suggestion that he did not use the funds to pay JAKKA Electronics.
13. The evidence before the Tribunal[100] was the Applicant paid JAKKA Electronics in cash for supplying goods to Mobile Phone Shack to meet the orders placed by Mohammadi Enterprises. Although an unusual business practice, having had the opportunity to observe the Applicant during the course of these proceedings this practice clearly worked for the Applicant, and his explanation was accepted by the Tribunal. This is not a case where the funds cannot be traced. Even the Respondent's Native spreadsheet was able to trace the flow of funds from Mohammadi Enterprises through the Applicant's Bankwest account to Jakka Electronics. Clearly from a corporate law perspective the arrangements to pay JAKKA cash were informal but they did not lack documentation and whatever issue the Respondent might have taken with JAKKA Electronics does not taint the Applicant's conduct. As Justice Logan stated in Anglo-American investments Pty Ltd (trustee) v Federal Commissioner of Taxation[101] "small businesses are often characterised by informal practices and in that respect, are therefore "'unremarkable'".
14. On the facts before the Tribunal, the Tribunal finds the Applicant was truthful, his answers during cross examination and his oral submissions were consistent with the verified reconciliation table prepared by the forensic accountant as well as the Respondent's own native spreadsheet. The Tribunal finds the Applicant was simply the paying agent for his trading entities and he did not beneficially derive the deposits transferred to his account by Mobile Phone Shack. That income belonged to Mobile Phone Shack, and to avoid unnecessary bank fees that company transferred the funds to the Applicant's bank account with Bankwest with a direction to pay those deposits directly to JAKKA Electronics for the purchase of phones from that entity.
15. Based on the above finding, the amount of $3,577,710.09 was not "unexplained deposits" and should not have been included in the Applicant's amended assessments for the income tax year ended 30 June 2018.

1. As the Full Court of the Federal Court (Logan, Downes, and Goodman JJ) recently reiterated in Charles Apartments Pty Ltd v Commissioner of Taxation:[102]

16 An agreement in writing evidencing the making and terms of the asserted intragroup loan from Demian Investments to CAPL was not adduced in evidence before the Tribunal by CAPL, if indeed there ever was an agreement in writing. The Tribunal accepted that the internal affairs of the Demian Group were conducted with great informality by Mr Demian. He was the ultimate controller of the entities within the group. > > 17 Such informality is, in itself, unremarkable in small business in Australia, especially when control is so closely held: Electrical Enterprises Retail Pty Ltd v Rodgers (1988) 15 NSWLR 473, at 489 (Kearney J); VL Finance Pty Ltd v Legudi (2003) 54 ATR 221, at [30] (Nettle J); Melbourne Corporation of Australia Pty Ltd v Federal Commissioner of Taxation [2022] FCA 972, at [44] (Logan J). Eligibility to claim a deduction under s 8-1 of the ITAA 1997 is not conditioned upon the existence of evidence in writing to prove that a liability was incurred in the amount claimed. It is singularly important that the Commissioner brings to bear this understanding of small business and of s 8-1 in his administration of the ITAA 1997 and other taxation legislation. Great injustices can be done if he does not do so. All this said, an absence of evidence in writing supporting the existence and terms of a loan can present real challenges for a taxpayer in discharging the statutory onus of proof mentioned above. Sometimes the existence of a loan and even the incurring of a related interest liability may be evident enough from a taxpayer's accounts. But such accounts may not, and often will not, disclose the terms of the loan concerned. In this case, the detailing of the terms of the intra-group loan to CAPL and its assignment depended upon the acceptance of Mr Demian's oral evidence by the Tribunal (emphasis added).

2. In his Statement of Facts Issues and Contentions, the Applicant stated that on numerous occasions he lent money as a director to various companies he had established from his personal bank account when those companies were struggling and required short-term capital injections. When the money came into the company, he would then repay the loan he had made to the company into his personal bank account. In particular, the Applicant stated he had lent money to Mobile Phone Shack in order for Mobile Phone Shack to buy stock for the retail store in Sylvania, when the store made money from the sales it then repaid the Applicant and the money was again deposited into the account that the Applicant had withdrawn the money from.
3. In relation to these loans, the Applicant's final submission document lists the lines in Appendix A that relate to the flow of funds between the relevant corporate entity and the Applicant. The Applicant gave the following entries by way of example: a cash deposit made on 16 November 2017 from Mobile Phone Shack to the Applicant Line 81. The annotation states loan Peter". "I was short $700 for my home loan repayment, the next line in the statement is my home loan payment so I took $700.00 cash director loan from Mobile Phone Shack. The bank statement shows "loan Peter". A repayment of a director loan made on 6 March 2018 Line 100. The annotation is "Mobile phone shack repays a director loan by transferring $850 from its IMB account ending 1462 to my IMB account ending 1231 with a reference to the T documents T 46 819."
4. The Applicant goes on to state he received another director's loan from mobile phone shack for $850. The Applicant stated he repaid this loan by lending Mobile Phone Shack $5,833 on 12 March 2018 and this transfer appears on the bank statement at TB 838. Underneath that transfer are a further 4 payments of $5,833 and a further payment of $4,283 making a total of $34,448 transferred from the Applicant's bank account into Mobile Phone Shack's bank account. The annotation beside each of the transfers made on 12 March 2018 from the Applicant's IMB account to Mobile Phone Shack's bank account is "Wages July, Wages Aug, Wages Sep, Wages Oct, Wages Nov, Wages Dec". The last transfer made on the same day for $4,833 simply has transfer Mobile Phone Shack. The Applicant explained in his final submissions that he made these payments "so that Mobile Phone Shack could pay my wages. You will see I have highlighted my wages in yellow on TB 838. As these wages are also notated as such on my bank statement, and also declared on my group certificate, they are not repayments of the orange director's loans". "As such I was still owed $32,448 by Mobile Phone Shack. Mobile Phone Shack then repaid this amount to me as it could afford to do so. It did this by paying me the following transactions". There was then a list of transactions identified by date and line item that occurred between April 2018 and June 2019 totalling $29,160.10.
5. The Applicant stated in final submissions that similar arrangements were undertaken between the Applicant and other entities controlled by the Applicant. Tracing the Tribunal document references given by the Applicant in the notation column of Appendix A, it was apparent that most of the transfers had a notation repay loan. Where no notation existed such as for a deposit made on 10 February, 2016 for $5000[103], the explanation for no notation on the bank statement was "unfortunately back in these days Westpac did not show the details for transfers when it was an account under the same profile group or let you write comments unless you did it at a branch and did the transfer at a counter as a teller transaction which is why some of my transactions do have comments and some do not".
6. A review of a transaction summary in Annexure C of the report prepared by the forensic accountant records the following:

a) The Transaction summary for the IMB account ending 1231 records transfers from that account to Mobile Phone Shack, I Love Fones Pty Ltd, and Peter's Fit Out. > > b) The transaction summary prepared for the Westpac account ending 6077 records loan repayments to [the Applicant]. > > c) The transaction summary for the IMB account ending 7465 records transfer to P3 Fonez Pty Ltd.

7. Annexure D headed 'Pre-performance of bank transactions workpaper records' the following transfers:

a) the transaction summary for 2016 records verifies transfers to the IMB account ending 1231 as $17,925.00 and loan repayments to the Westpac Account ending 6077 of $31,275.00. > > b) The transaction summary for 2017 records verifies transfers from the IMB account ending 1231 of $88,223.00 and loan repayments to that account of $33,020.00. > > c) The transaction summary for financial year ended 30 June 2018 verifies records transfers from the IMB account ended 1231 of $89,830.00 and loan repayments to that account of $179,700.00. > > d) transaction summary for the financial year ended 2019 verifies transfers from the IMB account ended 1231 of $39,880.00 and loan repayments to that account of $9,000.00. > > e) The transaction summary for the financial year ended 30 June 2020 verifies transfers from the IMB account ended 1231 of $193,000 00 and loan repayments to that account of $175,374.00.

f) The relevant bank statements form Annexure E and are highlighted with marker pen.

8. This is not a case where it was impossible for the forensic accountant to verify the flow of loan funds out of the Applicant's relevant bank account to the bank account of the relevant company, and the return of funds from the relevant company bank account to the bank account from which the Applicant had lent the funds.
9. During cross-examination the Applicant said that for most of the companies there would be annual accounts but he was never aware that he had to put them into evidence in these proceedings. When pressed by counsel for the Respondent that the accounts had not been put into evidence, the Applicant answered "No, I don't the accountants lodged them all and I don't have them with me whatsoever they didn't know there was any argument or any problems with any of the company accounts. They've never been they haven't been audited or anything by the ATO or asked anything in regard to them, so I believed everything was up-to-date and correct."[104]
10. When counsel for the Respondent put to the Applicant that he had not mentioned any of the loans between himself and the companies in any of the Applicant's applications for finance the Applicant answered " the directors loans in and out, sometimes you might loan the company money on Monday, they would pay a bill, they'd receive the stock from a supplier, then they pay me back the money the following day. So as I said, like, it's in and out. It's not like a director loan that sat there for 100 years. They're normally just in and out pretty quickly and there is no so it's not something really to declare, that on Monday I lent my company money. The company has purchased stock, then sold that stock, and then they paid me back the money, for example".
11. The Respondent's position was the Applicant had failed to maintain any records such as a ledger or schedule of the loans the Applicant made to the companies to demonstrate that the amounts were indeed director's loans. The Respondent relied on the decision of Steward J in Bosanac[105] that "where the taxpayer fails to retain records which evidence the course of a business or fails to create such documents, he or she may well face a great difficulty in demonstrating excessiveness." The Respondent's position is of course correct. The company is a separate entity from the director's or shareholders, it is not the director's private piggy bank, and at the very least a record or ledger recording money lent and money repaid should have been retained.
12. It is regrettable that the company accounts for the various entities were not in evidence before the Tribunal, and that the Applicants' evidence was there was no directors' loans ledger for the various companies. The Applicant clearly faced a considerable degree of difficulty in establishing he had lent money to his various companies and those companies had repaid the loans. However, it was not the case as counsel for the Respondent contended that the Applicant had "conceded there was no evidence of the loans ever being repaid" -certain "repayments" had been included as part of the unidentified deposits in the Applicants Amended Assessments. The issue was for the Applicant to establish he had in fact made loans to the various companies and certain deposits listed in Appendix A were in fact the repayments of money the Applicant had previously lent, or repayment of money he had previously borrowed from the company. The Applicant contended there were loans going both ways, the company had made loans to him and he had made loans to the companies, but the Respondent had not included in Appendix A both sides of the transaction.
13. From the notations on the relevant bank accounts, the forensic accountant was able to verify[106] deposits and bank account transfers between the Review Accounts for the IMB account ending 1231 of $17,925 in the financial year ended 30 June 2016, $88,223.00 in the financial year ended 30 June 2017, $89,830 In the financial year ended 30 June 2018, $39,880 in the financial year ended 30 June 2019 and $193,000 for the financial year ended 30 June 2020. The records available to the forensic accountant were the relevant bank statements. These were sufficient, in spite of the brief narration, to allow the flow of funds to be sufficiently identified by the forensic accountant to fall within the category of "verified" per the forensic accountant's reconciliation. As stated at paragraph [33], an authentic bank statement is a sufficient record for the purposes of the Corporations Act if it contains enough information to allow for the preparation of financial accounts. Although far less than perfect the Applicant's records appear to have been sufficient to fulfill that purpose. It was not the case, as the Respondents counsel submitted, that there "was a complete absence of business records to support the Applicant's contentions."[107]
14. The fact that the Applicant did not dispute these deposits during the objection phase is not fatal for the Applicant. The forensic accountants report clearly states the report is based on the evidence the accountant had reviewed, he had not been provided with any financial statements or management accounts by the Applicant or his advisors to review and consider in preparing his report in respect to the business operated by the Applicant. The forensic accountant states." My review of the ATO's audit material and further information provided by [the Applicant] to me including discussion with him, has allowed me to explain the nature and source of many of the unexplained deposits identified in the ATO transaction list. However, subject to the receipt of additional information, I have not been able to explain all deposits. Where I have not been able to explain the nature and source of the transaction I have labelled those deposits as "unverified" for the purposes of my report'[108] (emphasis added).[109]
15. A complete reconciliation of the various bank statements without the benefit of the transactions being identified in an Appendix format would have been an impossible task for the forensic accountant. Having said that the forensic accountant was still able to verify that a large number of transactions were not 'unidentified deposits' as alleged by the Respondent in its Reasons for decision. As stated above all that s 262A of the ITAA 36 and s 1035 of Corporations Act requires are records that at least facilitate the preparation of annual or half yearly financial statements that are capable of being audited. Cleary, the notation on the bank accounts was sufficient for the forensic accountant to identify and reconcile a large number of transactions without a ledger or cashbook or journal.
16. During cross-examination, when it was put to the Applicant that during the course of the objection phase his advisors RSM Australia (RSM) were provided with a list of transactions in dispute the Applicant answered "no they were told every single bank entry on every single bank account was income prove it's not income, so they were not given a list. No, they got told that any entry on any bank statement is considered to be income. We then had to try and go through it and reconcile it as best we could. If it was given to us in this format (referring to the Appendix A) it would have been a lot easier to go backwards and see the source of income, but it was never given to us in this easy to understand format before no."[110]
17. When it was put to the Applicant that he had taken inconsistent positions because he did not have any reliable records the Applicant was adamant that was not the case. During cross-examination the Applicant explained he was able to provide the notation in Appendix A because he had been through all the bank records. The following exchange occurred between Counsel for the Respondent and the Applicant:[111]

Counsel "you've given explanations for the first time in respect of some sums only during the course of these proceedings and never in the objection phase. That's correct isn't it?" > > Applicant "to some yes" > > Counsel "the reason that you've taken inconsistent positions is because you don't have reliable records?" > > Applicant "no that's not the case' > > Counsel "that's not the case? You don't think it's fair to say that the reason you've taken inconsistent positions is because we have a lack of record-keeping?" > > Applicant "no, because I say that every single line in here (referring to appendix A), I given you the document- I don't know what your referring to but the 1,500 page document, as you referred to this morning, we have highlighted where every transaction has come from and the source of them, so I would say that is obviously proof of where it's come from. It's been highlighted, the source, and shows you which accounts come through all or what not so I would not say that. That would be my accuracy of my record-keeping would be the factor I've gone through my records, yes. Maybe I didn't keep the best records but my accuracy of it was I went back and I got the bank statements, then I got the next statement, and I went back through and consistently did what I would call forensic accounting for example and going back through and finding the source of the funds where it came from."

18. Importantly, the letter from RSM to the Respondent dated 27 September 2022, states the methodology they adopted was identifying all relevant transactions then separately analysing each transaction in order to explain the nature or source of the transaction before determining whether the amount of the transaction represented assessable income. The letter states "For this purpose, in the event a particular transaction cannot be explained, we accept that the amount of that transaction should be included in the taxpayer's assessable income on the basis that the taxpayer cannot prove it ought not to be".[112]
19. The letter also notes RSM instructed Slaven Torline to prepare a report "analysing the transaction list in order to explain the nature or source of each transaction." The letter goes on to state that the Slaven Torline report is provided in draft because they were still waiting on information from the banks. The report of Slaven Torline states the report will be updated when further information is provided by the Applicant and subject to the receipt of that additional information the forensic accountant has not been able to explain all deposits. A table prepared by RSM based on the early draft Slaven Torline report lists the unexplained deposits identified by the ATO and after the initial forensic work based on incomplete information deducts various amounts the forensic accountant was able to verify from the Applicant's bank accounts that should not have been included as unexplained deposits in the Amended Assessments.
20. The Tribunal, with the benefit of Appendix A and the Applicant's notations referencing the line in each bank account and the Tribunal documents where the relevant bank statement could be found, does not conclude the Applicant had no records to reconstruct the various director loans and repayments. The forensic accountant and the Applicant's advisers RSM in 2022 would have faced an uphill battle undertaking the same reconstruction without the benefit of the transactions being summarised in the form of Appendix A. Apart from the volume of material to review, the time constraints imposed under the ITAA with respect to lodging an objection to the Respondent's Reasons for decision, and the contemporaneous ATO litigation, commenced around the same time as the Respondent issued the Amended Assessments, would explain why at the objection stage various "unidentified deposits" were accepted by the Applicant but challenged during the course of the hearing, once the Applicant had the benefit of the Appendix format.
21. Although it is a rare occurrence for a taxpayer to discharge the statutory onus, given the Applicant's "filing cabinet style memory", and the Applicant's practice of opening a new bank account for each new venture, with only transactions associated with that venture being deposited or withdrawn from the relevant bank account, the Tribunal finds the Applicant was able to reconstruct the financial records for each individual venture. The Tribunal accepts the explanation provided by Mr Heiler of RSM in his letter to the Respondent dated 27 September 2022 that "in the [Applicant's] case, maintaining bank accounts for each activity he undertook was his strategy for keeping a record of the transactions associated with that activity."[113] In effect the Applicant's record keeping were the bank accounts.
22. Having undertaken its own tracing of the references provided by the Applicant in the notation column of Appendix A the Tribunal prefers the Applicant's more direct evidence and the documentary evidence on which the Applicant relies to establish the source of the funds the Applicant contended he had advanced to his companies as loans, and the deposits the Applicant contended were repayments of those loans over the Respondent's submissions that the director loans were "totally unsupported by any evidence or any other contemporaneous records' and the Applicant was for the first time disputing "many of the deposits the Applicant did not dispute formed part of his assessable income during the objection".
23. The Applicant admitted he had failed to keep detailed records, and he had made mistakes in his record-keeping. When it was put to the Applicant that his tax returns were not completely accurate the Applicant answered quite truthfully and frankly

"no, I'd say that there is - I concede that there is probably about 70 grand worth of transactions that I can't actually be able to prove because the time has elapsed so far back and I don't have paperwork to prove them, so I give in to that 70 grand worth of transactions and say I can't prove them. But when they were lodged, they were lodged fairly at the time. But I'd say there was about 70 grand all up of transactions that I would concede that I have to pay tax on them because I can't prove them anymore".[114]

24. It was common ground that the Applicant had engaged a registered tax agent to prepare and lodge his income the returns for the years ended 30 June 2016, 2017 and 2018. The Applicant's evidence was the accountant used BankLink for the purpose of preparing these returns and he believed the returns were correctly lodged. BankLink is an automated service designed to streamline bookkeeping for small businesses and their accountants. It is a secure link between the bank and the accountant, that automatically codes transactions allowing accountants to prepare financial reports and tax compliance documents efficiently and without the need to rely on the taxpayer's description of a transaction. It was designed to eliminate manual data entry for small businesses and deliver accurate up-to-date data for tax compliance. If the accountant used Banklink to prepare the Applicant's income tax returns for the financial years ending 30 June 2016, 2017 and 2018 there would be no reason for the Applicant's tax returns to be anything other than accurate. Any discrepancy between the tax returns prepared and lodged by the registered tax agent may be the result of the Applicant initially accepting that amounts 'unverified" by the forensic accountant should be included in his assessable income because at the time he made that concession he was not able to prove otherwise.
25. The Tribunal accepts the Applicant's evidence as truthful and the bank statements and forensic accountants draft report as "records which evidence the course of a business" a proper discharge of the Applicant's onus of proof. The Tribunal finds, on the balance of probabilities, that the Applicant has demonstrated the amount of $463,657.78 was made up of directors' loans and should not have been included in the Amended Assessments.

1. Two reimbursements to the Applicant from Mobile Phone Shack remained in dispute at the end of the hearing. During closing submissions, the Applicant explained that the reimbursement for two amounts one of $250 and one of $950 were to reimburse him for cash he had used to pay a supplier of LCD screens. The Applicant explained to the Tribunal that an LCD screen is the front screen on a mobile phone. The following exchange occurred between the Tribunal and the applicant:

General Member: so just explain you lent the money to the company for LCD screens not one I presume > > Applicant: that's correct. So I paid the money. So what happened was Tony came in, little Asian guy that sells parts, he only takes cash. He doesn't have an EFTPOS machine or anything. I paid him cash for a part out of my own like out of my wallet. So then Mobile Phone Shack has then transferred to me $200 as a reimbursement for the cash that I've already paid out to Tony from it" > > General Member: so that's the repayment from the company. > > Applicant: yes so where the first one got Mobile Phone Shack transferred me $200 to reimburse me for the part that I'd pay Tony for and that last one on 22nd May, similarly instead of being on LCD I obviously bought multiple LCDs and parts-like, he's a spare parts person he sells parts and different things. Then similarly, I paid 950 for whatever parts and then I've been taking a reimbursement for parts of 950" > > Applicant: so it would be for those two transactions, for line 118 and line 127.

2. During the course of the above exchange the Applicant took the Tribunal member to the relevant Tribunal documents which were the bank statements for April and May 2018. The first entry for 24 April 2018, had the notation TFR xxxx462 Mobile Phone Shack and a credit entry of $200 underneath in brackets the entry contained the notation (Tony LCD). On 22 May 2018 there was a cash deposit for $950 and underneath that was a notation (Tony LCD) these entries appeared on document TB 840.
3. For the same reasons stated above in relation to directors' loans the Tribunal finds the notation on copies of the original bank account statements sufficient record of the two company transactions that remained in question. The Tribunal finds, on the balance of probabilities, that the entry on 24 April 2018 identified as "transfer xxx1462 Mobile Phone Shack (Tony LCD) and a credit of $200 and a Cash Deposit of $950 on 22 May 2018 with the narration (Tony LCD) underneath were director reimbursements and should not have been included in the amended assessments.

1. The Respondent's counsel chose not to cross-examine the Applicant in relation to the deposits with a notation Granny F. The Applicant during his closing submissions in relation to the outstanding miscellaneous deposit told the Tribunal he had been saving up to buy a Granny flat kit to build on one of the properties. The Applicant told the Tribunal "I put money aside each week. I did that by giving money to my mum each week to put aside in a drawer. But I understand I don't really have any proof to be able to provide on that one. So I concede on that, that's only like, hearsay that I actually did it." The following exchange then occurred between the Tribunal and the Applicant[115]:

General Member: "so I can understand that's a methodology you may have adopted" > > Applicant: "well, that's why I adopted it. So for those two lines of 1 to 3 and 125, that's what it was I was saving up to buy granny flat kit > > General Member: and where were you going to put the granny flat? > > Applicant: "I was going to put it on number xx Casula Road. I actually put the deposit into an account you'll see even paid the deposit to a granny flat company. And that was Best Sheds and Granny flats in Campbelltown, and the company went bankrupt. So it didn't end up being able to get the granny kit done" > > General Member: where do you want to take me to that? I can see $24,000 Granny flat on page TB 840 > > ... > > General Member: "there seems to be a Peter J Day, granny flat $24,000" > > Applicant: "no, that was a different account. We had got $24,000, that was getting transferred to a different account, so it had an account set up that I was going to use for the granny flat" > > General Member: "Okay. But then you've come down to the bottom and there is another $5000 debit isn't there for a granny flat there the same account if you look at it 132" > > Applicant: "yes, it is, yes correct" > > General Member: "okay so you are saving up to put money into an account for a granny flat" > > Applicant: "that's correct" > > General Member: "so that's about $30,000 and then there's another one granny flat $100" > > Applicant: "yes" > > General Member: "how much are granny flats"? > > Applicant: "a granny flat kit would be about $45,000 it cost you about $90,000 to build a granny flat". > > ... > > Applicant:: "I paid a deposit for a granny flat and when I paid the deposit for a granny flat, the granny flat company then actually ended up going broke" > > General Member: "can you remember what the deposit was"? > > Applicant,: "there should be a bank statement here for this 132 account and in that bank statement it actually shows where I paid the deposit and the money the rest of the money got transferred back to the other account I just need to try and find that bank statement. I'm not sure if I've got my bank statement here for that" > > General Member: "that's alright you're telling me that you paid about $16,000 to a company" > > Applicant: "That's correct the company was definitely granny flats in Campbelltown and they're just on Narelle and road--- yes but 11,000, 5000 is what got paid as a deposit" > > General Member: "11,000 or 16,000"? > > Applicant: "16,000 so it was paid as 11,000 as a first payment.... And then like a progress payment of 5,000" > > General Member: "and it would have come out of that account but we can't find it" > > Applicant: "it out of that account ending 132 yes I don't have it with me today" > > ... > > Applicant: "I know it's definitely in the TB documents because originally there was a heap they'd originally, they thought that they were income, these 132 accounts and because it was transferred from like 231 to 132 it was then taken off with double like double counting figures early on I think" > > ..... > > Applicant: "so as I was saying, if that was Kaths I'd put it aside by giving it to my mum over a period of about a year and a half to two years. I kept putting it inside an envelope and then use that money to pay the deposit for her granny flat". > > General Member: "okay but that was after the money here in the bank account is that right?" > > Applicant: "so it was paid from that 132 account. So what happened was ATO gave me a refund on that same TB 932" > > General Member: "yes I can see that" > > Applicant: "you'll see I got a refund from the ATO of 24,850" > > General Member: "Yes" > > Applicant: "so then I have transferred 24,000 of that to a granny flat account. So it wasn't all saving money up, it was my refund from ATO, I transferred to granny flat account and then also put my money that I'd had with my mum into the granny flat account and then paid the deposit to the granny flat people and they went bankrupt, so when I transferred about 24,000 has then gone back to 1321 account later on". > > ..... > > General Member: "alright so what money are we talking about that you gave to your mother". > > Applicant: "the 5000 and the 11,000....."

2. In closing submissions, the Respondent's counsel submitted that the Applicant had not filed a statement giving any evidence to support his contention as to the granny flat kit. The Applicant's mother had given 2 statements in the proceedings but had given no evidence in support of the Applicant's contention regarding the granny flat kit. "The contention is simply implausible. For example, there is no explanation for why these amounts needed to be withdrawn and set aside in cash, much less held by the Applicant's mother. Further, there is no explanation for why the money being held by his mother apparently over a two-year period was deposited in to amounts on two separate days ($11,000 deposited on 8 May 2018 and $5000 deposited on 16 May 2018)". Finally, the Respondent counsel submitted "the fact that a transaction is made the same day with a description "granny f"' in the narrative does not prove that the deposit received that day was not assessable income to the Applicant. In the case of the amount received on 8 May 2018, there is a discrepancy between the cash deposited ($11,100) and the amount transferred for the granny flat ($10,000)."
3. Counsel for the Respondent's submission is correct, a deposit with the narration "granny f "does not prove that the amount deposited was not assessable income to the Applicant". Having acknowledged that he couldn't prove that he had given money to his mother the finding of the Tribunal turns upon an assessment of the Applicant's credit. Given the detailed account provided by the Applicant to the Tribunal of his dealings with Best Sheds and Granny Flats in Campbelltown, the Applicant's establishment of a separate bank account to deposit his savings and the ATO refund into it to pay for the granny flat, the Tribunal's opportunity to consider the entirety of the evidence and the Tribunal's evaluation of the witnesses credibility and the overall feeling of these proceedings the Tribunal finds, on the balance of probabilities, that the proper inference to be drawn from the facts, is amount of $16,100 was not properly assessable to the Applicant and should be excluded from the Amended Assessments.
4. The Tribunal acknowledges that by asking a series of questions about the granny flat an inference could be drawn that the Tribunal was leading evidence from the Applicant. However, given the Applicant was self-represented, and clearly demonstrated characteristics of developmental dyspraxia during his cross-examination, the Tribunal was of the view it was procedurally fair to give the Applicant the opportunity to provide further information about the deposits identified on the original bank statements with a notation granny f. This was particularly so given the amended assessments were issued under both section 166 and 167 ITAA 36. It is well settled that an amended assessment issued under section 167 requires the Applicant to satisfactorily explain the source of all the "unidentified deposits" it is not enough to succeed by proving only a portion of the assessment is excessive. The Tribunal needed to be satisfied the amount of $16,500 had properly been characterised by the Respondent as an unidentified deposit when determining whether the s 167 assessments should have been made.
5. The information provided by the Applicant to the Tribunal together with the evidence before the Tribunal that the Applicant had developed a practice or habit of only depositing cash into his accounts when he needed to pay a bill and the fact that initially the Respondent had included a least one ATO refund in its calculation of the Applicant's un-identified deposits, the Tribunal is satisfied the deposits for the granny flat came from a non-taxable source.

Loan facilities the subject of proceedings in the New South Wales Supreme Court matter number 2021/0029 3286

1. Although the Respondent's response in Amended Appendix A states against the three loan facilities in question "references to loan facility and New South Wales Supreme Court case 2021/0029 3286 are accepted and not included in this analysis" in closing submissions the Respondent's counsel told the Tribunal they were not included "provided the Applicant could provide supporting evidence". When pressed. the Respondent's counsel told the Tribunal the loans made by private lenders were in dispute, these borrowing had not been challenged during of the objection phase and the Applicant's representatives, RSM Australia had advised the Respondent the amounts were "not disputed." Further, counsel for the Respondent submitted that "No 14ZZO application seeking to raise new things has been made. But just in terms of that's the context and history in which this proceeding has involved as initially none of that was in play."
2. The Tribunal finds it hard to believe that RSM did not formally object to deposits in the Applicant's bank account that allegedly related to advances under these loan facilities. For a start, the forensic accountants report prepared in September 2022 includes copies of the loan facilities in Annexure G.[116] Further the RSM letter to the Respondent states "we note interest payable on the loan from Mohammed Chekin and Bilal Choucair to help fund the taxpayer's purchase of the Casula Road properties is still being confirmed. Once finalised a claim for this interest as an allowable deduction will be made by the taxpayer both these loan agreements form part of the affidavit given by Maria Victoria Llorca dated 13 October 2021."[117]
3. In the same letter RSM states:

"In the course of the ensuring litigation, (referring to the ATO litigation that ultimately was the subject of NSW Supreme Court proceedings number 2021/0029 3286) numerous affidavits were made. Copies of these affidavits are not included here since we understand the ATO already have copies of these." > > "The ATO litigation is not directly relevant to the Taxpayer's objections. However, affidavits provided during the course of that litigation assist in establishing the facts and circumstances of the taxpayer and those facts and circumstances are relevant to the taxpayer's objections." > > "The ATO will be aware that although proceeds from the sale of the Casula Road properties, Casula allowed a full repayment of the banks, although only a partial payout of the loans advanced by the 3 caveators. To our knowledge, the ATO has not suggested the taxpayer has misrepresented his net worth". The 3 caveators being Cash Stash and Mr Mohamed Cheikh and Mr Bilal Choucair."

4. When the hearing resumed on 16 May 2025, the issue of "establishing the existence of the loans made by Mohammed Cheikh and Bilal Choucair and Cash Stash Pty Ltd to the Applicant" was raised by the Respondent's counsel at the beginning of the day. When asked by the Tribunal if the Applicant could possibly obtain the supporting documents the following exchange occurred between the Tribunal and the Applicant[118]:

Applicant: "Well, the supporting documents it was fought out in the Supreme Court, so in the - - - " > > General Member: "Yes but can you get the document. You could get the settlement arrangement or the document." > > Applicant: "The document was agreed - it was a, what's it called - it was like a privately - document that was done between the parties. I don't have a copy of it. It was done in the Supreme Court where the parties decided - because the ATO was saying I owed them $6 million. I sold off three of my properties so the ATO was arguing that the money, like, the profit from those properties, should go to ATO. But it was proven that the private lenders had loaned me the money. So instead of the money going to ATO, the money got awarded to private lenders". > > General Member: "So the ATO is still owed money. Is that right" > > Applicant: "The ATO didn't get any of their $6 million that they were claiming they were owed, which is what we're fighting for in appendix A here, if that makes sense". > > General Member:: "So they're still seeking to recover the money that wasn't recovered in the Supreme Court proceedings". > > Applicant: "No. I think I worded that wrong, sorry, Member". > > General Member: "The Supreme Court proceedings" - - - > > Applicant: "Was ATO took the bill, the amount they said was owed to them of the $6 million-odd figure, from appendix A, with the fines and everything. So they took me to court to try to get their $6 million". > > General Member: "So debt recovery proceedings, yes" > > Applicant: "Yes. So when they" - - - > > General Member: "Then the banks stepped into their shoes and said, 'but we've got a secured mortgage over those properties'". > > Applicant: "Yes. And so did the private - the loan facility people - private lenders". > > General Member: "Yes". > > Applicant: "So the ATO agreed in the end, that yes, the private lenders had lent the loan facility money. So then the loan facility people got paid out instead of ATO". > > General Member: "Yes. Okay. All right "

5. Counsel for the Respondent quite rightly submitted "just because someone's a priority creditor for whatever reason, that doesn't necessarily mean a person has - that's why I say different evidence in a different case and a commercial arrangement that's been brokered is not dispositive of the onus that the applicant bears in showing that it's not assessable to him".[119] Counsel for the Respondent told the Tribunal he had not been briefed in that matter and he had not been provided with any of the material.
6. The Applicant told the Tribunal "The only supporting material I have as far as from the Supreme Court would be where it was ruled that CashDash got paid 260,000 which was in the, like, in the, some of the lines where I said private lenders lent me 260,000 and was awarded by the Supreme Court that CashDash received the 260,000 that was, in fact, a private loan. I have that document."[120]
7. Unfortunately, the copies of the two Loan Agreements that formed part of the Tribunal Bundle were not the complete agreements. Counsel for the Respondent during cross-examination put to the Applicant that there was no evidence before the Tribunal of the loan schedules or evidence of any bank statements from Mr Cheikh or Mr Choucair showing money leaving their account and entering the Applicant's account. The Applicant acknowledged that was correct but clarified the answer by saying "the only thing that I can say is it was agreed upon in the Supreme Court that the amounts I documented are indeed[121]." Counsel for the Respondent unfortunately cut the Applicant off before he could finish his answer. Counsel for the Respondent then put to the Applicant that he could not identify what loan facility the deposit into his bank account came from, whether it was from the loan made by Mr Cheikh and Mr Choucair or from the loan made by Cash Stash Pty Ltd. The Applicant 's oral evidence was "yes_. But it's cash deposit into my account, the money came from the loan facility agreement_."
8. To clarify the position the Tribunal asked the applicant if all of the documents were placed before the Supreme Court in full. The Applicant told the tribunal "Yes, they were all placed in full. Yes, then the Supreme Court made the decision that they had loaned that loan."[122] The Applicant told the Tribunal that he was represented in the Supreme Court proceedings by counsel and the loan facility documents were before the court. The following exchange then occurred between the Tribunal and the Applicant[123]:

Applicant: "And at that stage, I told the Supreme Court that I was going to the tribunal with this so that's why they didn't sell properties because they said they'd wait for the outcome from the Tribunal before proceeding to ATO collecting their amount. > > General Member: "All right. So you still own the properties"? > > Applicant: "I have still have three properties in my name out of the six". > > General Member: "and these people are also still creditors" > > Applicant: "yes some of them are still owed money as creditors yes" > > General Member: "so they rank ahead of the tax office at the moment"? > > Applicant: "yes correct, as it had already been agreed upon with the tax office in the Supreme Court ruling. Yes."

9. In closing submissions counsel for the Respondent submitted "the sixth point concerns the two loan facilities. I have corrected the submission yesterday, and it's never been an issue that there are two loan agreements. The point that I make is there is no schedule of loans, or no evidence of loans coming to [the Applicant] so that you could make any finding that deposits in his bank statement were referable to these two loan facilities. I accept that there's two loan agreements, but that doesn't take the matter very far."[124]
10. It was common ground in the Amended Appendix A the loan facilities made available by Mohammed Cheikh and Bilal Choucair and Mr Allen Pan of Cash Stash Pty Ltd were the subject of Supreme Court proceedings; matter number 2021/ xxx 286 and the Respondent was a party to those proceedings. The existence of the loan facilities and the amount lent under those loan facilities was obviously established during the Supreme Court proceedings. The Tribunal finds it would be highly unlikely for the Respondent to agree to the payout of debts owed to Cash Stash Pty Ltd and Mohammed Cheikh and Bilal Choucair in priority to the Respondent's debt if the amounts lent to the Applicant could not be established.
11. Further, in the amended Appendix A against the various Loans made by the private lenders the subject of the Supreme Court proceedings the Applicant identifies the source of the deposit by bank account reference and where the Applicant transferred to deposit. The line item in the relevant bank account and the Tribunal document where that item could be located was also included by the Applicant.
12. With respect to counsel for the Respondent's submission that the Applicant had filed no application to raise new grounds under 14ZZK (1), it has been well settled since the decision of the Full Federal Court in Lighthouse Philatelics Pty Ltd[125] that the Tribunal has the power to permit a taxpayer to amend the grounds of objection to rely on reasons not initially advanced, even if those reasons involve entirely fresh grounds in substitution for the original grounds, or even if they require consideration of matters not considered by the Commissioner in the original assessment process. The court stated that the decision whether to allow the grounds of objection to be amended "ought to be made on the same considerations of justice upon which such decisions are regularly made in litigation."
13. It is also well settled that the discretion will be exercised in favour of taxpayers unless it can be demonstrated that the Commissioner would be prejudiced. For the following reasons the Tribunal finds the Respondent would not be prejudiced, even if the Applicant had not previously objected to the these loan amounts being treated as an unidentified deposit and assessable income of the Applicant, by allowing the Applicant to rely on the proceedings in the Supreme Court as evidence of the fact Mohamed Cheikh and Bilal Choucair and Mr Allen Pan of Cash Stash Pty Ltd had advanced funds to the Applicant and the amount advanced by each lender was deposited into the Applicant's IMB account ending 1231 and then transferred to another of the Applicants accounts..
14. Firstly, in the Applicant's Final submissions dated 19 May 2025, the Applicant states "I gave an explanation on pages 4 and 5 (TB 29 TB 30) of my SFIC as to the nature of the loan facility". The Applicant went on to provide the following details of the lines of credit made available to him by Mr Cheikh and Mr Choucair and Cash Stash stating "In the Supreme Court decision of 4/11/ 2021 $341,590.79 was paid to Cash Stash as the second defendant. Further orders were made in the Supreme Court on 3 /12/202 and Mr Cheikh was paid $173,051.63 as the third defendant- this was only part of what he was owed and that was the balance of what was left over after the sale of the properties the Supreme Court". The Applicant went on to state 'An explanation of line 270 on 19/03 /20 is as follows:

"these $260,000 payment was referred to in the above court decisions. Cheikh and Choucair transferred this $260,000 to my friend's company GBE phones. Then GBE phones transferred the funds to myself. The reason this was done was because at the time Cheikh was banking with CBA and it would have taken up to a week to transfer to my IMB (my bank). Transferring from CBA to NAB was instant. NAB used NAB connector for business customers and so NAB customers could pay anyone instantly with a token. This was agreed upon in the court case above."

15. Secondly, Appendix A that formed part of the Respondent's Objection decision, should have put the Respondent and the Respondent's counsel on notice that the character of the amounts deposited into the Applicant's bank account, allegedly as part of a line of credit, would be in issue when amended assessments were made under section 167 ITAA36. In fact, the issue of the Supreme Court proceedings was raised on the first day of the hearing (25 February 2025) so even if the Respondent had been taken by surprise, on 25 February 2025, the Respondent had ample opportunity to prepare to address this issue in the Tribunal when the hearing resumed in June 2025. If the Applicant's notice of objection failed to object to the deposits referable to these loans or lines of credit, the Respondent should not have been taken by surprise that the Applicant sought to raise them before the Tribunal, and the Tribunal finds the Commissioner suffered no prejudice.
16. On the evidence before the Tribunal, the Applicant has demonstrated, on the balance of probabilities, that the amounts lent by Cash Stash Pty Ltd and Mr Cheikh and Mr Choucair did not form part of the Applicant's assessable income for the relevant years.

1. The Applicant conceded the transactions he identified as "Not Disputed" in the amended Appendix A. In the applicant's final submissions dated 19 May 2025, the applicant stated:

"I'm not admitting guilt in any way for not disclosing these transactions, as for most of these the cash deposited was cash I had previously withdrawn that had already been accounted for" > > "I do however concede there is no possible way for me to prove the originating source of this cash or the flow of it. So I am therefore not disputing these any more" (emphasis added) > > the "Not Disputed" amounts that I am conceding by financial year are: > > 2016- $33,844.64 > > 2017-$11,935 > > 2018-$14,619.15 > > 2019 $4,918.28 > > 2020 $6,087.50 > > Total-$71,405.57

2. The Respondent accepted during the course of the hearing that 81 transactions relating to rental income totaling $67,864.64 were no longer unexplained deposits and would be removed from the amended assessments.
3. During the hearing the Respondent accepted that "all references to Salary and Wages are accepted provided they equate to the applicant's total S&W". The Applicant's salary and wages listed in Appendix A match the salary and wages declared on the Applicant's tax returns less the tax withheld for the 2017, 2018 and 2020 financial years. In the 2016 financial year the Applicant declared $61,586 as salary and wages less the tax withheld, that is $1,000 higher than the amount listed in Appendix A which totaled $60,593.92. The Applicant stated in his final submissions "the variance was probably due to the fact that for the first two weeks of that financial year his salary had been paid into an old Citibank account".
4. In the 2019 financial year the Applicant declared salary and wages less tax withheld of $185,522, in Appendix A the salary and wages were listed as $185,589. The Applicant explained in his final submissions "the slight difference of $67 was possibly due to a reimbursement for an iPhone digitizer" the applicant had paid cash for.

1. The table at [6] of the Respondent's opening submissions, copied from the Respondent's reasons for decision[126] is a cause of concern for the Tribunal. The table is reproduced below:
2. Table 3 - Cash Withdrawals from your personal bank accounts

1. The Applicant quite correctly drew the Tribunal's attention to the fact that the columns did not add up.
2. Apart from anything else, even if the Respondent's figures are accepted on face value the figures included in the 2019 year $24,764 and $38,960 add to $63,724 not the Respondent's total of $241,879 for that year. Similarly, the only entry on the Respondent's table for 2020 is $127,271 but that column totals $148,756.
3. On a more fundamental level the Applicant's evidence contained in amended Appendix A was the Bankwest account ending 8493 was primarily used for business purposes. The documents produced compulsorily by Bankwest to the Respondent confirmed the account was opened on 3 July 2017 and closed on 7 June 2018. Apart from a small number of interest payments (page 342) the Applicant's submitted there were five unrelated business transactions up until 4 December 2017. The relevant bank statements show interbank transfers on 17 February, one of $450 and one of $1,400 and two withdrawals from an ATM machine in Kingsgrove for the same amounts on the same day. Other than those transactions, the account was not used until 23 March 2018. All the transactions from 23 March 2018 until 7 June 2018, other than one transaction on 30 May 2018 for $700 that was not disputed by the Applicant, were the business-related transactions dealt with above at [75] - [106]. The account appears to have been solely used for business purposes after 23 March 2018 and primarily used for business transactions from July 2017 to February 2018. For the reasons set out above the Tribunal finds the withdrawals of $3,505,000 were not withdrawals from the Applicant's personal bank account.
4. The Applicant also pointed out that the table headed deposits to your mortgage account the total payment across the various home loans was not $704,763 but $692,664.69. The Respondent's table is reproduced below:

Applicant prepared a table showing the correct figures for each account the property each payment related to and where the Applicants figure had come from:

The final submission made by the Applicant in relation to the above table's concerned the Respondent's submissions in the Respondent's Fourth Further Amended SFIC. Essentially at [9] the Respondent states "the Applicant also made mortgage repayments during the income years ended 30 June 2016 to 30 June 2020 totaling $704,763."

1. At [10] the Respondent states "the Applicant declared for the income years ended 30 June 2016 to 30 June 2020 total assessable income "(reported salary, interest and net rent) before tax of $697,136".
2. The clear inference being the Applicant's income was less than the Applicant's mortgage repayments and the Applicant would therefore have negative income to survive from day-to-day.
3. It was clear from the Respondent's definition of assessable income that the Applicant's assessable income was calculated after mortgage interest had already been deducted from his gross income. The Applicant's total mortgage payments consisted of mortgage interest charged over the period of $483,980 and additional payments over the period of $208,684 that came out of the Applicant's net income, which the Applicant chose to pay to reduce his mortgage payments. The Applicant submitted he could afford to pay the extra $208,642 over the period from his after-tax income and still have money left over to live on.
4. The Applicant's submission was correct. The Applicant's net income over the period of $678,754 was more than sufficient for the Applicant to pay an additional $208,640 and have $470,114 left before tax left and still have money to live on. The Applicant was concerned that this error had not been identified or corrected by the Respondent. The Applicant's concern was a perfectly reasonable submission in the circumstances.

**CONCLUSIONS ON THE ASSESSMENTS -THE RESPONDENTS ISSUE 1

"Whether the Applicant has discharged his onus under s 14ZZK of the TAA 1953 of establishing that the amounts recorded in appendix a to the objection decision are not assessable to him in the relevant years."**

1. Notwithstanding the Applicant's less than perfect record keeping, the source material, being the original bank statements produced under compulsory notices to the Respondent, the draft forensic accountants report prepared in 2022, that broke down the transactions identified by the Respondent into various categories for each of the financial years under review, undertook detailed calculations divided into verified and unverified columns, annexed bank statements, business transaction reconciliation and stock invoices, a detailed Re-performance of bank transactions workpaper, the Domain Plus Real Estate Rental Income Summary Records for the relevant years and the fact that the 2 loans made by private lenders were the subject of New South Wales Supreme Court Proceedings that the Respondent was a party to, were sufficient to satisfy the Tribunal that documentary evidence existed to substantiate the Applicant's submissions.
2. The Tribunal accepted the Applicant's sworn testimony, his answers were detailed and he was plainly truthful. There were few inconsistencies between the written submissions and the other documentary evidence before the Tribunal and the Applicant's oral evidence given during his cross examination. The Applicant's parents, although clearly supportive of their son, gave credible and consistent evidence of the circumstances surrounding the loans they had made to their son. Mr and Mrs Day were cross-examined by the Respondent's counsel, and the Tribunal could discern nothing to suggest they had colluded with the Applicant or manufactured any part of their evidence.
3. It was unfortunate that the Applicant had not arranged to obtain witness statements from material witnesses. However, as Steward J stated in Cassaniti[127] as a general proposition it is not necessary for a party to call all material witnesses and produce all material documents to support their position. Although it may have been helpful if Mr Hillier from RSM or the forensic accountant Mr Torline of Slaven Torline had provided witness statements and been available for cross examination, the material they produced contained in the Tribunal Bundle spoke for itself. Further, it was apparent from the letter RSM sent to the Respondent in September 2022 that many affidavits potentially relevant to these proceedings had been filed on behalf of the Applicant in the Supreme Court proceedings. It may have assisted the Applicant if arrangements had been made for the affidavits relating to the loans from the private lenders Mr Choucair and Mr Cheikh to be made available to the Tribunal and well as any orders made by the Supreme Court and on a confidential basis the settlement arrangements between the parties to those proceedings. It may also have assisted the Applicant if Mr Aung had prepared a witness statement, however the annotation on the original bank statements was sufficient for the Tribunal to be satisfied that the Applicant had made loans to Mr Aung, among other of the Applicant's friends. It may have been helpful if Mr Mustafa Madarwala of Mohammadi Enterprises had prepared a witness statements however the annotation in the original bank statements that identified the electronic transfers from Mohammadi Enterprises with an invoice number and the reconciliation done by the forensic accountant was sufficient for the Tribunal to be satisfied that deposits made by Mohammadi Enterprises were payments for stock supplied by Mobile Phone Shack.
4. Having carefully considered the information contained in Amended Appendix A, which runs to 451 pages and cross referenced that material against the 4888 pages of Tribunal documents, primarily made up of the Applicant's Bank statements, and the opportunity to reflect on the oral evidence of the Applicant and his parents Mr Glennon Day and Mrs Cathie Day, the Tribunal finds on the civil standard, that the Applicant has discharged the statutory onus imposed on him under 14ZZK TAA. Other than the $71,404.57 conceded by the Applicant, the Tribunal finds all other amounts recorded in Amended Appendix A to the objection decision that which the Respondent maintained during the hearing were not assessable income of the Applicant.

1. Under s 170 ITAA36 the Respondent may amend an assessment at any time if the Respondent is of the opinion that there has been "fraud or evasion".
2. In this case the Respondent has exercised this power in respect of the assessments for financial years ended 30 June 2016, 2017, and 2018.
3. Under s 56 of the ART Act, for the purpose of reviewing a decision, the Tribunal may exercise all the powers and discretions conferred by any relevant enactment on the person who made the decision and under s108. The decision of the Tribunal, where there has been a variation or substitution of the decision under the review, is deemed to be that of the decision-maker whose decision is under review.
4. It is well settled that under the ART Act the Tribunal is placed in the same position as the administrative decision-maker at first instance under s 108 and s 108 generally excludes the introduction of the concept of onus of proof in making decisions on review. As Deputy President the Hon Brain Tamberlin QC held in Adam Bennett, Molly Bennett and the Estate of Edwin Bennet and Commissioner of Taxation[128] "No onus of proof in the legal sense generally arises under the AAT Act: see Catena v Australian Securities and Investments Commission[129], a decision of the Full Federal Court."
5. Section 14ZZK of the Administration Act relates to grounds of objection and burden of proof. It provides that on an application in the Tribunal for review of a reviewable objection decision, the Applicant has the burden of proving that the assessment is excessive.
6. Under s 350-10 item 2 of the TAA the production of a notice of assessment is considered evidence that the assessment was properly made and of its correctness.
7. It is also well settled that the provisions of s 170 ITAA36 form part of the substantive liability under an amended assessment:[130] The Applicant bears the onus of disproving the Respondents finding of evasion.
8. In the present circumstances it is worth setting out in full the much-cited statement of Dixon.J in Denver Chemicals Manufacturing Co v Commissioner of Taxation[131]

_"I think it is unwise to attempt to define the word "evasion". The context of s.210 (2) shows that it means more than avoid and also more than a mere withholding of information or the mere furnishing of misleading information. It is probably safe to say that some blameworthy act or omission on the part of the taxpayer or those for whom he is responsible is contemplated. An intention to withhold information less the Commissioner should consider the taxpayer liable to a greater extent than the taxpayer is prepared to concede, is conduct which if the result is to avoid tax would justify finding evasion" (_emphasis added).

9. As the Applicant conceded amounts in the financial year ended 30 June 2016, 2017 and 2018 only because there was "_no possible way for me to prove the originating source of this cash or the flow of it' (_emphasis added). The Tribunal cannot make any findings about those amounts.
10. To the extent the amended assessments for the income years ended 30 June 2016 - 30 June 2018 were grounded in a finding of evasion given the number of concessions made by the Respondent during the hearing and the Tribunal's findings in relation to the amounts not conceded by the Respondent, the Tribunal is not persuaded on the evidence before it that the Applicant's conduct was conduct to avoid tax and therefore justify a finding of evasion.
11. Furthermore, the Applicant used a registered tax agent to prepare and lodge his income tax returns for those years and provided the tax agent with access to a platform called Bank Link so if there were any errors in the preparation of those accounts, they were probably the result of inadvertence rather than a deliberate withholding of information. There was no evidence before the Tribunal to suggest the Applicant had not given the tax agent all relevant taxation information to prepare the tax returns. Based on the material before the Tribunal, the Tribunal finds any error in those returns was not the result of intentional disregard of a taxation law or recklessness by the agent as to the operation of a taxation law. The provisions of s 184-75 (6) should have been applied.
12. The Tribunal finds on the facts before it that the Respondent erred in forming an opinion of evasion on 20 August 2021 and was not authorised under section 170 of the Income Tax Assessment Act 1953 (Cth) (ITAA36) to issue notices of amended assessments to the Applicant for the income tax years ended 30 June 2016, 30 June 2017 and 30 June 2018.
13. In respect of the financial years ended 30 June 2019 and 2020, for the following reasons the Tribunal finds the Applicant has discharged the onus that the opinion of evasion should not have been formed.
14. Firstly, the Applicant conceded the amount of $71,404.57, only on the basis he could no longer prove "_the originating source of the cash or the flow of it". A_s a percentage of the alleged unexplained deposits of $6,863,098.96 that is 1.04%. In respect of the amounts conceded in the 2019 year of $4,918.28 and in the 2020 year of $6,087.78, in total $11,005.78, as a percentage of the amended assessments for the 2019 year of $308,326 and for the 2020 year of $1,250,948 in total $1,559,274, that is a percentage of 0.070%, by any standard a de minimis amount. There is a legal doctrine at common law that prevents the law from intervening where matters are trivial. The de minimis rule applies in both civil and criminal matters. Relevantly, for present purposes, in criminal matters the rule may prevent an offence from being proven where it is technically made out but its effect is insignificant.
15. In relation to the Copyright Act the High Court in Ice TV Pty Ltd v Nine Network Australia Pty Ltd[132] affirmed that the breach must be substantial for a breach of copyright to be found to have occurred.
16. With respect to taxation matters in Taxation Determination TD 2005/54: the Commissioner applied the principle that the law is not concerned with trifles (the minimis non curat lex), citing with approval the decision of Hill J in Farnell Electronics Components Pty Ltd.[133] In that case Justice Hill confirmed the de minimis principle is a principle of statutory interpretation and quoted with approval the following passage from Halsbury's Laws of England, 4Th ed, vol 44 (1), at paragraph [1441]:

"The de minimis principle. Unless the contrary intention appears, an enactment by implication imports the principle of legal policy expressed in the maximum de minimis curat lex (the law does not concern itself with trifling matters): so if an enactment is expressed to apply to matters of a certain description it will not apply where the description is satisfied only to a very small extent."

17. At [6] "the Commissioner does not consider that there is any intention to exclude the de minimis principle in the interpretation of sections 705- 35 and 104 - 515. What is de minimis in any particular case would depend on all the facts and circumstances including the relative cost and the value of the relative asset compared with the CA of the joining entity." The same reasoning applies in this case. Having addressed all of the evidence and considered the matter very carefully, the Tribunal determines the concessions made by the Applicant are the minimis and finds on the facts before it that the Applicant did not deliberately evade his taxation obligations in the financial years ended 2019 and 2020. Further, the errors made by the Respondent were significant. This is not a case of chipping away at the Respondent's assessments, these errors are material and formed part of the Respondent's reasons for decision.
18. In the table reproduced below the Applicant quite rightly pointed out that the cash withdrawals from his personal bank accounts in 2019 did not add up to $241,873 they added to $63,724. Similarly, there was only one entry in 2020 for an amount of $127,271 but the total for that year is recorded as $148,756. Further, the Applicant drew the Tribunal's attention to the fact that the Applicant had made no withdrawals in any year from the IMB account ended 2623, a review of that account demonstrated that was correct. The withdrawals from that account recorded in the Respondent's table amounted to $203,730. The relevant bank statements were produced by IMB to the Respondent on 31 March 2020 and they form part of the Tribunal documents at TB 10832 TB 1100. Finally, a review of the bank statement compulsorily produced to the Respondent for the Bankwest account ended 7009, do not reveal any deposits that were "unexplained" and certainly not an amount totaling $82,602.64.
19. The Tribunal found the Applicant to be truthful in his oral evidence, he conceded he may have made errors, but from the records that were before it, the Tribunal did not find "the taxpayer committed a blameworthy act by omitting from his tax returns the unexplained deposits which he used to fund his lifestyle without any credible explanation for his conduct. The deposits were substantially more than the taxpayer's declared income and the taxpayer knew, or ought to have known, that he had omitted reporting the income in his income tax returns for each of the relevant years",[134] as alleged by the Respondent in the Evasion Opinion. A review of the bank accounts produced under compulsory notice to the Respondent do not reveal deposits totaling $28.3 million were made to the Applicant's personal bank accounts during the income tax years ended 30 June 2016, 2017, 2018, 2019 and 2020. It is impossible for the Tribunal to ascertain where this figure originated from or conclude that this amount was used to fund the Applicant's lifestyle.
20. In respect of the financial years ended 2016-2018, the Applicant engaged a registered tax agent to prepare and lodge his income tax returns for the 2016- 2018 income tax years. The Applicant gave his tax agent access to all his accounts via the Bank Link platform. The Tribunal found nothing to suggest the Applicant failed to provide his tax agent with all necessary information to correctly prepare his income tax returns and if there was any error, which on the evidence before the Tribunal is doubtful s 284-75 (the so-called safe harbor provisions) should have applied.
21. In respect of the income tax years ended 2019 and 2020, the Respondent advised the Tribunal in the statement provided to the Tribunal on 16 February 2026 that the default assessments for the income tax years ended 30 June 2019 and 2020 were issued under s 167(a) ITAA36. The Applicant did not default in lodging his tax returns for those years albeit the 2019 income year was lodged late. Late lodgment is not ordinarily a sufficient reason for issuing a default assessment. The Applicant accepted he had made errors in those returns, however on the evidence before the Tribunal the errors appear to have been caused by the Applicant's inexperience in preparing his own returns rather than an intention to evade his tax obligations or furnish misleading information to the Respondent.

1. The notices of penalty assessments for the financial years ended 30 June 2016, 2017, 2018, 2019, 2020, made pursuant to section 284-75 (1) and 284 -75 (3) are set aside. To the extent the base penalty amount was imposed under section 284 -90 (1) under item 7 that imposes a penalty of 75% when section 284 -75 (3) applies those penalties are set aside. As the Respondent stated the base penalty amount was imposed under section 284 - 90 item 1 for Recklessness the penalty assessments are set aside.
2. The Tribunal exercises its discretion to remit the shortfall interest charge as on the facts before it, the Tribunal finds no evasion.

1. The Tribunal finds the Applicant did not omit a total of $6,863,098.96 of assessable income from his income tax returns in the financial years ending 30 June 2016, 2017, 2018, 2019, and 2020.
2. The Respondent erred in forming an opinion of evasion on 20 August 2021 and was not authorized under section 170 ITAA 36 to issue the notices of amended assessments to the Applicant for the income tax years ended 30 June 2016, 30 June 2017 and 30 June 2018.
3. The Applicant discharged the onus imposed on him under s 14ZZK of the Taxation Administration Act 1953 in respect of the amended assessments issued by the Respondent under s 166 and 167 of the ITAA36 for the income tax years ended 30 June 2019 and 2020.
4. The Applicant did not fail to furnish an income tax return for the income tax years ended 30 June 2019 and 2020. The default assessments made under section 167(a) in respect of those years should not have been made. It was therefore not appropriate for the Respondent to work out the base penalty amount by applying s 284-90 item 7.
5. Given the Applicant's concession for the finical years ended 30 June 2019 and 2020 to the extent there was an underreporting of income by the Applicant in the financial years ended 30 June 2019 and 2020 and any short fall interest charge is more than 20% the shortfall interest charge is remitted.

25 February 2025, resumed 16 June 2025, resuming 17 June 2025

[1] Tribunal Bundle (TB) pp. 147-163, Appendix A TB pp. 164- 230.

[2] Applicant's Final Submissions dated 19 May 2025.

[4] ST1,ST2. ST3, ST4, ST5 pp. 4583- 4602.

[7] These tables had been reproduced from the Respondents Reasons for decision.

[13] Respondent's Fifth Further Amended Statement of Facts Issues and Contentions dated 11 June 25 at [31]; Respondent's closing submissions at [7] and [11 ].

[19] Audit finalisation 2019 and 2020; TB pp. 235-238, Respondents Statement of Facts, Issues and Contentions dated 17 July 2025 at [9]-[10].

[21] Applicant's Final Submissions p 33; TB p 261.

[28] Respondents Statement of Facts pursuant to the Tribunal's Directions dated 7 July 2025 at 12 c

[30] Respondent's Response to Tribunal's queries of 28 January 2026, at heading p 3

[31] [2025] FCAFC 168 at [73]- [79].

[33] Respondent's response to Tribunal's queries dated 28 January 2026, p 3.

[42] TB p 498, TB p 502, TB p 506, TB p 510, TB p 514.

[43] TB pp.147- 163 - notices of amended assessments were issued on 1 June 2023.

[45] Respondent's Fifth Further Amended Statement of Facts Issues and Contentions at pp. 5-6.

[46] Respondent's response dated 16 February 2026.

[47] Trans p 145 at [22] - [27]; p 146 at [1]-[33].

[48] Trans. 17/06/25 at p 177 at [4] - [20].

[49] Australian Securities and Investments Commission v Hellicar [2012] HCA 17; (2012) 247 CLR 345 at [165]- [166].

[50] Commissioner of Taxation v Cassaniti [2018] FCAFC 212 at [13].

[54] [2005] NSWSC 417.

[55] [2018] FC AFC 212 at [88].

[56] [1983] 1 NSWLR 1.

[59] Applicant's Final Submissions dated 19 May 2025 at p 8.

[61] Trans p 65 at [40]; p 66 at [11].

[62] Trans p 108 at [46]; p 110 at [11].

[66] Trans 16 June p 46 at [19]- [33].

[67] Ibid, Trans p 49 at [1]- [24].

[72] Trans 16/6/25 p 70 at [3] - [8].

[73] Trans 16/06/25 p 37 at [36] - [42].

[74] Trans 16/06/25 p 40 at [36] - [43].

[75] Ibid p 40 at [45]; p 41 at [1] - [2].

[78] Trans 16/06/25 p 72 at [45]- 47] , p 73 at [1] - [5].

[79] Respondent's closing submissions at [34]-[38].

[84] TB p 278; Respondent's opening submissions at [5].

[93] Tran p 79 at [25]- [47], p 80 at [1]-[5].

[100] The Respondent's native spreadsheet, the forensic accountants report, the Tribunal's review of the evidence.

[102] FCAFC 180 (judgement handed down 11 December 2025) at [16] - [17].

[106] TB 4020 - 4040 Report Slavin Torline.

[107] Respondents closing submissions at [47] (c ).

[108] Forensic accountant report 7.1.1; TB p 4040.

[111] Trans p 63 at [35]-[47], p 64 at [1]-[14].

[113] RSM letter to the respondent dated 27 September 2022 TB 4639 at 4641.

[127] Commissioner of Taxation v Cassaniti [ 2018] FCAFC 212 at [88].

[128] [2015] AATA 455.

[129] [2011] FCAFC 32; (2011) 276 ALR 25.

[130] Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614; Rigoli v Commissioner of Taxation [2014] FCAFC 29; (2014) 141 ALD 529; Gashi v Federal Commissioner of Taxation [2013] FCAFC 30; (2013) 209 FCR 301; Rawson Finances Pty Ltd v Commissioner of Taxation [2013] FCAFC 26; (2013) 133 ALD 39 and Commissioner of Taxation v Rigoli [2013] FCA 784.

[131] [1949] HCA 25; (1949) 79 CLR 296 at [313].

[132] IceTV Pty Ltd v Nine Network Australia Pty Ltd [2009] HCA 14.

[133] Farnell Electronic Components Pty Ltd v Collector of Customs [1996] FCA 1135.