I have also not been satisfied for either of the two years in dispute that Mr Endycott:

a) has identified all relevant bank accounts and credit cards recording transactions which may contain assessable income; and > > b) has explained all relevant transactions such that the Tribunal can be satisfied as to their purpose and character.

In particular, I am not satisfied that Mr Endycott has adequately explained:

a) the very large number of transactions and amounts deposited to his personal accounts by the E&Y Trust which he contended were reimbursements for the sale of motorbikes by HDM; and > > b) The deposits to his personal accounts and credit cards which he contended were among other things, reimbursement for items and loans which could not be substantiated.

I have also found aspects of Mr Endycott's evidence to be unreliable and uncorroborated by evidence from other relevant witnesses and/or contemporaneous records. 13. In light of these findings, I am not satisfied that Mr Endycott has failed to show the Respondent's assessment for the 2016 year was excessive and in particular, I am not satisfied he has demonstrated what his correct taxable income is for the 2016 year. 14. My findings and conclusions for EFT, are also relevant to my finding that Mr Endycott has not discharged his onus for the 2015 year.

1. The amount Mr Endycott has contended comprises his taxable income for the 2016 year has also changed over the course of this dispute from the amount of $20,000 to that calculated by Mr Howlett to be $71,402.344F[347]
2. Mr Endycott conceded that deposits into his accounts x 2922 and x 1701 paid from x 9582, were his income.
3. I was satisfied on the evidence that the loan repayment from Mr Ryan was not income of Mr Endycott.
4. Once again, Mr Endycott had conceded that two streams of periodic payments comprise his income "Shane salary" and Management fee - Entire Group Aus".
5. For the 2016 year, periodic payments Mr Endycott received which I am not satisfied were not his income also included:

a) HDM directors fees; > > b) Morgan director fees; > > c) directors fees; > > d) training fees; and > > e) management fees from E&Y Trust and ERS.

Mr Endycott also did not discharge his onus of proving that transactions he contended were repayments of loans or gifts had that character, namely:

a) alleged deposit for sale of Guzzi motorbike; > > b) alleged repayment of loan by Mr Cohen;

Mr Endycott also did not discharge his onus in respect of payments to:

a) credit cards x5313/x5917/x0148/x8191; and > > b) credit cards x5583/x8821/x0075/x0780.

For the reasons I have provided, and given my findings, I find that Mr Endycott in the 2016 year:

a) continued to comingle personal and private monies; > > b) continued to create or oversaw the creation of records which were unreliable; > > c) briefed Mr Howlett with incorrect and unreliable records (including bank account statements and the correct net income figure for EFT) to allow him to correctly calculate Mr Endycott's taxable income; and > > d) incorrectly instructed Mr Howlett as to the character of a large number of transactions comprising his assessable income by asking him to assume they were not income;

with the consequence that Mr Howlett has incorrectly calculated Mr Endycott's correct taxable income.

I have also not been satisfied for either of the two years in dispute that Mr Endycott has:

a) identified all relevant bank accounts recording transactions which may contain assessable income; > > b) explained all relevant transactions such that the Tribunal can be satisfied as to their purpose and character.

In particular, I am not satisfied that Mr Endycott has adequately explained:

a) the very large number of transactions and amounts deposited to his personal accounts by the E&Y Trust which he contended were reimbursements for the sale of motorbikes by HDM; and > > b) the deposits to his personal credit cards which he contended were among other things, reimbursement for items and loans which could not be substantiated.

Once again, I have found aspects of Mr Endycott's evidence to be unreliable and uncorroborated by evidence from other relevant witnesses and/or contemporaneous records. 12. In light of these findings, I am not satisfied that Mr Endycott has failed to show the Respondent's assessment for the 2016 year was excessive and in particular, I am not satisfied he has demonstrated what his correct taxable income is for the 2016 year. 13. My findings and conclusions for EFT, are also relevant to my finding that Mr Endycott has not discharged his onus for the 2016 year.

1. Following the Respondent's objection decision, EFT's net income, GST and penalty position as assessed by the Respondent, was as set out below:345F[348]

Income Tax Assessments and Penalties after Objection

GST Amended Assessments and Penalties after Objection

Taxable income for 2016 and finding for the 2015 year

1. The amount EFT has contended comprises net taxable income for both years in dispute has also changed over the course of this dispute but Mr Howlett has opined in the 12 May 2025 report that for the 2016 year a tax loss was incurred.
2. I am not satisfied that EFT has discharged its onus under s 14ZZK TAA 53 in respect of the 2016 year to prove that the Respondent's assessment was excessive. The reasons for this include:

a) for the reasons given, I have found that the EFT records such as its general ledgers and financial statements are not reliable and note in summary that: > > 1. there was evidence of significant co-mingling of expenses between the entities in the Group; > 2. Mr Endycott regularly used personal bank accounts and credit cards for transactions for both EFT and personal transactions; > 3. the evidence revealed that EFT had paid for the expenses both of other entities and Mr Endycott; > 4. income of EFT was not properly recorded/reported (Petrie Point project and the HDM rent); > 5. not all relevant credit cards and bank accounts have been produced to the Tribunal creating the risk that not all income or expenses of EFT has been identified; and > 6. even now not all relevant transactions have been adequately explained. > > > b) Mr Howlett's calculations for EFT were incorrect and unreliable for the following reasons: > > > > 1. he was briefed with unreliable records (the EFT general ledger and financial statements as well as documents derived from these records) which have caused him to make incorrect calculations;346F[349] > > 2. he was not briefed with all of the bank and credit card statements leading to the risk that not all relevant transactions were identified; > > 3. he was briefed with assumptions which have caused him to incorrectly calculate the net taxable position for EFT; > > > > * - he was asked to assume unvouched transactions were income; > > * - he was asked to assume a proportion of expenses were deductible; and > > * - he was asked to assume various payments were not income of EFT (for example, the Petrie Point project invoices).

3. The consequence is that Mr Howlett has not correctly calculated EFT's net income for the 2016 year. Further, for the reasons I have given, and given all the unknowns given the state of its records, the Tribunal cannot be satisfied that EFT has or could demonstrate what its correct income was for the 2016 year.
4. In the circumstances, EFT has not established that the Respondent's assessment of EFT's net income for the 2016 year was excessive.
5. In all the circumstances and given the evidence which has been adduced, I also cannot be satisfied that EFT has correctly identified its net income for the 2015 year.
6. In circumstances where EFT made a distribution to Mr Endycott in the 2015 year, this is an additional reason for my finding that Mr Endycott has not discharged his onus of providing the Respondent's assessment of him for the 2015 year was excessive.

1. The Respondent has identified a miscalculation of the net amount of GST for the quarterly period ended 30 June 2016 and concedes it should be varied to $52,719 from $167,719.
2. I am otherwise not satisfied that EFT has discharged its onus of proving that the GST assessments for the tax periods in dispute were excessive. Briefly and in summary I have found:

a) income and expenses for entities in the group were attributed to EFT for each of the two years in dispute; > > b) Mr Endycott extensively claimed personal expenses as business expenses; > > c) EFT's records are incorrect and unreliable for both years but further, the versions briefed to Mr Howlett are unproven; > > d) Mr Howlett excluded the payments from the Petrie point project and incorrectly included the training payments in his calculations; > > e) Mr Howlett was asked to make other assumptions which are incorrect; > > f) EFT's net GST position for each tax period was calculated by Mr Howlett based on those incorrect and unreliable records and incorrect assumptions; > > g) Mr Holwett's reliance on these records and assumptions have led to inaccuracies both in his calculation and reporting on ITCs, and taxable supplies; and further > > h) Mr Howlett was not able to confirm whether some transactions were eligible transactions because he did not/could not examine the primary records (eg invoices).

1. In light of my findings against Mr Endycott and EFT for income tax shortfall and GST, it is necessary to next review the Respondent's decisions in respect of penalty for tax shortfall income (Mr Endycott and EFT) and GST penalty for EFT.

1. Division 284 Schedule 1, TAA 53 relevantly sets out the circumstances in which administrative penalties apply for the making of false or misleading statements by a taxpayer or their tax agent.347F[350]
2. Section 284-30 provides for the attribution to the trustee of a trust, any penalty imposed on a beneficiary arising from a shortfall amount arising from materially false or misleading statement made by the trustee which was not reasonably arguable.
3. Section 284-75 establishes liability for administrative penalty:

(1) You are liable to an administrative penalty if:

(a) you348F[351] make a statement to the Commissioner or to an entity that is exercising powers or performing functions under a *taxation law (other than the *Excise Acts); and

(b) the statement is false or misleading in a material particular, whether because of things in it or omitted from it.

(3) You are liable to an administrative penalty if:

(a) you fail to give a return, notice or other document to the Commissioner by the day it is required to be given; and

(b) that document is necessary for the Commissioner to determine a *tax-related liability (other than one arising under the *Excise Acts) of yours accurately; and

(c) the Commissioner determines the tax-related liability without the assistance of that document.

1. Calculation of base penalty in this case arises from a shortfall amount349F[352] resulting from the Respondent's determinations that materially false or misleading statement/s were made by the Applicants.350F[353]
2. Section 284 - 90 (1) (item 1) relevantly provides for the calculation of the base penalty amount of 75% of the shortfall amount as a result of a statement described in subsection 284‑75(1) or (4) and the amount, or part of the amount, resulted from intentional disregard of a taxation law 'by the taxpayer or their agent'.
3. Section 284 - 220 relevantly provides for an increase by 20% to the base penalty if the penalty arises under subsection 284‑75(3) and the taxpayer was previously liable to a penalty under that subsection. Relevantly, the amount of penalty may be increased where a taxpayer has taken steps to prevent the Respondent from discovering the shortfall.351F[354]
4. The Respondent imposed penalty against Mr Endycott personally and also against EFT for each of the years in dispute. Mr Endycott is the sole director and controlling mind of EGA Pty Ltd, the corporate trustee of EFT.352F[355] Mr Cullen was tax agent for both Mr Endycott and EFT. Consequently, the conduct of both Mr Endycott and Mr Cullen is relevant to the Tribunal's consideration of penalty in respect of both Applicants.

1. Section 284-75(5) Schedule 1 TAA 53 operates to provide protection from penalty where both the taxpayer and their tax agent took reasonable care in making a statement which is materially false or misleading.

1. Section 284-75(6) Schedule 1 TAA 53 operates to provide protection from penalty where a taxpayer's registered tax agent or BAS agent fails to take reasonable care in making a false or misleading statement (not intentional disregard or recklessness) but only where the taxpayer has given the agent all relevant taxation information.

1. Section 298-20 TAA 53 permits the Respondent to remit all or part of any administrative penalty imposed.
2. There is broad scope for the Tribunal to consider remission of penalty.353F[356] However in exercising that discretion, the Tribunal must consider:

a) whether there are grounds to support remission, including whether remission will avert an unjust, inappropriate or unreasonable outcome; and > > b) whether the exercise of the discretion is in accordance with the purposes for which it was granted under the legislation.354F[357]

3. The Federal Court has held that the Tribunal is not permitted to consider grounds which are divorced from the contravening conduct which gave rise to the penalty.355F[358] That said, the Tribunal does not need to establish special circumstances before deciding to remit penalty.356F[359]
4. The Applicants referred the Tribunal to Dixon v Commissioner of Taxation where Collier J set out principles relating to consideration of imposition and remittal of penalty,357F[360] including:

a) the discretion to remit only arises once the penalty is imposed; > > b) the remission discretion allows the Commissioner to mitigate the effects of the penalty in appropriate circumstances; > > c) the remission discretion is a leniency discretion but the different circumstances arising mean it there should not be generic principles applied to remission in all cases; > > d) the remission discretion is focussed on the taxpayer's conduct prior to the imposition of penalty; > > e) there are some factors the Commissioner of Taxation may include in his consideration such as consistency, the taxpayer's circumstances and compliance history and encouraging improvements in compliance behaviour; and > > f) the penalty regime punishes taxpayers who avoid their obligations and acts as a deterrent.

5. I have had regard to these principles in my consideration of penalty and whether to remit penalty imposed.

Did EFT and/or Mr Endycott make false or misleading statements as to a material particular?

1. In the 2015 year, EFT misstated its net distributable income in its tax return. The consequence of the Respondent's audit was that Mr Endycott was assessed for additional income (as beneficiary of the Trust).
2. By virtue of s 284-30 Schedule 1 TAA 53, the tax shortfall amount imposed on Mr Endycott as beneficiary of EFT has been applied to EFT.358F[361] I am satisfied that in the present case, the Respondent359F[362] was entitled to apportion the penalty resulting from the shortfall between EFT and Mr Endycott on the basis that EFT had made a false statement as to a material particular which led to the tax shortfall for the 2015 year. For completeness and in such circumstances, I do not accept the Applicants' submission that the penalty has been improperly imposed on EFT.
3. In the 2016 year, EFT again misstated its net distributable income by its report that the answer was 'nil'. The Petrie point project income alone negates the truth of that statement but these reasons disclose other reasons why that statement was false.
4. In both the 2015 and 2016 years, Mr Endycott falsely reported taxable income which had resulted in him paying no tax. As I have recorded, the differences between what was reported, and what Mr Endycott now contends as his taxable income and the Respondents assessments are marked.
5. The amounts reported by Mr Endycott in the 2015 and 2106 years were made in circumstances where he was knowingly in receipt of multiple periodic payments from entities within the Group and was privately reporting some of these payments as income to the NAB.
6. The Respondent's assessments revealed each of the tax returns for both Applicants to be substantially incorrect. The amounts originally reported have been shown by these proceedings to be incorrect.
7. In the circumstances, I am satisfied that the statements made by EFT and Mr Endycott for each of the 2015 and 2016 years in their income tax returns were false or misleading in a material particular, because of things in them or omitted from them.

What constitutes intentional disregard of a taxation law?

1. The Respondent applied a base penalty amount of 75% against both Applicants for intentional disregard in the making of a false or misleading statement.
2. The concept of intentional disregard requires satisfaction that the taxpayer has (1) some understanding of the relevant taxation law or appreciation of how it applies to their circumstances and (2) and deliberate conduct to 'flout' that taxation law.360F[363] The necessary intention can be inferred from the surrounding circumstances as well as direct evidence.361F[364]
3. Logan J observed of the relevant test in Russell v Commissioner of Taxation of the Commonwealth of Australia:362F[365]

Within s 290-40 of Schedule 1 to the TAA, Parliament has specified gradations of increasing severity in terms of conduct by a taxpayer or his, her or its agent which has resulted in a tax shortfall. Of these, "intentional disregard" is the most serious in terms of the infliction of a base penalty. It is intended to be qualitatively different to and more severe than "recklessness". That suggests that wilful blindness of a kind which in other contexts has been regarded as sufficient to supply the mental element in adverbial qualifications such as "knowingly" or "wilfully", q.v. Iannella v. French [1968] HCA 14; (1968) 119 CLR 84 at 95-96 per Barwick CJ and Comptroller-General of Customs v Woodlands Enterprises Pty Ltd [1996] 1 Qd R 589 at 602 603 per Pincus JA, McPherson JA agreeing, is insufficient to supply the mental element in "intentional disregard". Rather, conduct of that wilfully blind kind would fall under the rubric of "recklessness" for base penalty purposes.

1. The principle of recklessness was considered by the majority in Hart v Commissioner of Taxation with reference to BRK (Bris) Pty Ltd v Commissioner of Taxation:363F[366]

"Recklessness in this context means to include in a tax statement material upon which the Act or regulations are to operate, knowing that there is a real, as opposed to a fanciful risk, that the material may be incorrect, or be grossly indifferent as to whether or not the material is true and correct, and that a reasonable person in the position of the statement-maker would see there was a real risk that the Act and regulations may not operate correctly to lead to the assessment of the proper tax payable because of the content of the tax statement. So understood, the proscribed conduct is more than mere negligence and must amount to gross carelessness."

2. However, as the majority noted in Hart, there is a fine line between recklessness and dishonesty.364F[367]

What is the Tribunal's task in reviewing the administrative penalty imposed?

1. The Applicants have argued that the Tribunal in reviewing the base penalty applied 'must be satisfied Mr Endycott understood what he was doing was contrary to taxation laws'.
2. I cannot agree. Section 14ZZK of the TAA is applicable to the Tribunal's consideration of penalty.365F_[368]_ This means that it is the Applicants who bear the onus of establishing to the Tribunal's satisfaction that any penalty imposed by the Respondent was excessive. The correct test is whether the Tribunal is satisfied on the evidence presented that the Applicants have fully discharged their onus of proof that the penalty should not be imposed at all or imposed at a lesser rate.
3. That means the Applicants must satisfy the Tribunal that the Applicants, in making the relevant false or misleading statements, did not exhibit intentional disregard of a taxation law/s. Given the nature of Mr Endycott's ultimate submission and claim for the operation of the safe harbour provisions, if the Tribunal is satisfied of this, it must then also consider whether it is satisfied that the conduct would not 'fall under the rubric of "recklessness" for base penalty purposes'.366F[369] I say this because the safe harbour provision only applies in circumstances where a taxpayer has exhibited a lack of reasonable care.367F[370]

1. In the 2015 year, EFT's penalty is created by virtue of s 284-30 Schedule 1 TAA 53 and the consequential distribution from its net income to Mr Endycott, as beneficiary of EFT.
2. For the 2016 year, EFT did not make any specific submissions on the basis that it contended it could not be liable to penalty given its tax loss position but the Applicants did advance some contentions about excessiveness in respect of both Applicants.
3. The following is particularly relevant to my consideration of penalty against EFT for the years in dispute:

a) the failure to report income from the Petrie Point project and rental from HDM as income of EFT in circumstances where EFT paid expenses associated with the project and so Mr Endycott as the controlling mind of the trustee was on notice of the need to record income correctly.

My observations as to the conduct of Mr Endycott and Mr Cullen (below) are also relevant in terms of the assessment of penalty against EFT.

1. Mr Endycott contends that the 'behaviour' leading to his income tax shortfall amount for both the 2015 and 2016 years did not arise from intentional disregard for a tax law/s. Instead, he argues the correct penalty assessment should be 25% of the shortfall amount for failure to take reasonable care and this base level then attracts the protection of the safe harbour provision in respect of Mr Cullen's conduct.436
2. Mr Endycott contends that the Tribunal cannot be satisfied he understood what he was doing was contrary to taxation laws in circumstances where he did not understand the tax treatment of the issues and was not in a position to be aware whether the tax returns lodged for him in both years were materially incorrect. He says he wholly relied on Mr Cullen for advice.
3. Mr Endycott also submits that Mr Cullen as tax agent and with access to the relevant systems and records:368F[371]

a) failed to properly advise Mr Endycott and EFT on the taxation treatment of various forms of rent, salaries and wages which have been conceded in this proceeding by the Applicants; > > b) failed to properly record all of the allowable deductions of EFT; > > c) failed to take reasonable care in the preparation of his tax return for the 2015 tax year; > > d) should have advised Mr Endycott that the $800 per week salary he drew from EFT was assessable income and further notes that Mr Cullen acknowledged in the 2023 email that he was aware of and involved in the plan to pay Mr Endycott regular amounts as repayments of loans made by Mr Endycott 'over time', and these were reconciled at the end of each financial year;369F[372] > > e) failed to record all of the income of EFT in his calculations of the s 95 net income in the tax return of EFT for the 2015 year and should have accurately calculated the net income of EFT for the 2015 tax year to determine Mr Endycott's share of net income correctly; and > > f) was professionally negligent in the preparation of Mr Endycott's returns.

4. For the 2016 year, Mr Endycott also cited the death of his brother in June 2016 as an additional factor to those identified for the 2015 year. This event, he says only served to increase his reliance on Mr Cullen's skills and advice. He also referred to particular and significant health concerns.
5. In such circumstances, Mr Endycott submits that there is a demonstrated a basis for the base penalty to have been imposed at the 25% level instead of 75% and then for the protection afforded by the safe harbour provisions to apply to relieve him of any penalty.
6. The Respondent conceded that there was a calculation error in the assessment of tax shortfall income penalty for Mr Endycott for the 2016 year requiring it be varied to $113,666.85. He submitted the assessment for penalty for both years should otherwise be affirmed.

Conclusions about penalty - Mr Endycott for the 2015 and 2016 years

1. The following facts concerning Mr Endycott are materially relevant to my consideration of whether the base level of penalty imposed of 75% against Mr Endycott for intentional disregard of a taxation law in respect of the 2015 and 2016 years was excessive;

a) Mr Endycott is a painter by trade, suffers from dyslexia and is not qualified as an accountant or bookkeeper; > > b) Mr Endycott is also an experienced business-person and is director of EGA Pty Ltd which is the corporate trustee of EFT. The Group enjoyed an annual turnover of more than $6M in the 2015 year and employed at least 35 people. It is not a small business; > > c) Mr Endycott signed his annual tax returns as correct and as director of EGA Pty Ltd signed the returns and annual financial statements for EFT as correct, based on information and instructions he provided to Mr Cullen; > > d) Mr Endycott made a conscious decision to adopt a complex corporate structure for his business ('the business structure'); > > e) Mr Endycott engaged an accountant (Mr Cullen) to advise him about the business structure as well as to manage his financial and tax affairs; > > f) Mr Endycott was warned that the business structure meant he needed to keep assets and expenses separate between these entities and himself for accounting and tax purposes. Despite that advice, Mr Endycott and his employees actively engaged in significant movement of funds between entities, paid invoices from the wrong entities and co-mingled personal and business expenses. In doing so, Mr Endycott has admitted he did not take care where and how he recorded transactions and left matters to Mr Cullen to reconcile at the end of each financial year. He has conceded the accounts were a mess; > > g) Mr Endycott was directly involved in the accounting and financial side of the Group because he personally oversaw and authorised all expenditure above $300 (including giving instructions about prioritising of invoices and where funds should be drawn from to pay invoices). Further, Mr Endycott entrusted the bookkeeping for the entire business to his 19-year-old daughter who he personally instructed in terms of manner and priority of payments. These decisions directly contributed to the state of the business records and the comingling of business and personal monies. On some occasions, Mr Endycott also personally authorised payment of personal expenses as company expenses; > > h) Mr Endycott operated personal lines of credit. He did not establish an overdraft for his business but instead used these personal lines of credit which then required him to move money between personal and business accounts. Despite the previous advice to keep matters separate, Mr Endycott did not keep accurate records of loans which could later be reconciled with repayments; > > 1. Mr Endycott did not admit to drawing any salary from his business. Instead he knowingly participated in a process whereby he received a significant number of periodic payments from entities in the Group to his personal accounts and which he privately treated as his salary but did not declare for tax purposes. The evidence suggests and I infer that he established at least one of these arrangements ('the Mr Morgan director fees') without first seeking advice from or consulting Mr Cullen but the evidence otherwise suggests Mr Cullen was aware of the process; > > > j) The picture Mr Endycott knowingly presented to the NAB of his income, assets and liabilities stands in stark contrast to his income tax returns and is not explicable by the amounts he reported; > > > > k) Mr Endycott gave MTA access to the ledgers and MYOB for the business. There is no evidence before the Tribunal about whether Mr Cullen was instructed to maintain access to and scrutinise these records other than for the purposes of preparing tax returns and end of financial year statements. Instead, the evidence suggests Mr Endycott met with Mr Cullen at least every quarter to discuss 'significant transactions'; > > 1. by virtue of the amounts Mr Endycott has conceded are income and my findings both Applicants have significantly underreported their income for the years in dispute; > > > m) despite repeated requests and the issuing of statutory notices at audit, Mr Endycott has still not identified all relevant bank accounts for the years in dispute; > > > > n) not all transactions relevant to this dispute have been satisfactorily explained; and > > > > o) there was also substantial income earned from the Petrie Point project of which I infer Mr Endycott was aware and which was not reported to the Respondent by either by ERS or EFT. This potentially had significant implications for Mr Endycott's taxable income in 2016 given he was a beneficiary of EFT.

2. I am not satisfied in the circumstances that Mr Endycott could not have been ignorant about whether Mr Cullen was correctly reporting both his and EFT's income correctly in the income tax returns for the 2015 and 2016 years. To the contrary, the facts suggest Mr Endycott had direct and quite detailed knowledge of and involvement in the financial side of his business and how transactions were recorded and actively participated in events which have led to the tax shortfalls for both him and EFT.
3. I do accept that some aspects of Mr Endycott's conduct may at first viewing hint at recklessness. These include his lack of discipline in terms of the use of accounts and credit cards for both personal and business transactions and the correct recording of transactions for EFT.
4. However, I cannot ignore the evidence which suggests that Mr Endycott knew of but intentionally disregarded his legal obligations. These include for both of the years in dispute, ignoring the advice he received about keeping transactions for various entities in the Group separate, overseeing/authorising the payment of personal invoices by EFT, failing to keep proper records, and most significantly, his private treatment of the periodic payments as income while deliberately and knowingly claiming through tax returns that they were not for tax purposes even while they were reported as expenses for the relevant entities.
5. In the circumstances, I cannot be satisfied that Mr Endycott has demonstrated by his conduct that the base penalty applied was excessive. Even if I am wrong in this view, I note the evidence of recklessness otherwise associated with Mr Endycott's conduct would still preclude a finding that the proper level to be applied is 25% for failure to take reasonable care. In the circumstances, I am not satisfied there is a proper basis to support a finding of failure to take reasonable care.
6. It follows that the question of application of the safe harbour provision does not arise but even if a finding of failure to take reasonable care were applicable:

a) the evidence in this case still discloses that on at least one occasion (the arrangement for the payment of Mr Morgan's directors fees to Mr Endycott), Mr Endycott did not disclose the arrangements he made for a series of periodic payments to Mr Cullen until after the Respondent commenced his audit;370F[373] > > b) there is a complete absence of evidence about how Mr Cullen was otherwise instructed by Mr Endycott which would allow any determination of whether the safe harbour provision should apply. > > c) The safe harbour provision cannot apply if Mr Endycott did not give all relevant taxation information to Mr Cullen;371F[374] and > > d) Mr Cullen was not called to give evidence even though he has engaged with the Applicants in the course of these proceedings.

1. Under Division 284 TAA 53, liability for administrative penalty can arise from false or misleading statements of the taxpayer or their tax agent. I have also considered Mr Cullen's conduct for each of the years in dispute to the extent I am able to do so.
2. Serious allegations have been levelled at Mr Cullen in these proceedings. They were advanced by Mr Endycott, a self-interested witness who relies on his evidence, the tax returns, the original financial statements and a few emails. It is significant that Mr Cullen was not called to give evidence and so has not had an opportunity to respond or defend himself or give his side of the story. In such circumstances, I am cautious about drawing any conclusions as to Mr Cullen's conduct other than to infer he was unlikely to have corroborated Mr Endycott's evidence.
3. As far as Mr Parasyn offered her view (by way of the notice of objection) that Mr Cullen has been professionally negligent,372F[375] the basis for that view has not been the subject of any contestable evidence to the Tribunal and I have not afforded weight to the observation. It is not otherwise appropriate for the Tribunal to attempt to determine whether Mr Cullen acted negligently or in breach of his obligations as a tax practitioner. That would be a matter for the Tax Practitioners Board to investigate.
4. Despite this, there are some observations which can be made from the records about Mr Cullen's conduct. Mr Cullen is a qualified accountant and tax practitioner. He advised Mr Endycott to implement the structure for the Group and was aware of the need for monies to be kept separate.
5. Mr Cullen prepared and submitted returns and financial statements which were substantially incorrect and (aside from the Mr Morgan director fees) appears to have been aware of the periodic payments to Mr Endycott and prepared income tax returns for Mr Endycott for both years in dispute which did not declare these payments as income. He also would have been aware from his preparation of the financial statements, that these payments were being claimed as expenses of various entities but not claimed as income of Mr Endycott.
6. It is not clear whether Mr Cullen was aware of Mr Endycott's loan application to the NAB which treated the payments as income.
7. I cannot be certain how much Mr Cullen knew of the terms and conditions for the Petrie Point project but find it implausible that such a large source of income and expenditure would not have come to his attention when preparing the financial statements and income tax returns for the 2016 year, particularly given the expenses paid for by EFT. It is also concerning that the income received does not appear to have been declared by either EFT or ERS for the 2016 year.
8. It is also difficult to ascertain just how much Mr Cullen knew via his access to MYOB and whether Mr Endycott failed to disclose all relevant matters to him in the preparation of the returns and end of year accounts. The basis upon which Mr Endycott instructed Mr Cullen is not clear and his evidence would have assisted the Tribunal to understand the full nature of his engagement day to day with the business.
9. Nonetheless it is reasonable to assume that Mr Cullen would have quickly realised in preparing the financial statements and returns for the 2015 year that the Group's records were a mess. Beyond this, I cannot be certain Mr Cullen would have direct knowledge of all transactions in the accounts for EFT.
10. The Tribunal's task is to determine whether there is any basis for either of the years in dispute to be satisfied that Mr Cullen's conduct in making a false or misleading statement to the Respondent did not arise from intentional disregard of a taxation law or some lesser grade of conduct. In the circumstances I have described, I cannot be so satisfied particularly given Mr Cullen's expertise and given his conduct and knowledge of the periodic payments and conflicting expense claims. As a tax professional, Mr Cullen would have been well aware of the laws relating to such payments and given his role in preparing returns and financial statements, I infer he would have come to have direct knowledge of the state of the records and did not include all relevant transactions in Mr Endycott's returns.

Summary - shortfall penalty income for the 2015 and 2016 years (EFT and Mr Endycott)

1. For the reasons set out above, I am not satisfied the penalty assessment for:

a) EFT for the 2015 year for tax shortfall income is excessive; > > b) EFT for the 2016 year for tax shortfall income is excessive; > > c) Mr Endycott for the 2015 year for tax shortfall income is excessive.

2. While I do not accept the base penalty applied for the 2016 year for Mr Endycott was excessive, given the Respondent's concession, I am satisfied he tax shortfall income penalty for Mr Endycott for the 2016 year needs to be varied owing to the calculation error and should be recalculated to be $113,666.85.

1. The GST penalty tax periods to which base penalty was applied are the quarterly periods ended 31 December 2014 to 30 June 2016. The GST penalty periods to which a 20% uplift was applied are the quarterly periods ended 31 March 2015 to 30 June 2016.373F[376]
2. The Respondent has conceded a calculation error means for the GST net amount penalty imposed upon EFT for the quarterly tax period ended 30 June 2016 is incorrect and should be $47,447.10.
3. The Applicants argued that the GST penalty assessments for each quarterly tax period were excessive at 75% or incorrect and in the alternative submitted that the Tribunal should exercise the discretion to remit some or all the GST penalty applied.
4. The Applicants' submissions as to the excessiveness of the base penalty levels as remission and as to the application of the safe harbour provision for the tax shortfall income are also applicable to the GST penalty applied.
5. In respect of excessiveness, Mr Endycott's conduct in respect of both the training fees and the Petrie Point income is particularly relevant. Given the claims for expenses via EFT when the payments were being attributed to ERS is highly questionable. Mr Endycott presided closely over expense approval. In the circumstances, I find it implausible that he was not aware of the consequences as regards the Petrie Point project income.
6. Further, the approval of payment of invoices by EFT for personal expenses inevitably had consequences for GST reporting. Added to this, the consequences of the intermingling of personal and business activities and the finances of the various entities was objectively foreseeable.
7. In the circumstances, I am not satisfied the base penalty amounts applied for the relevant tax quarters are excessive. However, I am satisfied that for the quarterly tax period ended 30 June 2016 that the GST net penalty assessment should be varied to $47,447.10.
8. I have addressed the question of remission for tax shortfall income and GST penalty below.

1. In this case, I am satisfied there is a statutory basis for uplift to the penalty for:

a) EFT for the 2015 year;374F[377] and > > b) Mr Endycott for the 2016 year

based on prior application of the penalty provisions.375F[378]

1. The discretion to remit penalty is broad and can extend to remission of part or the whole of the penalty. In considering whether to remit, the Tribunal must consider all of a taxpayer's particular circumstances.376F[379]
2. I have considered and evaluated the Applicants' contentions as to why penalty should be remitted to EFT and/or Mr Endycott in this case and the Respondent's reasons for opposing the remit of penalty:

a) for the reasons I have already given, I am not satisfied Mr Endycott was not aware of his wrongdoing, particularly given his private treatment of the periodic payments and his failure to keep proper records and funds separate; > > b) through Mr Cullen, Mr Endycott gave inconsistent explanations for various transactions to the Respondent at audit and failed to provide evidence to support some of his contentions about the character of transaction; > > c) EFT has demonstrably failed to keep proper records and Mr Endycott has comingled accounts and monies to a significant extent and with deliberateness; > > d) while I accept the Applicants were up to date with their returns and BAS, the circumstances of the case and the scale of the underreporting which has occurred are significant. I am not persuaded this is a case where leniency is appropriate; > > e) I note that the Applicants have sought additional support since the audits and have changed accountants. However, for the reasons I have explained I am not satisfied that the Applicants' former accountants bear the whole of the responsibility for the resulting shortfalls; > > f) I accept the Applicants have been audited but do not accept that this in and of itself is a proper basis to remit the penalty, particularly in the circumstances of this case which concern the deliberate failure to report income; and > > g) I am not satisfied that the Applicants, in failing to properly apprehend their obligation to discharge their onus in respect of all transactions, bore no responsibility for the trajectory of the audit, objection and these proceedings.

3. I have not identified any other materially relevant reasons to support a decision to remit penalty.
4. In light of these considerations, I am not satisfied in all the circumstances, that these or any other matters establish a proper basis to remit some or all the penalty imposed upon either Applicant for the years in dispute.

1. Where it has jurisdiction to do so, the Tribunal has the discretion to remit interest where it considers it fair and reasonable.377F[380]
2. The Applicants both sought to have any general interest charge ('GIC') remitted and Mr Endycott sought to have any special interest charge ('SIC') remitted.
3. The Respondent advised the Applicants at objection that:

a) Mr Endycott was not able to object to the assessment of SIC on the basis that it was below 20% of the assessed shortfall;378F[381] and > > b) there is no provision permitting the Applicants to object to the GIC charged.379F[382]

4. In the circumstances, I am unable to identify any basis upon which the Tribunal has jurisdiction to review the interest applied380F[383] but for completeness would add that having considered the submissions made by the Applicants as to remission of any interest and the circumstances of the cases, I would not have been satisfied that circumstances exist in this case which fairly and reasonably support the Commonwealth bearing the cost of any interest attaching.

1. The decisions which are the subject of review are to be varied to give effect to the recalculations I have identified in these reasons and those variations are reflected in my orders.

15 and 16 July 2024, 9 to 15 July and 13 to 14 October 2025

10 September 2025, 9 October 2025 and 13 October 2025

Originally established on 27 May 2009 with Mr Endycott as the sole trustee.381F[384]

Incorporated on 19 June 2014382F[385] It has been the corporate trustee of the Trust since 16 July 2014.

Mr Endycott and Simon Yates were each 50% shareholders

EGA purchased property at 2365 Ipswich Road Oxley on 30 November 2015.383F[386]

Entire Paint and Property Solutions/Entire Coating Solutions

Originally EFT traded as Entire Paint and Property Solutions (EPPS). In around 2014 the business name was changed to Entire Coating Solutions (ECS). For a time there was an overlap between the two business names and bank accounts during the 2015 year.384F[387]

ERS' focus is providing concrete repurposing and underpinning.385F[388]

Incorporated on 24 August 2004.386F[389]

HDM is in the business of selling, servicing, building and repairing motorcycles.387F[390]

EGA and Mr Yates are directors and joint shareholders.

In July 2014 Mr Endycott transferred 25 shares to Mr Dundas for $113,5000 plus GST which had been paid to him in April 2014. He said Mr Dundas subsequently transferred the shares to EGA for $100,000 on 20 October 2016. 388F[391]

On 24 January 2017, Mr Endycott transferred his remaining 25 shares to EGA.389F[392]

EGA and HDM operate from the same business premises.390F[393]

Employed by Mr Endycott, initially as a receptionist (part time) in March 2009 at age 19 and then as a book-keeper for the Trust from September 2013.392F[395]

Accountant - employed by More Than Accountants (MTA) and former accountant and tax agent for Mr Endycott and his associated entities from 2009 to 14 January 2019.393F[396]

Shares in HDM were sold to Mr Dundas in 2014 for $113,000 and subsequently bought back by EGA as trustee of the Trust following the years in dispute for $100,000 (ex GST).395F[398]

In-house accountant to the Group. She was let go on the recommendation of Ms Parasyn on 20 May 2020.396F[399]

1. Described by the Applicant in submissions as 'a director and silent partner to Mr Endycott and Mr Yates in building the business of HDM'.397F[400]

Mr Morgan entered bankruptcy in 2017.398F[401]

Hired as accountants to the Group in or around November 2019. Ms Parasyn prepared notices of objection and requests for extension of time to object for the years in dispute.

Employee of MTA. From 2016, Ms Pearce provided additional bookkeeping and reconciliation assistance to Ms Endycott.399F[402]

Employee of the Group who was originally employed as a business development manager and then was promoted to the position of General Manager EGA in 2013.

A business partner of Mr Endycott and a director and shareholder of HDM.400F[403]

Engaged by the Group and prepared independent financial statements for the Group in 2022. In evidence were ledgers and financial statements they had prepared for the Group.

The primary office of the Group. It was purchased by EGA ATF EFT prior to the 2015 and 2016 years.401F[404] It was subject to a mortgage with the NAB (x5534).

2365 Ipswich Road Oxley402F**[405]**

Commercial property purchased by EGA ATF EFT on 30 November 2015. From 14 March 2016 it was subject to an NAB mortgage x3121.403F[406]

Commercial property acquired by EFT on 30 June 2014 and sold on 5 June 2016. It was subject to a mortgage with the NAB (x5534). The capital gain from the sale was $120,197 which has been conceded. The business of E&YF Trust and ERS and ECS were conducted from this site. HDM, ERS and E&YF Trust were charged rent for the use of property.

Property acquired by Mrs Endycott prior to her marriage to Mr Endycott. It was unencumbered. It was sold to Ms Endycott and her partner in 2016.404F[407]

16 Stonewood Street, Algester405F**[408]**

Property purchased by Mr and Mrs Endycott on 27 October 2014 and sold in December 2014.

3 Osprey Court, Rangeville406F**[409]**

Property purchased by Mr and Mrs Endycott in late December 2014. Mr and Mrs Endycott's primary residence.

1701 - a personal account in Mr Endycott's name. Mr Endycott told the Tribunal he also used this account for business expenses of the Group.407F[410]

2922 - a transaction account in the name of Mr Endycott. Mr Endycott told the Tribunal he also used this account for business expenses of the Group.408F[411]

0761409F[412] - an account in the name of Mr Endycott.

8191410F[413] - a credit card which Mr Endycott told the Tribunal he used to pay for business expenses

5313 - a transaction account in the name of Mr Endycott. Mr Endycott told the Tribunal he also used this account for business expenses of the Group.411F[414] It was not listed in Annexure B.

0418 - an account in the name of Mr Endycott. Mr Endycott told the Tribunal he also used this account for business expenses of the Group.412F[415]

8191 - a credit card in the name of Mr Endycott. Mr Endycott told the Tribunal that given cash flow difficulties he also used this account for business expenses of the Group and would reimburse from the company account.413F[416] Also attached were cards numbered x5850, x5868, x3911 and x3583.

Other accounts in the names of Shane/Caroline Endycott

4200 - a line of credit in the name of Mr and Mrs Endycott. Mr Endycott told the Tribunal that it was used for both personal and business expenses.414F[417] The account had a draw down limit of $500,000.415F[418] Mr Endycott contends that he used this line of credit to fund the operations of the Group.416F[419]

6925 - a line of credit/loan account in the names of Mr and Mrs Endycott secured over their place of residence (3 Osprey Court).

Entire Remedial Solutions (ERS) Trust's bank accounts

5443 - a units account in the name of Mr Endycott. The Applicants described this as the main trading account for the ERS Trust.417F[420]

5583 - in the name of ERS.418F[421] Mr Endycott told the Tribunal he was the cardholder and used this account for personal and the business expenses of the Group.419F[422]

8821 - in the name of ERS.420F[423] Mr Endycott told the Tribunal he was the cardholder and he used this account for personal and the business expenses of the Group.421F[424]

0075 - in the name of ERS.422F[425] Mr Endycott told the Tribunal he was the cardholder and he used this account for personal and the business expenses of the Group.423F[426]

0780 - in the name of ERS. Mr Endycott told the Tribunal in his written evidence that he was the cardholder and he used this account for both personal and the business expenses of the Group.424F[427] However, under cross examination he contended it was used just for business expenses.425F[428]

1. 9582 - Described by the Applicants as the main trading account of the ECS business.426F[429] The account was in the name of SJ Endycott atf Endycott Family Trust t/as Entire Paint and Property Solutions. Mr Endycott told the Tribunal customers of ECS paid their invoices into the account and that some deposits represented transfers in from other accounts within the Group.427F[430]

8035428F[431] - a loan account in the name of EGA atf for the Trust which was opened in November 2014 and closed April 2015. The balance of the account was transferred to x4200.

5438 - an account in the name of the Trustee to EFT to which interest was charged by NAB for various loans the Applicants say were made by the business.429F[432]

1022430F[433] - a loan account for EFT which Mr Endycott told the Tribunal was opened in September 2014 to replace x 7096 and was replaced by x 3121.

3121431F[434] - a loan account for EFT which Mr Endycott told the Tribunal was opened on 28 January 2016 and was taken out over the property at 2365 Ipswich Road.

7313432F[435] - an account for EFT.433F[436]

1. 5534434F[437] - a loan facility for EFT which the Applicant told the Tribunal was secured over the properties at 19/1645 Ipswich Road and 16 Lapis St and opened on 7 August 2014. Mr Endycott told the Tribunal that amounts were deposited into this account to meet loan repayments.435F[438]

7096436F[439] - a loan account which was closed on 12 September 2014 relating to EFT Trust.

4496 - account in the name of HDMC as Trustee for the E&Y Trust.

4034 - referred to in Annexure B as an HDM account.

Other undisclosed credit cards - not listed on Annexure B

7138 - a credit card (HDM or EGA or both).437F[440] Statements were not produced.

4260 - a credit card ECS credit card Mr Endycott.438F[441]

2935 - a cheque account referred to in E&Y Trust's trial balance.

0927 - a loan account a cheque account referred to in E&Y Trust's trial balance.

6439 - a bike sales account identified by the Respondent as not included in Annexure B.

[1] Throughout these reasons references to EGA ATF EFT will be expressed as 'EFT'. Collective references to Mr Endycott and EFT will be expressed as 'the Applicants'.

[2] Throughout these reasons references to the years in dispute will be expressed as the 2015 and/or 2016 years. Referred to collectively, 'the years in dispute'.

[5] Dated 27 May 2022, Hearing Book A1 T2, T35.