The Applicant's use of contractors in its business

1. JK's evidence and the evidence on the Tribunal Book is that the Applicant's business was mainly carried out with the assistance of contractors engaged by the Applicant. To the extent those contractors were professional educators, they were contractors that were resident in Australia in order to meet regulatory and compliance obligations.[16] The claims for input tax credits for the costs of the professional educator contractors form the major element of the disputed input tax credit claims in this case. Where the word "contractor" is used in this decision, I am generally referring to professional educator contractors as a result, unless specified otherwise.
2. The Applicant also engaged some other contractors, aside from professional educators. Some of those other contractors, such as the Applicant's casual contracted bookkeeper, were based overseas.[17] Contractors were also engaged to assist the Applicant to meet regulatory reporting requirements.[18]
3. Professional educators contracted by the Applicant provided services that included preparing and updating the Applicant's online course materials to ensure the Applicant's training modules meet training guidelines,[19] training, validating materials and assessments.[20] There is evidence on the Tribunal Book that reflects the provision of such services.[21]
4. JK pointed out that the Commissioner thought that all of its contractors were based overseas, when they were not.[22] It is evident that there was this mistaken view by the Commissioner.[23] The Applicant sought to make a great deal of this matter, repeatedly raising it at the hearing, regularly raising it in material on the Tribunal Book, and suggesting in its objection that this error caused the assessments.[24]
5. The parties differ about what was said and when. It is not pertinent to this case whether the position is that the Applicant told the Commissioner that all contractors were overseas, or that was misunderstood by the Commissioner from what was said, or that was never said by the Applicant, and the Commissioner got it entirely wrong. The question of the residence of contractors is of course relevant to determining whether GST input credit claims can be claimed at all,[25] but that is not the entirety of what is being considered in this case. When considering GST, this case is about whether the Applicant has met its burden of proof to substantiate claims made for GST input credits, including if the contractors were Australian residents. So, while I appreciate the Applicant's frustrations about this matter, this issue is not determinative and is left aside.

The filing of the business activity statements ("BAS") for the Relevant Periods

1. On 20 March 2020, the Applicant filed the BAS for each of the Relevant Periods.[26] JK prepared and lodged the BAS. Some of the BAS were considerably late due to what JK said in evidence was a "conflict of third party events" and a "confluence of events and immense adversity."[27] The Tribunal understands that JK's evidence referred to the Applicant being the subject of inquiries from ASQA at the time requiring correspondence and engagement with ASQA, the State government funding the Applicant relied upon being suspended, and a number of other issues impacting the business including as a result of the cyber events (described below), and health issues suffered by JK, the Applicant's sole director.[28]
2. The Applicant decided not to file its BAS on time. JK said that the delayed filing of the Applicant's BAS was because the Applicant had to prioritise what was impacting the business the most, "as any average taxpayer would do." As an aside, the Tribunal notes that the Applicant may be under an impression that there is a test at taxation law focusing on the "average taxpayer." This term was repeatedly used by JK in evidence and by the Applicant in submissions before the Tribunal.[29] For clarity, there is no test of the "average taxpayer" in the taxation legislation. The taxation law applies on its terms. The penalties provisions also do not create an "average taxpayer" test.
3. JK said in evidence that as the Applicant was in a refund position for GST purposes, JK mistakenly took the view that being late with its BAS would not be problematic, as the only detriment was to the Applicant.[30] The Tribunal understands the Applicant to be aware that this view was wrong. For the record, filing returns when they are due is a requirement of the law no matter what the taxpayer's perceived outcome of those returns is, it is an offence not to meet the requirements of a taxation law,[31] and there are penalties applicable to taxpayers that fail to lodge BAS or other returns on the day they are required.[32] The Applicant is fortunate that further action was not taken against it.
4. JK prepared and filed the BAS. JK emphasised to the Tribunal in evidence that the Applicant would have been in a refund position due to it making GST-free supplies. JK acknowledged that the Applicant had been "rushing" when preparing its BAS, JK was under pressure, seeing a doctor, JK was on "income protection" at the time, and acknowledged some errors were made. The "rushing" comment was later explained by JK on re-examination from Mr Ahmed as being due to the Commissioner's portal "shutting down" due to a new portal being provided.[33] JK's evidence was that this portal shut down might otherwise prevent the lodgment of the Applicant's outstanding BAS. It is decidedly unclear what JK is talking about in these comments. When put to JK by Mr Ahmed on re-examination, JK was not aware of the four year rule in the GST Act for claiming input tax credits. The Applicant was aware of there being a four year rule, as there is evidence that the Commissioner advised the Applicant of that,[34] although it is not clear whether this was known by JK at the time the BAS were lodged.
   1. JK acknowledged in evidence that when JK prepared the Applicant's BAS for the Relevant Periods the Applicant did not have access to all of the invoices to support the input tax credits claims made in those BAS. However, JK noted that those invoices were available at the time they were issued.[35] This is not an answer to the requirement for the Applicant to have that material when the BAS are filed.[36] The actual facts upon filing the BAS need to be considered not what might have happened had the facts been different.
5. JK said that the Applicant was not sure how to proceed with its BAS given the lost data as a result of two cyber events,[37] and the BAS were prepared on the basis of available information. The information relied upon was comprised of summaries the bookkeeper had which were later described as "spreadsheets",[38] some of the information the bookkeeper had put into Xero on a "random" basis,[39] and miscellaneous information available to JK which is on the Tribunal Book.[40] In cross-examination, JK said Xero was not relied upon when preparing the BAS, which was contrary to other evidence and submissions. The use and reliance upon Xero when preparing and lodging the BAS for the Relevant Periods is considered in more detail below.[41] For the record, if there is uncertainty about what to do when preparing BAS, taxpayers are encouraged to contact the Commissioner and discuss the matter.
6. JK's evidence was that JK had no reason to doubt the material relied upon when preparing the BAS as it was in line with expectations of the Applicant's expenditure, and also noted that the claimed amounts were consistent with ATO Industry Benchmarks (although that may have been known after the BAS had been filed and there is no evidence it was considered at the time the BAS were prepared and filed).[42] Mr Ahmed submitted in Oral Closing that JK prepared the BAS from the material to hand at the time, and in the circumstances, that was the best that could be done at the time. This matter is considered further when considering penalties below.
7. JK appropriately acknowledged that in hindsight the Applicant should have informed the Commissioner about the cyber events that JK said impacted the Applicant's ability to file the BAS and resulted in lost data including invoices.[43] All taxpayers are encouraged to liaise with the Commissioner if there are problems such as this.
8. In the BAS for the Relevant Periods the Applicant claimed a total of approximately $647,370 in GST refunds.[44] The claimed GST refunds were a result of claiming input tax credits of $647,370 in the relevant periods. The Commissioner allowed $1,461 of that claim,[45] meaning that $645,909 represented the disputed portion. The disputed portion was not refunded by the Commissioner to the Applicant.[46] It is this claim that is at issue in this case. The Applicant has now adjusted this claim, and it now appears to be $522,578 that is in dispute.[47]

The use of Xero when preparing the BAS for the Relevant Periods

1. How the Applicant used Xero, the accuracy of Xero, and whether Xero reports were relied upon in preparing the BAS was an issue between the parties. The following summarises the evidence:

(a) Ms Rares pointed out that there were errors in the Xero material on the Tribunal Book. Xero had been set to a cash basis for GST, while the Applicant was registered on an accruals basis. JK agreed that did not make sense. Other issues included that there was a GST amount for "donations" on the Xero reports,[48] which have no GST impact, but they are recorded on Xero has having a GST cost. In addition, "wages and salaries" were recorded on Xero[49] as an expense where the Applicant incurred GST, when that also was not correct. Finally, Ms Rares noted that the Xero report included GST on "retained earnings" - also not correct.[50] > > (b) When those points were put by Ms Rares to JK, JK said the errors pointed to by Ms Rares in the Xero reports all had been "fixed up" by Mr Ahmed. From the Tribunal Book it is true that the points raised by Ms Rares were raised previously with the Applicant with amendments proposed, although it is apparent all of the errors were not fixed.[51] However, the point being made by Ms Rares seems to have been missed by the Applicant. Ms Rares focused on the position at the time the BAS were lodged as well as the nature of the materials relied upon. That point of time is relevant when considering penalties. At that time, it appears the Xero reports were relied upon at least in part. > > (c) When Ms Rares put to JK that the Commissioner needed evidence of the exact amount of GST incurred by the Applicant, JK indicated that the matters raised by Ms Rares were "small errors" compared to the overall GST refund JK asserted was owed to the Applicant. This was no answer, as tax is not a size contest, tax is a group of laws that focus on compliance. > > (d) The Tribunal understands that Ms Rares was also saying that the Commissioner could not rely upon the BAS being accurate and nor could the Applicant suggest the BAS were accurate at the time they were filed. This is because the material upon which the BAS were based was inaccurate. These are valid issues to raise as the point of time that the BAS were filed is relevant to penalties. As JK appropriately acknowledged, the Xero material had errors. > > (e) However, JK denied in cross-examination that that Xero had been used when preparing the Applicant's BAS filings for the Relevant Periods. Ms Rares pointed out that this evidence differed from the Applicant's SFIC at [32] which stated that the Applicant had relied upon Xero records when filing its BAS for the Relevant Periods.[52] A phone note from the Commissioner from 2 April 2020 also records that shortly after the BAS were filed, Xero was said by JK to be the basis for the BAS filed.[53] This is an evidential inconsistency. Ms Rares asked for clarification, and JK said that the data the Applicant used when preparing the BAS were the Applicant's bookkeeper's spreadsheets, which JK "was cross-referencing as well as doing random checks." JK confirmed those spreadsheets were not directly in evidence before the Tribunal, although some spreadsheets based on that material were in evidence.[54] The Tribunal finds JK's evidence and the Applicant's submissions on the use of Xero to be inconsistent. > > (f) As is noted above, the spreadsheets JK says the BAS were based upon are not in evidence, although Mr Ahmed's spreadsheets what are said to be based on those earlier spreadsheets are said to be in evidence:[55] > > > (i) A document that comprises spreadsheet material prepared by Mr Ahmed around June 2021 (and which ought to have been on the Tribunal Book)[56] was provided after the hearing for the Tribunal to consider.[57] Mr Ahmed's spreadsheets at A-20251125-2 do not reconcile with the BAS as filed. This is deliberately so, as it is understood that the claims made in the original BAS have been adjusted by Mr Ahmed.[58] That suggests these spreadsheets could not possibly have been relied upon to prepare the BAS. Ms Rares appropriately acknowledged that A-20251125-2 should have been on the Tribunal Book, but said all of it is based on the same demonstrably inaccurate material. Ms Rares also suggested in Oral Closing that A-20251125-2 makes the same error on GST as JK's evidence.[59] > > > > (ii) The second document provided to the Tribunal after the hearing was A-20251125-1 which is a repeat of T48-549 to T48-563 and comprises Xero reports. Perhaps it is this material that the Applicant says was relied upon when preparing the BAS. When A-20251125-1/T48-549 to T48-563 are considered, the aggregate GST inclusive figures or GST exclusive figures for "Consulting/freelancer" for the four BAS quarters of each financial year bear no resemblance to the equivalent amounts in A-20251125-2 [60] which is to be expected as A-20251125-2 is, apparently, an adjustment to the earlier claims. But this material also does not resemble what was claimed in the BAS nor in other Xero reports provided to the Commissioner after the BAS were filed.[61] So, this material cannot have been relied upon to prepare the BAS either. If spreadsheets were relied upon, they are not in evidence. > > (g) The Tribunal Book also demonstrates inconsistencies from the Applicant about its use of and reliance upon Xero. The Applicant's objection said at T46-527 "It is worth noting at this juncture that the ATO appears to have assumed that all transactions were being individually recorded on Xero. This was not the case. The individual transactions were on the bespoke software and Xero simply included the journals necessary to record the results." That differs from what JK said in a Statutory Declaration provided to the Commissioner which stated that the bookkeeper "contemporaneously record[ed] all transactions into Xero, which generated the activity statement summaries provided." [62] It also differs from what the Applicant said to the Commissioner by letter dated 7 June 2023.[63] Earlier, on 23 April 2020[64] the Applicant advised the Commissioner that the Xero reports for the periods ending 30 September 2018, and 31 December 2019 were "correct" but then on 2 June 2021 the Applicant advised the Commissioner that it was "not diligent in Xero".[65] > > (h) In addition, the Xero reports on the Tribunal Book[66] include reports that were filed as amendments to BAS for the periods ending 31 December 2019 and 30 September 2018,[67] and then further amended Xero reports for the entirety of the Relevant Periods. [68] If Xero material was not relied upon at all when filing the BAS in the first place, it is hard to see why that would have occurred. It is also notable that the Applicant seeks to rely on each Xero report as the "particular document" upon which the discretions in subsection 29-70(1B) and subsection 29-75(1) should be based.[69] If Xero was never relied upon, it is hard to see why the Applicant would do this. > > (i) Appropriately, as she is required to do at law,[70] Ms Rares put the Commissioner's case to JK which was that there simply were no tax invoices from contractors available at any time. JK strongly denied that. JK's evidence focused on what the Applicant described in its Tribunal filings as "holistic data"[71] which in JK's view proved the Applicant's case. I consider that material in my legal analysis below.

2. The Tribunal can only conclude that the Applicant's position has changed on how Xero was used, and whether it was used to prepare the BAS. The Tribunal has no admissible evidence[72] to clarify this. Inconsistencies in the Applicant's evidence, correspondence and submissions do not assist the Applicant.
3. It is reasonable to infer that Xero was relied upon by the Applicant when preparing its BAS for the Relevant Periods since it is what is provided by the Applicant to the Commissioner to support its BAS. That is not to say other things (such as spreadsheets which the Tribunal does not have and cannot consider) may not have been relied upon when preparing those BAS. But it is to say that I do not accept JK's evidence that the Xero reports were not relied upon at all when preparing the BAS at issue. The weight of the evidence on the Tribunal Book and submissions put to the Tribunal is otherwise.

Storage of the tax invoices issued by contractors to the Applicant

1. In cross-examination of JK, Ms Rares asked about invoices the Applicant received from contractors and where the Applicant stored them as well as the Applicant's process and what was relied upon when preparing the BAS for the Relevant Periods.
2. JK's evidence both in the JK Witness Statement, under cross-examination, and in re-examination was as follows:

(a) As described in this decision, the Applicant ran an online business model which JK described in evidence at the Tribunal as a "contracting outsource model." Contractors and students that supplied services would upload their invoices directly onto the Applicant's business and information management system hosted by GoDaddy (which is further described below). That is where the invoices would be stored. The impact of the cyber events (described below) was that there was a loss of this material. > > (b) The Applicant's primary accounting records were also on the Applicant's business and information management system that was hosted by GoDaddy. > > (c) There was no structure for invoice information to be stored locally by the Applicant. The backup to the Applicant's system was also hosted by the same provider, GoDaddy, and was also lost as a result of the cyber events. > > (d) At a high level, when preparing the BAS, a bookkeeper contracted by the Applicant would use the Applicant's business and information management system. The bookkeeper would consolidate uploaded contractor invoices, calculate the cost of services provided, and calculate the input credits and claim GST refunds.[73] > > (e) Invoices for costs from entities that did not work for the Applicant directly (for instance, Officeworks) were emailed to the Applicant, saved and subsequently uploaded onto the Applicant's business and information management system that was hosted by GoDaddy. > > (f) The Applicant also used Xero on a "trial basis" but that was not the Applicant's main system, and the Xero reports were "random".[74] Xero was used on an "ad hoc basis" by the bookkeeper by recording some material. The purpose was to see what Xero could do, in order to improve the Applicant's platform. The primary records were on the Applicant's dashboards which are understood to be part of the business and information management system. The reference to a "trial basis" of Xero was said to mean that the Applicant did not pay for the subscription. As is noted elsewhere in this decision,[75] this evidence of "ad hoc" use of Xero is inconsistent with JK's Statutory Declaration and other submissions made by the Applicant. And, as is noted above, I do not accept that Xero was not relied upon at all when preparing the BAS.

The Commissioner's offer to use its formal powers to obtain tax invoices from contractors

1. There is evidence that in 2022 the Commissioner discussed with the Applicant the option of the Commissioner issuing formal statutory requests to contractors for copies of the invoices which they issued to the Applicant for the Relevant Periods.[76] The Commissioner said it wanted this material in order to ensure it made the correct objection decision.[77] The Applicant advised the Commissioner that it did not want this to happen and sought repeated assurances from the Commissioner that it would not happen.[78] Emails and discussions about this matter litter the Tribunal Documents.[79]
2. The Tribunal asked JK questions about this at the hearing. JK said that the reason the Applicant did not want to do this was due to there being issues with ASQA and the relevant State government funding body at or around the time, due to fit and proper person requirements where it was perceived that engagement with the Commissioner could be adverse to that, and concerns about an adverse impact on the Applicant's position with those bodies both at that time and going forward. Concerns were also expressed about there being an impact on the Applicant's relationship with its contractors.[80] From the evidence on the Tribunal Book, the Applicant consistently maintained that the industry in which it operates in relies upon reputation and there are sensitivities which are said to make it not feasible for those invoices to be obtained.[81]
3. JK's evidence was that the Applicant was happy for the Commissioner's officials to speak to contractors as long as they did not say they were from the Commissioner, and JK did not know why this was not acceptable.[82] Elsewhere on the Tribunal Book it is stated that the Applicant's objection to the Commissioner issuing formal notices was not as stated in JK's witness evidence, but because the Applicant wanted those notices not to mention the Applicant.[83] There was even a rather bizarre suggestion that the Commissioner sit in on phone calls with contractors, in secret.[84] The Commissioner does not need the Applicant's permission to use its formal statutory powers, nor does an Applicant get to dictate to the Commissioner how those powers are used. The Commissioner nevertheless operated in accordance with the Applicant's strongly expressed wishes on this occasion. [85]
4. In the Tribunal's assessment, JK's and the Applicant's suggestions about how the Commissioner should exercise its powers were misguided. The Applicant's approach lacked common sense. The Commissioner was offering to use its statutory powers to obtain the information it was seeking. The practical situation the Applicant faced at the time was that the Commissioner was not satisfied with the evidence produced by the Applicant for varying reasons and was seeking corroborative evidence.[86] The Applicant had not itself obtained the tax invoices from its contractors[87] and took the position before the Tribunal that it was not feasible to do so.[88]
5. The Commissioner obtaining that information from the contractors would have been helpful to the Applicant when its tax issues were being determined by the Commissioner, and it could have enabled the Applicant to prove the GST costs it incurred and satisfy the Commissioner that it could rely upon the other information produced by the Applicant. It may have been that the tax matters could have been concluded at this point without the need for the hearing at the Tribunal. The Applicant could even have sought to work with the Commissioner to agree a sample of contractors for this purpose, but it did not do so.
6. When considering the Applicant's suggestions as to the manner in which the Commissioner should have agreed to use its powers, at law, the Commissioner is not entitled to use its statutory powers in section 353-10 of Schedule 1 to the TAA as some sort of undercover operative, and the powers do not work that way. The statutory powers require the Commissioner to issue a formal notice, say it is the Commissioner, refer to the statutory power, and for the Commissioner to specify what information it is seeking, including about what, and by what time it is required to be provided. Even if those features at law did not give rise to evident problems with the Applicant's suggestions, it can be concluded by applying common sense that it is unlikely that a contractor would simply hand over material like invoices to an unknown person from an unnamed organisation.
7. In terms of impact on the Applicant's relationship with ASQA, the State government body and/or contractors, this reasoning ultimately impacted the Applicant's ability to produce evidence to the Commissioner. After reviewing the material, it is hard for the Tribunal to accept that the Applicant or the Commissioner seeking copies of invoices which is a simply an ordinary everyday taxation and financial matter of a minor nature could even possibly have impacted the fit and proper person requirements outlined in the Tribunal Book.[89] It is hard to understand why the obvious explanation that the invoices were needed because the Applicant's copies were longer available (years had passed) was so catastrophically damaging. While a review by another regulator such as the Commissioner is of course relevant to ASQA, seeking invoices is such a minor matter that I do not accept the catastrophic consequences the Applicant said would arise. In addition, if the invoices were produced by the contractors, as would be expected given document retention requirements at taxation law, the Commissioner would have gone away. There would have been no issue for ASQA. Whatever the position about the validity of the Applicant's concerns, ultimately, the Applicant made a forensic evidential decision in circumstances where the Applicant bears the burden of proof under taxation law and where the Applicant did not have access to contractor tax invoices in its own records.
8. The Applicant's failure to accept the Commissioner's offer even for a limited number of contractors could also give rise to questions of credibility, particularly whether it could be inferred that there were no invoices in the first place. This appears to have been the Commissioner's conclusion. This matter is also relevant to the Tribunal when considering the uplift to the base penalty amount and whether the Applicant has sought not to assist the Commissioner, and will be returned to below in that context.

1. The purpose of recording the below evidence in full detail is to consider the credibility of JK's and the Applicant's evidence, including as to the reason for the Applicant not having tax invoices at the time the BAS were filed. It is also to consider whether figures upon which the BAS for the Relevant Periods were based in part (such as figures for contractor costs taking into account the professional services credit system) could be said to be broadly reliable. The final reason is because of the Applicant's repeated submissions that its evidence had not been properly considered, and to demonstrate that it has been.

The hosting arrangements of the Applicant's business and information management system during the Relevant Periods

1. During the Relevant Periods, the Applicant had a business and information management system. JK described the Applicant's business and information management system as a bespoke "integrated Business and Information management system" or "BIMS."[90] It is described as "an API-driven platform designed to streamline education, finance and professional services exchanges within the [ZBDD] Training ecosystem."[91] The Tribunal Book contains a lot of material that comprises general descriptions of the Applicant's integrated system.
2. JK said the business and information management system[92] was comprised of four[93] specialised systems which were integrated and streamlined to automate business and financial operations:[94]

(a) The student learning management system or LMS;[95] > > (b) The student relationship management system or SMS; > > (c) The business management system or BMS - which appears to interchangeably be referred to as the "financial management system" or FMS sometimes[96] and the IMS or "information management system" other times;[97] and > > (d) The professional services credit system or PSC which is discussed further below. This is described slightly differently in the Applicant's SFIC as the "professional credits program" in combination with the business management system, [98] and sometimes described as the "professional services credit association".[99]

3. GoDaddy was the company that hosted the Applicant's websites during the Relevant Periods. GoDaddy also hosted the Applicant's intellectual property and the backup system and provided other hosting services to the Applicant. [100]
4. JK noted in evidence that the relevant State government body that provided funding to the Applicant either had access to the Applicant's business and information management system, or at the very least data from that system was sent to that State government body. This was to ensure that compliance conditions imposed upon the Applicant were met. [101] This is assumed to include the invoices that were uploaded onto that system by contractors. This is assumed, because otherwise the Applicant's stated efforts to seek material from the relevant State government body[102] would have been of little value.
5. The important system for GST purposes is the business management system. The JK Witness Statement says this system managed all tax compliance processes and states that its core functions were:[103]
   1. Invoicing and receipting for tuition fees, service charges, and product purchases.
   2. Integrated payment gateway for digital wallet balances.
   3. Real-time financial reporting and compliance with tax regulations, including GST.
   4. Automatic reconciliation of payments with LMS and SMS records.
   5. Tracks GST-inclusive contractor invoices, validates them for compliance, and converts the approved invoice value into [professional services] credits. These credits are instantly reflected in the contractor's digital wallet for future transactions within the [ZBDD] ecosystem.

The Applicant's professional services credit system

1. As is noted above, the Applicant offered a "professional services credit" system as part of its business and information management system,[104] which JK described as an "education digital wallet ecosystem" on its business and information management system.[105] The Applicant's Outline calls the professional services credit system a "Barter System" which gave rise to credits in lieu of monetary payments. It is described as beneficial for several reasons, including reducing financial barriers to education.[106]
2. The professional services credit system is further described in copious material prepared by JK and annexed to the JK Witness Statement. This also includes materials headed "Meta Version - Digital Education Credit Card" which describes one "objective" of the "model" to be to "ensure robust accounting and compliance under IFRS and Australian GST laws" for example.[107] That means that GST was at least considered.
3. JK's evidence in the JK Witness Statement, in cross-examination by Ms Rares, inn re-examination, and the other evidence on the Tribunal Book can be summarised as follows:

(a) The professional services credit system was a "white-label barter exchange platform"[108] within the education system which enables contractors to share services with each other and to exchange professional services for professional credits.[109] The system enabled contractors to the Applicant to acquire qualifications, meet professional development requirements and use professional services credits to do various other activities or to obtain other products and services (such as purchasing course materials) within what is described as an "internal marketplace."[110] JK also described the professional services credit system that as a mechanism by which students (and not merely contractors) could also receive credits for administrative and marketing tasks, and use those credits to enrol for and pay for their qualifications.[111] > > (b) During the period in which the Applicant was not registered as a registered training organisation and could not provide education services,[112] JK explained that contractors may have been entitled to use any professional services credits they had with the Applicant to acquire qualifications from other registered training providers or use the credits for professional development. Presumably there must have been some sort of common system across providers for that to be the case, or linkages between providers' own systems. However, the professional services credit system is described as "bespoke" by the Applicant so perhaps there were no such linkages. There is no clarificatory evidence. This point is not of major importance and is left aside. > > (c) The professional services credit system meant that contractors were paid in credits by the Applicant rather than in money.[113] The conversion ratio was $1 of value was equal to 1 credit.[114] > > (d) Towards the end of 2018, JK said in evidence that the majority of contractors were paid in credits rather than in money.[115] The Tribunal Book also contains a short list of ten contractors said to be part of the "professional services credit association" [116] which is undated and which might undermine the assertion that the majority of contractors were paid in credits in 2018 (as there are other lists suggesting there are many more contractors than ten),[117] but as it is undated, that cannot be said for certain. > > (e) Payments made to contractors in the Relevant Periods also included cash payments. JK also gave evidence before the Tribunal that there were also occasional cash payments during the Relevant Periods, including for a short period by the students directly to the contractors (so in this circumstance, it seems that expenses were not incurred by the Applicant at all).[118] In email correspondence from 8 March 2022 the Applicant described cash payments as a "large amount of the payments made", as opposed to occasional payments.[119] The Applicant's objection and the Applicant's SFIC[120] also state that cash payments could be made both to professional educators and all other suppliers and by students, seemingly throughout. > > (f) JK said that the Applicant's professional services credit system automatically added GST. This was the case even though the evidence is that not all of the Applicant's contractors were registered for GST[121] (which counters the Applicant's later submissions that it can be inferred the contractors were all GST registered).[123] JK's evidence was that services from students might also generate credits, and it is reasonable to infer that, as students, they too might not be GST registered, although again, that cannot be said for certain. JK said that the GST registration status of contractors was randomly checked by JK and those checked by JK were registered for GST. JK acknowledged not all of the contractors were checked by JK, but JK was sure the bookkeeper checked. The Tribunal has no admissible evidence from the bookkeeper.[124] > > (g) The evidence at the Tribunal about the manner in which contractors' invoices that were GST inclusive were dealt with in the professional services credit system was, to put it mildly, confused. When a $5000 GST inclusive contractor invoice was put to JK as an example, JK said that $5000 minus the 10% GST - so 4,500 - would be the professional services credits provided. This differed from the Appendix to the JK Witness Statement[125] which said that the professional services credits provided in that example would be 5,000. JK said in cross-examination that the Appendix to the JK Witness Statement was an error. The two inconsistent statements in the Appendix to JK Witness Statement and JK's answer in cross-examination were pointed out to both be wrong by Ms Rares in any event.[126] In re-examination JK confirmed that JK was no expert on GST and relied on a bookkeeper with Australian GST experience. As is noted above, the Tribunal has no admissible evidence from the bookkeeper.[127] The Tribunal understands that Ms Rares put this issue to JK because the Commissioner was concerned that costs potentially recorded in the Applicant's material on the Tribunal Book as professional services credits and used in part to reflect contractors' costs could be inaccurate for GST purposes. This was relevant evidence. > > (h) Also put to JK by Ms Rares in cross-examination was T11-133 which was provided to the Commissioner by the Applicant on 23 April 2020[128] as a "GST transaction report" for the GST period ending 31 December 2019 supporting the BAS filed on 27 March 2020. That document is a Xero report headed "Transactions by BAS Field Audit Report". It records an amount for "consulting - freelancer" as $175,551.72. JK confirmed in evidence that this figure comprised the professional services credits paid to contractors, and JK noted that that this was not a considerable sum per contractor, as there were approximately 30. That point from JK was not relevant to what was being asked. > > (i) Ms Rares pointed out to JK that the Applicant could not be aware how much of this $175,551.72 had been redeemed or not. JK confirmed this was the case because the Applicant had no access to the portal due to the cyber events outlined below. I understand the point Ms Rares was making was that the Applicant did not (using the term loosely) "pay" contractors that amount as we cannot be certain they benefitted from all of it. JK stated on re-examination by Mr Ahmed that the Applicant would honour these professional services credits. According to the Applicant, it might be said to have allocated those credits and "paid" for the services of the contractors and students that supplied it services at the time those services were supplied. Ms Rares' point is that the professional services credits may be valueless and hence not valuable consideration for a supply.

4. Taking the most favourable view of all of this evidence, I could conclude that JK did not design the professional services credit system, someone else did, potentially one of the witnesses that did not appear before the Tribunal,[129] and perhaps JK was confused in evidence about how GST worked. As is noted below, even if I was to consider the unsigned and undated evidence said to be from witnesses that did not appear at the Tribunal, that evidence does not assist me and further questioning would have been needed for anything valuable to be gleaned.[130] As those witnesses did not appear, I have no such evidence.
5. In summary:

(a) The Tribunal has no substantive evidence as to how the professional services credit system was designed for GST purposes. The Tribunal has a lot of material on the Tribunal Book which provides high level generalised descriptions of the professional services credit system, including a description of apparently future-focussed objectives which may never have come to fruition. This is not of assistance. > > (b) When considering how the professional services credit system deals with GST-inclusive invoices, the Tribunal has two contradictory pieces of evidence from JK about dealing with GST inclusive invoices that are both wrong. It has no other evidence. This suggests the system was not designed to meet the Applicant's GST obligations accurately. > > (c) The Tribunal has incomplete evidence of the GST registration status of the contractors in the Relevant Periods that used the professional services credit system. The Tribunal may not have a full list of who the contractors were[131] and what it does have suggests that a number of them were not GST registered.[132] There is no evidence as to how contractors that were not GST registered were accurately dealt with for GST purposes in the Applicant's professional services credit system. The evidence is that GST was dealt with in the same way for all contractors even though some contractors were not GST registered.[133] This also suggests that the professional services credit system was inaccurate when dealing with GST.

6. As a result, I have no evidence that can satisfy me on the balance of probabilities that the professional services credit system appropriately dealt with GST. The Tribunal cannot be satisfied that any figures put to the Tribunal of contractor costs in the professional services credit system accurately reflected GST. This is not determinative of the Applicant's GST case which focuses upon the sufficiency of other evidence.

1. JK gave evidence that there were two cyber events which impacted the Applicant's business adversely.[134] The result of those events was that the entire business information management system including its financial management system was no longer accessible.
2. The first cyber event was in or around October 2018 ("the first cyber event").[135] Ms Rares asked JK questions in cross-examination about the first cyber event. JK's evidence and the Applicant's submissions before the Tribunal about the first cyber event can be summarised as follows:

(a) In the first cyber event the Applicant lost all of its intellectual property and data, including invoices from suppliers.[136] That included all websites, and that included systems such as the business management system/financial management system where contractors would upload their invoices. It also included the ability to access all other invoices from suppliers, including those where their invoices were separately uploaded onto the business management system/financial management system as described in paragraph ‎28(e) of this decision. It also included a loss of all of the accounting materials. All backup material wa[137]lso lost.137 Confusingly, at one point the Applicant's SFIC refers to the first cyber event as a loss of a "majority"[138] its data138 although it is then stated that "all data" was lost. > > (b) The Tribunal notes that it has some invoices from the Relevant Periods on the Tribunal Book,[139] including some limited invoices from contractors.[140] The Applicant explains that some of this material was "created contemporaneously," [141] which the Tribunal understands means it was downloaded by the Applicant separately from its system or otherwise at the time. There is also evidence of a google drive being discovered containing some of this material which also explains the availability of this material.[142] Further, the Applicant describes material that was received separately by the Applicant and then uploaded onto the Applicant's business management system in the manner described at paragraph ‎28 of this decision. Those explanations as well as the corroborative evidence described at paragraph ‎50(e) of efforts made to recover the data, satisfy the Tribunal that the fact there are some invoices on the Tribunal Book does not undermine the evidence of the first cyber event. > > (c) Ms Rares noted that GoDaddy had indicated to the Applicant that there was an issue with payment of its invoices for its hosting services. JK said there was money in the Applicant's bank account and on the relevant credit card that was automatically charged by GoDaddy,[143] there was no problem with payment, it was an issue at the GoDaddy end, [144] and it may have been due to an old expired JK credit card being charged by GoDaddy.[145] Whether the first cyber event arose from non-payment or otherwise is of no real relevance. > > (d) JK said the Applicant was shocked by the first cyber event, as the Applicant had been in touch with GoDaddy about the potential provision of other products and services, such as further domain names and domain extensions.[146] The Applicant never expected such an event to occur. The Applicant's backup system was also hosted by GoDaddy, and it was lost as well. The loss of the Applicant's system was a very serious event for the Applicant's business as it lost its student database, its qualification data, its validation and compliance records, as well as all of its intellectual property and business records.[147] > > (e) JK said the Applicant got in touch with GoDaddy promptly and between December 2018 and February 2019, JK liaised with GoDaddy to try and recover its data.[148] JK was overseas at the time, including for medical reasons.[149] There is corroborative evidence on the Tribunal Book of the efforts made by JK with GoDaddy and others in this regard.[150] On re-examination, JK said that the Applicant thought at the end of 2018 that the material would be recoverable by GoDaddy. There is also evidence of the Applicant seeking advice from specialists about the ability to recover material.[151] > > (f) JK also said that the Applicant sought to obtain data from the relevant State government funding body, which, as noted above,[152] either had access to the Applicant's system or had been provided financial data from that system.[153] However, JK said that the relevant State government funding body had not downloaded the material prior to the first cyber event, and it was prevented from doing so after the first cyber event as nothing was accessible at that point. This was a fruitless avenue of inquiry for the Applicant. There is no corroborative evidence of these efforts, on balance I accept it is possible they occurred. > > (g) The Tribunal notes that the Commissioner suggested when considering all that evidence in totality there is "significant doubt"[154] about the reason that there is a lack of tax invoices. I do not take this as meaning that the Commissioner did not believe the first cyber event happened.[155] It seems the Commissioner particularly thought that the Applicant ought to have obtained corroborative material from suppliers as the Commissioner was concerned about GST errors in the material that Applicant had produced to the Commissioner. JK's evidence in response to that is also that unfortunately fruitless efforts were made with those suppliers (such as contractors) stated to be about "150 phone calls",[156] although there is only very limited corroborative evidence to demonstrate those efforts were made.[157] The weight of the evidence on the Tribunal Book and the Applicant's submissions suggest that any such efforts at or around the time of the Commissioner's investigation and audit were not significant. The Applicant has consistently said (in different ways) that seeking such invoices was not feasible.[158] > > (h) I note that the Applicant advised the Commissioner of the first cyber event initially on 2 June 2021 as well as repeatedly after that.[159] This was more than a year after the communications between the Applicant and the Commissioner commenced in April 2020, and during this period the Commissioner was seeking tax invoices.[160] This was also long after the Applicant knew this material could not be recovered, which appears to have been in 2019.[161] JK accepted that the first cyber event should have been raised earlier.[162] > > (i) The late raising of the first cyber event with the Commissioner is troubling, does not reflect any common sense when dealing with the Commissioner, and might undermine the credibility of the evidence from JK about the existence of the first cyber event. The Commissioner's Outline of Submissions dated 21 October 2025 ("Commissioner's Outline") at [26] suggests that the evidence of the first cyber event should be treated with caution and makes assertions that the Commissioner was "misled" at times by JK as to the existence of supporting material.[163] It is clear there were communication difficulties between the Applicant and the Commissioner. Mr Ahmed's Opening Submissions sought to say this lateness is not significant because JK was never asked by the Commissioner about invoices - there appears to be a dispute about whether the Applicant was asked for invoice material at an early stage so that she was on notice to raise the first cyber event with the Commissioner. > > (j) While, as I note below, there are reasons for caution at times in the overall evidence, I do not accept the Commissioner's position about the first cyber event because of the corroborative evidence on the Tribunal Book, particularly of the efforts to recover data. That evidence supports the fact that the first cyber event occurred, even though it was raised late with the Commissioner (which is concerning). It is noted that the Commissioner acknowledges that there is corroborative evidence of the first cyber event.[164]

3. There is sufficient evidence to satisfy the Tribunal that the first cyber event occurred in or around October 2018.

Between the first cyber event and the second cyber event

1. Ms Rares asked JK some questions about the Applicant's accessibility to contractor invoices after the first cyber event occurred. JK's evidence before the Tribunal was that after the first cyber event, the Applicant's database was rebuilt around April 2019, still using GoDaddy as a host and still using the Applicant's bespoke systems.[165] JK confirmed in cross-examination that after April 2019 invoices began being uploaded again to the Applicant's business and information management system.
2. Ms Rares pointed out to JK that between October 2018 and April 2019 contractors could not have uploaded their invoices as the Applicant did not have a database as a result of the first cyber event and asked how the contractors were paid and invoices dealt with. JK initially said invoices were saved until the Applicant's system was live and then uploaded, and the Applicant did not retain hard copy invoices. The Commissioner suggested that the Applicant should have been able to access contractor invoices after October 2018 up to and including April 2019.[166] When Ms Rares queried JK's evidence on this point with JK at the hearing, JK was uncomfortable and felt "attacked" and a short break was granted by the Tribunal.
3. The best I can make of JK's evidence was that the Applicant waited to upload invoices from contractors until the website was restored in April 2019 and then they were lost in the second cyber event. I do not have any answer to Ms Rares' question about when contractors were paid. The evidence given to the Tribunal by JK following the break was that contractors waited six months to be paid as they "knew the system." The reference to the "system" may suggest that no payment was needed, perhaps as a result of the use of the professional services credit system but the Tribunal also has competing evidence that there were cash payments as well.[167] Non-payment for work for six months strains credulity, and I do not accept JK's evidence on this point. In my view there is reason to infer that tax invoices were not properly retained as required by law. I am not satisfied by JK's evidence in relation to the invoices for periods between the first cyber event and the second cyber event. In my assessment, JK simply did not answer Ms Rares' question because JK had no explanation. This impacted the credibility of the Applicant's assertions that it had tax invoices for all of the Relevant Periods which were lost due to cyber events.
4. The Tribunal appreciates that witnesses are not always used to being forensically questioned. which is why JK was given a break. I record that at times, the Tribunal was bemused by JK's reaction when asked questions by Ms Rares. It seemed to the Tribunal that if JK had no ready explanation or JK's explanation was flawed in some way, JK would become combative, attack the Commissioner's officials and the process, claim the Applicant was not being listened to, and divert to make assertions about procedural matters over which the Tribunal has no jurisdiction. This happened in this context as well as throughout JK's evidence, could undermine the credibility of JK's evidence,[168] and this reaction did not advance the Applicant's case in any way.[169]
5. While saying the above, I accept Mr Ahmed's submission in oral closing submissions ("Oral Closing") that JK simply got frustrated at times, thought the Applicant was not being heard, and got side tracked onto perceived issues of process, and that taxation law and the Commissioner represent an alien world to JK. I also accept that JK is a passionate advocate for the Applicant, was making efforts to engage with the Commissioner's questions but was affronted by what was perceived as their implication, and I accept no offence to Ms Rares was intended by JK's reaction. I have determined that any negative inferences that may be drawn from JK's evidence will only be where JK's evidence was inconsistent either internally or with other evidence, strained credulity, seemed contrary to common sense, or a question was not answered by JK. That is consistent with case law.[170] Despite my ability to do so,[171] and to the benefit of the Applicant, I have not drawn adverse inferences in terms of credibility solely from the nature of JK's reaction (at times) to questions.

1. JK's evidence described another cyber event that was said to have occurred "in early 2020,"[172] later confirmed in cross-examination to be January 2020. This differed from the Applicant's Outline which said it was December 2019.[173] This was the "second cyber event." A summary of JK's evidence in evidence, on cross-examination and re-examination is as follows:

(a) The Applicant's system was rebuilt in April 2019 following the first cyber event. The rebuilt system was comprised of the same four systems as is described above. GoDaddy continued to provide hosting services. JK explained that GoDaddy continued to be used including because it was "easy" (in the sense presumably that it was easier than changing hosting providers) and because the Applicant had to demonstrate a consistent online presence for ASQA.[174] > > (b) The rebuilt system proved to be unstable and was vulnerable to cyberattacks. The second cyber event was caused by a cyberattack, and JK accepted the second cyber event was the Applicant's fault.[175] JK's evidence was that the Applicant did not raise the matter with GoDaddy. The impact was that malware destroyed the website in January 2020. All material was lost. There is nothing on the Tribunal Book evidencing any efforts by the Applicant to recover this data following the second cyber event. > > (c) JK said that after the second cyber event, the Applicant abandoned its business and information management system, and re-established a simple website within six weeks using a basic WordPress model.[176] > > (d) Ms Rares put to JK that the second cyber event had only been raised with the Commissioner in JK's Witness Statement and the Applicant's SFIC and was not raised in the audit, or the objection, and had only come up before the Tribunal.[177] JK appeared to acknowledge this, but then JK's evidence diverted into the form noted above in paragraph ‎55. From the material on the Tribunal Book, it is evident that Ms Rares is correct. The matter seems to have been first raised in the Applicant's SFIC in March 2025.

2. Other than JK's evidence, I have not found any material on the Tribunal Book that supports the position that there was a second cyber event. It is not as clear cut as the first cyber event, and my acceptance of there being a second cyber event must be focused on an assessment of JK's credibility. On balance, I do not accept the evidence of the second cyber event. It can be reasonably inferred that the second cyber event was a reason raised late for a lack of tax invoices for the entirety of the Relevant Periods.
3. There are two main reasons for that conclusion. The first is that the second cyber event was never raised with the Commissioner in an engagement between the Applicant and the Commissioner that lasted for years, in circumstances where the Commissioner was asking for invoices from the Applicant. Taking the best case for the Applicant, I can accept from the Tribunal Book that the relationship between the Applicant and the Commissioner became somewhat difficult at points during this period, and this may have led to hesitation on the Applicant's part. However, it defies common sense for the Applicant not to raise the second cyber event with the Commissioner at any stage if it occurred, as the Commissioner was repeatedly asking for material, and this was said to be a further reason material sought by the Commissioner was not available to the Applicant. The fact the second cyber event was not raised until the matter was before the Tribunal in 2025 is very troubling and suggests it is a late explanation for a failure to maintain documentation.
4. The second reason for my conclusion is that there is no corroborative evidence on the Tribunal Book that could alleviate my concerns about the late raising of this evidence, unlike the position with the first cyber event. For instance, there is no evidence of any efforts to recover the data or of this being raised with GoDaddy which hosted the Applicant's data, or with any other service provider, which might be expected to have occurred. There are also minor inconsistencies between JK's evidence and the Applicant's Outline on the timing of the second cyber event.
5. I am also not satisfied by JK's evidence in relation to the invoices for periods between the first cyber event and the second cyber event. In my assessment, JK simply did not answer Ms Rares' question because JK had no explanation. This impacted the credibility of the Applicant's assertions that it had tax invoices for all of the Relevant Periods which were lost due to cyber events.
6. However, I record that whether the second cyber event occurred and whether there were invoices between the first cyber event and the second cyber event are not determinative of the first issue in this case which focuses on substantiation and focuses on the sufficiency evidence that is available to the Tribunal.

The Applicant's holistic data on the Tribunal Book

1. The Applicant says that "expected profit levels" "expected contractor expenses" "benchmarking and other data" is sufficient evidence[178] to substantiate its claimed GST input credits for contractor costs and to satisfy subsections 29-70(1B and/or subsection 29-75(1) of the GST Act. The Applicant points out that the number of students the Applicant had during the Relevant Periods could not have been managed without contractor expenses and other expenses.[179] The Applicant refers to "thousands of pages" on the Tribunal Book, which it says the Commissioner has not considered.[180] From the objection decision, that suggestion from the Applicant is demonstrably incorrect and unfair to the Commissioner as it quite clearly has gone through the Applicant's material. [181]
2. JK's evidence was that the Applicant's holistic material is comprised of 5 categories -invoices, organisation memberships/bank statements, affidavits, accounting materials (such as profit and loss statements), and testimonials.[182]
3. There is relevant material that has been provided by the Applicant as a part of what it describes as its "holistic data", but some of that material is not relevant. The Applicant appears to be using this material to demonstrate that it carried on business, it incurred expenses, and that ergo, all should be allowable. For the avoidance of doubt, the Tribunal accepts the Applicant carried on business including in the Relevant Periods, but records that does not answer the issues in this case.
4. As is demonstrated in the legal analysis below, showing that the Applicant carried on business in the Relevant Periods is not enough. The architecture of the GST Act requires an audit trail. Where there are no tax invoices, as is noted by the background to the GST provisions, there should be sufficient evidence to verify the claims. In addition, while the Tribunal accepts the Applicant carried on business including in the Relevant Periods, it notes that for some of the Relevant Periods the Applicant could not operate due to the issues with ASQA and the relevant State government funding body and this needs to be considered. The issue is whether the Applicant's holistic material and estimated costs can be accepted by the Tribunal as meeting its burden of proof in the overall circumstances.

1. The Tribunal records that it has considered the material on the Tribunal Book in its entirety. That material comprises documentation that falls in the following categories:

(a) Correspondence with ASQA - this material is mainly relevant to the issue of whether, due to the Applicant losing its registered training organisation status, the Applicant made GST-free supplies. This is no longer at issue.[183] This material includes Court materials such as affidavits (that are unsigned although a random scanned signature page may reflect the were sworn) and ASQA registration documents.[184] While an affidavit from JK in this material says that "contractors and salaries" were $1,297,500[185] it is not obvious to what period that relates (it appears from the dates to be 2016 or 2017), but it bears no correlation to what was claimed in the Applicant's BAS,[186] the Applicant's revised figures,[187] to figures noted below in the ASQA reports,[188] nor to figures claimed by the Applicant in its "Reconstructed revenue and expense calculations"[189] nor to its spreadsheets at A-20251125-2 (which are further described below). The affidavit says nothing about the GST nor other matters (such as price, the extent to which the contractors are GST registered). > > (b) Screenshots - Multiple different screenshots of an outlook email box showing lists of emails without the emails themselves. [190] This provides nothing of relevance to the issues before the Tribunal. > > (c) Marketing materials and materials seeking sponsorship[191] - These are not relevant to the issues before the Tribunal. > > (d) ASQA audit materials including a financial viability risk assessment or FVRA reports.[192] They demonstrate the Applicant was meeting regulatory requirements which have nothing to do with taxation law. The only relevance is in what the Applicant says it has or will incur as "cash paid to suppliers and employees" which over a twelve month period is said to be projected as $2,130,852 and then in "key expenses" teaching staff are said to comprise $1,397,628 in year 1 and then a forecast increase to $1,677,154. The date this material relates to is not crystal clear, but it seems to be referring to the 2020 financial year, so it may only have partial relevance to the Relevant Periods.[193] In any event, none of this says anything about GST and none of it reconciles in any way to the Applicant's other figures.[194] > > (e) A strategic plan for 2015-2019 - [195] This plan describes the Applicant's business but does not address material relevant to GST substantiation. > > (f) Pay slips relating to JK[196] which may have been relevant to an earlier issue about PAYGW for the Applicant which is understood to now be resolved. This material is no longer relevant to the issues before the Tribunal. > > (g) Bank accounts and bank statements obtained by the Commissioner[197] and some bank statements provided by the Applicant[198] that show payments may have been made[199] or were received by the Applicant.[200] Many of these bank statements are outside of the Relevant Periods.[201] The bank statements that are in the Relevant Periods do not show anything relating to GST, but they are relevant to potentially demonstrate payment to suppliers. > > (h) Updated BAS and workpapers which comprise Xero reports which are relevant matters for the Tribunal.[202] > > (i) Unreadable material - An unreadable document entitled "Records and process used to form basis of BAS".[203] Unreadable "folder" cover pages entitled "[ZBDD] folders"[204] which appear to comprise the materials noted at paragraph ‎67(j) below. These matters are disregarded. > > (j) Material demonstrating that courses were offered and awards given to the Applicant for its activities: > > > (i) Many pages of photos (often in repetition) of JK with various luminaries in industry and evidence of an award given to the Applicant (with a big four consulting firm as a sponsor) and other awards.[205] This is not relevant to GST substantiation. > > > > (ii) Spreadsheets or lists annexed to JK Witness Statement showing a list of students that have either commenced or completed certificates dated "2016 Nov, Dec, Jan" "2017 Master List", and "2017 Class enrolments", a list of materials moved by an individual with the initials SF to a 2018 Audit Report drive, a job find status report for one student, a continuous improvement register which appears to be from 2018. There is also a power point slide pack entitled "Continuous Improvement Database".[206] This material is not relevant to GST substantiation. > > > > (iii) Other material comprising emails from students and a "self-assessment tool kit" and "participant statement".[207] There are also emails from JK to various persons some of whom appear to be professional educator contractors,[208] and lists of what are said to be "school based trainees".[209] None of this is relevant to GST substantiation. > > (k) "Testimonials" from varying people about the Applicant's business,[210] JK,[211] and assertions about the reputation of the Applicant locally and globally.[212] This is not relevant to GST substantiation.[213] > > (l) A document entitled "Reconstructed revenue and expense calculations" which is a table prepared by the Applicant, which refers to some of the above material, material relating to revenue from "units of competency", as well as statistics and benchmarks from Government.[214] That document also calculates sales, an estimate of labour costs (which has no reference to the JK pay slips) and expenses on a "ratio" basis taking into account ATO benchmarks, a consultant ratio and costs[215], the work done by consultants, and a table reflecting the "student journey". This is relevant material for the Tribunal to consider. It is noted that this document bears no clear correlation to A-20251125-2 - for instance at T50 contractor costs for 2017 are said to be $1,119,242.12 while on A-20251125-2 those same costs for 2017 are said to be $1,051,520.00. > > (m) A "sample of invoices"[216] or other material of which the following are not relevant for the following reasons: > > > (i) No GST is added (for instance, due to a supplier being an overseas supplier), or it is unclear whether the supplier is GST registered, or no GST is identifiable: T51-574, T51-577, T51-632 to T51-634, T51-664, T51-678, T51-702, T51-635 to T51-662, T51-678, T51-693 to T51-694,[217] T51-702, T58-830 to T58-831, ST6-1132 to ST6-1136, T58-813 to T58-827, T59-890 to T59-893, ST6-1200, ST6-1202,[218] ST6-1220. > > > > (i) Not invoices - quotes, statements of account or unsigned agreements, or no evidence given of the nature of the supply T51-575, T51-578, T51-596, T51-612, ST6-1125, ST6-1132 to ST6-1136, ST6-1186, ST6-1198, ST6-1207 to ST6-1208, ST6-1232 to ST6-1234, ST6-1236. > > > > (ii) Not addressed to the Applicant or it is confusing as to whether the Applicant is the addressee[219] - ST6-1209 to ST6-1215, ST6-1242. > > > > (iii) Do not relate to the Relevant Periods - are either for periods prior to or after the Relevant Periods or it cannot be determined what period the document relates to T51-588, T51-589, T51-590, T51-594, T51-615, T58-835[220] to T58-837; T58-840, T58-841, T58-843, T58-844, T58-845, T58-846, T58-847, T58-848, T58-849 to T58-889, T58-835, T58-836 to T58-837, T58-839, ST6-1185,[221] ST6-1203, ST6-1206, ST6-1216, ST6-1217, ST6-1223, T5-60 (which appears at A8-1364 again). > > > > (iv) Not clearly relating to creditable acquisitions - for example, T51-628. > > > > (v) Not about supplies made to the Applicant, but comprise recipient created tax invoices for supplies by the Applicant or comprise remittance advice about payments made to the Applicant: T53-749 to T53-767, T53-770 to T53-776. > > (n) Invoices/Material that relate to the Relevant Periods so are relevant, sometimes only in part and require apportionment[222] or which rely upon certain assumptions being made.[223] All such invoices need to be double checked to ensure they are each separate invoices, and there are no double ups. Of these: > > > (i) The following can be demonstrated as having been paid in whole or in part: T51-624, T51-626, T51-667, T51-679.[224] > > > > (ii) The remaining of which cannot be clearly demonstrated as having been paid and some of which require further consideration:[225] T51-591, T51-592, T51-595, T51-611, T51-613, T51-614, T51-616, T51-617, T51-618 to T51-622,[226] T51-623, T51-624, T51-625, T51-627, T51-630, T51-663, T51-665, T51-668, T51-669, T51-671, T51-672, T51-673, T51-674, T51-675, T51-676, T51-677,[227] T51-679, T51-680, T51-681[228] to T51-683, T51-684, T51-688, T51-691,[229] T51-695, T51-696 to T51-698, T51-699, T51-700, T51-701, T51-703,[230] T51-704, T51-705, T51-706, T58-807, [231] T58-808, T58-828, T58-829, T58-832 to T58-834, T58-838, T58-839, ST6-1192, ST6-1193, ST6-1195, ST6-1196, ST6-1197, ST6-1204 to ST6-1205, ST6-1218, ST6-1221, ST6-1224, ST6-1226, ST6-1227, ST6-1228, ST6-1229 to ST6-1231, ST6-1235, ST6-1243, ST6-1244, ST6-1245, ST6-1249, ST6-1250, ST6-1251, ST6-1252.

2. This "holistic" material will be returned to in the Tribunal's analysis below.

The audit, objection, the Application for Review and other matters between the Applicant and the Commissioner

1. As is noted above, the Applicant and the Commissioner engaged with one another for a considerable period. The relevant events are summarised below.
2. The Commissioner started looking into the Applicant's BAS soon after they were filed. As is stated above, some of the BAS were considerably late. The Tribunal Book records a call being made to the Applicant on 2 April 2020[232] in relation to the BAS filed on 27 March 2020.[233] An audit commenced in late April 2020.[234]
3. The Commissioner made various information requests initially and asked questions of the Applicant.[235]
4. On 5 May 2020, the Applicant filed revised BAS for two periods in the Relevant Periods (September 2018 and December 2019).[236] The purpose of that was said to be to reverse points raised with the Applicant by the Commissioner[237] that were included in the BAS and arose from Xero reports. For instance, claims made for GST on donations and retained earnings, and an incorrect claim for ASQA costs. These points were raised by Ms Rares at the hearing (see paragraph ‎24(a) above) and they are relevant for considering the position when the BAS were filed.
5. Between May 2020 and June 2021 further questions were raised by the Commissioner with the Applicant,[238] the Applicant provided material to the Commissioner,[239] the Commissioner sought and obtained material from banks and AUSTRAC,[240] further phone and email contact was made between the Commissioner and the Applicant,[241] and a notice pursuant to section 353-10 of Schedule 1 to the TAA ("the section 353-10 notice") was issued by the Commissioner to JK as director of the Applicant on 31 March 2021.[242] As the cover letter was directed to JK in JK's capacity as director, and the notice itself is directed to the Applicant, it was issued to the Applicant.
6. In relation to the section 353-10 notice:

(a) It was not responded to by the Applicant or JK. When Ms Rares asked JK about this at the hearing, JK's response was that JK (and presumably the Applicant) could not trust named officials of the Commissioner for varying reasons, including the specific official that issued the notice. JK's response to Ms Rares' question was completely unsatisfactory_._ It should not be a surprise to anyone in the Australian community that the taxation law does not operate dependent upon each taxpayer's perception of the officials working for the Commissioner. The taxation law operates according to its terms. > > (b) To be clear to JK and the Applicant, a notice pursuant to section 353-10 of Schedule 1 to the TAA is required to be satisfied at law. It is an extremely serious matter not to respond to the section 353-10 notice at all. Not responding is an offence pursuant to section 8C and section 8Y of the TAA for which both the Applicant and JK (as an officer of the Applicant) could be prosecuted, and for which penalties under section 8E and section 8ZF could be imposed. That was specifically stated in the notice the Applicant received.[243] The Applicant and JK are fortunate to not have been prosecuted. There was simply no justification for failing to reply to the section 353-10 notice.[244] > > (c) Most pertinently to this case, the Applicant failing to meet its legal obligations under section 353-10 of Schedule 1 to the TAA could be considered as obstructive to the Commissioner, and could be maintained to justify an uplift to any base penalty amount imposed upon the Applicant pursuant to paragraph 284-220(1)(a) of Schedule 1 to the TAA. This is considered further below.

7. The Applicant complained to the Inspector-General of Taxation and Taxation Ombudsman about the processes that had been undertaken by the Commissioner at some point during this period.[245] That complaint did not result in any outcome recorded on the Tribunal Book that impacts this case.
8. On 15 June 2021, the Commissioner completed its audit and directed correspondence to the Applicant outlining the amended assessments and penalty assessments that were issued.[246] This included amounts relating to PAYG withholding, and issues relating to whether the Applicant made GST-free supplies which are not at issue in this case.
9. The Applicant objected to the assessments and penalty assessments on 13 August 2021[247] and 14 July 2022.[248] In its proceedings before the Tribunal the Applicant is limited to its grounds of objection.[249] The grounds of objection[250] were:

(a) The Applicant's records recorded in Xero and/or on spreadsheets should be accepted as supporting its input credit claims.[251] > > (b) The Commissioner was mistaken as to the residence of the contractors that were professional educators.[252] That resulted in the assessments at issue. > > (c) A reasonable estimate could be used to determine the appropriate figures. A spreadsheet showing the revenue and expected costs could be provided. [253] It was said that the Applicant could provide a "range of sample invoices" from educators. Other expenses were within the range of anticipated expenses. > > (d) There was no tax shortfall as the Commissioner did not accept the BAS,[254] was merely an issue of timing,[255] or the shortfall was a lesser amount.[256] The Applicant had a reasonably arguable position.[257] There were no false or misleading statements,[258] the Applicant did not fail to take reasonable care,[259] the penalty should be remitted in the overall circumstances,[260] a voluntary disclosure and/or "oral ruling" from the Commissioner ought to be taken into account[261] and arguments relating to the Taxpayer's Charter.[262]

(a) There are no grounds focusing on whether the Applicant was reckless or not, and no grounds focussing on the uplift to the base penalty amount pursuant to section 284-220 of Schedule 1 to the TAA.[263] > > (b) There are no references to subsection 29-70(1B) or subsection 29-75(1) of the GST Act, nor to section 155-5 of Schedule 1 to the TAA. This is perhaps not surprising as these provisions are about the Commissioner's exercise of discretion and they are amenable to judicial review in the Federal Court or the Federal Circuit and Family Court of Australia (Division 2),[264] but cannot be objected to nor can they found proceedings under Part IVC of Schedule 1 to the TAA before the Tribunal. The Applicant has proceeded before the Tribunal on the basis that the GST assessments are excessive because input tax credits were available and that is where the Tribunal has jurisdiction. It is in that context that the Tribunal has considered whether the material produced by the Applicant supports its GST input tax credit claims, and the Tribunal is not per se determining the exercise of discretions in any of subsections 29-70(1B) or 29-75(1) of the GST Act nor in section 155-5 of Schedule 1 to the TAA. > > (c) At the hearing, Mr Ahmed sought to raise another issue relating to what he described as "small business tax relief" in respect of which the Tribunal allowed submissions to be filed after the hearing.[265] This relates to PS LA 2012/5. I note that the Applicant's Written Closing suggests the "small business tax relief" ground is not new, as it was raised in a letter dated 7 June 2023.[266] That is not an answer as the 7 June 2023 letter is not the objection, and it is dated years after the objection was filed. The Commissioner's Written Closing takes the view that the "small business tax relief" ground is a new ground, and that the Tribunal does not have jurisdiction to grant relief on this basis in any event.[267] This will be returned to below. > > (d) In order for me to consider any arguments on the above issues, I either need to come to the conclusion that the existing grounds of objection are wide enough to cover those matters, or I need to exercise my discretion in section 14ZZK(a) of the TAA to allow the Applicant to raise those issues or to accept other correspondence to the extent it raises those matters as part of the objection. I deal with that when considering each issue below.

11. The Applicant and the Commissioner engaged in correspondence, phone calls and meetings over a considerable period as part of the objection process. [268] This included the provision of further information by the Applicant, and it included meetings and calls that appear to have resulted in a lot of disputes between the parties.[269]
12. On 14 June 2024, the Commissioner issued its objection decision which partly allowed the Applicant's objection in a very minor way.[270] Amended assessments were issued on 18 June 2024.[271]
13. An Application for Review of the Commissioner's objection decision was filed in this Tribunal[272] on 17 July 2024.[273]
14. The Tribunal Book also evidences that a number of other issues arose between the Applicant and the Commissioner during the objection and audit processes as well as after the objection decision was issued:

(a) The Applicant made a number of requests for information pursuant to the Freedom of Information Act 1982 (Cth) and received information from the Commissioner.[274] Complaints were made about the responses to these requests, the Applicant was dissatisfied, correspondence ensued, and considerable time was spent on these matters. Issues relating to this were also raised with the Commissioner's Office of General Counsel.[275] > > (b) Complaints arose as to whether the Commissioner had acted in accordance with its obligations as a model litigant and debate ensued about the applicability and nature of those obligations.[276] > > (c) Debate also ensued about the Taxpayer's Charter and its status at administrative law.[277] > > (d) There was also dispute about some of the administrative processes that the Commissioner may undertake as part of its objection processes. The question was whether the Commissioner must undertake alternative dispute resolution - in this case, a facilitation. There was debate about whether certain of the Commissioner's officers said that processes such as facilitation would be undertaken and then that was reneged upon.[278] The same can be said for the administrative process known as "independent review".[279] There were issues about whether any of that could be the source of challenge.[280]

15. Much of the material specified at paragraph ‎82 was related to the Applicant's perception that there were matters contended to have been said or done by the Commissioner's officials that were somehow binding at administrative law, and/or could otherwise be challenged on administrative law grounds. The Tribunal Book is full of material on those issues, all of which is not relevant to the case before t[281]Tribunal.281 As is noted in Closing Comments below, and as the Applicant was advised prior to [282] hearing,282 these are not matters that are within the jurisdiction of t[283]Tribunal.283 I leave these matters aside.

1. The Applicant's burden of proof before the Tribunal is to demonstrate on the balance of probabilities "that the assessment is excessive or otherwise incorrect and what the assessment should have been."[284] In doing so, section 14ZZK of the TAA provides that the Applicant is limited to the grounds stated in the Applicant's objection, unless the Tribunal orders otherwise.
2. There is no burden of proof on the Commissioner. As was noted by Justice Mason in Gauci v Commissioner of Taxation [1975] HCA 54; (1975) 135 CLR 81 at 89 (referring to the forerunner of section 14ZZK of the TAA):[285]

The Act does not place any onus on the Commissioner to show that the assessments were correctly made. Nor is there any statutory requirement that the assessment should be sustained or supported evidence. The implication of such a requirement would be inconsistent with s190(b) for it is a consequence of that provision that unless the appellant shows by evidence that the assessment is incorrect, it will prevail.

1. The only witness before the Tribunal was JK. All other witness statements filed by the Applicant[286] are neither signed nor dated, and they have been disregarded, as those witnesses did not appear at the hearing and the Commissioner was not given the opportunity to cross-examine those witnesses. This was discussed with the parties and that ruling was made by the Tribunal and explained at the hearing.[287] Mr Ahmed disagreed with the Tribunal's ruling on that point and also made submissions that the failure of these witnesses to give evidence should not be held against the Applicant. Similar comments were made by JK at [105] of JK Witness Statement about the Applicant's inability to source other witnesses to give evidence. I have accepted the Applicant's submission and I have concluded I will not draw the inference that I could draw that the non-appearing witnesses that may have provided the unsigned and undated witness statements would have given evidence adverse to the Applicant.[288]
2. However, it should not be a revelation to the parties that when assessing whether the Applicant has met its burden of proof, the Tribunal must weigh up the evidence it has before it. The Tribunal cannot consider evidence it does not have, nor speculate as to what that evidence might be had it been given. It is for the Applicant to present its case and evidence to meet its burden of proof.
3. There are a substantial number of cases that talk about the nature of the burden of proof on an applicant in proceedings under Part IVC of the TAA such as the present case. High level principles are set out below. All of the principles the Tribunal sets out below are subject to the obvious statement that meeting the burden of proof and the application of the below principles depends upon the circumstances of each case, including what the relevant statutory provisions are, how those provisions must be met, and the evidence in the particular case.
4. Relevant principles that can be drawn from the case law are as follows:

(a) The manner in which the burden of proof can be said to be satisfied will vary with the circumstances of each case: Condon v Federal Commissioner of Taxation [2023] FCA 561 [57]. > > (b) The burden of proof under section 14ZZK can be considered as a pair of scales, and is satisfied if the Applicant succeeds "in weighing down those scales ever so slightly in [its] favour": Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation 83 ATC 4015, 4019; Commissioner of Taxation v Cassaniti [2018] FCAFC 212 [88]. > > (c) To meet its burden of proof the Applicant must establish the facts upon which it relies: Danmark Pty Ltd v Federal Commissioner of Taxation (1944) 7 ATD 333, 337. This can be done by witness evidence and/or documentary evidence. > > (d) Witness evidence may be accepted as meeting the statutory burden of proof in its own right: Gauci v Federal Commissioner of Taxation [1975] HCA 54; (1975) 135 CLR 81 [12]; Commissioner of Taxation v Cassaniti [2018] FCAFC 212 [88]. > > (e) It is not obligatory for the Applicant to call all possible witnesses nor, necessarily, to produce contemporaneous documentation in order to meet its burden of proof, but the evidence that is presented must satisfy the Applicant's burden: Commissioner of Taxation v Cassaniti [2018] FCAFC 212 [88]; Commissioner of Taxation v Clark [2011] FCAFC 5 [64]-[66]; Allied Pastoral Holdings Pty Ltd v Commissioner of Taxation 83 ATC 4015, 4021; Epov v Commissioner of Taxation [2007] FCAFC 139, [22]-[23]. > > (f) Witness evidence that is self-serving or given when the witness has a clear personal interest in the outcome of the proceeding will be subject to careful scrutiny, but such evidence is not prima facie unacceptable and may meet the burden of proof: McCormack v Federal Commissioner of Taxation [1979] HCA 18; (1979) 143 CLR 284, 302; Commissioner of Taxation v Cassaniti [2018] FCAFC 212 [88]; Federal Commissioner of Taxation v SNF (Australia) Pty Ltd [2011] FCAFC 74 [82]; Pascoe v Federal Commissioner of Taxation (1956) 30 ALJR 402, 403. > > (g) Corroborative evidence to witness evidence may make it more probable that the witness evidence is credible: Imperial Bottleshops Pty Ltd v Federal Commissioner of Taxation [1991] FCA 276 [31]. > > (h) While it might be considered prudent for there to be corroborative objective evidence (such as contemporaneous documentation), there is no requirement that witness evidence can only be accepted as sufficiently probative if it is corroborated: Commissioner of Taxation v Cassaniti [2018] FCAFC 212 [88]. > > (i) Inexact evidence may still be viewed as sufficiently credible and reliable to meet the Applicant's burden of proof: Ma v Federal Commissioner of Taxation [1992] FCA 359 [18]; Allard v Commissioner of Taxation [1992] FCA 643; (1992) 24 ATR 493, 499; Haritos v Commissioner of Taxation [2015] FCAFC 92, [236]. > > (j) A lack of evidential particularity, evidential inconsistency, contradictory evidence, or scant evidence may of itself mean that the burden of proof is not satisfied: Bosanac v Commissioner of Taxation [2018] FCA 946 [58];[289] Epov v Commissioner of Taxation [2007] FCAFC 139, [22]-[23]; Anglo American Investments Pty Ltd (Trustee) v Commissioner of Taxation [2022] FCA 971, [77], [104], [107], [115], [141], [211]; Melbourne Corporation of Australia Pty Ltd v Federal Commissioner of Taxation; Photo Advertising (International) Pty Ltd v Federal Commissioner of Taxation [2022] FCA 972 [92], [137], [138].

1. The submissions of each party are set out in the Commissioner's Outline and the Applicant's Outline.[290] In short:

(a) The Applicant's position on GST substantiation is that its holistic evidence is sufficient to meet the statutory test.[291] The Applicant applied for the Commissioner to exercise its discretion pursuant to subsections 29-70(3) and/or 29-75(1) of the GST Act to be exercised and that was refused.[292] While subsections 29-70(1B) and 29-75(1) of the GST Act are considered in this decision, the Tribunal is not deciding whether either discretion should be exercised.[293] Rather, the Tribunal is considering whether there is sufficient evidence for the Applicant to demonstrate that the assessments are excessive and what they should be. > > (b) The Commissioner's position on GST substantiation is that a particular document must be identified for each supply claimed,[294] the Applicant did not make efforts to seek invoices from suppliers and did not wish the Commissioner to do so,[295] the Applicant has not produced other evidence to demonstrate its entitlement to input tax credits,[296] the Applicant has demonstrated a pattern of inadequate record keeping and the explanations provided for the absence of tax invoices are not credible for the entirety of the Relevant Periods.[297] The Commissioner further says that JK has extensive business knowledge, and that the Applicant's holistic evidence does not establish basic matters such as that the suppliers were GST registered or required to be so, and that the supply made to the Applicant was a taxable supply.[298]

2. The Tribunal considers those submissions and the relevant law below.

Legal analysis - the legislative provisions, the case law, and the Commissioner's guidance

Legislative provisions - The relevant provisions in the GST Act and tax law

1. The GST Act is, in many respects, a mechanical Act which revolves around a legislatively imposed audit trail in order to ensure that various conclusions can be evidenced in a self-assessment environment. There are requirements for particular filings and particular documents to be held. In relation to GST input tax credits, the relevant important document for the audit trail is a tax invoice that meets the requirements in the GST Act.[299] That document is critical to demonstrating the nature of the supply, whether it is fully or partly creditable, the GST registration of the supplier, the time the supply occurred, the price, and the GST imposed. The tax invoice has been described as the "c_ornerstone_" of the GST Act.[300]
2. When claiming GST input tax credits, the relevant statutory provisions are as follows:

(a) Subsection 29-10(3) of the GST Act provides that a tax invoice (as defined in section 195-1 and subsection 29-70(1) of the GST Act) is required to be held when a BAS is given to the Commissioner in which GST input tax credits are claimed. If a tax invoice is not held, subject to statutory time limits, the input tax credits are not claimable until the period in which a tax invoice is held.[301] > > (b) Subsection 29-10(3) also provides that there is an exclusion from the requirement to hold a tax invoice if the circumstances are those that the Commissioner determines in writing to be circumstances in which the requirement for a tax invoice does not apply. Legislative instruments are issued to set out what falls within that exception and they are not relevant here.[302] When considering those legislative instruments, they themselves focus on there being sufficient other evidence to identify suppliers, recipients, ABNs, supplies, price, GST payable, and the extent to which each supply was a taxable supply.[303] This is demonstrating that the legislative instrument exclusions from tax invoice requirements still require sufficient information to provide an audit trail. > > (c) Pursuant to section 382-5 of Schedule 1 of the TAA (amongst other matters) a taxpayer is required to keep and retain records if a claim is made for GST input tax credits. It is an offence not to do so.[304] The records must be in English and such as to enable the taxpayer's entitlements and liabilities under the GST Act to be readily ascertained.[305] > > (d) Section 262A of the Income Tax Assessment Act 1936 (Cth) provides that a taxpayer carrying on a business is obliged to maintain records that record and explain all transactions that are relevant under that Act. Such records would of course be of assistance in the GST Act context as well. > > (e) GST input tax credits can only be claimed where the supplier charges GST. That is made clear by the basic provisions of the GST Act, such as section 29-5 which focuses on the "GST payable by you" in relation to a taxable supply that is a creditable acquisition under Division 11 of the GST Act.

Legislative provisions - The extent of legislative flexibility if tax invoices are not held, the statutory provisions and background materials

1. This case is about the disputed input tax credit claims made by the Applicant, totalling $645,909[306] or $522,578.[307] The Applicant has acknowledged that it did not have all of its tax invoices when it filed its BAS for the Relevant Periods and made its claims for GST input credits. As noted above, that is contrary to subsection 29-10(3) of the GST Act, as tax invoices from suppliers are required to be held at the time BAS are filed claiming input tax credits.[308] The Applicant says that the reason that it did not have tax invoices was because of the first cyber event and the second cyber event.
2. Subsection 29-70(1) sets out requirements before a document will comprise a tax invoice, it was inserted as a result of amendments made to the GST Act in 2010 which essentially removed these requirements from regulations and into the GST Act itself.[309] Those requirements are detailed, and fairly obvious, given the need for an audit trail. The requirements include that there is sufficient information to clearly ascertain the supplier's identity and ABN, the total price, what is supplied and when it is supplied, the extent to which the supply is a taxable supply, the date the invoice is issued, and the amount of GST imposed. If input tax credits are claimed, the GST Act provides limited flexibility to the requirement to hold a tax invoice at the time a BAS is given to the Commissioner.
3. The 2010 amendments inserted subsection 29-70(1B) of the GST Act which provides that the Commissioner may treat a document as a tax invoice even where it would not otherwise be a tax invoice. A similar provision arises in the context of adjustment notes in subsection 29-75(1) of the GST Act.[310]
4. When considering the legislative text of subsections 29-70(1B) and 29-75(1), the text suggests a wide scope to the discretion to accept tax invoices and/or adjustment notes which otherwise do not meet the requirements. Statutory text is to be interpreted with its context and purpose in mind, and an interpretation that best achieves the object of the legislative provision is to be preferred.[311] The text of each provision at issue does not limit the circumstances in which each provision will apply, but the context in which the provisions appear in the GST Act is important. That context makes it an obligation to maintain tax invoices or adjustment notes that meet the requirements. That tells us that it will not be absolutely commonplace for documents that do not meet those requirements to be accepted.
5. When considering the purpose of subsection 29-70(1B) and subsection 29-75(1), the legislative history and extrinsic documents can be turned to for guidance of Parliament's intention, but the text of the provision has primacy.[312]
6. The legislative history of subsection 29-70(1B) shows that it was inserted as a result of the 2010 amendments. The 2010 amendments merely moved what was formerly below an earlier version of subsection 29-70(1) of the GST Act ("However, the Commissioner may treat as a tax invoice a particular document that is not a tax invoice") into a new subsection.
7. The background to the earlier form of subsection 29-70(1) provided that the discretion was inserted to provide some flexibility and was to be exercised particularly where a document held by the taxpayer "strictly does not meet the information requirements for tax invoices or adjustment notes as prescribed by the GST Act, the regulations and the applicable form (if any) approved by the Commissioner. In those situations, the requirement to hold a tax invoice or adjustment note may impose a disproportionate burden on you, particularly if you hold a document that substantially complies with the requirements and the entitlement to the input tax credit or decreasing adjustment is otherwise verified."[313] Subsection 29-75(1) was inserted at the same time as the earlier form of subsection 29-70(1) and for the same reason.[314]

1. The Tribunal and the Courts have regularly commented upon the status of the Commissioner's guidance to its officials and to the community.[315] This guidance is not the law. The Tribunal does not apply guidance from the Commissioner, it applies the law. As Senior Member Lye noted in Nguyen and Commissioner of Taxation [2025] ARTA 1662 at [45]:

The Tribunal, in undertaking independent review, should be mindful of, but is not bound to follow an agency's policy, and must be cautious where there is concern that the policy may not lead to the correct result in a particular proceeding or may not wholly encompass the relevant statutory test. Ultimately, the Tribunal must demonstrate that it has independently turned its mind to what is the correct or preferable decision based on the relevant legislative test and the material which is before the Tribunal [footnotes omitted].

1. The Commissioner's guidance to its officials is set out in Law Administration Practice Statement PS LA 2004/11 The Commissioner's discretion to treat a particular document as a tax invoice or adjustment note ("PS LA 2004/11").
2. PS LA 2004/11 provides that:

(a) The discretions are in relation to a "particular document".[316] > > (b) The individual facts and circumstances of the taxpayer must be considered. Factors that may be relevant include where a recipient or supplier have lost records from a natural disaster or some other event impacting their business.[317] > > (c) The following factors should be considered:[318] > > > (i) Evidence of entitlement to the input tax credits must be demonstrated. > > > > (ii) Whether the recipient of the supply has made a genuine attempt to obtain an invoice or adjustment note from the supplier. > > > > (iii) Whether the recipient of the supply made a claim for input tax credits knowing they did not have tax invoices. > > > > (iv) What the recipient's tax compliance history is like. > > > > (v) Whether the absence of tax invoices or adjustment notes is a regular event. > > > > (vi) What the relevant knowledge, skills and experience of the recipient are. > > > > (vii) Whether the Commissioner did or advised something that contributed to the recipient not seeking or the supplier not providing the tax invoices or an adjustment note. > > > > (viii) Whether the passing of time still makes it reasonable for tax invoices to be sought from the supplier.

3. GSTR 2013/1 also provides some limited guidance. GSTR 2013/1 is a public ruling. That means it is binding upon the Commissioner.[319] GSTR 2013/1 notes that the factors set out in PS LA 2004/11 are not exhaustive and the relevant circumstances in each case must be considered.[320] Again though, the Commissioner says it is looking for a document to treat as a tax invoice.[321]
4. In the Tribunal's view, the factors set out in PS LA 2004/11 are valid points to consider. It is also correct for the Commissioner to say in GSTR 2013/1 that the factors to consider are not limited in any way to those matters, and all of the circumstances of the particular case must be considered. There is nothing objectionable in the Commissioner's guidance.
5. In a different context, the Commissioner has also issued guidance to its officials in Law Administration Practice Statement PS LA 2011/25 Reconstructing records and making reasonable estimates for taxpayers affected by disasters ("PS LA 2011/25"). PS LA 2011/25 is focused on natural disasters (such as fires, floods, weather events, earthquakes) where original records have been destroyed. Obviously, that is not what has occurred here, when considering the issues in this case there is an analogy, as the Applicant says an issue outside its control has resulted in the destruction of its records. PS LA 2011/25 provides guidance to the Commissioner's officials that the Commissioner may accept reasonable estimates and "trend-based estimates" in circumstances of a natural disaster including for BAS.[322] Importantly, the taxpayer is expected to make efforts to reconstruct the records, including working with the Commissioner to seek material from third parties.[323]
6. Paragraph 6 of PS LA 2011/25 provides:

Assisting taxpayers who are in business to lodge their business activity statement

The taxpayer may be able to lodge a BAS using a signed statement by them setting out a reasonable estimate of their GST. If the requisite tax invoices cannot be obtained or reconstructed to enable input tax credits to be attributed to the relevant periods, consider an assessment for a net amount under section 155-5 of Schedule 1 to the Taxation Administration Act 1953 (TAA).

1. Section 155-5 of Schedule 1 to the TAA provides that the Commissioner has a discretion to make an assessment of an array of matters including a net amount or a credit under any indirect tax law at any time. It is noted that the Applicant refers to what it calls "QC67545" as something that the Commissioner "unfairly denied".[324] That refers to a page on the Commissioner's website which is in the same factual context as PS LA 2011/25 (i.e., natural disasters) and which states (amongst other matters) "If you can't prove claims made in your tax returns or activity statements because your records have been lost or destroyed, we can still accept the claim if it's not reasonably possible to get the original or replacement documents."
2. It needs to be clearly understood by the Applicant that subsections 29-70(1B) and 29-75(1) of the GST Act and section 155-5 of Schedule 1 to the TAA are about discretions of the Commissioner. The discretion to exercise or not exercise assessment powers or to accept or not accept documents as an invoice or an adjustment note may be subject to judicial review, but this is not the purview of the Tribunal. What the Tribunal is considering in this case is whether the assessments are excessive because GST input tax credits were available to the Applicant.
3. The Tribunal notes that in the JK Witness Statement[325] the Applicant cites a further ruling from the Commissioner that it wishes to rely upon. That cited ruling (Taxation Ruling 97/17) appears to have been generated by artificial intelligence, JK's Witness Statement is entirely inaccurate on what that ruling is about and says, and the Tribunal has put those submissions aside.[326] As is further noted below in the context of considering cases cited by the Applicant, parties before the Tribunal should not be relying upon artificial intelligence without checking the accuracy of what it produces. It wastes time and cost.

1. I turn to considering the case law. In summary:

(a) In Queensland Harvesters Pty Ltd v Commissioner of Taxation [2009] AATA 351 ("Queensland Harvesters") claims were made for costs incurred where the suppliers were not registered for GST and this alone may have led to the claims for input tax credits being disallowed, although the Tribunal did not deal with the matter in that manner.[327] The Tribunal found that none of the invoices relied upon to support input tax credit claims were valid invoices and held that the taxpayer's director was indifferent to that fact. The Tribunal commented that there was no obvious basis for an exercise of the discretion that (at the time) was at the base of subsection 29-70(1).[328] The Tribunal held it was necessary for the taxpayer to demonstrate it had acted with reasonable care. > > (b) In Douglass v Federal Commissioner of Taxation [2010] AATA 138 ("Douglass") the taxpayer did not succeed in his challenge of the Commissioner's refusal to accept his input tax credit claims without valid invoices. The taxpayer claimed that his original invoices were lost because a package was stolen from his car. When considering whether it was convinced that GST input tax credits were available, the Tribunal considered the equivalent of subsection 29-70(1B) of the GST Act. The Tribunal found that the material presented by the taxpayer was replete with errors and inconsistencies,[329] the supporting documents he sought to adduce had numerous mathematical errors,[330] and there were legal errors (for example the periods in which claims were made for input tax credits were wrong) and suggestions of fabrication.[331] The Tribunal also did not find the taxpayer's evidence credible.[332] > > (c) In Mold v Federal Commissioner of Taxation [2011] AATA 823 ("Mold") the taxpayer was a cabinet maker. The case was about GST input tax credit claims and income tax deductions. The taxpayer's GST case was that he had directed tax invoices to the Commissioner by post. The Tribunal accepted that had occurred and that was the reason for the loss of invoices. The Tribunal did not accept much of the taxpayer's evidence produced as substantiation of his input credit claims. For instance it did not accept that bank statements presented by the taxpayer supported his input tax credit claims as they did not specify what was purchased nor anything about GST, nor were documents from earlier periods than those in dispute accepted as supportive of claims in the periods in dispute, and other documents such as statements of account were also determined to be inadequate.[333] The Commissioner had accepted that that taxpayer had demonstrated a basic level of expenditure in the relevant periods and this provided some support for the prior existence of invoices. The Commissioner allowed some input tax credits on that basis, but the percentage allowed for GST purposes, differed from the percentage allowed for income tax purposes.[334] A greater amount of input tax credits than suggested by industry benchmarks was allowed by the Tribunal based on the circumstances of the business. The taxpayer's GST case was partly allowed.[335] > > (d) In Trnka v Federal Commissioner of Taxation [2012] AATA 492 ("Trnka") the taxpayer claimed input tax credits for acquisitions for a thoroughbred horse racing and breeding business. The taxpayer maintained that some invoices had been provided, and the Commissioner had been told that computer problems and a fire at his tax agent's premises prevented the provision of other material. The Tribunal did not accept the taxpayer's GST input tax credit claims, mainly because it was not convinced there was an enterprise at all,[336] but also because the evidence was inconsistent, and there was no material that provided the information needed to demonstrate the claimed acquisitions occurred, that consideration was provided, that the acquisitions were for taxable supplies, and the information necessary for GST purposes.[337] > > (e) In Very Important Business Pty Ltd v Federal Commissioner of Taxation [2019] AATA 1120 ("Very Important Business") the case in relation to claimed input tax credits revolved around whether the taxpayer made GST-free supplies or GST exempt supplies. However, the case also touches on the GST invoice requirements in the GST Act, including subsection 29-70(1B).[338] The Tribunal did not accept the documents presented by the taxpayer as invoices or supporting material. The Tribunal considered that evidence entirely inadequate, unreliable and incomplete and did not accept GST input tax credits were available. [339] > > (f) Cash World Gold Buyers Pty Ltd v Federal Commissioner of Taxation [2020] AATA 1546 ("Cash World Gold Buyers") was in main part about a number of issues unrelated to section 29-70(1B). At [203]-[212] the Tribunal considered the invoices and other documents presented by the taxpayer in support of its input tax credit claims. The Tribunal held that the documents produced by the taxpayer should not be accepted . This was because the supplies were not outlined properly, the documents were deliberately ambiguous, section 29-70(1B) does not allow documents that are 'half good" to be treated as tax invoices (that is, there must be sufficient information for GST purposes), and because of conclusions about the taxpayer's credibility.[340] > > (g) In BSRJ v Federal Commissioner of Taxation [2021] AATA 333 ("BSRJ") the taxpayer was a property developer that sought to claim a GST input tax credit on a progress claim under a construction contract by treating that progress claim as a tax invoice. The cost at issue had already been claimed in a later, now time-barred, BAS period. The taxpayer maintained that it was properly claimable in an earlier tax period. The Tribunal held it should not treat the progress claim as evidence of a tax invoice, as that would give rise to the taxpayer obtaining a substantial unintended benefit in circumstances where an input tax credit had already been obtained.[341] I note that Applicant seeks to rely on BSRJ to say as it had not already obtained input tax credits, that is a factor in favour of the discretion being exercised.[342] I do not accept that submission as it does not properly consider the holdings of the case, and the Applicant also describes the facts of BSRJ incorrectly. However, I accept that the Applicant is able to distinguish this case on its facts. > > (h) In H&B Auto Repair Centre Pty Ltd v Federal Commissioner of Taxation [2022] AATA 3561 ("H&B Auto Repair") the taxpayer relied upon bank statements, and deposits and withdrawal receipts to support its input tax credit claims. These documents were held to not provide adequate details to be treated as a tax invoice and did not support the claimed input tax credits.[343] The Tribunal noted that the taxpayer had been provided a number of opportunities to provide such invoices (including to seek copies of the relevant tax invoices from suppliers) and had failed to do so. This was a factor against it.[344] > > (i) In the present case, the Applicant seeks rely upon subsection 29-75(1) of the GST Act as well.[345] That provision relates to adjustment notes and provides simply that the Commissioner may treat a particular document as an adjustment note. That provision applies where there is an adjustment event. Adjustment notes are issued by suppliers, so perhaps the Applicant is seeking to refer to recipient created adjustment notes. The Applicant's argument is that it lodged its BAS and subsequently sought to adjust the BAS, and so adjustment notes are relevant, and its holistic material ought to be accepted.[346] I proceed on the basis that subsection 29-75(1) is relevant.[347] > > (j) The only case the Tribunal has found on subsection 29-75(1) is Vadasz v Federal Commissioner of Taxation [2006] AATA 682 ("Vadasz"). In Vadasz the Tribunal did not accept documents presented by the taxpayer as adjustment notes because of inconsistencies and inaccuracies in the taxpayer's evidence before the Tribunal and the unreliability of the taxpayer's records.[348]

2. The Tribunal notes that by way of an annexure to JK's Witness Statement, the Applicant sought to rely upon approximately 70 cases found by way of the use of artificial intelligence, none of which have a proper citation. The Applicant's Outline is comprised of more than 100 pages, containing more cases or repeating cases all of which have no proper citation. Following an order from the Tribunal in pre-hearing directions, the Applicant withdrew all its cited cases other than three cases. Parties before the Tribunal are again warned about the use of artificial intelligence. I reiterate the comments in Smith and Commissioner of Taxation [2026] ARTA 25 at [83]:

If artificial intelligence is used as a research tool, cases identified must be found on public websites (such as www.austlii.edu.au) and, assuming they exist, read before they are put to the Tribunal. Otherwise, the Tribunal's time and scarce resources are being wasted, as the Tribunal must look for cases that do not exist and read cases that have no relevance at all.

3. The three remaining cases that the Applicant said it wishes to rely upon were raised on 31 October 2025 when the Applicant responded to the Tribunal's Directions. For the following reasons the Tribunal does not consider the Applicant's submissions and these cases to be relevant:

(a) ACN 154 520 199 Pty Ltd (in liquidation) v Commissioner of Taxation [2020] FCAFC 190 ("ACN 154 520 199 Pty Ltd (in liquidation)") is one of what are known as the GST gold cases. The points at issue are about whether the taxpayer's supply of gold was GST-free or input taxed which in turn impacted upon the taxpayer's ability to claim GST input tax credits, the meaning of "refining" in this context, the application of the GST anti-avoidance provisions in Division 165 of the GST Act, and a review of underlying proceedings in the Tribunal. This was particularly focused upon whether the Tribunal was entitled to make adverse findings based solely upon documents that had not been the subject of cross-examination. > > (b) It may be that the Applicant's various submissions about "the 2020 gold miners case"[349] or the "gold refiners case" are intended to refer to ACN 154 520 199 Pty Ltd (in liquidation). The broad thrust of those submissions are responded to below: > > > (i) The Applicant suggests that "the burden of proof is removed from the taxpayer" or there is a "proportional burden of proof".[350] The burden of proof is on the Applicant. The burden of proof is not removed from the taxpayer. At [162] of the Applicant's Outline "In short: ZBDD raised a credible case, the Commissioner must lead cogent evidence to displace it - the ATO cannot rely on speculative inferences or failure-to-prove by the taxpayer when the material facts are within the Commissioner's control." As is noted below when setting out the nature of the burden of proof at law, this is not correct. The Commissioner has no such burden nor control of the Applicant's facts. If what the Applicant refers to is an evidentiary onus, as was stated by the Full Federal Court in Richard Walter Pty Ltd v Commissioner of Taxation [1996] FCA 1557 at [7] it is a misconception to refer to this as a shifting onus upon the Commissioner. The Applicant has to establish its case to the Tribunal on the balance of probabilities. > > > > (ii) The Applicant suggests that the Full Federal Court "accepted a less restrictive reading than the ATO's"[351] of the provisions at issue in that case. Even if that is correct, the provisions in ACN 154 520 199 Pty Ltd (in liquidation) are not at issue in this case, so that is irrelevant. > > > > (iii) The Applicant also asserts that the Tribunal cannot make "adverse findings on credibility without full procedural fairness and that fact finding on dominant purpose was too intensive to decide as a matter of law."[352] References are also made to "motive".[353] The holdings on purpose or motive relate to Division 165 of the GST Act, which is not at issue here, so that is irrelevant. > > > > (iv) The suggestion is that the Tribunal cannot "treat ZBDDs (sic) position as defeated by mere assertion or inferences drawn from procedurally unfair fact-finding".[354] Any findings made by the Tribunal in this case are made from hearing all of the evidence in examination, cross-examination and re-examination, reviewing all of the material and submissions put by each party, and reviewing the jointly put Tribunal Book. There is no procedural unfairness. > > > > (v) None of the matters raised in the ACN 154 520 199 Pty Ltd (in liquidation) case are relevant to this case. > > (c) HNMF and Commissioner of Taxation [2023] AATA 4067 is also one of the GST gold cases. It is the result of ACN 154 520 199 Pty Ltd (in liquidation) being remitted to the Tribunal for further decision. None of the issues in that case have any relevance to this matter for the same reasons as is expressed above. In any event, HNMF was further appealed and remitted back to the Tribunal again.[355] > > (d) Commissioner of Taxation v MBI Properties Pty Ltd [2014] HCA 49 was about the supply of a going concern relating to the supply of residential premises and whether an increasing adjustment arose pursuant to section 135-5 of the GST Act. None of those issues are relevant to this case. It might be what the Applicant refers to as "MBI" in JK Witness Statement and the Applicant's Outline, although that case appears to have been withdrawn by the Applicant. If the Tribunal is correct and the reference to "MBI" is intended to be a reference to this case, the Applicant appears to be relying upon this case for propositions such as that documentary evidence, the totality of evidence, and circumstantial facts can be relied upon in the absence of tax invoices, as well as for a submission about proportionality when considering penalties. [356] None of these things were said by the High Court in MBI Properties.

1. I first deal with the relevant invoices in the Applicant's holistic material noted above at paragraph ‎67(n). The Commissioner has not allowed the relevant invoices noted above on the basis that it cannot be demonstrated that all of those invoices have[357]en paid,357 presumably on the basis that they cannot be tracked to specific line items in bank statements or to a statement of account or receipt.
2. In Charles Apartments Pty Ltd v Federal Commissioner of Taxation (No.2) [2025] FCAFC 180 ("Charles Apartments"), the Full Federal Court noted that there is a degree of informality in small business, and at [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.

3. The burden of proof is on the balance of probabilities. It is not a criminal standard. I have concluded that in principle[358] the Applicant has met its burden of proof in relation to the invoices at paragraph ‎67(n). I am satisfied on the balance of probabilities that those invoices comprise taxable supplies from their face, had a creditable purpose given the GST-free nature of the Applicant's supplies, and were satisfied by the Applicant. There are dates, price, GST registration details on those invoices.
4. I do not accept that the Applicant is required to match every expense to a line item on a bank statement in order to demonstrate payment on the balance of probabilities. The bank statements on the Tribunal Book do not cover all of the bank accounts identified by the Commissioner at T22 for the Relevant Periods so there is incomplete evidence. However, it is also reasonable to suggest that groups of invoices from one supplier may have been paid together so that payments cannot be forensically tracked. I have also reached my conclusion for the reasons expressed by the Full Federal Court in Charles Apartments. It is not necessary for the Applicant to do what the Commissioner suggests in order to meet its burden of proof. It is probable that payment was made, or action from some of the suppliers against the Applicant to recover those debts would be demonstrable.
5. I set aside the Commissioner's decision and remit the invoices identified in paragraph ‎67(n) to the Commissioner so that GST input tax credits are allowed to the Applicant, after the Commissioner checks to ensure they reflect separate costs and do not double up, and after the Commissioner checks matters specified by the Tribunal in footnotes to paragraph ‎67(n).

1. The more difficult issue relates to the Applicant's estimated expenses for contractor costs - these particularly relate to professional educator contractors and form the bulk of the Applicant's claimed input tax credits. There are competing issues.
2. In favour of the Applicant's case are the following matters:

(a) I have accepted that the Applicant carried on business during the Relevant Periods, used contractors in the Relevant Periods, and that the first cyber event occurred. Where the Applicant cannot produce the required invoices for a period for reasons beyond its control, that is a factor that must be considered when determining whether the Applicant has met its burden of proof. Another way to put that is to say that it can be maintained that the burden of proof should not be determined negatively solely because the Applicant is not able to provide tax invoices due to a factor that is beyond its control. > > (a) In Mold, the Tribunal accepted that the onus on the taxpayer to prove the GST assessments were excessive needed to be considered balancing the fact that the loss of materials rendered him unable to do so with complete accuracy. The Tribunal accepted it was relevant, to some degree, to consider industry ranges. A number of aspects of the taxpayer's case were not accepted by the Tribunal, but the taxpayer did succeed in part in his GST input tax credit claims. The Tribunal accepted a higher GST claim than an industry range in the particular circumstances of the taxpayer's business, as sales would have decreased due to the taxpayer's health issues. Similarly, here, the Applicant is seeking to claim expenses that it says are broadly aligned with industry benchmarks and has taken into account its business circumstances. The Applicant can maintain that Mold supports its approach in this matter. > > (b) The Commissioner's guidance to its officials in PS LA 2011/25 suggests that in the case of a natural disaster the Commissioner may accept an estimate of a BAS, and may issue an assessment of a net amount or a credit under an indirect tax law pursuant to section 155-5 of Schedule 1 of the TAA taking into account the taxpayer's estimate. This might be maintained to support the Applicant by saying that its onus of proof to establish the assessments are excessive should be similarly considered.

3. Against the Applicant's case are the following factors:

(a) The GST Act is clear, a tax invoice is required to substantiate a claim for input tax credits. The legislative background indicates that at least substantial compliance with the requirements of subsection 29-70(1) and/or subsection 29-75(1) of the GST Act is required.[359] In short there must be sufficient evidence to be confident of the claimed amounts on the balance of probabilities. > > (b) The context in which subsection 29-70(1B) and subsection 29-75(1) sit in the GST Act is important. In context, each of subsection 29-70(1B) and subsection 29-75(1) are outliers to the normal course, which is that proper tax invoices and proper adjustment notes must be held in order for the GST Act audit trail requirements to be met. That suggests that the application of those provisions should not be commonplace. Of course, the Commissioner's discretion to apply subsection 29-70(1B) and subsection 29-75(1) of the GST Act is subject to judicial review, and I am considering whether to accept the Applicant's holistic evidence as meeting the burden of proof to establish that the assessments were excessive. Nevertheless, the existence of those subsections is relevant to me when considering the form of the evidence presented, whether it satisfies the GST Act and whether it satisfies the burden of proof. > > (c) The case law demonstrates that for claimed input tax credits to be accepted in the absence of tax invoices, the evidence presented by the taxpayer must be credible, not be inconsistent, and provide adequate details of the matters needed under the GST Act (such as the price, the nature of the supply, the date of the supply, the supplier's name and GST registration details) and the taxpayer's record keeping system should be considered reliable. There are also questions about the care taken by the taxpayer to meet its obligations under the GST Act and its efforts to seek to reconstruct its records by contacting suppliers: Queensland Harvesters, Douglass, Trnka, Very Important Business, Cash World Gold Buyers, H&B Auto Repair, Vadasz. > > (d) There are some differences between this present case and Mold. Unlike the position in Mold I do not accept the Applicant's evidence as to the reasons for the lack of availability of tax invoices in all of the Relevant Periods, and nor, on the balance of probabilities, that the Applicant made requests for copies of invoices from all of the contractors to reconstruct its records, the Commissioner does not concede there were invoices in existence, and the amount of the claim is significant (in Mold the total claimed input tax credits were around $65,000, here it is $522,578[360] or $647,370). > > (e) JK has a clear personal interest in this matter, and as a result JK's evidence has been subject to scrutiny by the Tribunal when considering whether the Applicant has met its burden of proof. While much of JK's evidence has been accepted by the Tribunal, there were matters that gave rise to issues about the credibility of that evidence. For example: > > > (i) While I accept that more than likely the first cyber event occurred, for the reasons outlined above,[361] I do not accept the evidence of the second cyber event because of a lack of any corroborative evidence. While corroborative evidence to witness evidence is not necessarily required to meet the Applicant's burden of proof, where there are credibility issues with witness evidence (as I have found above in relation to the second cyber event), corroborative evidence would alleviate those issues, as it did when considering the first cyber event. > > > > (ii) I am not satisfied that the Applicant has given an adequate explanation for the lack of contractor invoices between the first cyber event and the second cyber event.[362] > > > > (iii) When considering the first cyber event, I am not satisfied that the Applicant properly dealt with GST in its systems prior to that event. For example, the Xero reports are inaccurate and remain inaccurate, and, from the evidence before me, the professional services credit system did not deal accurately with GST. > > > > (iv) An inference can be drawn from the overall evidence that there were no accurate or available invoices for at least some of the Relevant Period - from at least October 2018 to December 2019. The overall evidence also supports the conclusion that the Applicant's system was inadequate to meet its obligations in the GST Act for all of the Relevant Period. > > (f) When considering the Applicant's estimated figures in T50 or in A-20251125-2, there are reasons for concern as to whether the estimated costs reflect the costs the Applicant may have incurred on the balance of probabilities. For example, the costs are generated by inferring all such contractors were GST-registered[363] when that is not correct from the face of the evidence on the Tribunal Book.[364] The estimates do not take into account the periods in which the Applicant could not operate due to ASQA and the relevant State government funding body's actions described above at paragraph ‎8 when it might be expected that contractor costs would be minimal. > > (g) Further, I am not satisfied that the Applicant has based its calculations on the right number of contractors. The Applicant has not presented a full list of the contractors nor of their GST registration status. The number of contractors used by the Applicant during the Relevant Periods is unclear - in evidence before the Tribunal it was said to be approximately 30,[365] the lists on the Tribunal Book show 60 (although these are not all professional educator contractors and include service providers such as lawyers)[366], 10[367], 27[368], 11[369] and the lists do not reconcile with one another.[370] A statutory declaration from JK indicates that the number of contractors is "approximate."[371] From the evidence, it cannot be discerned with any clarity exactly who the contractors were in the Relevant Periods, nor their GST registration status. > > (h) Over time the Applicant has moved its claimed position from the filed BAS claims to amended Xero reports, to profit and loss financials in A-20251125-2, to an estimate of costs, and to Xero as the "particular document". The figures in all of this material do not reconcile.[372] > > (i) In terms of the reconstruction of the Applicant's records, the Tribunal is satisfied that the Applicant did request invoices from at least one of its contractors,[373] but it is not satisfied that the Applicant requested invoices from all of its contractors when those invoices would have been available. This is because the weight of the evidence on the Tribunal Book is that the Applicant took a consistent position that it was not feasible to have done so for what are said to be (broadly) industry reputational concerns. On balance, I am not satisfied as to the credibility of the reason the Applicant did not obtain those invoices, nor that there was a persuasive reason for the Applicant to refuse to work with the Commissioner to do so even for a sample of contractors. These matters also give rise to concern about whether the material lost by the first cyber event included invoices from all its contractors in the first place.

4. I have concluded that the Applicant has not met its burden of proof to demonstrate that, in relation to contractor costs, the Commissioner's assessments were excessive and what they should be. I record the following:

(a) I do not agree with the Commissioner about the need for "a particular document" that of itself substantially meets the tax invoice/adjustment note test.[374] In my view the case law such as Mold is correct. The material as a whole should be considered to determine if it provides sufficient evidence and meets the onus of proof. In this case, my assessment is that it does not. > > (b) The text of subsection 29-70(1B) and subsection 29-75(1) does not seek to test the reason why there are no valid tax invoices or valid adjustment notes. However, in my view, when considering a Part IVC case, the context of those provisions in the GST Act is important, as that context makes it clear that sufficient evidence is necessary to meet the GST audit trail requirements. That means when assessing whether the Applicant has met its burden of proof I should consider: > > > (i) Whether I accept the reason for there being no valid tax invoices or valid adjustment notes; > > > > (ii) The Applicant's GST compliance - including whether the Applicant's system contained errors which meant that it did not or would not properly meet the GST requirements in any event; and > > > > (iii) The Applicant's efforts to seek to reconstruct its lost records, including by seeking copies of invoices from contractors. > > > > I am supported in that conclusion by Queensland Harvesters, Cash World Gold Buyers, Mold, Douglass, H&B Auto Repair and Vadasz. I have made comments above about each of those issues. I do not accept the Applicant's case on those points. > > (c) I might have accepted contractor costs in Relevant Periods impacted by the first cyber event (i.e., for the Relevant Periods from 30 June 2016 to October 2018) as I accept that the first cyber event occurred. However, for the reasons outlined above in paragraphs ‎121(f), ‎121(g), and ‎121(h), I am not satisfied there is evidence before the Tribunal to discern the costs relating to that period with even broad accuracy. I carefully considered the holistic evidence, the spreadsheet evidence in A-20251125-2 and the estimate at T50. My assessment is the evidence is inadequate to meet the Applicant's burden of proof to demonstrate to me what the assessments should be.

5. I affirm the Commissioner's decision in so far as the costs for professional educator contractors are concerned. I have determined I cannot treat any of the Xero reports, A-20251125-2 and T50, and the Applicant's holistic evidence or any combination thereof as meeting the Applicant's burden of proof to demonstrate the assessments are excessive and what the assessments should be.[375] The Applicant has not satisfied me otherwise on the balance of probabilities.

1. The last group of issues relates to the shortfall penalties imposed on the Applicant by the Commissioner.[376] The Commissioner imposed 50% penalties on the Applicant on the basis that shortfall amounts arose from the Applicant's BAS for the Relevant Periods, and that the shortfall amounts were the result of recklessness by the Applicant as to the operation of a taxation law. There are copious submissions and correspondence between the parties on the Tribunal Book on the issue of penalties. I note that the penalties will reduce as a consequence of my conclusions at paragraphs ‎114 to ‎118 above.
2. The Tribunal views all of the issues raised by each party as sub issues of three high level issues:

(a) Whether the Applicant is liable for an administrative penalty pursuant to section 284-75 of Schedule 1 to the TAA. > > (b) If the Applicant is liable to an administrative penalty, whether a penalty of 50% pursuant to section 284-90 of Schedule 1 to the TAA is excessive, particularly whether a shortfall amount arose as a result of recklessness by the Applicant as to the operation of a taxation law. > > (c) If any penalty is imposed, whether it should be remitted in whole or in part pursuant to section 298-20 of Schedule 1 to the TAA.

3. There is a further issue relating to the imposition of section 284-220 of Schedule 1 of the TAA and the base penalty uplift. While I accept that the Applicant's grounds of objection seeking penalty remission covers the base penalty uplift, the Applicant has not objected to the imposition of section 284-220 of Schedule 1 to the TAA in the first place. To be clear to the Applicant, the grounds of objection are set out in the objection, and not elsewhere. This is considered further below.

Is the Applicant liable for an administrative penalty?

The statutory provisions, relevant case law and guidance

1. I first set out the relevant parts of the statutory provisions dealing with penalties. I have omitted provisions that deal with tax agents, as the Applicant's evidence is that it was JK that prepared and lodged the BAS for the Relevant Periods and the Applicant did not engage a tax agent for that purpose.
2. Subsection 284-75(1) of Schedule 1 to the TAA provides that liability to a penalty arises where:

(a) you make a statement to the Commissioner ...and

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

1. Subsection 284-75(5) of Schedule 1 to the TAA provides:

You are not liable to an administrative penalty under subsection (1) ... for a statement that is false or misleading in a material particular if you and your agent (if relevant), took reasonable care in connection with the making of the statement.

1. The Commissioner's has issued guidance on the penalties regime.[377] Most relevant to this case are the following:

(a) Law Administration Practice Statement PS LA 2012/5 Administration of the false or misleading statement penalty - where there is a shortfall amount ("PS LA 2012/5); > > (b) Miscellaneous Taxation Ruling MT 2008/1 Penalty relating to statements: meaning of reasonable care, recklessness and intentional disregard ("MT 2008/1") > > (c) Law Administration Practice Statement PS LA 2006/2 Administration of shortfall penalty for false or misleading statement ("PS LA 2006/2")

2. There is a lot of case law on the statutory provisions which will be referred to in my analysis below as will references to the above guidance, where it is relevant.

Was there a false or misleading statement in a material particular?

1. The first issue is whether a false or misleading statement was made by the Applicant.
2. The Applicant says it did not make a false or misleading statement.[378] The explanation for this is (per the Applicant's SFIC) "the lodgements were based on copies of original data that had been lost."[379] The Applicant also says that the figures claimed were not false because they were "consistent with contemporaneous bookkeeper and Xero data".[380]
3. The Commissioner takes a different view and says that the false or misleading statement was the claim for $647,370 input tax credits when the Applicant was not entitled to $645,909 of those claims.[381]
4. A false or misleading statement can arise for the purposes of section 284-75 in a tax return such as a BAS.[382] I have concluded that at law the statement made in the BAS as lodged by JK was false or misleading to the extent of the contractor costs. The case law demonstrates that claiming input tax credits while not holding a valid tax invoice is of itself a false or misleading statement as there is no entitlement to such a claim[383] and having disorderly systems and records also can give rise to false and misleading statements being made.[384] The Applicant's own case is that the claim should have been $522,578 and not $647,370 as was the lodged claim. That amended claim was made more than a year after the BAS were lodged (i.e. 9 June 2021 compared to the lodged BAS of 27 March 2020). The lodged claim was false or misleading.
5. Further, when considering issues of GST substantiation, in PS LA 2004/11 at [9] in the context of considering its discretion in subsections 29-70(1B) and 29-75(1) of the GST Act, the Commissioner says to its officials:

If the Commissioner's discretion is not exercised, shortfall penalties and general interest charge may apply to amounts incorrectly claimed. The recipient may also be liable to a penalty for failing to keep proper records. You should refer to the relevant policies when making any decisions about applying or remitting penalties and or interest - see section 12 of this Practice Statement.

1. I accept that guidance is accurate. If input tax credit claims do not satisfy the requirements of section 29-10 of the GST Act, there is no entitlement to those claims and any net amounts calculated in the BAS pursuant to section 17-5 of the GST Act are not correct. That is the case here.
2. In terms of whether the statement was false or misleading in a material particular I have concluded it was. The size of the claim reflects its materiality. I am satisfied that the errors made were errors in a material particular. The claim made was for more than $600,000, and this is a material figure both generally and in the context of the Applicant's business.
3. I also agree with the findings of Deputy President Forgie in Confidential and Commissioner of Taxation [2013] AATA 112 at [890] which are in the income tax context, but which also apply by analogy to GST input tax credit claims in the BAS where the GST Act provides that there is no entitlement to make such claims:

A statement claiming a deduction when none is claimable is false in a material particular. Disclosure of a taxpayer's taxable income is a fundamental aspect of a taxpayer's obligation under the ITAA36 and ITAA97 to pay the amount of tax that he or she should properly pay. It is the base line from which the Commissioner carries out his functions under that legislation. A taxpayer may properly reduce what would otherwise be the amount of taxable income for any year of income by claiming a deduction. The proper assessment of a taxpayer's taxable income lies at the heart of the assessment of the tax that is, or is not, payable on it. Speaking in general terms, false statements about amounts that may be deducted from that taxable income strike at the heart of that process. > > Did the Applicant take reasonable care?

4. Subsection 284-75(5) of Schedule 1 to the TAA would relieve the Applicant of its liability for shortfall penalties if it took reasonable care when making the statement in its BAS. This requires me to take into account the circumstances at the time the returns were filed, the Applicant's knowledge, education, experience and skill, and to consider the matter objectively.[385]
5. The Applicant said it took reasonable care because:

(a) The Applicant tried to comply with its tax obligations using the best information available to it and this is what a reasonable person would have done.[386] There was no reason to doubt the material relied upon, and it is broadly aligned with industry benchmarks (although the knowledge of that argued industry alignment arose later).[387] The Applicant also said that the holistic material demonstrated reasonable care and efforts were made to reconstruct records.[388] Some of the matters raised by the Applicant happened after the BAS was filed and I must take into account the circumstances at the time the BAS were filed. > > (b) The Applicant used contemporaneously transposed data and made a genuine attempt to comply, that it should be presumed the Applicant took reasonable care unless the facts suggest otherwise. The Applicant sought advice from the Commissioner.[389] > > (c) The Applicant submits that reasonable care does not mean perfection is required.[390] > > (d) Mr Ahmed submitted in Opening and Oral Closing at some length that JK was not a GST expert. Mr Ahmed said that a person with JK's knowledge and experience would have done the same thing as JK when preparing and lodging the BAS. > > (e) The Applicant also made lengthy submissions drawing analogies with the law of negligence in Opening and in Oral Closing with reference to the Commissioner's guidance in MT 2008/1. In essence, the Applicant maintained that in the overall circumstances, it was not negligent and had acted as a reasonable person would in dealing with the risk that the input tax credit claims were inaccurate. Arguments were also raised by the Applicant about the foreseeability of risks, and these are also dealt with below.

6. The Commissioner's position is that the Applicant did not take reasonable care.

(a) The Commissioner takes a different view about the Applicant's knowledge and skill, pointing to the Applicant's GST registration from 2015 and its ABN registration since 2013, as well as JK's personal ABN from 2009[391] and describing JK as experienced in business. > > (b) When considering the situation at the time the BAS were filed, the Commissioner said in Oral Closing that the spreadsheets said to be relied upon are not in evidence, there are errors in Xero which must have been partly relied upon and these errors included treating all sorts of matters as credible acquisitions when they were not suggesting overclaimed amounts. There were also errors in the Applicant's professional services credit system when it came to GST. It is not known how many contractors were GST-registered. The Tribunal cannot be satisfied that what the Applicant relied upon when preparing the BAS was not also in error.

7. The Tribunal has concluded that the Applicant did not take reasonable care when lodging the BAS on 27 March 2020. I do not accept what the BAS lodgment on 27 March 2020 was reasonable attempt to comply with the taxation law, taking into account the circumstances. This is for the following reasons:

(a) I have taken into account the Applicant's circumstances, and JK's knowledge and skill. I do not take the same view as the Commissioner, and I do not consider that JK has any particular expertise arising from the Applicant's registration for GST or the existence of ABNs for the Applicant and JK. I also found JK's GST knowledge to be average at best, and basic errors were made in JK's evidence.[392] > > (b) I agree with the Applicant that perfection was not required for the Applicant to have taken reasonable care. > > (c) Even taking into account JK's lack of expertise, I do not consider it to have been reasonable for the Applicant to simply lodge BAS with input tax credit claims comprising many millions of dollars of costs without any supporting records. That concept - records to support costs - is rather basic in nature. The evidence is that the Applicant knew it did not have tax invoices and it knew it needed to have tax invoices to claim input tax credits. I have accepted the first cyber event resulted in a lack of detailed records for part of the Relevant Periods and have weighed that fact when considering this matter. Even taking that into account, the records before the Tribunal and that I have found were relied upon in lodging the BAS were, as the Commissioner submits, error ridden, particularly the Xero reports. At the time the BAS were lodged, some of the material had very obvious errors, for instance the wrong GST registration basis being recorded for the Applicant, and donations, salaries and the like being treated as creditable acquisitions. I can accept that this material may have been the only material JK had to hand, but that is not enough to meet the test of having taken reasonable care. It also seems likely that any spreadsheets relied upon (which are not before the Tribunal) were based on this material. Even accepting the circumstances in which the Applicant found itself following the first cyber event, relying upon such error ridden material was not a prudent action. I further note that the BAS did not reconcile with the Xero reports, and there is inconsistent evidence as to what JK relied upon when preparing the BAS. I specifically record that given the first cyber event, on its own these issues may not have convinced me that the Applicant did not take reasonable care for the periods impacted by the first cyber event, but these matters are a factor that I have taken into account in combination with the factors below. > > (d) It is relevant when considering the reasonable care test for me to consider the Applicant's record keeping system as a whole.[393] I am not satisfied that the Applicant's system prior to the first cyber event as described in evidence and put before me accurately met the GST Act requirements.[394] I have made findings in that regard in relation to the professional services credit system, including because the Applicant appears to have considered all of its contractors would be GST-registered, when the evidence is they were not. Finally, I do not accept on the balance of probabilities that the second cyber event occurred because I have no corroborative evidence in circumstances where there is reason to question the credibility of JK's evidence. I have taken Mr Ahmed's Oral Closing into account, but it has not persuaded me otherwise. I also do not accept an adequate explanation has been provided for absent records between the first cyber event and the second cyber event. Nor have I accepted, on balance, that there was a credible reason for the failure to obtain tax invoices from contractors and/or to work with the Commissioner to do so. Finally, while I do not give this point any serious weight at all, I note that it could be said having the entire business system and the backup system hosted by the same entity is not sensible, and a backup system should be kept and hosted entirely separately. > > (e) It is notable that shortly after the BAS were lodged, Xero reports were provided to the Commissioner that differed from the lodged BAS.[395] Subsequently, more and more material was lodged by the Applicant, much of it inconsistent, culminating in the lodgment more than a year later of A-20251125-2 which comprises an amended claim that is substantially less than the lodged BAS (an around $150,000 difference). All of that undermines the idea that the BAS as lodged at the time of lodgment reflected a claim made with reasonable care. > > (f) I accept that at the time the BAS were lodged, the Applicant was in some disarray due to the numerous issues it was managing, including because of the first cyber event which I accept occurred. I also accept there was stress involved for JK, including because of medical issues.[396] I have taken those circumstances into account, and I accept some errors in those circumstances. Perfection is not sought. On the other hand, it is relevant that the Applicant chose to lodge BAS late when it could have engaged assistance to lodge those BAS on time as required by law. My assessment is, given the circumstances faced by the Applicant, a prudent person would have sought assistance. Engaging a tax agent in these circumstances and lodging BAS on time may well have meant that the Applicant had no GST problems at all,[397] or, at the very least took reasonable care. Failing to engage assistance can mean there was a lack of reasonable care in the overall circumstances.[398] The Applicant can be said to have chosen not to know or deal with its GST obligations and this too is not the care of a reasonable person in the Applicant's circumstances. [399] > > (g) It is also notable that nobody with tax expertise was engaged to check the BAS prepared and lodged by JK. JK is a person I have found has at best average tax knowledge. No one was engaged to check the BAS in circumstances where the Applicant knew it did not have supporting material due to what it described as a catastrophic event - the cyber event(s). [400] This too is not prudent behaviour. > > (h) I reject the Applicant's submissions that are to the effect that it was not reasonably foreseeable that the cyber events would occur, so reasonable care can be said to have been taken.[401] That submission is really saying that if the Applicant had filed its BAS on time there would have been no problem. The facts at the time the BAS were lodged are relevant when assessing whether reasonable care was taken, not what might have been. The BAS were lodged late, there were no tax invoices, and late lodgment was a deliberate choice by the Applicant. > > (i) Even putting all of that aside, there is one very obvious thing that the Applicant did not do that would certainly have tipped the balance in its favour on this issue before the Tribunal. Prior to lodging the BAS, the Applicant should have told the Commissioner about the cyber event(s) and asked for advice as to what to do. If there was uncertainty as to what to do because of lost material, the Commissioner should have been contacted.[402] The Applicant did not do this. A reasonable person in the same circumstances would have sought to engage with the Commissioner or hired an agent to engage with the Commissioner. I have taken into account the circumstances described by JK at the time as "rushing" and the other matters impacting the circumstances at the time. I record that if the Commissioner had been advised of the cyber event(s) a short time after the lodgment of the BAS,[403] I also would have taken that into account and likely given that significant weight. This did not happen either.[404] Such actions would have been the actions of a prudent person in the circumstances of the Applicant.

8. For those reasons the Applicant has not satisfied me on the balance of probabilities that it took reasonable care when lodging the BAS on 27 March 2020.

What is the relevance of the 'reasonably arguable position' test?

9. The Applicant maintains it had a reasonably arguable position and the claims it made were about as likely as not to be correct.[405] This point has no relevance to the matters before the Tribunal, as the reasonably arguable position test does not apply to the GST Act, per subsection 284-75(2) and section 284-90 of Schedule 1 to the TAA. In any event, as was noted by the Full Federal Court in Sanctuary Lakes Pty Ltd v Federal Commissioner of Taxation [2013] FCAFC 50[406] even if the Applicant had a reasonably arguable position, that does not mean it took reasonable care.[407] This matter is left aside.

If the Applicant is liable to an administrative penalty, is a shortfall penalty of 50% pursuant to item 2 of the table at section 284-90 of Schedule 1 to the TAA excessive?

1. The first argument to consider is whether there is a shortfall. The Applicant maintains there is no shortfall arising from the lodged BAS because the Commissioner did not allow the input tax credits that were claimed in the BAS, and that at best, this is a timing issue.[408] This can be dealt with briefly. Subdivision 284-B of Schedule 1 to the TAA is designed to impose penalties in relation to statements made to the Commissioner. There is a shortfall at law. Item 2 of the table in subsection 284-80(1) of Schedule 1 to the TAA provides that the amount of the shortfall is the difference between the misleading statement in the BAS, and the allowable input tax credits. It does not require the claim made in the BAS for the Relevant Periods to have been allowed by Commissioner.[409] The focus is on the statement.

Was the Applicant reckless as to the operation of a taxation law?

1. The first point to make is that recklessness is an objective test. Character tests and business reputation are not the issue. What is assessed is the circumstances at the time the statement was made.[410] Stating that an action was taken in "good faith"[411] is also not a defence to a finding of recklessness.[412]
2. RYJZ and Commissioner of Taxation [2026] ARTA 182 summarises the meaning of recklessness in this context at [73]-[75]:

[73] There is a lot of case law as to what recklessness means in the context of section 284-90 of Schedule 1 to the TAA. The Commissioner has also issued guidance to its officials and the public in MT 2008/1 and PS LA 2012/5.

[74] In BRK (Bris) Pty Ltd and Commissioner of Taxation [2001] FCA 164 at [77] the Court held:

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 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 a gross carelessness.

[75] What recklessness means can be summarised from the case law as follows:

(a) Recklessness is not found merely because errors are made in tax returns.[413]

(b) Dishonesty is not required.[414]

(c) Intentional disregard is not the test, and actual knowledge is not required, indifference of consequences foreseeable by a reasonable person can comprise recklessness.[415]

(d) Recklessness is something more than failing to take reasonable care.[416]

(e) Believing something to be true does not mean that a taxpayer was not reckless.[417]

(f) Inaction can be evidence of indifference and can comprise evidence of recklessness.[418]

1. The Applicant says that it was not reckless, was not grossly indifferent to any risk, and that it took reasonable steps in all of the circumstances.[419] The Applicant does not make these submissions in its objection (to which it is limited) but in other correspondence and submissions before the Tribunal. Recklessness is not even mentioned in the objection. The Applicant has not made any submissions seeking that the Tribunal accept these arguments as additional grounds of objection. I have competing submissions from the Commissioner on this point so there is no unfairness in the overall circumstances. I exercise my discretion pursuant to section 14ZZK(a) of the TAA, and I extend that the Applicant's grounds of objection to include a ground that the penalties are excessive because the Applicant maintains it was not reckless.
2. The Commissioner's position is that the Applicant was reckless. The basis for this, as set out in the objection decision and reiterated in the Commissioner's SFIC and the Commissioner's Outline, canvassed the following points (in summary): [420]

(a) JK is experienced in business. > > (b) The Applicant has poor record keeping practices that fall significantly short of what is reasonable. > > (c) The summary reports provided (Xero) provided after the BAS could not be reconciled with what was filed in the BAS. > > (d) Contradictory information was provided - the Commissioner contends it was told all contractors were based overseas (which the Applicant disputes), and the Commissioner also says it could not reconcile the costs claimed to have paid by JK's credit card with available records. > > (e) Tax invoices were not produced. > > (f) The shortfall was significant and warranted greater attention and diligence than was applied to the BAS. > > (g) A reasonable person in JK's position with JK's business experience would know that there is a real risk that the amount of input tax credits claimed would result in false or misleading statements as they were not based on tax invoices nor reconcilable with other material.

3. The Tribunal records its position on the points raised by the Commissioner as it differs from some aspects of the Commissioner's position:

(a) As is noted above, I differ from the Commissioner when it comes to JK's business experience and knowledge of GST in particular. I assessed that knowledge and experience as average at best. I assessed JK as a passionate advocate for the Applicant, with that advocacy not focused on the detail of matters such as taxation and JK's evidence not reflecting much knowledge of such matters. This differs from similar cases such as NOAC Consultants Pty Ltd v Federal Commissioner of Taxation [2006] AATA 1035 where recklessness was found in relation to input tax credit claims made by a tax agent based (in part) on an assessment of its knowledge. > > (b) I also differ with the Commissioner about the availability of tax invoices being a factor in so far as the first cyber event is concerned. That was a matter beyond the Applicant's control. I agree with the Commissioner about invoices after October 2018, however. > > (c) I differ with the Commissioner on issues relating to contradictory material being provided by the Applicant. The parties differ about what was said and when in relation to the residence of contractors and particularly whether it was ever said that the professional educators were overseas contractors or not. From the overall evidence, I err on the side of considering that a misunderstanding due to poor communication. The parties will differ as to what JK said to the Commissioner and whether there were misunderstandings. I do not have sufficient evidence to conclude JK misled the Commissioner. However, I agree with the Commissioner when it comes to the contradictory material about the amount of the claim however, about the Xero reports provided to the Commissioner differing from the BAS and the inconsistencies in the Applicant's evidence about reliance upon the Xero reports. > > (d) I agree with the Commissioner that the size of the shortfall, the rushed nature of the BAS lodgements, and the poor record keeping practices and flaws in the Applicant's system prior to the first cyber event, and my findings about a lack of invoices after October 2018 are factors to consider.

4. On balance, for the reasons set out below, I have determined that the Applicant has not satisfied me it was not reckless in filing the BAS for the Relevant Periods in the form it did. The penalty assessments are not excessive as a consequence.
5. Recklessness requires gross indifference to a risk. JK filed the BAS for the Relevant Periods in a "rushed" manner following what was said to be a series of catastrophic events, and it appears to the Tribunal that not much thought was given to the veracity of the amount of the claimed input tax credits. The claims made in the BAS differed from figures on the Xero reports for instance which were available at the time, but this was not checked. JK sought no assistance despite only average tax knowledge (at best). The Commissioner was not told about the catastrophic events before the BAS were filed or shortly thereafter. The magnitude of the claims was significant.
6. While JK might say that the circumstances at the time were difficult and the Applicant did the best it could from the evidence it had available, I agree with the Commissioner that filing BAS in the manner JK did in those circumstances reflects clear indifference to the obvious and foreseeable risks that they might be wrong. The Applicant suggests the Applicant was "forced to send incorrect data" because of the cyber event(s)[421] which might be said to reflect that the Applicant knew at the time the BAS were lodged that they were incorrect. The Applicant knew well before March 2020 that material impacted by the first cyber event was not recoverable. The BAS were in fact wrong, and the Applicant admits as much in its revised claims in A-20251125-2. Not only were the BAS wrong but the supporting material relied upon is inconsistent. My assessment is that at the time the BAS for the Relevant Periods were filed, and the Applicant determined that it was worth making the claims and taking the chance because it considered the benefit of the potential GST refunds. The Applicant was grossly indifferent to the risks of making such substantial claims, and took no steps to try and alleviate those risks (such as seeking advice, getting the BAS checked pre-filing, or approaching the Commissioner). I have also found above that I do not accept the entirety of the Applicant's explanation for there being a lack of tax invoices for all of the Relevant Periods, and nor do I accept the credibility of the reasoning for those invoices not being obtained from contractors and/or the Applicant refusing to work with the Commissioner to obtain those invoices.
7. I am supported in my conclusion by an array of cases including the following:

(a) Tenvoc Properties Pty Ltd v Commissioner of Taxation [2006] AATA 529 where the director of the taxpayer simply signed BAS without checking them and the BAS contained errors. His lack of interest and indifference to the taxpayer's obligations was held to be recklessness. The magnitude of the shortfall was also relevant. > > (b) Print Applied Technology Pty Ltd v Commissioner of Taxation [2011] AATA 555 where GST input tax credit claims were made in relation to a transaction that did not take place and the director of the taxpayer did not check the BAS to ensure that those claims were not made, and there was some evidence that he allowed the claims to be made and knew the advisers were making the claims despite there being no entitlement to them. The director and the Applicant were assessed as indifferent. The Tribunal held that the director could not rely upon the conduct of the taxpayer's advisers as an excuse for not himself assessing the correctness of the taxpayer's claim or not engaging others to do so. > > (c) Eastwin Trade Pty Ltd v Federal Commissioner of Taxation [2017] AATA 140 [103] claiming GST input credits in circumstances where no tax invoices had been provided to its tax agent was held to comprise recklessness in the overall circumstances. The magnitude of the claims, and there being other errors in the BAS were also relevant. > > (d) Similar holdings were made in Trnka v Federal Commissioner of Taxation [2012] AATA 492 where the lack of tax invoices, and the Tribunal not accepting the explanation for that lack of invoices, were factors in favour of a recklessness penalty. > > (e) In NOAC Consultants Pty Ltd v Federal Commissioner of Taxation [2006] AATA 1035 failing to check a BAS filed and not having appropriate record keeping practices were factors supporting the imposition of a recklessness penalty. A difference to the present case for the Applicant, was that the taxpayer had been audited before, was a tax agent (so would be expected to meet higher standards), and took no steps to tidy up previous systemic issues. > > (f) In Very Important Business Pty Ltd v Federal Commissioner of Taxation [2019] AATA 1120 conclusions that the taxpayer's systems did not appropriately account for or maintain GST records were factors supporting a recklessness penalty. > > (g) In Queensland Harvesters Pty Ltd v Commissioner of Taxation [2009] AATA 351 a recklessness penalty was held to be appropriately applied to a taxpayer that claimed input tax credits without valid tax invoices because no effort was made to check the invoices and the claims made, and the magnitude of the claims would have called for additional checking. > > (h) In Employee Investment Company Pty Ltd v Federal Commissioner of Taxation [2009] AATA 367 recklessness penalties were upheld for a taxpayer that had disorganised records, and had concluded that any supplies it made in the relevant period would be cancelled out by input tax credits for which there was no supporting material. The holdings in this case included rejecting assertions that other litigation in which the taxpayer was engaged and a failure to have the necessary records excused the taxpayer's behaviour at the time the BAS were filed. > > (i) In Douglass v Federal Commissioner of Taxation [2010] AATA 138 the Tribunal did not accept the taxpayer's explanation for a failure to provide invoices for the entirety of the periods at issue and the inability to reconcile material were factors in favour of a recklessness penalty being imposed. A difference to the present case is that the taxpayer was assessed as not having given any reliable evidence.

If any penalty is imposed, should it be remitted in whole or in part pursuant to section 298-20 of Schedule 1 to the TAA?

1. The parties also differ on this aspect. It can be dealt with in brief. It should be noted that I deal with the base penalty uplift below separately to the main penalties.

1. Section 298-20 of Schedule 1 to the TAA provides a broad power to remit all or part of the penalty.
2. The Applicant's case is (in summary) that the penalties for recklessness should be remitted in full or at least in part because:

(a) There was a voluntary disclosure. It is decidedly unclear what the Applicant is referring to and whether this relates to the GST matters before the Tribunal. The Applicant states that a voluntary disclosure was provided "pursuant to a review offered by the Commissioner" but then the "Commissioner subsequently advised that this was an error in their letter and that no such review would be made available".[422] The Commissioner offered to receive voluntary disclosures early on in the audit process[423] and it is part of the Commissioner's standard correspondence to seek that taxpayers come forward to it and declare any errors they might have made[424] even during an audit process. The statutory provisions provide that if a voluntary disclosure is made that can reduce applicable penalties.[425] But a voluntary disclosure must be made in the approved form. [426] I can see nothing on the Tribunal Book reflecting that any such voluntary disclosure was made. In any event, the Applicant has proceeded before the Tribunal on the basis that its position is correct, and there is no shortfall. I leave this matter aside.[427] Perhaps the Applicant is saying that its revised claim in A-20251125-2 reflects a voluntary disclosure of a shortfall; if that is its argument, it is not a disclosure made in the approved form which is what the statute specifically requires. > > (b) The Taxpayer's Charter has not been complied with as the circumstances, particularly the cyber events and all of the other events impacting the business and JK, should have been considered. The imposition of the penalty was harsh and disproportionate in the overall circumstances. The Commissioner based the imposition of penalties on incorrect factual assumptions, including that the contractors were resident overseas. There is no actual shortfall of taxation, and the penalty is unjust, unfair and unreasonable.[428]

3. The Commissioner takes the view that there is no basis for penalties to be remitted essentially repeating the reasons for penalties being imposed in the first place.[429] The Commissioner also says that the fact the relevant input tax credit claims were not allowed so there is no consequence that the Applicant did not receive a refund based on its input tax credit claims. This is not a reason for remitting penalties.[430] I agree with that latter point raised by the Commissioner. The penalty is imposed upon statements.

1. I have carefully considered the material on the Tribunal Book, and particularly reviewing the evidence of what the Commissioner took into account when coming to its conclusions on remission. On balance, the Applicant has satisfied me that there should be a partial remission of the penalties taking into account the circumstances in this case. By a narrow margin, I am not satisfied that the Commissioner fully considered all of the circumstances as carefully as it should have.
2. I have concluded that there is a reason for remission in part, taking into account the overall circumstances faced by the Applicant at the time the BAS for the Relevant Periods were filed. This is on the following basis:

(a) I have accepted that the first cyber event occurred in October 2018. For that reason, I accept that there was a lack of available material relating to Relevant Periods between 30 June 2016 and 30 September 2018, and for part of the Relevant Period ended 31 December 2018 (that is, the period from 1 October 2018 to 31 October 2018). I am troubled of course, as I am not satisfied that the Applicant's system adequately met its GST obligations for any of the Relevant Periods. But, as I accept the first cyber event occurred, I must take that into account when considering the remission power. > > (b) To that extent, and by a narrow margin, I accept it would be unjust to suggest that the Applicant was reckless in relation to the Relevant Periods impacted by the first cyber event, when the loss of records can be maintained to be to a degree due to matters outside of the Applicant's control. > > (c) However, I do not accept that the Applicant took reasonable care in filing the BAS for the Relevant Periods impacted by the first cyber event. A prudent person in the Applicant's circumstance would not have filed the BAS for those periods in the form they were filed, for the reasons I have outlined above. It would send an entirely inappropriate message to remit penalties any further when there are obvious steps the Applicant should have taken. > > (d) For that reason, I remit the penalties from 50% to 25% for the Relevant Periods ending 30 June 2016 to 30 September 2018, and apportion the penalties for the period ended 31 December 2018 so that penalties are applied at 25% for the period from 1 October 2018 to 31 October 2018, and 50% thereafter. > > (e) I do not accept in the overall circumstances that there is any justification for further remission. In particular, I do not draw the same conclusions in relation to the Relevant Periods after 31 October 2018. For the reasons I have outlined above, I am satisfied that Applicant was reckless, and I am not satisfied that it is appropriate to remit the penalties in those periods in full or in part. > > The small business tax relief ground - a new objection ground supporting remission?

3. During the hearing Mr Ahmed sought to raise an argument that Appendix B to PS LA 2012/5 should be applied by the Tribunal. In that Appendix it is said that penalty relief may be granted to individuals and small businesses in some circumstances. Notably it is said that penalty relief will not be granted in circumstances where there a penalty is imposed to recklessness, as I have found above. PS LA 2012/5 also this relates to "low value shortfall amounts and a low [base penalty amount]" neither of which appear to be the position in this case. Mr Ahmed suggests this is not a new ground of objection because it is covered in a letter dated 7 June 2023.[431] Of course, that is not the Applicant's objection.
4. The Commissioner takes the view that this is new ground of objection which the Applicant cannot rely upon without leave. The Commissioner also says that, in any event, the power referred to in Appendix B is in section 3A of the TAA which contains the Commissioner's powers of general administration, and this is not reviewable by the Tribunal.[432]
5. It is quite wrong for the Applicant to point to a letter dated years later and suggest it forms part of its grounds of objection. In my view, the Applicant's current grounds of objection seeking remission of penalties may arguably cover the small business tax relief ground, but this is a fairly weak argument. I am prepared to exercise my discretion pursuant to section 14ZZK(a) of the TAA to allow the Applicant to raise this ground as part of an argument about remission - but not on the basis that 'relief' should be granted as that is different to remission and is not a reviewable decision. I agree with the Commissioner that there is an issue about the jurisdiction of the Tribunal to consider 'relief' further as that power appears amenable only to judicial review.
6. This matter is of no consequence to my decision above on remission. PS LA 2012/5 is not the law. That Tribunal applies the law not the Commissioner's guidance. In any event, on its terms, the guidance in Appendix B of PS LA 2012/5 does not apply to the Applicant because the shortfall is large, and a penalty for recklessness has been imposed upon the Applicant. I am also not satisfied that the penalties should be further remitted for any reason based on this material.

Should the base penalty uplift have been imposed and/or should it be remitted?

1. The Commissioner appears to have imposed the base penalty uplift on two bases:[433]

(a) Firstly, pursuant to paragraph 284-220(1)(a) of Schedule 1 to the TAA on the basis that the Applicant took steps to prevent or obstruct the Commissioner from finding out about the false or misleading nature of the statement because failed to provide substantiation of its claims although opportunities were given, and failed to respond to a notice issued pursuant to section 353-10 of Schedule 1 to the TAA.[434]. > > (b) Secondly, pursuant to paragraph 284-220(1)(c) of Schedule 1 to the TAA on the basis that the Applicant made false or misleading statements after the 30 June 2016 period (i.e., for periods from 1 July 2016 to 31 December 2019) claiming input tax credits. The same penalties were imposed on each of those BAS periods as were imposed on the 30 June 2016 BAS period.

2. The Applicant's only obvious argument on the uplift is set out in the Applicant's SFIC which suggests the uplift should not have been imposed as the events in question were a single event, and not a consistent behaviour.[435] The Applicant also says that it did not fail to co-operate with the Commissioner pointing to the thousands of pages of holistic data is relies upon.[436] Once again, the Applicant has not raised this in its objection. Once again, I am prepared to allow the Applicant to expand its grounds of objection to raise this matter pursuant to paragraph 14ZZK(a) of the TAA.
3. I am not satisfied that the base penalty uplift has been inappropriately applied. I have noted above that in my view there is a lack of a strongly credible reason for the Applicant's failure to obtain tax invoices from its contractors, and more particularly to work with the Commissioner to do so from even a sample of contractors with the Commissioner using its formal powers. I was not convinced by JK's evidence in that regard. Most critically however, it is clear that the Applicant failed to comply with a formal section 353-10 notice issued to it, without any basis. That alone is more than sufficient to satisfy paragraph 284-220(1)(a) of Schedule 1 to the TAA. The fact that the Applicant provided other material does not alleviate that matter.
4. In addition, paragraph 284-220(1)(c) of Schedule 1 to the TAA applies on its terms. I may have been persuaded to remit the base penalty uplift if only paragraph 284-220(1)(c) of Schedule 1 to the TAA was applicable, as I agree with the Applicant that the imposition of penalties was all one event and I would have taken that into account.
5. However, due to the matters outlined above, particularly the seriousness of the Applicant's failure to respond to the section 353-10 notice and the entirely inadequate manner in which this was dealt with in the evidence before the Tribunal, I am not persuaded this is an appropriate case to remit the base penalty uplift in any of the Relevant Periods.

1. There are some other matters that arose in this case which the Tribunal comments upon below as they were of concern to the Tribunal. They are not substantive matters that impact the outcome of this decision in any way, and this is why they do not appear in the body of reasoning in this decision. The comments below are provided merely as guidance to other parties that may appear before the Tribunal.

1. The Tribunal was troubled during the hearing as well as during JK's evidence as a result of JK being given indulgence by the Tribunal to also present the Applicant's case alongside Mr Ahmed.
2. JK continually raised perceived issues about named officials of the Commissioner, JK described the audit and administrative processes that were or were not pursued, responses to freedom of information requests that were flawed in JK's view, varying complaints the Applicant made to whom and when, what JK asserted officials said to JK which JK apparently believes were somehow legally binding on the Commissioner at administrative law,[437] and that were reneged on later. This included scandalous claims about certain officials.[438] JK proceeded at length on these perceived issues in opening, in evidence,[439] in re-examination and in Oral Closing. JK used time to try to give evidence about these matters from outside of the witness box. The amount of time spent on dealing with these matters was of frustration, as the Tribunal had to intervene frequently.
3. While these matters were clearly genuinely felt or perceived to be valid issues by JK, all of it should have been put aside. This is because the Applicant had been clearly advised by the Tribunal in pre-hearing processes[440] that its jurisdiction was to consider the tax law issues (in this context, GST and penalties), and the Tribunal does not have the administrative law jurisdiction. If the Applicant felt the Commissioner's processes required review and there were administrative law issues that needed determination, the Applicant should have proceeded other than in the Tribunal and was on notice to do so. For the avoidance of doubt, the matters raised by JK have not been taken into account by the Tribunal in reaching its decision in this case, and no adverse inferences been drawn against any of the Applicant, JK, or the Commissioner from the matters raised by JK.
4. The point of raising these matters in these Closing Comments is to reiterate the importance of the Tribunal's statutory objectives. All parties before the Tribunal need to be aware of the Tribunal's statutory objectives which the Tribunal is required to pursue as set out in section 9 of the Administrative Review Tribunal Act 2024 (Cth). Those objectives include that "applications before it are resolved as quickly, and with as little formality and expense, as a proper consideration of the matters before the Tribunal permits" (Emphasis added).[441] JK's submissions and evidence did not assist the Tribunal to meet that objective. All parties before the Tribunal are required to use their best endeavours to assist the Tribunal to achieve its objectives in section 9.[442]
5. Other applicants to the Tribunal should not follow the Applicant's lead in this case, and advisers to such applicants should ensure that what happened in this case is not repeated in future cases. The Tribunal has more than 100,000 live cases before it, its resources are severely stretched, and, in order to ensure that applications are dealt with promptly and in accordance with the Tribunal's objectives, its time should be valuably spent. Instead, in this case, the Tribunal was required to manage and wade through a lot of material that was not relevant to the case before it.

1. JK's evidence included explanations about the Applicant's inability to source witnesses to support the Applicant's case.[443] JK's evidence and the Applicant's Outline both suggest that those witnesses are fearful of the Commissioner, and there is a perception of a potential ongoing impact from giving evidence for the Applicant in the Tribunal "against" the Commissioner.[444] These comments do not in any way influence the Tribunal's decision in this case. However, if JK's evidence correctly expresses the reasoning of potential witnesses before the Tribunal and the community's perception, it is concerning, and requires comment.
2. The Commissioner, like every regulator, wants to reach decisions based on the true facts and spends a lot of time trying to source facts. If taxpayers think the Commissioner is wrong, they bear the burden of proof in any case in the Courts or the Tribunal, including to provide evidence that the facts are not as the Commissioner thinks they are. The basic principle is that no one knows the facts better than the relevant taxpayer. Sometimes the Commissioner gets it wrong on the facts and/or the law, can be corrected by the taxpayer, and/or the Courts and the Tribunal can set the Commissioner straight if they are given the correct facts. Of course, sometimes the Commissioner does not agree that the facts are as presented by taxpayers, and witness evidence and corroborative evidence from a taxpayer can convince the Commissioner or if necessary, a Court or the Tribunal.
3. The Commissioner has considerable powers, and in doing its job and exercising those powers the Commissioner can cause disruption and cost. The Tribunal appreciates that this can give rise to concern and frustration in the Australian community. But to put things bluntly, the Commissioner's officials are simply not a group of evil villains scheming to reap revenge on the Australian community when the true facts are not what the Commissioner thought they were. Approaching matters with the Commissioner with that attitude is incorrect and entirely counterproductive. This is not a reason for not appearing as a witness. The Commissioner's officials are everyday Australians doing their job to try to assess tax correctly and they are trying to get it right. The tax law is complex, and the Commissioner does not always get it right - that is where witnesses can help.
4. It is contrary to a healthy tax system for anyone in the Australian community to fear giving evidence at the Tribunal to clarify the facts. Without evidence of the true facts, a taxpayer may struggle to meet its burden of proof before the Courts and the Tribunal when trying to correct the Commissioner. There is absolutely no reason for any hesitation to give evidence before the Tribunal. If Australians want to ensure that the Commissioner always gets it right, they should be prepared to assist where they have evidence to ensure that is the position.

10 November 2025, 11 November 2025, and (final date of party closing submissions) 8 December 2025

Mr A Ahmed, Adam Ahmed & Co Tax Lawyers and Chartered Accountants

Australian Taxation Office, Litigation and Legal Services (Ms Rares)

Australian Taxation Office, Litigation and Legal Services

[1] Subject to the comments and analysis below about the Applicant's grounds of objection - see paragraphs ‎77 and ‎78 below.

[2] JK is said to be both the sole director and sole shareholder of the Applicant during the Relevant Periods: T63-927; T57-798 [1].

[3] Witness Statement of [JK] dated 17 July 2025 ("JK Witness Statement") [12]-[13] - also repeated on the Joint Tribunal Book ("Tribunal Book") at various spots including A17.

[4] JK Witness Statement [28]-[33]. JK Witness Statement includes Appendices about these regulatory requirements - for instance, A17-2600 to A17-2601. Other Appendices identify "general compliance" by the Applicant with ASQA requirements in 2017 for example (A17-2591). None of this mentions GST.

[9] T5-60. This may have been due to an inadvertent failure to renew that registration: T9-122.

[11] JK Witness Statement [52]. This may have been resolved with the State government funding body on a retrospective basis for instance. It is confusing to see a letter at A27 suggesting there may still have been an issue in late 2024 with the relevant State government funding body, but it is assumed that issue was resolved.

[13] T18-156; T43-496 [21], [23], T43-500 to T43-501, T52-523.

[14] JK Witness Statement [30]-[36].

[15] T61-904 to T61-917 comprise a financial viability risk assessment report for ASQA which tests financial viability by way of historical and projected financial reports. The material at T61 may relate to either 2019 (within the Relevant Periods), or, if future focussed, 2020 (so outside the Relevant Periods). It seems more likely it is future focused as the figures mirror each other month by month, and appear to be future projections. In any event, it is not material that deals with GST.

[17] JK Witness Statement [61]; T1-10.

[21] For example, ST5-1067 is an email between a trainer and a student relating to assessments; ST5-1082 is an email indicating that an educator is electing to train 5 students. T57-803 to T57-804 set out evidence in the form of a Statutory Declaration from JK as to the use of contractors.

[22] JK Witness Statement [61]. Applicant's SFIC [24].

[23] For example, see T2-45 referring to "contradictory information", ST3-999 bullet point 3, T39-476 (disputed at A8-1388), T43-497 [32a], T46-527, T46-528.

[24] For example, see the Applicant's SFIC [50], the objection at T46-527 and T46-528, the Application for Review at T1-10, and JK Witness Statement [15], [61].

[27] JK Witness Statement [86]. Also, the Applicant's Outline page 18.

[28] JK Witness Statement [36], [49]-[53], [86]-[88]. This was also advised to the Commissioner: T7-114.

[29] For example, the term was used in evidence at JK Witness Statement [89], annexure to JK Witness Statement headed "Case Law Precedent" " 5. Average Taxpayer" and in the Applicant's SFIC [5], [85].

[30] JK Witness Statement [54]-[55]. Applicant's SFIC [31].

[32] Sections 286-25, 286-75 and 286-80 of Schedule 1 to the TAA. The administration of these provisions is also set out in guidance issued by the Commissioner to its officials: Law Administration Practice Statement PS LA 2011/19 Administration of penalty for failure to lodge on time.

[33] This "portal shut down" issue is also referred to by the Applicant at T41-482, ST3-1021 and A8-1391.

[34] T7-114 - phone note dated 2 April 2020. Also noted in the Position Paper at T43-494 [14].

[35] JK said that when the Applicant had the invoices they were uploaded onto the Applicant's system and cross-checked by the Applicant's contracted bookkeeper, and randomly checked by JK. The Tribunal has no admissible evidence from the bookkeeper. This potential witness neither signed nor dated his witness statement and failed to appear before the Tribunal.

[36] Trnka v Federal Commissioner of Taxation [2012] AATA 492 [72]. The same point is raised by the Applicant in ST3-1021 "If the taxpayer had submitted on time, there would not be an issue". This is no answer to anything, as it is not what the facts are.

[37] JK Witness Statement [56]. The cyber events that were said to have occurred are referred to in more detail in this decision at paragraph ‎49 and following.

[38] These summaries were described in JK Witness Statement [25] as reconciled summary reports, "PL" (profit and loss accounts), and GST calculations that were saved by the contracted bookkeeper "on occasion" after being downloaded from the Applicant's business and information management system but not consistently. JK described such material as "only randomly" done in cross-examination. JK also said the material was in the form of "spreadsheets" which are not before the Tribunal - see paragraph ‎24(f) below. There is inconsistency in this evidence as is outlined further in this decision below.

[39] This 'randomness' was said to be because Xero was being used on a trial basis to gather insights to improve the Applicant's business and information management system and was not utilised as the account record system of the Applicant: JK Witness Statement [26]. This evidence is inconsistent with a Statutory Declaration on the Tribunal Book from JK which was provided to the Commissioner in 2022.

[40] JK Witness Statement [58]. JK did not specify what the miscellaneous material was.

[41] See paragraph ‎24 and following.

[42] JK Witness Statement [60]-[61].

[43] JK Witness Statement [57]-[59].

[44] There is a minor discrepancy which the Tribunal assumes is typographical. Commissioner's SFIC [8], [13] says the claim totalled $647,372 at [11] but $647,370 at [8], and the shortfall to be $645,909 at [8]. The Commissioner's SFIC refers to the total claim as $647,370 at [29] and in the table at [8]. The Commissioner's Outline [3] pastes the table from [8] of the Commissioner's SFIC. The Applicant's Statement of Facts, Issues and Contentions dated 18 March 2025 ("Applicant's SFIC") [33] confirmed that the refunds claimed totalled $647,370.

[47] See A-20251125-2 referred to in paragraph ‎24(f) below. Three of the figures (for 2017, 2018 and 2019) referred to in A-20251125-2 are relied upon in the Applicant's Objection T46-522.

[49] T11-128, T11-131, T11-133 for example.

[51] T12-134 a phone note from 27 April 2020 and T13-135 an email from the Applicant dated 5 May 2020 suggesting these errors were reversed in T14 and T15. However, T14 and T15 continue to record the Applicant as being registered on a cash basis for example. The same can be said for other amended Xero reports at A-20251125-1/T48-549 to T48-563. The Applicant still maintains inaccurate Xero reports.

[52] Also stated in the Applicant's SFIC at [48].

[53] T7-114 - although the note refers to "Xerox" instead of Xero, assumed to be a typographical error. The Tribunal records that it accepts that phone notes are business records pursuant to section 69 of the Evidence Act 1995 (Cth). The Applicant also may dispute the accuracy of this note, as JK appeared to challenge the accuracy of a phone note in cross-examination before the Tribunal. This has been taken into account by the Tribunal when assessing weight to be given to phone notes.

[54] T48-544 may be referring to these spreadsheets, which appear to have been produced via Xero (at T48-549 and following).

[55] The spreadsheets and other documents provided by the Applicant to the Tribunal on 25 November 2025 comprise two documents, The first is a document entitled "[ZBDD] Amendments to ATO" that is made up quarterly Xero reports for each of the Relevant Periods grouped in financial years, and is referred to by the Tribunal as "A-20251125-1." A-20251125-1 is merely a repeat of T48-549 to T48-563. The second document provided to the Tribunal after the hearing is a document entitled "2021.06.09 Financials and GST Calculation - [ZBDD]" and has been accepted into evidence as "A-20251125-2." It is the second document that was subject to the Tribunal's order after the hearing. I can also see that A20251125-1//T48-549 to T48-563 still records that the Applicant was registered on a cash basis for GST, when that is wrong.

[56] It was accepted by the Commissioner at the hearing that this document should have been on the Tribunal Book.

[57] The spreadsheets and other documents provided by the Applicant on 25 November 2025 comprise two documents, The first is a document entitled "[ZBDD] Amendments to ATO" that is made up quarterly Xero reports for each of the Relevant Periods grouped in financial years, and is referred to by the Tribunal as "A-20251125-1." A-20251125-1 is merely a repeat of T48-549 to T48-563. The second document provided to the Tribunal after the hearing is a document entitled "2021.06.09 Financials and GST Calculation - [ZBDD]" and has been accepted into evidence as "A-20251125-2." It is the second document that was subject to the Tribunal's order after the hearing.

[58] That document suggests on a financial year basis that total "Consulting-freelancer" costs were $923,472.73 in 2016, $1,051,520 in 2017, $1,379,449.47 in 2018, $1,359,966.66 in 2019, and claims that this results in an overall GST refund that is not $645,909 nor the full claim of $647,370 in the filed BAS, but $522,578. None of this resembles what was claimed in the BAS.

[59] That is, it does not back out GST at 1/11.

[60] For example, the total GST inclusive figure in A-20251125-1 for "consulting/freelancer" is $1,056,057.55 in 2017 and $1,416,098.17 in 2018. In A-20251125-2, the GST exclusive figure for "consulting/freelancer" for 2017 totals $950,451.79 and for 2018 totals $1,274,488.62.

[62] T57-798 under "Summary of Evidence for [ZBDD]" [3].

[63] ST3, [5] "We know the actual expenses were contemporaneously recorded in Xero." And ST3-1023 "the taxpayer has recorded its transactions contemporaneously on Xero."

[65] T40-478 - phone note dated 2 June 2021.

[66] T10-125 and following, T11-130 and following, T14-141 and following, T15-146 and following, T48-549 to T48-563/A-20251125-1.

[70] Pursuant to the rule in Browne v Dunn (1893) 6R 67 HL.

[71] A8-1331, A9-1500 [7]. T57-798 [6]. JK Witness Statement [73] and annexure at page 85. Applicant's SFIC [22]-[24], [76b].

[72] The unsigned undated witness statement at A29-2884 which is purportedly from the bookkeeper, a non-appearing witness, has not been accepted in evidence. The Commissioner could not cross-examine the witness, and none of the evidence could be tested. Even if that witness statement was to be considered and given any weight at all, it says little on this point only noting Xero at A29-2887 [12]. Further questions would have been necessary to get any valuable evidence, but this witness did not appear at the Tribunal.

[75] See, for example, paragraph ‎24(g).

[76] T47-541 to T47-542; T62-923 to T62-924.

[77] JK Witness Statement [62] suggests that JK "did not consider this to be a genuine offer." The Tribunal does not accept that.

[78] ST4-1058 to ST4-1059. ST6-1109 to ST6-1110.

[80] ST4-1058 to ST4-1059. ST6-1109 to ST6-1110. T63.

[82] JK Witness Statement [63]. Also noted in the Applicant's SFIC [76a].

[84] T65-952 - how this would obtain tax invoices was unclear.

[85] For instance, ST4-1058, and at T65-951 the suggestion was that the entire business would be destroyed.

[86] This is evident from material on the Tribunal Book - for instance, it is overtly stated at times, such as at ST1-962.

[87] There is extremely limited corroborative evidence of such requests being made - ST6-1241. The Applicant says "over 10" contractors were contacted (A8-1322). That may be describing the contact made in 2025, and not during the Commissioner's investigation. There is no corroborative evidence other than one email to demonstrate the Applicant contacted its suppliers and sought to reconstruct its records during the Commissioner's inquiries. The Applicant also submits it was not feasible to contact suppliers (A8-1324) which might suggest it did not do so. While A22-2814 to A22-2823 is evidence that the Applicant contacted a number of contractors this was in 2025 and was focused on the proceedings before the Tribunal, and was long after the Commissioner's investigation and after the retention period for the invoices would have expired.

[89] A18. While JK Witness Statement [103] notes that whether a person is involved in proceedings was a question, the Commissioner's offer to use its formal powers was made before there were tax proceedings.

[90] It is noted that the JK Witness Statement [7] refers to "global mentor program databases" which from their description have nothing to do with the GST or tax penalty issues in this matter or the business and information management system.

[92] This system is further described in the Applicant's objection at T46-526 as including "client relationship management" software. It is similarly described in the Applicant's Statement of Facts Issues and Contentions dated 18 March 2025 ("Applicant's SFIC") [10]. The Submission on behalf of the Applicant dated 7 October 2025 ("Applicant's Outline") describes the four "modules" differently at [28].

[93] This is described as "three core software systems" not four in the Applicant's SFIC [11].

[94] JK Witness Statement [19], Appendix to JK Witness Statement A17-2602 to A17-2611 sets out further details of these systems with examples.

[95] This might also be what the Applicant describes as "the ZBDD Client/Student Relationship Management system (CRM)" in the Applicant's Outline. There are varying descriptions by the Applicant.

[98] Applicant's SFIC [10] describes what appears to be (c) and (d) in combination as a "multifaceted and fully comprehensive business management and digital wallet ecosystem", and the professional services credit system is called the "professional credits program" at [12].

[100] JK's evidence on cross-examination was that there were 17 websites hosted by GoDaddy; JK Witness Statement Appendix 3. JK Witness Statement [35] describes 15 websites, 21 databases, business and student data and business information hosted by GoDaddy. T54-782 (a statement of work from a service provider to recover the Applicant's websites and other material) refers to 15 websites.

[101] JK Witness Statement [44], [51], [87.5].

[102] See paragraph ‎50(f) below.

[104] See paragraph ‎38 and following below.

[105] JK Witness Statement [16]-[17], Appendix A17-2602. The Applicant's professional services credit system is also described as an "internal intranet portal" and a "decentralised professional services exchange model inclusive of GST" which "allowed exchanges of professional services between contractors." T57-804. A17-2604.

[106] Applicant's Outline [33] to [35], [37]. Some of the material on the Tribunal Book appears to comprise future objectives for the professional services credit system as opposed to reality. For instance, it describes being able to use professional services credits at a grocery store (A17-2613), when there is no evidence that this ever happened.

[110] There is some evidence at ST6-1117 headed "[ZBDD] Professional Services Credits [ZBDD] Association" which includes slides from a 'continuous improvement database" which supports these comments in evidence to a degree. Other materials around these slides also provide supporting evidence of the nature of the professional services credit system to some degree - for example, ST6-1123.

[112] See paragraph ‎8 above.

[113] This explains a point made by the Commissioner in its objection decision at T2-45 which was that there was insufficient funds in the bank accounts for the Applicant to have paid the creditable acquisitions claimed.

[114] JK Witness Statement, Appendix A17-2602, A17-2604.

[115] There is evidence on the Tribunal Book of some payments in credits - for instance, ST5-1063 to ST5-1064 (in early 2016), ST5-1079 to ST5-1083, and ST6-1185 (although this is outside of the Relevant Periods).

[118] Applicant's SFIC [17]. T62-919. T57-803 is part of a Statutory Declaration which provides evidence that the Applicant also sometimes paid the contractors in cash for small amounts initially, and it appears cash payments were also made more regularly T47-540 to T47-541, T62-919.

[120] T46-526; Applicant's SFIC [14], [17].

[121] For example, see ST6-1184 (a list which appears to be incomplete). When considering whether the contractors were GST registered, I do not accept the Applicant's submission that it can be assumed that the contractors were GST registered by also assuming an average pay. 122 The material on the Tribunal Book also evidences at ST2-990 that at one point the Applicant named three contractors to the Commissioner (perhaps at T62-919 or T62-922) and the Commissioner discovered that at least two of them were not GST registered. The Tribunal notes that whether the third contractor identified to the Commissioner by the Applicant was engaged as a contractor to be an administrator or a professional educator is not relevant so the Commissioner raising this matter at ST2-990 is of no significance.

[124] The Tribunal has an unsigned undated witness statement that it has not accepted in evidence because the bookkeeper did not appear and could not be cross-examined. Because it was unsigned and undated, it could not even be certain whose witness statement it was. Even if that witness statement was to be considered, it contains no evidence on this point in any event: A29-2884.

[126] It is 1/11th of the total price that needs to be deducted before commensurate professional services credits are allocated.

[127] Even if the relevant unsigned undated Witness Statement for a non-appearing witness was to be considered, it contains little to no evidence on this point, and may suggest exactly the same error was made as in JK's evidence in any event: A29-2885 [7ii].

[129] See footnotes 285 and 286 below.

[130] Potentially one of the witnesses that failed to appear at the Tribunal may have designed the professional services credit system as specified below -see paragraph ‎86 and footnotes 285 and 286 below. The Tribunal notes that even if it was to consider what the Applicant filed as unsigned undated witness statements for those non-appearing witnesses at A28-2878 and A29-2884, there is no evidence in those statements about how GST was dealt with in the professional services credit system and, in particular, there is no evidence in those witness statements that demonstrates GST was dealt with accurately. Questioning by the Applicant and/or the Commissioner would have been necessary to obtain any relevant evidence. That did not occur as neither of those witnesses appeared.

[131] JK Witness Statement [104] sets out a list of people that JK tried to contact, but this is not a full list of the contractors as it does not correlate to other material such as ST6-1184 and T46-529. ST6-1184 is described as comprising "a list of all the contractors [JK] can [send]" (ST6-1110) and yet we have other contractors noted elsewhere, and the lists do not align (21 of the 31 contractors listed in the JK Witness Statement are on ST6-1184, and only 2 of the 11 contractors listed on T46-529 appear on ST6-1184). There is other material (such as A9-1515) which sets out how contractors are used, but does not name contractors nor deal with GST. It seems that the Applicant may not know with accuracy who provided it services.

[133] See paragraph ‎45(f) above.

[134] JK Witness Statement [35]-[44] and Appendix A17-2593 to A17-2596 suggests a loss of over $9.5m, A17-2597 to A17-2599 ascribes a value to the loss of intellectual property as well.

[135] JK Witness Statement [35]-[44].

[136] JK Witness Statement [35]. Applicant's SFIC [26].

[139] See paragraph ‎67(n) below.

[143] Objection Decision T2-17 [34].

[144] JK Witness Statement [39]-[40], A17-2615 and A19-2720 comprise an email from Commonwealth Bank demonstrating sufficient funds were available.

[146] JK Witness Statement [36]- [37].

[148] JK Witness Statement [38]-[39], [41]-[42]. Applicant's SFIC [27].

[150] A19-2714 to A19-2719. Also see the annexure to JK Witness Statement headed 'GoDaddy Hosting Data Loss" A17-2616 to A17-2619. Also, T54-777 to T54-793.

[151] For example, in February 2019 and March 2019, T54-779 is an email with a specialist about how to try and recover data, and T54-782 is a proposed Statement of Work for that purpose.

[152] See paragraph ‎41 of this decision.

[155] The comment in the Commissioner's Position Paper at T43-501 that "You failed to respond and provide any tax invoices or proof of payment for the acquisitions made in carrying on your business. It is reasonable to draw the inference that you did not hold tax invoices or other documentation to substantiate your claims and that you reported GST on acquisitions in order to claim a net GST refund to which you had no entitlement" may be saying that the Commissioner did not believe the first cyber event occurred. If it is, I do not accept that conclusion. In fairness to the Commissioner, this comment was in the context of setting out the statutory provisions so what may have been meant is that there were no invoices available at the time the BAS were prepared, as opposed to reflecting any disbelief about the first cyber event.

[156] JK Witness Statement [65]-[67]. This bears no resemblance to the number of contractors said to have been used by the Applicant.

[157] ST6-1241. The Applicant says "over 10" contractors were contacted (A8-1322) that may be describing the contact made in 2025, and not during the Commissioner's investigation. There is no corroborative evidence other than one email to demonstrate the Applicant contacted its suppliers and sought to reconstruct its records during the Commissioner's inquiries. The Applicant also submits it was not feasible to contact suppliers (A8-1324) which suggests it did not do so. While A22-2814 to A22-2823 is evidence that the Applicant contacted a number of contractors this was in 2025 and was focused on the proceedings before the Tribunal and being witnesses. This was long after the Commissioner's investigation and long after the retention period for the invoices for the Relevant Periods would likely have expired.

[158] Ibid, footnote 156.

[159] For instance, T40-478, T43-498 [33], T47-540.

[161] T54-777 and following demonstrates that the Applicant knew in 2019 that the material could not be recovered.

[162] JK Witness Statement [57]-[59].

[163] Commissioner's Outline [49]-[50].

[165] JK Witness Statement [46]-[48], although this evidence relates to the second cyber event.

[168] For example, an inference could be drawn that there was no viable explanation that could be given and JK's combative reaction was designed to divert attention from that.

[169] This kind of reaction by JK is also reflected in some of the correspondence on the Tribunal Book, for instance see T63-128 and A2-1302.

[170] For example, Onassis v Vergottis [1968] 2 Lloyd's Rep 403, 431 "If a witness's evidence conflicts with what is clearly shown to have occurred, or is internally self-contradictory, or conflicts with what the witness has previously said, it may usually be regarded as suspect." This case has been applied in the Australian Courts.

[171] For example, the nature of responses made by a combative witness that avoided answering questions in Makrylos v Federal Commissioner of Taxation [2023] FCA 971 was held at [206] and [209] to support the conclusion that his evidence was entirely unreliable.

[175] On re-examination by Mr Ahmed, JK suggested that this incident occurred because a phishing email was clicked on.

[176] JK Witness Statement [47]-[48].

[177] This is also raised in the Commissioner's Outline [29].

[181] T2 [42], [44], [45], [47], [57], [58], [59], [67], [68], [70], [75], [77].

[182] JK Witness Statement annexure page 86.

[183] T9-122; T20-164, JK Witness Statement annexure relating to ASQA compliance.

[184] For instance, ST3-1037 to ST3-1057, ST9-1258, A5-1313.

[185] ST3-1044 [39], T60-902 [39] (a repeated document on the Tribunal Book - one of many).

[186] Each BAS on T6. T50-572 provides entirely different figures as estimates. Using the Xero reports provided at T10 and T11 for the September 2018 and December 2019 BAS periods as examples, these show figures of approximately $120,330.84 and $175,551.72 (including GST) per period for "Consulting/Freelancer" costs. These do not correlate with the figures in the ASQA report.

[187] T14-142, T14-144, T15-147 and T15-149 show figures for "Consulting/Freelancer" for the September 2018 and December 2019 BAS periods were $153,107.98 and $190,951.72 (including GST). A-20251125-1 shows the "Consulting/Freelancer" figures for the September 2018 BAS period as $348,830.50.

[188] See paragraph ‎67(d) below.

[190] ST5-1077 to ST5-1078, ST5-1084, ST5-1086, ST5-1098 to ST5-1103, ST5-1107, ST6-1115 to ST6-1117, ST6-1130 to ST6-1131, ST6-1157 to ST6-1158, ST6-1171.

[191] For instance, ST6-1177, A4-1306 to A4-1312, A14-2431, A15-2444 to A15-2530. This material is also annexed to the JK Witness Statement, and partly repeated on the Tribunal Book at A8-1343 to A8-1344.

[192] T61-904 to T61-917; see paragraph ‎9 and footnote 15 above. It may not even be about the Relevant Periods.

[194] See paragraph ‎67(a) above.

[199] For instance, see T52-716 on 31 October 2016 shows a payment to a person with the first name "Cassandra" which may be a payment to a contractor with that first name listed on ST6-1184, but an invoice cannot be identified, and it is not clear what the payment was for. Similarly, on T52-729 there is a payment recorded on 12 October 2017 to a person with the first name "Giselle" and which appears to be the person listed at T46-529 as a contractor. It is unclear what this relates to, as is whether GST was payable on that cost in any event.

[201] For instance, T22 to T24-226 all appear to be about periods outside of the Relevant Periods.

[202] T48-544 to T48-563/A-20251125-1.

[203] JK Witness Statement annexure at page 84.

[204] JK Witness Statement annexure page 73, page 80.

[205] For example, JK Witness Statement [6]-[15], annexure pages 24-37, A14-2449.

[207] ST5, ST5-1068, ST5-1069, ST6-1238 to ST6-1241, A14-2440 to A14-2443, A17-2575 and following.

[208] For example, ST5-1085, ST5-1087 to ST5-1097, ST6-1138.

[210] ST3-1026, A2-1286, A2-1287, A2-1288, A2-1289, A2-1290, A14-2395 to A14-2430, A14-2434 to A14-2439.

[211] There include descriptions of the recognition received. For example, A9-1502.

[213] Nor is it relevant to penalties - for instance see RYJZ and Commissioner of Taxation [2026] ARTA 182 [79b] which records that a "canonised saint" can have a penalty imposed upon them.

[215] This has no obvious correlation to anything else on the Tribunal Book including, for instance, the ASQA financial viability risk assessment report T61-904 to T61-917 - although that report may be focused on a future period, outside of the Relevant Periods - that is unclear.

[216] Referred to at T49-567, and commencing at T51-574.

[217] This invoice is unreadable, and the amount cannot be identified.

[218] As an example, the ABN reflects that this entity is not GST registered, and it is unclear whether it was in the past.

[219] ST6-1242, while addressed to the Applicant, is delivered to the NSW Aboriginal Land Council.

[220] Nothing that the first five lines on T58-836 relate to the Relevant Periods, but it is unclear whether the invoices referred to were GST free supplies.

[221] This invoice demonstrates no GST registration for the supplier either.

[222] For instance, T51-630 a renewal for three years so the amounts attributable to the Relevant Periods needs consideration, T51-691 and T58-839 only the first few lines of which are in the Relevant Periods. ST6-1221 appears to in part be costs incurred by the Applicant and in part for JK - apportionment may be necessary.

[223] For instance,T51-703 is GST on a credit card surcharge which relies upon the supply to which the surcharge relates being a taxable supply.

[224] This is the same as T51-668, so only one of these appears in this list.

[225] For example, ST6-1228 may be a GST inclusive invoice within the Relevant Periods but it is not clear what "pre-Conversion invoices" are and the nature of the supply is unclear (it could be a financial supply). If it is unclear, the Tribunal errs in favour of the Applicant, and this invoice should be allowed.

[226] This statement of account needs to be further considered - it seems likely that the invoices listed were for creditable purposes, and the nature of the business of the supplier could be checked further online. If it is unclear, the Tribunal errs in favour of the Applicant, and this invoice should be allowed.

[227] The reference to "data" as a supply needs consideration as it is vague and the figures charged are totally rounded figures. The nature of the business of the supplier could be checked further online. If it is unclear, on balance, the Tribunal errs in favour of the Applicant, and this invoice should be allowed.

[228] This statement of account needs to be further considered - it seems likely that the invoices listed were for creditable purposes, and the nature of the business of the supplier could be checked further online. If it is unclear, the Tribunal errs in favour of the Applicant, and this invoice should be allowed.

[229] This statement of account needs to be further considered. It seems likely that first 6 invoices listed (which are in the Relevant Periods) were for creditable purposes as it relates seemingly to the ASQA litigation before the Tribunal. While we cannot see GST, there is no suggestion that the invoices referred t0 could be otherwise than taxable supplies, so the total costs could be considered as GST inclusive, reversed out and allowed.

[230] T51-703 is GST on a credit card surcharge which relies upon the supply to which the surcharge relates being a taxable supply. That seems likely given the nature of the supplier. It is also a de minimis charge so the favours allowance in the overall circumstances.

[231] Noting that T58-809 demonstrates part payment.

[237] These points are recorded at T12-134, a phone note of a call between the Commissioner and the Applicant.

[242] T37-414; A8-1380. The time period for compliance was also extended: T38-420.

[244] The Applicant might seek to excuse itself by saying it had no additional material to provide, in which event it ought to have responded to the Commissioner setting that out and setting out how the information already provided met the requirements of the notice. It failed to do that.

[248] T56. This comprises an email simply confirming that the Applicant objects to the June 2018 period. That was due to an administrative error by the Commissioner, as the assessment for that period was issued after the Applicant filed its objection. To tidy that away, the objection was confirmed after the assessment had been issued.

[250] Ignoring issues such as PAYGW and the nature of the Applicant's supplies (whether GST-free or not) that are not at issue in this case.

[260] T46-532. T46-533, T46-537. As is noted below at paragraph ‎126, I accept that the grounds seeking remission of the penalty include remission of the penalty uplift, but the objection contains no grounds challenging the imposition of the penalty uplift.

[262] T46-537. This argument focuses on the need to consider the Applicant's circumstances, which is demonstrated below.

[263] The "voluntary disclosure" and "oral ruling" arguments appear to be solely related to grounds that are no longer at issue before the Tribunal - particularly the nature of the Applicant's supplies and whether they were GST-free or not.

[264] Administrative Decisions (Judicial Review) Act 1977 (Cth) - see section 3 "decisions to which this Act applies", section 5. Statutory discretions such as those in subsections 29-70(1B) and 29-75(1) of the GST Act and section 155-5 of Schedule 1 to the TAA are not amenable to challenge before the Tribunal under Part IVC of the TAA, but may be considered in judicial review proceedings: Commissioner of Taxation v Futuris Corporation Ltd [2008] HCA 32.

[265] Applicant's Submissions dated 24 November 2025 pursuant to the Directions dated 11 November 2025 ("Applicant's Written Closing") and Commissioner's submissions dated 9 December 2025 pursuant to the Directions dated 11 November 2025 ("Commissioner's Written Closing").

[267] Commissioner's Written Closing [10], [18], [21]-[26].

[268] T48 to T55, T57 to T65, ST1 to ST10, A2, A4-A7, A13-A16.

[270] T66. As is noted above, $1,461 of the Applicant's claimed input credits was allowed.

[272] On 14 October 2024, the Administrative Appeals Tribunal became the Administrative Review Tribunal. Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No.1) Act 2024 (Cth) proceedings that were not finalised before 14 October 2024 are continued and finalised by the Administrative Review Tribunal. Anything done in relation to any such proceeding before 14 October 2024 is taken to have been done by the Administrative Review Tribunal.

[274] For example, see A1, A3, A2-1291 and following, A8-1324, A9-1662, A9-2391, A20-2780, A23-2828 [14], A23-2829 [19], A25-2870, Applicant's SFIC [42].

[275] For example, A1-1269, A2-1291 and following.

[276] For example, see ST9-1259, ST10-1267 to ST10-1268, A8-1334, A20-2780.

[277] For instance, ST3 [3], Applicant's SFIC [42].

[280] For example, T1-10, A8-1339, A11-2391, A20-2770, JK Witness Statement [94]-[95].

[281] For instance, much of what appears at A20-A26.

[282] ZBDD and Commissioner of Taxation [2025] ARTA 2197.

[283] See paragraph ‎172 and following below.

[284] Section 14ZZK of the TAA. Commissioner of Taxation v Ross [2021] FCA 766 [46]; McCormack v Federal Commissioner of Taxation [1979] HCA 18; (1979) 143 CLR 284, 301; Bai v Federal Commissioner of Taxation [2015] FCA 973 [31]; Bai v Federal Commissioner of Taxation (No.2) [2015] FCA 1083 [2].

[285] Upheld in other cases such as McCormack v Commissioner of Taxation [1979] HCA 18; (1979) 143 CLR 284, 303, 306, 323.

[286] There were two other unsigned, undated witness statements filed, one for MB a casual contracted bookkeeper and the other for BAAM a contracted software engineer (A29-2884 and A28-2878). They have not been accepted in evidence by the Tribunal.

[287] The Tribunal has commented on those witness statements above in footnote 129 for example. From those comments it can be concluded that the unsigned, undated witness statements alone would not have been of material assistance to the Applicant, and evidence in person responding to questions would have been necessary for any valuable evidence to be obtained.

[288] Per Jones v Dunkel [1959] HCA 8; (1959) 101 CLR 298.

[289] Upheld in Bosanac v Commissioner of Taxation [2019] FCAFC 946 [90]-[91], and further upheld in Bosanac v Commissioner of Taxation [2019] HCA 41 [22]-[23].

[290] For the reasons noted below in relation to the use of artificial intelligence (see paragraphs ‎112 to ‎113 below), the Applicant's Outline has been disregarded to the extent of the cases cited, as they are without proper citations and/or do not exist. The Applicant has reduced the cases it is relying upon to three as discussed further below (see paragraphs ‎112 to ‎113 below) in any event. It is noted that the Applicant's Outline is also in part more evidence from JK. This material has been considered by the Tribunal.

[291] Applicant's Outline [12], [14], [89]-[94].

[292] This kind of submission is put in a number of different ways in the Applicant's Outline for example [165] "ZBDD's holistic evidence as a package and its totality validates ZBDDs credibility as a business accruing expenses and its credibility stands without adequate process." The Applicant's submissions in the Applicant's Outline on penalties will be turned to below. The remainder of the Applicant's submissions in the Applicant's Outline canvas issues that are not in the Tribunal's jurisdiction (for example Applicant's Outline [76] and following, [168] and following) or are not relevant to the issues before the Tribunal (for example legislative reform suggestions Applicant's Outline [184] and following).

[293] As discussed above, the Commissioner's discretion can be considered in judicial review proceedings before the Federal Court or the Federal Circuit and Family Court (Division 2).

[294] Commissioner's Outline [36]-[37].

[298] Commissioner's Outline [39c], [40].

[299] As set out in subsection 29-70(1) and (if applicable) subsection 48-57(1) or subsection 54-50(1) of the GST Act.

[300] Huynh and another v Commissioner of Taxation [2008] AATA 305 [32]; Trnka v Federal Commissioner of Taxation [2012] AATA 492 [71].

[301] Although not relevant for the bulk of the periods in the Relevant Periods of this case, post October 2019, section 3G of the TAA provides for an electronic invoicing system which may be established by the Commissioner. This is presumably to try to assist with taxation compliance.

[302] The relevant legislative instruments are listed in Goods and Services Tax Ruling GSTR 2013/1 Goods and services tax: tax invoices ("GSTR 2013/1") [118]. This includes for instance recipient created tax invoices.

[303] For example, A New Tax System (Goods and Services Tax): Waiver of Tax Invoice Requirement (Offer Document and Renewal Notices) Determination 2023 (Cth) LI 2023/8 [7] and A New Tax System (Goods and Services Tax): Waiver of Tax Invoice Requirement (Acquisitions from or Acquisitions by a Beneficiary of a Bare Trust) Determination 2023 (Cth) LI 2023/5 [7]

[304] Subsections 382-5(9) and 382-5(10) of Schedule 1 to the TAA.

[305] Subsection 382-5(8) of Schedule 1 to the TAA.

[306] See paragraph ‎23 above.

[307] A-20251125-2 is an amended claim. Three of the figures (for 2017, 2018 and 2019) referred to in A-20251125-2 are replicated in the Applicant's Objection T46-522 so it is this claim that appears to be in dispute.

[308] Of course, the mere existence of a tax invoice does not mean that input tax credits are necessarily claimable and whether the supply actually occurred must be tested: e.g., Bayconnection Property Developments Pty Ltd and others v Commissioner of Taxation [2013] AATA 40.

[309] The requirements to comprise a tax invoice formerly appeared in a prescriptive manner in the former regulation 29.70.01 of the A New Tax System (Goods and Services Tax) Regulations 1999 (Cth). Amendments were made in 2010 by way of the Tax Laws Amendment (2010 GST Administration Measures No.2) Act 2010 (Cth) ("the 2010 amendments") which were said by the Explanatory Memorandum to replace a prescriptive list with subsection 29-70(1): Explanatory Memorandum to the Tax Laws Amendment (2010 GST Administration Measures No.2) Bill 2010 (Cth) ("EM to the 2010 amendments") [3.6]-[3.10]. The 2010 amendments also resulted in the insertion of subsection 29-70(1A) of GST Act which applies to documents issued by one entity to another entity. Such a document can be treated as a tax invoice if it would otherwise meet the requirements of being a tax invoice, but for the fact it does not contain certain information, and if the missing information can be obtained from other documents issued between the two entities. There are no submissions from either party about this provision. The Tribunal has been unable to find any obvious material on the Tribunal Book that enables it to track any supplier to the Applicant in multiple documents in any event.

[310] It is noted that the Applicant seeks to rely upon the adjustment note provision as well: ST3 [1] - an adjustment note would be issued by the supplier as a general rule, so presumably the Applicant means a "recipient created adjustment note" - this is never said. Subsection 29-75(1) of the GST Act entitles the Commissioner to treat a particular document as an adjustment note even where it is not one.

[311] Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355 [78] and section 15AA of the Acts Interpretation Act 1901 (Cth).

[312] Lacey v Attorney-General Qld [2011] HCA 10 [43]-[44]; Federal Commissioner of Taxation v Consolidated Media Holdings Ltd [2012] HCA 55 [39]. Section 15AB and paragraph 15AB(2)(e) of the Acts Interpretation Act 1901 (Cth).

[313] The Explanatory Memorandum to A New Tax System (Indirect Tax and Consequential Amendments) Bill 1999 (Cth) [1.44]. The EM to the 2010 amendments does not give a great deal of guidance about subsection 29-70(1B), simply noting at [3.23] and [3.27] that by way of subsection 29-70(1B) the Commissioner retains the discretion it had previously. Subsection 29-70(1B) was further amended in 2012 to repeal a note that previously appeared below subsection 29-70(1B). This was unrelated to the exercise of the discretion itself, and is related to legislative changes to the GST assessment process: Explanatory Memorandum to the Indirect Tax Laws Amendment (Assessment) Bill 2012 (Cth) [1.43] - [1.45].

[314] A New Tax System (Indirect Tax and Consequential Amendments) Act 1999 (Cth), item 42.

[315] As examples, Drake v Minister of Immigration and Ethnic Affairs [1979] FCA 53; (1979) 27 ALR 579 (Full Federal Court); Drake v Minister for Immigration and Ethnic Affairs (No.2) [1979] 2 ALD 634, 636, 641, Smith and Commissioner of Taxation [2026] ARTA 25 [77]; Santavas and Commissioner of Taxation [2025] ARTA 2515 [42].

[319] Section 357-60 of Schedule 1 to the TAA.

[320] GSTR 2013/1 [52], [82]-[83].

[322] PS LA 2011/25, 2 [5], 3 [6].

[324] A8-1331; A8-1340, T63-927. It is also noted that the Commissioner's Position Paper at T2-30 [68] refers to an email from the Applicant dated 19 May 2023 which does not appear to be on the Tribunal Book and where this reference is also made. This appears to be a further error on the Tribunal Book, as is noted in this decision the document A-20251125-2 was also omitted in error.

[326] In the JK Witness Statement at page 112 and 114 it is suggested that Taxation Ruling 97/17 is about record keeping requirements and then assertions are made about what that ruling says in the GST context. Not only is that ruling not about record keeping requirements, but about entertainment expenses, it says nothing about GST, and the comments cited about GST are not said.

[327] Queensland Harvesters Pty Ltd v Commissioner of Taxation [2009] AATA 351 [25]-[27].

[328] Queensland Harvesters Pty Ltd v Commissioner of Taxation [2009] AATA 351 [33].

[329] Douglass v Federal Commissioner of Taxation [2010] AATA 138 [35]-[44].

[330] Douglass v Federal Commissioner of Taxation [2010] AATA 138 [46] - refers to errors that replicate the error identified above at paragraph ‎45(g) and footnote 125.

[331] Douglass v Federal Commissioner of Taxation [2010] AATA 138 [47]-[50].

[332] Douglass v Federal Commissioner of Taxation [2010] AATA 138 [62]-[75].

[333] Mold v Federal Commissioner of Taxation [2011] AATA 823 [17]-[20], [30].

[334] Mold v Federal Commissioner of Taxation [2011] AATA 823 [21].

[335] Mold v Federal Commissioner of Taxation [2011] AATA 823 [31].

[336] Trnka v Federal Commissioner of Taxation [2012] AATA 492 [81]-[82].

[337] Trnka v Federal Commissioner of Taxation [2012] AATA 492 [51]-[58], [63], [66]-[80].

[338] Very Important Business Pty Ltd v Federal Commissioner of Taxation [2019] AATA 1120 [38]-[39].

[339] Very Important Business Pty Ltd v Federal Commissioner of Taxation [2019] AATA 1120 [97]-[103].

[340] Cash World Gold Buyers Pty Ltd v Federal Commissioner of Taxation [2020] AATA 1546 [208]-[210]. The holdings in this case were also supported in Smith and Commissioner of Taxation [2026] ARTA 25 [88].

[341] BRSJ v Federal Commissioner of Taxation [2021] AATA 333 [58]-[60].

[343] H&B Auto Repair Centre Pty Ltd v Federal Commissioner of Taxation [2022] AATA 3561 [74]-[75].

[344] H&B Auto Repair Centre Pty Ltd v Federal Commissioner of Taxation [2022] AATA 3561 [71]

[347] The Commissioner accepts that subsection 29-75(1) of the GST Act can be relevant to recipient created adjustment notes in any event: GSTR 2013/2 - Goods and services tax; adjustment notes [53].

[348] Vadasz v Federal Commissioner of Taxation [2006] AATA 682, [40].

[349] For example, Applicant's Outline [9], [82], [85], [109], [118], [131], [170], [171], [172], [175], [164], [166], another [175], [177], [181], [200], page 69; JK Witness Statement page 106; A23-2829 [24]-[25].

[350] Applicant's Outline [9], [170], [171], [164], [175], [200].

[352] Applicant's Outline [170], [171].

[353] Applicant's Outline [164], [171].

[354] Applicant's Outline [161] (page 47).

[355] The case was further appealed in Federal Commissioner of Taxation v ACN 154 520 199 Pty Ltd (in liq) [2025] FCAFC 146 and remitted back to the Tribunal for a further decision.

[356] JK Witness Statement 112 [4], [1], 114 and for "proportionality in penalty assessment" (citing the "Federal Court" for a High Court case).

[358] Subject to the Commissioner ensuring that there are no repetitions and checking the matters noted above in the footnotes to paragraph ‎67(n).

[359] See paragraph ‎98 above.

[360] This lower figure is the amount in dispute, noting that three of the figures (for 2017, 2018 and 2019) referred to in A-20251125-2 when coming to the $522,578 are replicated in the Applicant's Objection T46-522.

[361] See paragraphs ‎58 to ‎58‎60 above.

[362] See paragraph ‎61 above.

[365] See paragraph ‎45(h) above.

[369] T46-528 to T46-529 - examples of contractors in the Applicant's Objection.

[370] For example, the longer list at ST6-1184 does not contain all of the contractors listed on T46-529.

[372] See paragraph ‎67(a) above for examples.

[373] The Applicant says, "over 10 contractors" were asked (A8-1322) and JK Witness Statement [66] described "150 phone calls". There is very limited corroborative evidence of any of this on the Tribunal Book: ST6-1241. A22-2814 to A22-2823 reflect efforts made to contact suppliers in 2025 in preparation for Tribunal proceedings, and not close to the time of the audit when the invoices may have been available.

[374] Commissioner's Outline [36]-[37]. The Commissioner's position would, in my view, inappropriately narrow the discretions in subsections 29-70(1B) and 29-75(1) of the GST Act.

[377] This material has been taken into account on the same basis as is described above at paragraph ‎101.

[382] PS LA 2012/5 [5]; MT 2008/1 [16]; PS LA 2006/2 [27], [28], [31].

[383] Chalmers v Federal Commissioner of Taxation [2008] AATA 308 [33]. Eastwin Trade Pty Ltd v Federal Commissioner of Taxation [2017] AATA 140 [102], [103]; JG and JA Williamson Holding Pty Ltd (as Trustee of John Williamson Family Trust) v Federal Commissioner of Taxation [2007] AATA 1344 [8], [10].

[384] Employee Investment Company Pty Ltd v Federal Commissioner of Taxation [2009] AATA 367 [50], [53].

[385] Assessing reasonable care is an objective test: Confidential and Commissioner of Taxation [2008] AATA 415, [57], [60]; MT 2008/1 [27]-[29], [45]. Hutson and Commissioner of Taxation [2009] AATA 574 [105].

[387] JK Witness Statement [60]-[61].

[389] ST3-1030 to ST3-1031. When considering the advice from the Commissioner, T46-524, it was not related to claiming input tax credits in the absence of tax invoices, but to whether the Applicant was making GST-free supplies. It is not relevant in the context of this case, and this point is not considered further.

[392] Errors such as backing out GST at otherwise than 1/11. I have assessed JK's evidence as mixed in nature. That is, it was broadly credible, but strained credulity at times, and I have not accepted critical parts of that evidence seeking corroborative evidence that was at times not available (such as evidence pertaining to the second cyber event, the reliance on Xero, and the efforts made to obtain tax invoices from contractors).

[393] Explanatory Memorandum to A New Tax System (Tax Administration) Bill (No.2) 2000 (Cth) [1.67], [1.72].

[394] For clarity, for the same reasons I do not accept the Applicant's assertion in its objection (T46-532) that the Applicant complied with its record keeping requirements under section 262A of the Income Tax Assessment Act 1936 (Cth).

[397] If the Applicant had done this the Applicant would (on its evidence) have had supporting material for its input tax credit claims.

[398] Sinclair v Federal Commissioner of Taxation [2010] AATA 902 [93]; Vision Intelligence Pty Ltd v Federal Commissioner of Taxation [2013] AATA 527 [59]-[60].

[399] Tilli and Commissioner of Taxation [2026] ARTA 80 [62] referring to a taxpayer that "chose not to know".

[400] Tenvoc Properties Pty Ltd v Commissioner of Taxation [2006] AATA 529 [39], [41].

[403] It would have been logical to do so, when the Commissioner contacted the Applicant in April 2020 or shortly thereafter.

[404] The Applicant did not tell the Commissioner for more than a year about the first cyber event, and did not tell the Commissioner at all about the second cyber event until the matter was before the Tribunal.

[405] T46-533 [4]. T64-946, ST3-1032, A9-1502, A9-1508. This argument may have been raised in relation to income tax and PAYGW matters that are not before the Tribunal.

[406] Sanctuary Lakes Pty Ltd v Federal Commissioner of Taxation [2013] FCAFC 50 [149]-[151].

[407] The point was reiterated in D Marks Partnership v Federal Commissioner of Taxation [2016] FCAFC 86 [95], [128].

[409] Craddon v Federal Commissioner of Taxation [2011] AATA 790; Aurora Developments Pty Ltd v Federal Commissioner of Taxation (No.2) [2011] FCA 1090 [11]; NOAC Consultants Pty Ltd v Federal Commissioner of Taxation [2006] AATA 1035 [10]; Print Applied Technology Pty Ltd v Commissioner of Taxation [2011] AATA 555 [36].

[412] For instance, see Smith and Commissioner of Taxation [2026] ARTA 25 [102].

[413] MT 2008/1 [99]-[102]. PS LA 2012/5 [107]-[108]. Hart v Federal Commissioner of Taxation [2003] FCAFC 105 [33]-[34].

[414] Hart v Federal Commissioner of Taxation [2003] FCAFC 105 [33]-[34].

[415] Smith and Commissioner of Taxation [2026] ARTA 25 [101]-[102]. PS LA 2012/5 [14H]; MT 2008/1 [100]-[101].

[416] Hart v Federal Commissioner of Taxation [2003] FCAFC 105 [44].

[417] Oxby and Commissioner of Taxation [2022] AATA 3239 [53]-[56].

[418] Abotomey and Commissioner of Taxation [2025] ARTA 719 [337].

[419] Applicant's SFIC [53]-[58]; Applicant's Outline [34].

[420] T2-45; Commissioner's SFIC [34]; Commissioner's Outline [42]-[43].

[423] As is demonstrable at T7-115 from the phone note of a call between the Commissioner and the Applicant on 2 April 2020.

[424] For instance, see T16-152, T45-517.

[425] Section 284-225 of Schedule 1 to the TAA.

[426] Pursuant to section 388-50 of Schedule 1 to the TAA.

[427] I also leave aside the alleged "oral ruling" as a ground for remission as that appears to relate to issues not before the Tribunal.

[428] T46-536 to T46-537; Applicant's' SFIC [62]-[67]; Applicant's Outline [127]-[131].

[429] T2-45 to T2-46; Commissioner's Outline [58]-[60]; Commissioner's SFIC [36].

[430] Commissioner's Outline [57] citing Dixon as trustee for the Dixon Holdsworth Superannuation Fund v Commissioner of Taxation [2008] FCAFC 54.

[431] Applicant's Written Closing [1].

[432] Commissioner's Written Closing [17], [21]-[24].

[433] T2-44; T2-45 [179] suggests the Commissioner may have changed its original position to focus only on paragraph 284-220(1)(a) of Schedule 1 to the TAA. The original position appears to be that paragraph 284-220(1)(c) of Schedule 1 to the TAA was also applied: T43-505.

[434] Referred to at paragraphs ‎73 and ‎74 of this decision.

[435] Applicant's SFIC [52], [62].

[436] Applicant's Outline [124]-[126].

[437] For instance, T46-524 referred to "oral rulings" that were said to be "binding" in some way. A8-1329 focuses on a call between one of the Commissioner's officials and the Applicant in August 2020 where it is asserted that the official said the audit was "finalised", and the Applicant suggests that this is also in some way binding at law.

[438] Claims such as acting maliciously and lying. JK Witness Statement [107], enclosing a medical certificate at A17-2592. Also, at A1-1280 to A1-1281, A20-2772, A24-2858, AA2-2979. Applicant's Outline pages 48 - 49.

[439] For example, JK Witness Statement [90]-[96], [107].

[440] The Tribunal put all of this in writing to the Applicant in its interlocutory judgment ZBDD and Commissioner of Taxation [2025] ARTA 2197 refusing to issue a summons to a named official from the Commissioner because the matters the Applicant wanted to raise were irrelevant to proceedings before the Tribunal. The Tribunal explained why this was so. The Tribunal's interlocutory decision also clearly advised the Applicant that if it wanted to proceed on the matters raised by JK, it needed to do so in the Federal Court or the Federal Circuit and Family Court (Division 2).

[441] Paragraph 9(b) of the Administrative Review Tribunal Act 2024 (Cth).

[442] Section 56 of the Administrative Review Tribunal Act 2024 (Cth).

[443] JK Witness Statement [97]-[105].

[444] JK Witness Statement [97] refers to the Commissioner "targeting" people and potential witnesses being concerned about that. Applicant's Outline [56].