In his article in the August issue of Taxation in Australia, Gareth Redenbach, CTA, Barrister, Victorian Bar, Foley’s List, looks at the onus of proof following the Cassaniti decision.
The article is excerpted in this post.
The Full Federal Court decision of Steward J (Greenwood J agreeing and Logan J concurring with additional reasons) in FCT v Cassaniti 1 (Cassaniti) notably clarifies the law in relation to what is necessary for a taxpayer to discharge their burden of proof on review in a tribunal or court.
Cassaniti sets out, in concise terms, a series of five propositions relevant to determining whether a taxpayer has discharged their burden of proof.
For corporations, both large and small, the decision highlights the operation of s 1305 of the Corporations Act 2001 (Cth) (Corporations Act) which may have the effect of practically discharging the burden of proving underlying facts if the matters are recorded in the financial records of a company. This should have the effect of making the process on review quicker, more certain and consequently cheaper for litigants (subject to proving the documents were kept by the company for the purposes of the Corporations Act).
In the article's concluding comments, he notes that the decision in Cassaniti represents much-needed clarification on the extent to which the Commissioner can successfully assert that the burden of proof has not been met.
More practically, it provides a roadmap to steps that can be taken to narrow issues in dispute before and during litigation by reference to certain documentary and sworn evidence to reduce the cost, complexity and risk in resolving disputes with the Commissioner(s).
For corporations, both large and small, both the five principles enunciated at para 88 of Cassaniti and the operation of s 1305 highlight ways in which it may be possible to contain the extent of a factual dispute both before and during litigation. Taxpayers would be well advised to consider the case and its implications in any active disputes, at the audit or later stages, with the Commissioner.
Gareth Redenbach, CTA, is a barrister practising in revenue law and has over 10 years of experience in tax matters.
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