Buzadzic & Anor v FC of T
Members:FD O'Loughlin QC DP
LA Hespe SC SM
Tribunal:
Administrative Appeals Tribunal, Melbourne
MEDIA NEUTRAL CITATION:
[2021] AATA 4820
FD O'Loughlin QC (Deputy President) and LA Hespe SC (Senior Member)
Reasons
1. This application is a burden of proof case that required the Applicants to demonstrate that the assessments they had received that were based upon Unexplained Deposits,[1]
2. During the 2007 to 2013 Years,[3]
Table 1
Related party income flows to the Applicants disclosed in tax returns |
|||||
Year | Dividend income of D & L Buzadzic Trust | Assessable income amounts | |||
Mr Buzadzic | Mrs Buzadzic | ||||
Trust amounts | Salary | Trust amounts | Salary | ||
2007 | $276,921 | $206,118 | $52,997 | $206,118 | $33,101 |
2008 | $66,975 | $14,820 | $69,229 | $27,166 | $56,834 |
2009 | $345,086 | $145,345 | - | $144,708 | - |
2010 | $263,969 | $141,499 | - | $148,571 | - |
2011 | $350,000 | $207,380 | - | $207,380 | - |
2012 | $160,000 | $125,470 | - | $125,473 | - |
2013 | $618,000 | $370,900 | - | $370,900 | - |
Totals | $2,080,951 | $1,211,532 | $122,226 | $1,230,316 | $89,935 |
$1,333,758 | $1,320,251 |
3. Following an audit of their affairs, the Respondent identified amounts that he considered were evidence of, or represented, unreported income:
- (a) for Mrs Buzadzic, amounts calculated by reference to Unexplained Deposits in excess of $1,000 of three types in her bank accounts which the Respondent says are either income as ordinarily understood and taxable as ordinary income, or for those from related parties, deemed dividends taxable pursuant to Division 7A of the 1936 Assessment Act;[4]
Income Tax Assessment Act 1936 (Cth). - (b) for Mr Buzadzic, amounts calculated by reference to:
- (i) Unexplained Deposits in excess of $1,000 of three types in his bank accounts;
- (ii) Unverified Credit Entries in excess of $1,000 of two types credited to his loan accounts as recorded in the books of entities associated with him;
- (iii) an amount of interest on a term deposit which had been paid to him in the 2008 and 2009 Years;
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- (iv) a capital gain made by Mr Buzadzic on realization of a share investment in the 2010 Year; and
- (v) what the Respondent says is a deemed dividend under Division 7A of the 1936 Assessment Act on account of balances owing to related companies that were not paid within the prescribed time.
4. The Respondent then formed the opinion that there had been fraud and/or evasion, considered that he had an unlimited period to amend the Applicants' assessments, and then amended the Applicants' 2007 to 2013 Year assessments and included in those amounts in their taxable income.
5. Mr Buzadzic conceded that the undeclared interest amounts and undeclared capital gain on the disposal of shares were assessable but that those amounts had been omitted from his tax return in error. Mr Buzadzic submitted that that error did not amount to a blameworthy act that could sustain an opinion that there had been fraud or evasion.
6. The Respondent has also imposed penalties:
- (a) for Mr Buzadzic, calculated at the 75% rate in respect of the Unexplained Deposits, Unverified Credit Entries in loan accounts and the capital gain on disposal of shares, at the 50% rate in respect of the deemed dividends under Division 7A, and at the 25% rate in respect of the omitted interest income, with an uplift of 20% in second (2008) and subsequent Years; and
- (b) for Mrs Buzadzic, calculated at the 50% rate with an uplift of 20% in second (2008) and subsequent Years,
and shortfall interest charge (SIC).
7. Table 2 sets out the adjustments made to Mrs Buzadzic's taxable income and the penalties and SIC imposed.
Table 2
Mrs Buzadzic: adjustments |
||||
Year | Additional amounts assessed | Tax Shortfall | Total Penalties | SIC |
2007 | $136,665 | $64,915.88 | $32,457.90 | $44,843.14 |
2008 | $112,624 | $49,996.40 | $29,997.80 | $28,120.29 |
2009 | $382,832 | $179,845.20 | $107,907.10 | $83,412.69 |
2010 | $118,890 | $53,993.65 | $32,396.15 | $19,728.55 |
2011 | $136,416 | $64,797.60 | $38,878.55 | $15,725.46 |
2012 | $132,000 | $59,659.85 | $35,795.30 | $9,773.03 |
2013 | $23,671 | $11,007 | $6,604.20 | $1,249.93 |
Totals | $1,043,098 | $484,215.58 | $284,037 | $203,853.09 |
8. The additional amounts assessed shown in Table 2 had three components as set out in Table 3.
Table 3
Mrs Buzadzic: particulars of the additional taxable income assessed |
||||
Year | Unexplained Deposits from: | Total additional amount assessed | ||
Associated Entities | Third parties | Unknown Sources | ||
2007 | $119,647 | $17,018 | $136,665 | |
2008 | $69,253 | $1,170 | $42,201 | $112,624
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2009 | $27,000 | $322,632 | $33,200 | $382,832 |
2010 | $46,408 | $27,911 | $44,571 | $118,890 |
2011 | $74,067 | $11,149 | $51,200 | $136,416 |
2012 | $110,000 | $22,000 | $132,000 | |
2013 | $23,671 | $23,671 | ||
Total | $446,375 | $362,862 | $233,861 | $1,043,098 |
9. Table 4 sets out the adjustments made to Mr Buzadzic's taxable income and the penalties and SIC imposed.
Table 4
Mr Buzadzic: adjustments |
||||
Year | Additional amounts assessed | Tax Shortfall | Total Penalties | SIC |
2007 | $345,071 | $163,908.70 | $122,931.50 | $116,193.55 |
2008 | $786,251 | $369,969.20 | $332,216.95 | $213,765.99 |
2009 | $529,479 | $249,502.50 | $224,331.40 | $110,954.84 |
2010 | $488,853 | $229,090.01 | $187,974.20 | $86,778.88 |
2011 | $1,159,054 | $550,550.63 | $494,783.05 | $140,330.70 |
2012 | $354,935 | $167,593.30 | $129,080.10 | $29,369.97 |
2013 | $274,752 | $127,759.70 | $114,983.70 | $15,905.87 |
Totals | $3,938,395 | $1,858,374.04 | $1,606,300.95 | $713,299.80 |
10. The additional amounts assessed to Mr Buzadzic as listed in Table 4 had five general categories as set out in Table 5.
Table 5
Mr Buzadzic: particulars of additional amounts assessed in Table 4 |
|||||
Year | Unexplained Deposits | Unverified Credit Entries | Deemed Dividends | Net Capital Gain (shares) | Interest |
2007 | $264,071 | $81,000 | |||
2008 | $409,555 | $372,333 | $3,376 | $987 | |
2009 | $191,255 | $337,443 | $781 | ||
2010 | $106,584 | $243,219 | $129,504 | $9,546 | |
2011 | $69,325 | $1,084,729 | $5,000 |
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|
2012 | $68,558 | $132,807 | $153,570 | ||
2013 | $162,967 | $111,785 | |||
Total | $1,272,315 | $2,363,316 | $291,450 | $9,546 | $1,768 |
11. The Unexplained Deposits as listed in Table 5 had three general categories as set out in Table 6.
Table 6
Mr Buzadzic: categories of Unexplained Deposits |
|||
Year | Unexplained Deposits from: | ||
Associated Entities | Third parties | Unknown Sources | |
2007 | $133,294 | $42,964 | $87,813 |
2008 | $283,996 | $103,191 | $22,368 |
2009 | $58,051 | $133,204 | |
2010 | $31,733 | $4,142 | $70,709 |
2011 | $29,125 | $40,200 | |
2012 | $19,676 | $4,809 | $44,073 |
2013 | $12,000 | $67,715 | $83,252 |
TOTAL | $567,875 | $396,225 | $308,215 |
12. The Unverified Credit Entries in loan accounts accounts as listed in Table 6 had two general categories as set out in Table 7.
Table 7
Mr Buzadzic: totals of Unverified Credits Entries |
|||
Year | Unverified Credit Entries | Loan balance mismatches treated as unverified credits | Total |
2007 | $81,000 | $81,000 | |
2008 | $61,800 | $310,533 | $372,333 |
2009 | $293,381 | $44,062 | $337,443 |
2010 | $34,954 | $208,265 | $243,219 |
2011 | $134,228 | $950,501 | $1,084,729 |
2012 | $132,807 | $132,807 | |
2013 | $111,785 | $111,785 | |
Total | $849,955 | $1,513,361 | $2,363,316 |
13.
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The Unverified Credit Entries component of Table 7 was made up of single entries to various loan accounts held by Mr Buzadzic with various entities he controlled or in which he had a material interest. The totals of these credits for each Year and relevant Associated Entity are as set out in Table 8.
Table 8
Mr Buzadzic: totals of related entity Unverified Credits Entries |
|||||
Year | Related entity | ||||
Western General Bodyworks Pty Ltd | Geelong Collision Centre Pty Ltd | Geelong Towing Service Pty Ltd | Western General Auto Pty Ltd | Mynt Pty Ltd | |
2007 | $81,000 | ||||
2008 | $61,800 | ||||
2009 | $185,000 | $39,099 | $69,282 | ||
2010 | $6,250 | $28,704 | |||
2011 | $134,228 | ||||
2012 | $53,911 | $78,896 | |||
2013 | $99,590 | $5,000 | $7,195 | ||
Total | $478,979 | $83,896 | $46,294 | $81,000 | $159,786 |
14. The Unexplained Deposit amounts from Associated Entities and Unverified Credit Entries to related entity loan accounts were those deposits and credits of $1,000 or more that were not reflected in increases to Mr Buzadzic's loan account with the Associated Entity, were not reflected in the Associated Entity's accounts as repayments of loans made to the Associated Entity or distributions of income by the Associated Entity already included in Mr Buzadzic's assessable income, and did not on their face appear to be reimbursements of business expenses which the Commissioner was able to identify as having been paid by Mr Buzadzic on his personal credit cards or from his personal bank accounts. Approximately $3.5m of reimbursements were identified. The credits for these reimbursements were not included in the totals assessed.
15. The loan balance mismatches treated as unverified credits components of Table 7 were made up of those instances where the opening balance of Mr Buzadzic's loan account with an Associated Entity for a Year recorded an amount less than the closing balance in that account for the preceding Year as disclosed in the financial records provided to the Respondent. The reduction in the recorded amount owed by Mr Buzadzic needed to be explained just like other unexplained credit postings to those accounts. The totals of these balance mismatches for each Year and relevant Associated Entity are as set out in Table 9.
Table 9
Mr Buzadzic: loan balance mismatches treated as unverified credits to related entity loan accounts |
||||
Related entity | Year | |||
2008 | 2009 | 2010 |
2011
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|
Western General Bodyworks Pty Ltd | $44,208 | $742,955 | ||
Western General Bodyworks Pty Ltd (2) | $72,325 | |||
Western General Bodyworks Pty Ltd (Rocket) | $45,984 | $60,500 | ||
Western General Towing Pty Ltd | $14,631 | $20,694 | $34,281 | |
Geelong Collision Centre Pty Ltd | $28,275 | $112,765 | ||
Geelong Collision Centre Pty Ltd (2) | $96,000 | |||
Geelong Towing Service Pty Ltd | $2,900 | $15,312 | ||
Geelong Towing Service Pty Ltd (2) | $194,000 | |||
Geelong Towing Service Pty Ltd (Rocket) | $2,000 | |||
Logistic Car Rentals Pty Ltd | $26,531 | |||
Total | $310,533 | $44,062 | $208,265 | $950,501 |
$1,513,361 |
16. The outstanding loan balances at the relevant lodgement date which have been assessed as deemed dividends under Division 7A and the applicable distributable surpluses were as set out in Table 10.
Table 10
Mr Buzadzic: outstanding loan account balances as at the relevant lodgement date and distributable surpluses |
|||
Year | Entity name | Outstanding balance | Distributable surplus |
2008 | Western General Towing Pty Ltd | $3,376 | $55,553
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2010 | Geelong Collision Centre Pty Ltd | $385 | $412,158 |
2010 | Western General Bodyworks Pty Ltd | $129,119 | $337,782 |
2011 | Geelong Towing Service Pty Ltd | $5,000 | $271,258 |
2012 | Western General Bodyworks Pty Ltd | $153,167 | $286,244 |
2012 | Western General Towing Pty Ltd | $403 | $192,991 |
Total | $291,450 |
17. Through the objection and subsequent disputation processes, the Respondent has conceded that a small number of assessed amounts have been adequately explained. They were as set out in Table 11. The Respondent otherwise did not narrow the issues in dispute and required the Applicants to prove the amount of their actual taxable income for each Year.
Table 11
Respondent's conceded amounts |
||
Year | Description | Amount |
Mr Buzadzic | ||
2008 | Deposits to bank accounts from Associated Entities | $10,000 |
2013 | Deposits to bank accounts from Associated Entities | $7,000 |
2013 | Deposits to bank accounts from unknown sources | $10,000 |
Mrs Buzadzic | ||
2010 | Deposits to bank accounts from Associated Entities | $13,900 |
2013 | Deposits to bank accounts from unknown sources | $3,000 |
18. The respective number of Unexplained Deposits, Unverified Credit Entries and loan account balances mismatches are as set out in Tables 12 and 13.
Table 12
Mrs Buzadzic: number of Unexplained Deposits or Unverified Credit Entries |
|||
Year | Unexplained Deposits from: | ||
Associated Entities | Third parties | Unknown Sources | |
2007 | 20 | - | 5 |
2008 | 12 | 1 | 6 |
2009 | 5 | 3 | 5 |
2010 | 8 | 2 | 3 |
2011 | 7 | 1 | 3
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2012 | 1 | - | 2 |
2013 | - | - | 6 |
Total | 53 | 7 | 30 |
Table 13
Mr Buzadzic: number of Unexplained Deposits or Unverified Credit Entries |
|||||
Year | Unexplained Deposits from: | Unverified Credit Entries | |||
Associated Entities | Third parties | Unknown Sources | Loan a/c credits | Balance discrepancies | |
2007 | 15 | 1 | 15 | 5 | |
2008 | 14 | 8 | 6 | 3 | 3 |
2009 | 8 | 2 | 6 | 3 | |
2010 | 8 | 2 | 5 | 2 | 6 |
2011 | 5 | 3 | 4 | 5 | 4 |
2012 | 5 | 1 | 4 | 11 | |
2013 | 4 | 4 | 12 | 9 | |
Total | 59 | 21 | 46 | 41 | 16 |
19. For the Applicants to succeed in relation to the disputed primary tax assessments, they need to demonstrate what their taxable incomes were for the 2007 to 2013 Years. To do this the Applicants must, as a minimum, demonstrate that the amounts that comprise the totals that remain disputed are not income or otherwise assessable or have already been included in their assessable income. The Applicants could also succeed by showing that there was no fraud or evasion or that the fraud or evasion opinion should not have been formed.
20. For the Applicants to succeed in relation to penalty and SIC they need to show that there was not a tax shortfall, or, if there was a shortfall, the penalty and SIC have been inappropriately imposed or should be remitted.
21. As explained below:
- (a) the uncontradicted evidence before the Tribunal was that Mrs Buzadzic was a stay-at-home mother whose involvement in the Buzadzic Group was limited to acting at the direction of Mr Buzadzic and his employees and that the amounts deposited in the accounts of Mrs Buzadzic belonged to Mr Buzadzic. As a result, the Tribunal has set aside the Commissioner's objection decision in relation to Mrs Buzadzic; and
- (b) except for a small minority of instances, Mr Buzadzic did not explain the sources of the moneys which resulted in the deposits in the bank accounts in his name or the credits to his director loan accounts. By moneys, the Tribunal refers not just to cash, but also to set-offs, payments by direction and other forms of fund transfers. The credit entries and deposits remained very substantially unexplained. As a consequence, Mr Buzadzic did not discharge his onus of proving what his correct taxable income was. The evidence of the distributions made to him and how funds flowed to him from his related entities that he provided was not sufficient to conclude that the amounts of money reflected in the entries the Respondent has identified were not income or otherwise assessable and that his taxable income was the amount he had returned. Having provided evidence that the amounts in the accounts of Mrs Buzadzic belonged to him, he provided no explanation for the deposits made into those accounts which could be accepted by the Tribunal as
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demonstrating that those amounts were not his income. It follows from this conclusion that the Tribunal does not have a sufficient foundation to conclude that the fraud or evasion opinion formed or held by the Commissioner ought not to have been formed or held, or to conclude that the penalty decision should have been made differently. As a result, notwithstanding that the Tribunal has found that the Commissioner had erroneously assessed some deposits and credits as unexplained, the objection decisions in relation to Mr Buzadzic have been affirmed.
Procedural Matters
22. There are six procedural matters that need to be noted, namely:
- (a) the Evidence before the Tribunal;
- (b) the Respondents' concessions;
- (c) the Forensic Accounting Evidence;
- (d) the Submissions Process;
- (e) the Tribunal's questions concerning Mrs Buzadzic's evidence;
- (f) the Role of the Tribunal in dealing with financial record evidence.
Evidence before the Tribunal
23. Mr and Mrs Buzadzic's applications for review were heard concurrently.
24. At the start of the hearing the Tribunal directed that evidence in one proceeding be evidence in the other. Consequently, the Commissioner's submission that Mrs Buzadzic failed to lead evidence from various sources, including Mr Buzadzic, cannot be accepted.
25. The material presented to the Tribunal included:
- (a) large volumes of documents filed with the Tribunal pursuant to section 37 of the AAT Act;[5]
Administrative Appeals Tribunal Act 1975 (Cth). - (b) large volumes of accounting records, including electronic copies and print outs from the MYOB accounting package used to maintain records of business transactions and to assist in preparing the accounts for the entities controlled by Mr Buzadzic;
- (c) written statements and oral testimony of the following witnesses who were extensively cross examined:
- (i) Mr Evans - financial controller of the Buzadzic Group from 2013;
- (ii) Mr Stirling - a bookkeeper for the Buzadzic Group;
- (iii) Mr Kane - an external tax accountant to the Buzadzic Group between February 2012 and July 2013;
- (iv) Mr Hadded - a principal of the firm providing tax accounting services to the Buzadzic Group from 2008 to 2013, excepting 2012;
- (v) Mrs Buzadzic - who gave her testimony prior to Mr Buzadzic being called;
- (vi) Mr Buzadzic; and
- (vii) Mr Vasudevan, a partner of the firm Pitcher Partners, who was engaged to provide forensic accounting evidence.
26. Notably, Mrs Buzadzic gave evidence before Mr Buzadzic. Some of the questions put to Mrs Buzadzic involved expenditures using credit cards in her name to which she responded that she knew nothing of the expenditures and assumed that they were business expenses and that the money had been spent by Mr Buzadzic. While there were presumably forensic considerations for this, the same questions were not put to Mr Buzadzic. In these circumstances, which are expanded upon below, Mrs Buzadzic's evidence that she knew nothing of the expenditure and that it had not been incurred by her was not contradicted. To the contrary, Mr Buzadzic's responses to some of the cross examination questions put to him were entirely consistent with Mrs Buzadzic's evidence. This has weighed significantly on some of the findings below.
The Respondents' concessions
27. At the commencement of proceedings, it was made clear to the Tribunal and to the Applicants that the Commissioner was willing to make concessions in relation to specific identified deficiencies to the extent evidence was produced. Notwithstanding the Commissioner's willingness to make concessions in relation to specific amounts, his position was that Mr Buzadzic was still required to prove what his taxable income was and what the assessment should have been. At the commencement of the hearing the following exchange took place:
DEPUTY PRESIDENT: ..If there are 20 items in the unexplained deposits, if 12 of
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them are adequately explained and eight aren't, is the Commissioner's position that the applicant taxpayers-they've proven that the assessment is excessive to the extent of those 12?MS SHAND: To the extent that the applicants are able to substantiate certain deposits, then the Commissioner will, in order to narrow the issues in dispute, will concede any amounts where there is evidence to substantiate that, and in the absence of that, the Commissioner's position is that it's the applicant's onus to show what the income is as a whole, and by explaining one entry, that's not sufficient to knock off that entry. But the applicants need to show the entire income, what it is, in order to discharge their onus.
DEPUTY PRESIDENT: So if they explain 12 but not 20 deposits - - - ?
MS SHAND: Then the Commissioner will concede those, in order to narrow the issues, and then it won't be necessary for - - -
DEPUTY PRESIDENT: … if the applicant leads evidence in relation to 12 of the 20 that the tribunal might be inclined to accept … what's the Commissioner's position on the power of the tribunal to reduce the assessments on account of the 12 that are explained?
MS SHAND: The applicant's onus is to show what the income is, and I would say that by showing there's an error in relation to one component, that doesn't discharge the applicant's onus to show what their income is, and what the assessment should have been, which is what they're required to do.
DEPUTY PRESIDENT: So is the Commissioner's position in this case that the applicants need to demonstrate the entirety of the adjustment is wrong?
MS SHAND: That's correct, because their onus is to show that th[e] assessment is excessive and what it should have been, and by saying there's an error here, that doesn't say what the assessment should have been. It really shows, well, the Commissioner may have made an error at some point, and the cases are very clear that if the Commissioner has made an error in a default assessment, that doesn't discharge the applicant's onus. But obviously the Commissioner as a model litigant is not going to press any discrete items where there's evidence substantiating them. In our SFIC, we did - in the annexures - did strike out some line items we further review. It appeared that there may have been documents to substantiate a number of items, and there's also two more which I want to add to that as well.
DEPUTY PRESIDENT: So is the Commissioner saying that he's allowed to partially reduce the assessments, but not the tribunal?
SENIOR MEMBER: In the absence of the taxpayer leading evidence as to what their true taxable income is?
MS SHAND: Yes, that's right. If the applicants haven't discharged the onus of showing what the assessments should have otherwise been, or should be, then by showing there's an error with one line item, that's not sufficient.
28. Although the Commissioner conceded certain Unverified Credit Entries did not reflect the derivation of income, the Commissioner nonetheless contended that Mr Buzadzic had not discharged his onus. Based on statements made by Nettle J in Bosanac,[6]
Notwithstanding the various discrete concessions made by the Commissioner in Annexures 3 and 4 to these submissions, the Tribunal should be satisfied that the Applicants did not discharge their onus in respect of the unexplained deposits. It is not enough for the Applicants to show that there was error in the Commissioner's calculation of their assessable income.
29. The Commissioner's concession might be taken to be that for the entries which he now accepts as having been explained, the Tribunal need not trouble itself with making more than a finding that they have been explained and need only focus on whether or not the non-conceded entries and deposits are explained, but unless all of the non-conceded deposits and entries are explained the assessments, including the conceded entries, stand. The concession appears to be merely a concession that the
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Tribunal need not trouble itself with analysis of the conceded items.30. However, in the same submissions, the decision sought by the Commissioner in respect of Mr Buzadzic was that:
the objection decision relating to the amended assessment issued to Mr Buzadzic in respect of the year ended 30 June 2013 to take into account the Commissioner's concessions [relating to two deposits into Mr Buzadzic's accounts]; and
remit the objection decisions to the Commissioner to recalculate the penalties and amend the amended assessments and the penalty assessments as is necessary to give effect to the decisions in (a) and (b) above;
31. It is difficult to reconcile precisely what the Respondent is really asking for. In the circumstances set out more fully below, this difficulty does not need to be addressed or resolved.
Forensic Accounting Evidence
32. As indicated above, forensic accounting evidence from Mr Vasudevan was led on behalf of the Applicants. This evidence was compiled after the hearing had begun and ultimately led to a substantial gap in proceedings. Through the course of hearing Mr Evans' and Mr Hadded's evidence, it became apparent that during the course of the Respondent's audit the Applicants' representative had provided incomplete accounting records of the various Buzadzic Group entities to the Respondent. It was also quite apparent that:
- (a) records that were supplied to the ATO[7]
Australian Taxation Office. during the course of the audit were supplied after there had been something of a breakdown in the relationship between the Applicants' representatives and the Respondent's audit personnel; - (b) the financial records provided to the audit team did not include all of the transactions entered into between the Applicants and the various entities in the Buzadzic Group during the relevant years or the year end adjusting entries which potentially affected directors loan account balances processed by the Buzadzic Group's external accountants;
- (c) working papers (and/or records) asserted to have been maintained by the Buzadzic Group's external accountants would probably be available and would probably contain information that would explain year end adjusting entries and other entries posted and included in the year end finalised accounts.
33. When this situation became apparent in December 2018, the Tribunal indicated that it… would be greatly assisted by … a forensic account's report that pieces the picture together. The Applicants accepted this invitation which was not opposed by the Respondent.
34. The Applicants subsequently proposed the following questions for the independent expert:
- (a) What is the provenance and character of credit entries to loan accounts with various companies as particularised in paragraph 54(a) of the decision on objection?
- (b) What is the provenance and character of discrepancies between closing and opening balances of loan accounts between successive years particularised at paragraph 54(b) of the decision on objection?
35. The references to character of entries to loan accounts and discrepancies in the proposed questions tend to reveal a misunderstanding of the real issues that needed to be addressed, which concerned the provenance of the funds that the entries or mismatches represented and whether those funds were sources of income that had not been brought to account. The Tribunal can readily accept that a repayment of a loan is not a transaction that produces an assessable or income amount for the person making the repayment or the recipient. However, the money used or applied to make the repayment may have been income, or the source of that money may have been a source of income, and that income may not have been brought to account.
36. The Tribunal and the Respondent expressed concerns about the form of the questions, in particular about the character of the entries. In his letter of 7 February 2019 the Respondent said of the proposed questions to the expert:
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…3 As currently drafted, we do not understand how the expert's opinion of the 'character' of the relevant transactions is relevant to the issues in dispute, or will otherwise assist the Tribunal. In this regard, we note that on the final day of the hearing, at pages 351−2 of the transcript, there was the following exchange with the Tribunal which highlighted that the central issue for the transactions was provenance and not character:
DEPUTY PRESIDENT: Dr Orow, far be it for us to tell you how to run your case. There are significant mismatches of information which, on the vive voce evidence of the accountants, is explained or explainable.
DR OROW: Yes.
DEPUTY PRESIDENT: And it's explainable by reference to supporting working papers and documents that can be retrieved from various places and the like. This kind of case calls for proof of provenance and appropriateness of adjustments that are made to ledger accounts that square them off or balance them out, and provenance of amounts that are being credited to various accounts. And the last lot of credits to Mr Buzadzic's loan account with Mint reveals the complete mismatch of communication that has been going on with this matter. There is someone sitting in the witness box saying they're not income, and you've got someone sitting on the other side of the ledger saying, "Prove the provenance of the amounts", that an amount credited to a loan account, the crediting process itself reveals an investment in, to Mint.
DR °OROW: Yes.
DEPUTY PRESIDENT: What the Commissioner has been asking for is what is the provenance, where did the money come from. How do we know it's not income, because where that money came from is not explained. And that's the constant - the two people going down opposite paths in this case. I don't want you to − to dictate to you what you do and don't want to do, or you should and shouldn't do. The choice is open to you about what you're proposing to lead.
DR OROW: Thank you.
…
Our further comments in relation to proposed question 1:
What is the provenance and character of credit entries to loan accounts with various companies as particularised at paragraph 54(a) of the decision on objection?
5. As well as referring the expert to the summary of the credit entries referred to at 54(a) of the decision on objection dated …., we consider it may assist the expert to have their attention drawn to the more detailed and particularised references to the credit entries in:
…
[three documents where the Respondent identified the entries that needed to be explained]
6. In our view, in light of our comment at paragraph 3 above, the proposed question should be drafted so as to focus on, for each of the relevant transactions and on the basis of the briefed documents: (a) whether the expert is able, based on their training, study or experience, to identify the provenance or source of any funds which are recorded as having been credited to the director's loan account, and if so, (b) specifying the relevant source (or sources) of those funds.
Our comments in relation to proposed question 2:
What is the provenance and character of discrepancies between closing and opening balances of loan accounts
ATC 9827
between successive years as particularised at paragraph 54(b) of the decision on objection?7 As well as referring the expert to the summary of the unexplained discrepancies referred to at 54(b) of the decision on objection …, we consider it may be helpful to draw the expert's attention to the more detailed explanation of the discrepancies in the Commissioner's reasons for decision on audit dated 28 April 2016 at paragraphs …...
8. In our view, in light of our comment at paragraph 3 above, the proposed question should be drafted so as to focus on, for each of the unexplained discrepancies: (a) whether the expert can provide an explanation for the discrepancies based on their training, study or experience, and if so, (b) identifying the explanation, including if relevant, by identifying the relevant opening and closing balance of the relevant loan accounts for each of the relevant years, and the appropriateness of any end−of−year adjustments made to those relevant loan accounts in the relevant years.
37. And in the directions hearing on 1 March 2019 the following exchanges transpired:
MS SHAND:….The other concern I just want to note is you would have seen the Commissioner's correspondence about the questions. Now, obviously it is the applicant's case, and the applicant can ask whatever questions the applicants think are necessary, but in the context here where the expert now says they need three months to prepare a report it concerns me if they are going to be answering questions which the Commissioner thinks have no utility, and in particular the question about the character of these transactions where it was made very clear on the last day of the hearing that the issues in dispute really go to the provenance of these funds, which have been credited to the loan accounts, and not to the character of the evidence. So if this expert is going to engage in a long exercise going through each transaction and giving evidence about the character and drawing out this whole exercise more than is necessary, we would resist that.
…
Now we've been told that he's going to take three months to undertake this exercise which includes talking about the character of various transactions, which we say is clearly …[irrelevant].
DR OROW: I'm grateful for the comments that were made but there are a couple of very important matters to bear in mind. The expert is being retained by the applicants. We phrased the questions, if they have issues with them we were content to take note of the points that were made and the Commissioner indicated in his letter that there are a number of documents that he wishes and issues he wishes to be put to the expert, and we considered those. But the phrasing of the questions as far as we're concerned is correct. The expert has expertise in the field to be able to look at the movement of funds and decide what the character of that movement is not only the source of it, and I think with respect that would be of benefit to the tribunal
…
DEPUTY PRESIDENT: In relation to the questions and in relation to this whole exercise, the tribunal has taken the course that it has so as to facilitate to the applicant a path that in the tribunal's view will throw light on what the relevant facts are. And with that light hopefully leading to a proper resolution of the dispute. That's where we're coming from as the tribunal. We see some difficulties in those questions that have been put to the expert, and we fear that either the answers to those questions might not be the proper subject matter of a forensic accountant support, and might not be of any assistance in resolving this matter.
The questions don't really reflect the concerns that we expressed …. (indistinct), and those concerns have been identified in the … relevant bits of the transcript identified in the Commissioner's correspondence on 7 February, and again today. We can't dictate to you what evidence you should lead, but we do
ATC 9828
see considerable merit in the commentary made by the respondent in his letter of 7 February. We also note that the applicant hasn't altered the questions but has indicated that it is proposed to provide the expert with those comments.We repeat the concerns that were expressed about the gaps in the evidence and the provenance of amounts and entries made to journals which affect loan account balances and the like, and we have concerns about the gaps in the evidence that go to that provenance which leads to a concern that we're unable to form a view on the appropriateness of those alignment adjustments that have been made.
…
38. Notwithstanding these concerns, the proposed questions in unaltered form together with transcript of the earlier discussions in the Tribunal were part of the material provided to the chosen expert, Mr Vasudevan.
39. The Applicant filed a report on 18 September 2019 from Mr Vasudevan which purported to address the questions framed by the Applicant.
40. Mr Vasudevan was extensively, and very effectively, cross examined in a hearing in November 2019. There was nothing inappropriate in the cross examination. This was called for in the circumstances and revealed that the report filed could not be relied upon to provide substantive support to the Applicant's cases.
41. At the continuation of the hearing on 17 December 2019, Counsel for the Applicants re-examined Mr Vasudevan in a manner which took the form of a cross-examination. At the conclusion of this re-examination, Counsel for the Applicants submitted that Mr Vasudevan had failed to do what he was asked to do when he was engaged as an expert and requested leave to obtain and file a report from another expert. Given the history to the production of the forensic accounting report, the Tribunal denied this application.
Submissions process
42. The Applicants filed their closing submissions on 20 February 2020 before the Covid-19 pandemic impacted Tribunal hearings. Those submissions were prepared on the basis that they would be developed further in an oral hearing.
43. On 20 March 2020, as the impact of the pandemic on Tribunal hearings became more apparent, the parties were advised that the Tribunal intended to minimise the need for oral submissions and that the Tribunal expected that it would rely upon the written submissions of the parties. The parties were granted further time to ensure those submissions included everything they wanted to say.
44. The Respondent filed his written closing submissions on 21 April 2020. The Respondent's filed amended written closing submissions on 13 May 2020 and further submissions on 28 August 2020.
45. In March 2020 the Applicants lost the representation of Counsel and an extension of time for the filing of their further submissions was granted on 29 April 2020. In June 2020 a further extension was granted to accommodate the personal circumstances of those involved in assisting the Applicants in preparing their response to the Respondent's submissions in the absence of Counsel. The Applicants re-engaged their Counsel in July 2020 and lodged both reply and further reply submissions on 9 September 2020.
Tribunal's questions concerning Mrs Buzadzic's evidence
46. On 31 July 2020 the Tribunal asked the parties to advise the Tribunal as to the outcome that should follow if, notwithstanding the Commissioner's submissions to the contrary, Mrs Buzadzic's evidence were to be believed and that she had given an accurate account of her knowledge and or memory of the events about which she was asked. The Respondent did not address this request and, rather, maintained the earlier submissions that she should not be believed.
47. In so far as her evidence that the moneys in those accounts belonged to Mr Buzadzic was concerned, the Commissioner submitted that:
she chose not to call any evidence from Mr Buzadzic to explain the sources of the various deposits made into her personal accounts.
Each of the transactions in Table 4.1 of RS Annexure 4 (Deposits from Associated entities which have not been identified in
ATC 9829
loan accounts), required an explanation from the managing director of those Associated Entities, that is, Mr Buzadzic. Neither Mr Buzadzic, or anyone else in the business, was called to give evidence in chief on this topic. The Tribunal should infer Mr Buzadzic's evidence would not have assisted Mrs Buzadzic…Some of the deposits summarised at Table 4.2 of RS Annexure 4 were received from third parties which were business associates or presumed business associates of Mr Buzadzic. Mrs Buzadzic nevertheless did not lead evidence from Mr Buzadzic or those business associates to explain these deposits
Furthermore, …. in providing the explanations in her witness statement, Mrs Buzadzic in cross-examination stated that she had relied on information provided by Mr Evans. In many or most cases, it was evident she did not have first-hand knowledge of the matters that were referred to in her witness statement. Mr Evans was not called by Mrs Buzadzic to give evidence on these matters, and therefore the basis for her conclusionary, hearsay evidence could not be tested by the Tribunal. Importantly, Mr Evans did not join the business until 2013, so it was unclear how he was able to assist Mrs Buzadzic in providing these explanations. To the extent that he may have reviewed business records or other documents in order to investigate the unexplained deposits, those records and documents were not put before the Tribunal. So while Mrs Buzadzic may have honestly believed Mr Evans' explanations, those explanations could not be satisfactorily tested.
Role of Tribunal in dealing with financial record evidence
48. The Tribunal cannot and has not sought to undertake a forensic examination and interpretation of the accounting records (which were included MYOB files) laid before it.
49. The Tribunal is not in a position, unassisted, to embark on an examination of records of varying degrees of completion without being party to or involved in the transactions they are said to record, in an endeavour to work out what the Applicants' taxable income was and whether any or all of the amounts the Respondent has included in the amended assessments totals that he has assessed were truly assessable. Where the respective amounts are not obvious, for the Tribunal to undertake that task without proper assistance and explanatory evidence would be engaging in speculation and guesswork which is not the proper foundation for concluding whether an applicant has demonstrated what the relevant taxable income is.
50. The Applicant has relied on the assistance of externally engaged accountants and lawyers to attempt to do this.
51. The Tribunal has relied upon the parties and the evidence led by them, including evidence of an expert forensic accountant. Both parties were represented by experienced counsel. In these circumstances the Tribunal can expect to have explained to it the competing conclusions that should be reached based on the evidence led and to have its attention directed to the specific material relied upon by the parties in support of their respective cases.
Facts
52. The Applicants, Mr and Mrs Buzadzic, are husband and wife.
53. The Applicants' tax returns disclosed assessable income from their Associated Entities as set out in Table 1 above.
Mrs Buzadzic
54. Mrs Buzadzic was principally engaged in domestic and family activities. In 2007 and 2008 Mrs Buzadzic received a salary from WGBW,[8]
55. Mrs Buzadzic's involvement in the affairs of the Associated Entities was very limited. While there were bank accounts and credit cards in her name and she was a named signatory to some of the bank accounts, and from time to time she filled in and signed deposit slips in relation to bank accounts held in her name when directed to do so by her husband or his personal assistants, Mrs Buzadzic was not involved in transferring funds from the accounts in her name to other entities in the Buzadzic Group.
56.
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Mr Buzadzic had access to the bank accounts and credit cards in her name and he used those bank accounts and credit cards as he wished. Mrs Buzadzic also used the credit cards in her name to pay for household expenses.57. Mrs Buzadzic relied upon Mr Buzadzic to pay the credit card bills and provide information to the accountants who prepared her income tax returns. She did not review the credit card statements for the credit cards issued in her name.
Mr Buzadzic
58. During the relevant Years, through various group entities he controls, Mr Buzadzic operated panel beating workshops and other related businesses (including towing and car rental businesses) owned by the Western General Group of Companies. For part of the relevant period, through entities he controlled, Mr Buzadzic was also involved in two nightclub businesses and a tattoo business.
59. Mr Buzadzic and/or his assistants employed in the Buzadzic Group directed all financial matters for his family. He controlled all bank accounts that were in his name or in Mrs Buzadzic's name and directed the deposits to be made into those accounts and the funds to be transferred from those accounts to other entities in the Buzadzic Group.
Intermingling of business and personal finances and accounting
60. During the relevant Years, there were at least 26 bank and credit card accounts in the name of Mr Buzadzic (four in the name D. Buzadzic Western General Body Works Pty Ltd) and Mrs Buzadzic.
61. Private and business sourced money has been extensively intermingled over an extensive period.
62. WGBW generated significantly more revenues than the other entities.
63. Mr Buzadzic directed that cash be loaned from WGBW to the other entities he controlled as needed. Mr Buzadzic also directed that cash that was not required for immediate use in the business operations of each entity be transferred to a home loan account to reduce the interest being incurred on that account.
64. Mr Buzadzic used personal credit cards (some issued in his name and some in Mrs Buzadzic's name but in respect of which he exercised control) to pay personal and business expenses in order to accrue maximum credit card reward points. Use of credit cards for this purpose can be assumed to be extensive given the quantum (in excess of $3.5m) of reimbursements of business expenses paid for by the Applicants that the Respondent has accepted. From time to time, Mr Buzadzic also drew down on his home loan account to provide funds to the businesses in which he or the Buzadzic Group held an interest.
65. Transactions between Mr Buzadzic and the Associated Entities were generally recorded in ledger asset and liability accounts generally titled loan account in the accounting records of the Associated Entities. Advances from the Associated Entities to Mr Buzadzic resulted in increases in those account balances owed and the transfer of funds from Mr Buzadzic, or at the direction of Mr Buzadzic, to those accounts, resulted in decreases in the account balances owed as shown in those accounts. No evidence was provided of written agreements recording the terms on which these advances were made. A significant element of the present dispute relates in part to the accuracy and completeness of the manner in which those accounts were maintained.
66. There was a ledger account in the accounting records of Logistic Car Rentals Pty entitled Loan Account -L Buzadzic. Increases and decreases in this ledger account reflected funds transferred at the direction of Mr Buzadzic. For the reasons set out below, the Tribunal finds that the balance recorded in this account were amounts advanced to Mr Buzadzic, irrespective of whether amounts were deposited in bank accounts or credit card accounts in his name or in Mrs Buzadzic's name.
67. As discussed further below, prior to 2013, Mr Buzadzic engaged bookkeepers to maintain the accounting records of the WGBW Group.[9]
68. The Applicants led very limited evidence as to the book-keeping practices or arrangements employed by the Buzadzic Group in 2007. Mr Buzadzic's evidence was that bookkeeping responsibilities in that Year were performed by his personal assistant, Ms
ATC 9831
Suzana Jankovic. Ms Jankovic was not called as a witness. Mr Buzadzic led no evidence otherwise explaining the basis on which credits were made to his loan accounts or explaining the deposits in his bank accounts (including the bank accounts in Mrs Buzadzic's name which he directed and controlled). External accounting services were provided to the Buzadzic Group by Mr Bozyk of Douglas Clark Associates. Mr Bozyk did not give evidence.69. Between 2008 and 2013, MYOB business accounting system was used to maintain the accounting records of the entities in the Buzadzic Group. The MYOB system was not used to record the transactions in the personal bank accounts or personal credit card accounts in the names of Mr and Mrs Buzadzic. Accounts were not prepared for either Mr Buzadzic or Mrs Buzadzic in their personal capacities.
70. Five witnesses, Messrs Stirling, Kane, Hadded, Evans and Vasudevan gave evidence as to financial matters.
Mr Stirling
71. Mr Stirling provided bookkeeping services to the Buzadzic Group from about March 2008. Mr Stirling generally worked from home and attended the WGBW Group premises in Maribyrnong and Geelong two to three days each week to record transactions in the MYOB system. Mr Stirling did not provide bookkeeping services to the trustee companies Buz Cubby Pty Ltd, Buzadzic Pty Ltd or Delarch Pty Ltd.
72. Mr Stirling posted entries in the MYOB system to reflect transactions made by the WGBW Group during the Year based on source documents provided to him, generally in the form of invoices and sales receipts.
73. Mr Stirling did not perform banking duties which involved attending a bank branch such as depositing funds into the bank accounts of Mr or Mrs Buzadzic. However, Mr Stirling did perform internet banking activities at the direction of Mr Buzadzic such as transferring funds into the credit card accounts or home loan accounts of Mr or Mrs Buzadzic. It was not part of Mr Stirling's role to deposit moneys into the personal bank accounts of Mr and Mrs Buzadzic except on the instructions of Mr Buzadzic. He transferred funds from the WGBW Group entities to credit card accounts or home loan accounts in their names when he was instructed to do so by Mr Buzadzic. When he transferred funds to these personal accounts, he posted increases (debits) to the director's loan account with the WGBW Group entity.
74. Mr Stirling posted decreases (credits) to the director's loan account if he was informed that Mr Buzadzic had paid an expense on behalf of that entity out of personal funds (whether that be on a personal credit card in Mr or Mrs Buzadzic's name or from his home loan account). Although Mr Stirling often sighted copies of invoices before making credit entries, he did not always do so. Mr Stirling relied upon the information provided to him by Mr Buzadzic or Mr Buzadzic's personal assistants. If he sighted an invoice for the business that had been paid on a credit card in Mr or Mrs Buzadzic's name, he generally posted a decrease (credit) to the director's loan account and a corresponding debit to the entity's expense account. If he was not provided with source documents or was not told by Mr Buzadzic or his personal assistants when Mr Buzadzic had paid an invoice for one of the WGBW Group entities he would not make entries in the accounting system.
75. Mr Stirling 's evidence was that he became more aware of the need to personally sight invoices or source documents after he completed his Certificate IV in bookkeeping in about 2012 or 2013.
76. Nothing in this process required Mr Stirling to identify from where Mr Buzadzic had obtained the funds to pay invoices or expenses for the WGBW Group entities.
77. Mr Stirling admitted under cross examination that there were instances where amounts were transferred from the WGBW Group entity bank accounts to Mr Buzadzic's personal bank or credit card account without any entry appearing in Mr Buzadzic's loan account. Whether the transfers were otherwise accounted for as reimbursements of expenses incurred by the relevant WGBW entity is a possibility. However given the approach to identifying transactions and entries that formed the basis of the amended assessments, for the disputed entries in the present matter to be explained on the basis of
ATC 9832
them being a reimbursement it is necessary to point to some evidence that indicates that that would be so.78. Mr Stirling did not have access to or review the bank account statements for the personal bank accounts of Mr and Mrs Buzadzic (including the home loan account). Although Mr Buzadzic testified that his bookkeeper had full access to his personal credit card statements, Mr Stirling's evidence was that he did not have a practice of reviewing the credit card statements issued to Mr or Mrs Buzadzic, though on occasion he would see a copy of them when trying to see if a supplier invoice had been paid. What Mr Stirling said is not inconsistent with Mr Buzadzic's evidence and the Tribunal accepts Mr Stirling's evidence.
79. Some of the entities in the WGBW Group had their own bank accounts. Mr Stirling performed a weekly bank reconciliation for these entities' bank accounts whereby he checked that the balance of each WGBW Group entity's bank account as recorded by the bank reconciled to the balance recorded in the relevant MYOB ledger account. As part of this process, Mr Stirling was able to identify transactions in the WGBW Group entity's bank account which had not been recorded in MYOB ledger. If a deposit into those accounts was identified as having come from Mr Buzadzic, a decrease (credit) was recorded in the MYOB system against Mr Buzadzic loan account balance (recording a reduction in the amount owed by Mr Buzadzic to the entity). Mr Stirling did not know from where Mr Buzadzic had sourced the funds for these deposits and loan account reductions.
80. Mr Stirling's evidence was that Mr Buzadzic's two personal assistants, neither of whom was called to give evidence, also entered transaction data into the MYOB systems.
81. At the end of each of financial year, Mr Stirling sent a copy of the MYOB system files to the external accountant who then had responsibility for preparing the end of year financial statements and tax returns. Mr Stirling had no involvement in the process or recording of dividend declaration or trust distributions made by the entities in the Buzadzic Group.
82. Mr Stirling could not shed any light on the Unverified Credit Entries identified by the Respondent.
Mr Hadded
83. Mr Hadded is a principal of a firm called The Practice which acted as external accountants and tax agents for Mr and Mrs Buzadzic and for the Buzadzic Group between 2008 and 2011 and from July 2013.
84. Mr Hadded's firm never asked for and was not provided with the personal bank statements or credit card statements for Mr and Mrs Buzadzic and was unaware of the amounts deposited into those accounts. Mr Hadded's evidence was that his firm generally had a practice of sending a checklist to its clients of information that if relevant the firm would require. He testified that I don't recall that we would have sent that to Danny because I don't know whether he would have acted on it.
85. In so far as the Buzadzic Group entities were concerned, each Year his firm was provided with the MYOB ledger accounts maintained by the Buzadzic Group bookkeeper recording the day to day transactions. Mr Hadded's firm used this information together with information retained in their records to produce finalised accounts. This process entailed:
- (a) starting with the relevant entity's finalised accounts from the previous Year as recorded in the external accountant's system;
- (b) using the closing balances as recorded in those accounts as the opening balances for the current Year;
- (c) transferring the entries for the daily transactions entered into during the Year as recorded by the Buzadzic Group bookkeeper in the MYOB records provided to Mr Hadded's firm;
- (d) posting year-end adjustments to reflect transactions the internal staff of the Buzadzic Group were unaware of, for example dividends paid and trust distributions and entries to consolidate the intragroup loans in WGBW;
- (e) calculating the closing balances for each ledger account and using those closing balances to prepare the finalised financial statements for the relevant entity; and
- (f) advising the Buzadzic Group of the entries to be posted to the Buzadzic Group accounting system so as to align the
ATC 9833
accounting records maintained by the Buzadzic Group with those maintained by the external accountants (alignment entries). As explained further below (at [166]), the amounts posted in the alignment entries were a product of a number of integers.
86. Mr Hadded himself was not involved in the preparation of the work papers supporting the adjustment amounts. Mr Hadded did not know if the alignment entries were in fact posted by the Buzadzic Group to their accounting system records. If the aligning entries were not posted in the Buzadzic Group accounting system, the opening and closing balances of the financial records maintained by the Buzadzic Group would not be the same as those maintained by the Buzadzic Group's external accountants and which were reflected in the finalised accounts.
87. Mr Hadded's firm had no reason to question the daily transaction entries made by the client in the MYOB ledger. It was not the role of his firm to audit the records maintained by the Buzadzic Group bookkeeper. Mr Hadded asserted that in so far as the director loan account was concerned:
I have no reason to believe that those transactions were not accurately recorded in our in-house general ledger and to the extent the entries represented amounts drawn down by Danny Buzadzic then they were offset by:
- - Dividends declared each year as resolved with our clients during the tax planning sessions conducted between April and June each year …
- - Amounts introduced into the companies and sourced by Buzadzic from increased in his personal home loan (rocket) account
- - Other intra group credit loan balances that existed from time to time but which were not income in nature and which were credit balances referable to dividends booked by the respective companies in the group.
88. Mr Hadded did not provide an explanation of the basis for his belief. The Tribunal was not provided with resolutions of dividend declarations or declarations of trust distributions. It was not suggested that the business records before the Tribunal showed that the disputed credit entries were referable to amounts drawn down on the Buzadzic personal home loan account. Nor was it explained how the accounting records provided to the Tribunal demonstrated that the disputed credit entries were referable to dividends booked by the respective companies in the group. The forensic accountants' report prepared by Mr Vasudevan did not fill the information/explanation shortfall. The Tribunal accordingly attaches no weight to Mr Hadded's assertion of belief. While he may genuinely hold the beliefs he expressed, such beliefs, particularly as to accounting matters concerning a significant business, need to be corroborated by the usual business records ordinarily maintained or required to be maintained before they can be afforded material weight.
89. Mr Hadded also testified that the discrepancies identified by the Commissioner between the closing balance of the director's loan account as at the end of one Year and the opening balance of that account as at the commencement of the following Year were the result of the Commissioner relying upon incomplete MYOB files provided by Mr Evans during the course of the audit.
90. Mr Hadded testified that Mr Buzadzic would pay expenses from everywhere. … Part of the challenge was trying to establish where they were paid from and that to understand the movements in the ledger accounts that gave rise to the year end balances in the director's loan account, it would be necessary to look at all the general ledgers for the different entities in the Buzadzic Group. The process was further complicated by the payment of dividends and distributions from trusts which were applied to repay director loan balances.
91. Mr Hadded also testified that it would not be possible for a director to withdraw money from a company's bank account without that withdrawal needing to be reflected in the accounting system (otherwise the ledger balance for the bank account would not reconcile to the bank account balance as recorded in the bank statements). However if the source of funds was not from a company balance sheet, loan account or a company bank account unless it was tracked, you wouldn't know. All that can be said of this evidence is
ATC 9834
that once an amount is in the system it could not leave it without creating an imbalance if it is not recorded appropriately on departure. That is a feature of double entry accounting systems. This evidence says nothing of any moneys not first deposited into the company's bank account or recorded in company accounts.92. The Tribunal concludes that it was not impossible for Associated Entities' cash amounts to be deposited directly in Mr Buzadzic's accounts without having been first deposited in an entity's bank account or otherwise recorded. The evidence before the Tribunal was that most, but not all, of the work performed by the WGBW Group related to insurance claims and payments by insurance companies that were traceable. However not fully traceable amounts could be received, for example, from customers to the extent that the customer was required to pay an excess or for works not the subject of an insurance claim.
Mr Kane
93. Between 2 February 2012 and 19 July 2013, Mr Kane was an external accountant who provided accounting services to the Buzadzic Group. He prepared financial statements for the group entities and their tax returns, as well as Mr and Mrs Buzadzic's personal tax returns. Mr Kane never sought and was not provided with personal bank statements or personal credit card statements. Mr Kane posted year-end adjustments to the MYOB ledger accounts provided to him by Mr Stirling prior to preparing the finalised financial statements. Mr Kane did not have cause to examine the individual transactions posted to the director loans ledger accounts over the Year, except to the extent to which he posted year-end adjustments. It was not part of his engagement to verify or audit each record posted to the ledger. Mr Kane testified that he prepared working papers as part of the end of year process. The Tribunal was not provided with copies of those working papers.
Mr Evans
94. From January 2013, Mr Buzadzic engaged Mr Evans to act as financial controller for the Buzadzic Associated Entities. Mr Evans had no direct knowledge of how the affairs of the Associated Entities were conducted prior to 2013.
95. Mr Evan's testified that during the course of a financial year, entries were posted to the ledgers in the MYOB system maintained by the Buzadzic Group to record day to day transactions, although he did not himself post such entries.
96. During the time Mr Evans was employed by the Buzadzic Group:
- (a) Mr Stirling was responsible for ensuring that during the Year all supplier invoices, all sales receipts and all cash movements in the entity bank accounts were posted into the MYOB accounting system;
- (b) at the end of the Year, the internally maintained ledgers were provided to the external accountants to post year-end adjustments. The adjusted accounts were used to prepare the financial statements, and from their tax returns, for each of the entities; and
- (c) Mr Kane (and later Mr Hadded's firm) was responsible for preparing Mr and Mrs Buzadzic's personal income tax returns.
97. Mr Evans' evidence was that if any of the businesses had a cash shortfall, Mr Buzadzic drew on the home loan account and provided that cash to the business, whether by depositing that cash in the bank account of the entity requiring the funds or by paying the creditors of that entity directly. Mr Evans concluded from his review of the ledger accounts, that cash transfers from the bank accounts of the Buzadzic Group entities to an account in the name of Mr or Mrs Buzadzic were recorded by posting a credit entry to the entity's ledger account for cash at bank and debiting another account. If the cash transfer was a reimbursement for an expense paid for the business on a credit card issued in the name of Mr or Mrs Buzadzic, the debit may have been either to the entity's expense account (a profit and loss account) or to the entity's director loan asset account which recorded the balance owed by Mr Buzadzic to the entity. The Tribunal's assumption is that the difference in the debiting treatment would depend on whether the expense had previously been recognised with a corresponding debit to the director's loan account. The amounts reimbursed were often rounded up or down, and in
ATC 9835
those cases the reimbursement would not match perfectly the amount shown on the personal credit card statement.98. Mr Evans' evidence was that when he was financial controller, he had instructed, and it was his understanding, that at the end of each financial year the external accountants would arrange for the declaration and payment of dividends, at times through trusts, to Mr and Mrs Buzadzic in amounts equal to the loan balances recorded in each entity's accounts as owing by them to the respective entity. Where the shareholder in these Associated Entities was a trustee of one of the Buzadzic trusts, the dividend was subsequently distributed as part of a trust distribution, ultimately to the Applicants as beneficiaries. Beyond this instruction, Mr Evans was not directly involved in the process by which dividends and trust distributions were resolved and paid.
99. During the course of the ATO audit, Mr Evans provided information to the ATO. It is apparent that the audit process was not without difficulty perceived by at least Mr Evans if not the Auditors as well. In frustration, Mr Evans provided MYOB ledgers to the ATO which were incomplete. The records provided did not include, for example, non-trading transactions e.g. dividends paid to shareholders.
100. Mr Evans also contributed significantly to the details provided in Mrs Buzadzic's witness statement.
Mr Vasudaven
101. As noted above, when the incomplete nature of the records provided to the Respondent and to the Tribunal became apparent, the Tribunal suggested that it would be assisted by a forensic accountant's report explaining the source and provenance of the entries recorded in the various ledger accounts. The Applicants engaged Mr Vasudaven for that purpose.
102. Following cross examination, it became apparent that Mr Vasudaven had not addressed the questions asked of him and the Applicants did not seek to rely upon his report except to the extent that his report confirmed that in the finalised accounts, there was no discrepancy between the closing balance in the account as at the end of one Year and the opening balance in that account at the commencement of the following Year. The Tribunal attaches no weight to Mr Vasudaven's report. The discrepancy issue is discussed further below from [162] onward.
Consideration
103. Six general considerations are particularly relevant to the proper disposition of the present applications, namely:
- (a) intermingling of money;
- (b) the reasonableness of proof required;
- (c) the assistance s 1305 of the Corporations Act[10]
Corporations Act 2001 (Cth). - (d) the assistance a double entry accounting system provides;
- (e) the usefulness of estimates;
- (f) the relevant burden of proof.
Intermingling of money
104. The first general consideration concerns intermingling of various entities' money. Using available funds and credit cards and intermingling of various entities' money (including personal money) as has occurred in the present matter is not of itself improper. There may be various reasons for managing money this way. Using readily available cash to service the most pressing need, using private credit cards for business expenditures to secure airline loyalty points, and moving cash to and from home loan accounts so as to minimise interest accruals on a home loan might well be some of those reasons. However, if that type of activity is undertaken, the records kept of it need to allow the appropriate unmingling to be effected with a degree of confidence that the unmingling process is accurate, and the financial statements and balances produced are also accurate, and not merely a speculative end product of antecedent speculation.
105. The present circumstances call for, or require, a degree of record keeping that ensures that amounts transferred between accounts of different entities and for different purposes are accurately accounted for and can be explained if the need arises. By merging his business and personal affairs in the way he did, Mr Buzadzic created a situation which made these tasks difficult. A warning was by Isaacs J in Stone:[11]
A man is, of course, at liberty to keep his records as he pleases, subject to express statutory provision…. But, if he chooses to keep them so as to afford no sufficient internal evidence of the nature of the
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transactions they record, he must be prepared to take the consequences of his own omission.
A similar warning was made by Davidson AJ in Sabiel where his Honour said:[12]
although a person is not bound to keep the best of books or the best system of accounting that is available, nevertheless, if through the want of records of this kind he falls into a position which is hostile to himself, he has to put up with it unless he can establish from other facts appearing in evidence that the case he is putting forward is correct.
106. A failure to create and retain records can have consequences for a taxpayer seeking to discharge its onus of proof.[13]
107. There were a number of ways in which the Applicants may have led evidence of the transactions to which the so-called Unexplained Deposits related. Inconsistent vague recollections that amounted to no more than speculation is not evidence that can be accorded any weight. Whilst a failure to call a third party witness in these circumstances does not found an inference that the evidence would not be helpful to the taxpayer, the failure to call such witnesses may result in the taxpayer failing to discharge their onus of demonstrating the assessment to be excessive because the Tribunal does not have before it countervailing material of any weight.
Reasonableness of proof required/lack of documents
108. The second general consideration concerns the reasonableness of the proofs required in the circumstances and an inability to produce documents. It was contended on behalf of the Applicants that no adverse finding should be made merely because the Applicants were unable to produce contemporaneous records. The submission was that it was not reasonable to expect a person to retain records of personal transactions (such as a private sale of furniture) for an indefinite period and that no adverse finding should be made merely because the Applicants were unable to produce contemporaneous records.
109. While that proposition might be of some influence in some cases, the obligation and expectation to retain a document does not exist in a vacuum. Much depends on the nature of the transaction and whether it is of a kind that would result in retention of documents in the circumstances. This is not a case where a taxpayer has been assessed because they have failed to produce a supporting record in respect of a single isolated deposit which might have been explained by private transactions some time ago for which records are inherently unlikely to have been retained, and are potentially unobtainable when the time comes to establish their character and provenance some years after the event. The evidence, or lack of it, in the present matter needs to be seen in the context of the pattern of conduct, the manner in which Mr Buzadzic conducted his affairs, the number of discrepancies, the size of the discrepancies (bearing in mind that the Commissioner did not seek explanations for and did not question transactions of less than $1,000) and the period over which the discrepancies were identified. The present circumstances include three trusts and 16 companies with which Mr Buzadzic was associated, repeated intermingling of substantial volume and value of business transactions with private arrangements, repeated intermingling of funds of separate businesses and their owners and an apparent reluctance to do what the group's external accountants usually ask of their clients. The deposits and credits to loan accounts that have been the subject of scrutiny were all in excess of $1,000 and were all unexplained. Most of the credits and deposits had their origins in entities that Mr Buzadzic controlled or was significantly associated with which carried on businesses. That of itself suggests that the transactions might not be explained away as private transactions for which records ought not be expected. To the contrary, those circumstances suggest that there might be expected to be a business record or trail that sets out the provenance of the deposits and credits and thus throw light on whether the deposits and credits reveal, or are the produce of, an undisclosed source of income.
Corporations Act s 1305
110. The third general consideration concerns the extent to which s 1305 of the Corporations Act assists the Applicants.
111. In aid of the proposition that there was no discrepancy between relevant opening and
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closing balances of accounts and (it can be accepted) more generally, the Applicant relies upon s 1305 of the Corporations Act as supporting a contention that the final accounts of an entity are prima facie evidence of the matters recorded in them. The final accounts for the Associated Entities do not disclose a difference between the closing balance of one Year and the opening balance of the following Year.112. Section 1305 of the Corporations Act is in the following terms:
- (1) A book kept by a body corporate under a requirement of this Act is admissible in evidence in any proceeding and is prima facie evidence of any matter stated or recorded in the book.
- (2) A document purporting to be a book kept by a body corporate is, unless the contrary is proved, taken to be a book kept as mentioned in subsection (1).
113. The term books is defined in s 9 to include financial reports or financial records. Financial records includes documents of prime entry and working papers and other documents needed to explain the methods by which financial statements are made up and adjustments to be made in preparing financial statements.
114. Under the Corporations Act, all proprietary companies must keep financial records that correctly record and explain its transactions: s 286.
115. The evidence before the Tribunal was that the financial records of the WGBW Group were compiled by the external accountants combining the MYOB records of daily transactions maintained by each entity and end of year adjustments to those records to reflect end of year transactions such as dividends, trust distributions, and the consolidation of loan accounts into WGBW. The external accountants provided WGBW Group with a list of alignment journal entries that needed to be posted so that the client's records reflected the balances in the records maintained by the external accountants. The evidence was that these entries were not always made by the client, resulting in the client's MYOB records deviating from the finalised records maintained by the external accountants and failing to accurately replicate the finalised books of account.
116. Section 1305 of the Corporations Act provides very limited assistance to the Applicants. The section provides that such books are prima facie, but not conclusive evidence of the matters recorded in them. The Commissioner was entitled to interrogate the accounts. He has interrogated the accounts and, after accepting that there had been reimbursements of business expenditure in excess of $3.5 million, asked questions of particular items. In the scheme of the business operations of the group of Associated Entities comprising three trusts and 16 companies over a period of 7 years, the number of items that remain unexplained, was not an overwhelming number.
117. It was clear from the evidence led that the basis for the entries made in the accounts that are under review were not all explained, and that the Tribunal could not be satisfied that all of the entries made were an accurate reflection of the underlying transactions. The accuracy of the records depended on the accuracy and completeness of the information provided to the bookkeeper. The Tribunal is not satisfied that all information relating to Mr Buzadzic's dealings with the WGBW Group was accurately provided to the bookkeepers.
Double entry accounting system
118. The fourth general consideration is similar to the third, and concerns the extent of assistance afforded by double entry accounting systems under which each debit must have a corresponding credit. Thus, if cash has been transferred from an Associated Entity to Mr Buzadzic, double entry accounting would require the recording of a decrease in the Associated Entity's cash account and a debit to another account.
119. It may be accepted that under double entry accounting each debit in an entity's accounts must have a corresponding credit in that entity's accounts. But that does not explain the transaction or transactions which gave rise to the debit entry. It does not explain why the debit entry does not reflect an amount that was sourced in an actual or constructive receipt of income by Mr Buzadzic, whether from the lending entity or some other entity. The explanations required a
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comprehensive forensic examination of the accounts of all the Associated Entities and of Mr Buzadzic's financial affairs which was not undertaken.
Estimates
120. The fifth general consideration concerns estimates. The Tribunal notes the following passage from Haritos:[14]
[233] The second way in which the appellants put their argument that the Tribunal had misconstrued or misapplied the burden of proof section was to contend that the section did not, contrary to the Tribunal's view, require exact proof of the amount by which the assessment was excessive. The appellants referred to
Ma v Commissioner of Taxation [1992] FCA 530; 37 FCR 225 where Burchett J, after referring at length to the decision of the High Court in
Commissioner of Taxation (Cth) v Dalco [1990] HCA 3; 168 CLR 614, said, at 233:Furthermore, the making of estimates upon inexact evidence, which is so much a feature of both judicial and administrative decision-making, cannot be uniquely excluded from appeals against betterment assessments. To refuse to consider the credit, not only of the applicant, but also of his independent and unchallenged witnesses, simply because the effect of the evidence was to support his accountant's generalisations about double-counting rather than to hit upon a precise figure, was to fall into an error of law.
[234] The proposition which the appellants sought to derive from this passage was that in performing its review function, the Tribunal may be required to make an estimate upon inexact evidence, and it cannot avoid its responsibility to make findings by relying on the burden of proof section. This proposition may be accepted for present purposes. The difficulty for the appellants is that, subject to the third argument dealt with below, they are unable to identify the estimate they contend the Tribunal should have made and the evidence by reference to which the estimate should have been made…
121. There is a distinction between inexact evidence which supports an estimate and the Tribunal merely making a guess. In this case, the Respondent has identified particular occurrences which call for explanation. Any role of estimates in these circumstances is very limited.
Burden of Proof
122. The sixth general consideration concerns the relevant burden of proof. The Applicant bears the onus of proving that the amended assessment is excessive. Unless the Commissioner agrees to narrow the issues, this burden is not discharged by showing error in the basis on which the amended assessments were issued. Rather, it is for the Applicant to establish that the amount assessed exceeds their actual liability. This requires the Applicant to demonstrate what their actual taxable income is.
123. In Bosanac,[15]
As the primary judge recorded although the Commissioner conceded that the two amounts totalling $600,000 were not taxable income, the Commissioner "did not otherwise admit the underlying factual foundation alleged by the [plaintiff]". Thus, as both the primary judge and the Full Court reasoned, in effect, the position remained that the amount of taxable income for which the Commissioner contended was the amount shown in the Objection Decision. In substance, the only effect of the Commissioner's concession was that the plaintiff was relieved of the necessity of negativing the inference, otherwise available, that the two amounts totalling $600,000 were taxable income. The onus remained on the plaintiff to adduce evidence sufficient to establish on the balance of probabilities the true amount of his taxable income (of course, making such forensic use as could be made of the Commissioner's concession that the conceded amounts were not assessable income and thereby that the amount of taxable income as determined by the Commissioner exceeded the true amount. The plaintiff was not entitled to proceed on the basis that the conceded amounts could simply be deducted from the amount of taxable income that the Commissioner had determined in the relevant year of income.
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That reasoning was correct. As has been seen, although the Commissioner and a taxpayer may agree to confine an appeal to a specific point of law or fact - and where that occurs, the taxpayer might succeed in the appeal by demonstrating that he or she is entitled to succeed on that point - in the absence of such an arrangement, the Commissioner is entitled to rely on any deficiency in the taxpayer's proof of the excessiveness of the amount assessed in order to uphold the assessment. Equally, if all the facts are known, and the amount of taxable income in dispute depends only on the legal complexion of the established facts, the taxpayer may succeed by demonstrating on the balance of probabilities that the amount in question does not bear that legal complexion. But where, as here, an appeal proceeds on the basis that not all of the material facts are known, either because the taxpayer has been less than forthcoming in making disclosures to the Commissioner or for some other reason, the taxpayer cannot succeed by showing only that the basis of the Commissioner's assessment was in some respect erroneous; since for all that can be told, unless and until the taxpayer proves to the contrary, there may be other income of which the Commissioner was not aware and which the Commissioner has not taken into account. In order to succeed in such a case, the taxpayer must discharge the burden of demonstrating on the balance of probabilities the true amount of the taxpayer's taxable income and thus that the amount determined by the objection decision is excessive. Here, that required the kind of wide survey and exact scrutiny of the plaintiff's business activities to which the primary judge referred and which was conspicuously absent from the plaintiff's presentation.
124. The concessions made by the Commissioner during the course of proceedings were, at times, difficult to understand. As set out above, there were a number of instances where the Commissioner conceded that certain deposits and credits were satisfactorily explained. However it appears that the Commissioner was not willing to concede that as a consequence, the Tribunal should find that the conceded deposit amount should be excluded from Mr Buzadzic's amended assessable income unless Mr Buzadzic could explain all of the relevant deposits and credits.
125. In this matter, there were clear deficiencies in the records provided to the Tribunal. The basis for accounting entries remained unexplained. The manner in which funds flowed between the entities was not explained except in the form of generalisations. The distributions included in Mr Buzadzic's income tax returns were not reconciled to either the bank account statements (which was not unexpected given that the evidence was that the distributions were not paid in cash) or to the amounts recorded as owed to the various entities by Mr Buzadzic. It was not at all clear how trust distributions returned as being made to Mrs Buzadzic could be used to reduce amounts owed to the Associated Entities by Mr Buzadzic. The source and provenance of identified deposits and credit entries (and in particular the transactions which had given rise to the deposits or credit entries) remained unexplained.
126. The burden of proving a negative is not easily discharged.[16]
127. Aside from the amounts which the Commissioner concedes as explained (including the deposits which the Commissioner conceded were debited to the director's loan ledger accounts) and the money received on the sale of heritage number plates, the Tribunal is not satisfied that Mr Buzadzic has shown what the source or sources of money reflected in the disputed deposits and credits (including credits to eliminate apparent opening and closing loan account balance mismatches) was or were, and as a consequence has not shown that:
- (a) the deposits from the Associated Entities and the unexplained credits were not
ATC 9840
attributable to amounts of undeclared income derived by Mr Buzadzic; and - (b) the deposits from the non-associated entities and unknown persons were not attributable to amounts of undeclared income derived by Mr Buzadzic from an unidentified source.
128. In a case such as the present where the Commissioner has assessed a taxpayer on the basis of unexplained deposits and unexplained sources for reductions in their liabilities, to the extent that the taxpayer contends that their income is sourced from distributions and dividends, it is incumbent on the taxpayer to lead evidence that explains how those distributions and dividends were paid (whether in cash or book entry), how the distributions had been reflected in their taxable income as returned and how those dividends and distributions explain decreases in personal liabilities.
129. Mr Buzadzic appeared to assert that the deposits to his bank accounts from his Associated Entities were to be explained on the basis that they were:
- (a) reimbursements to him of outgoings he incurred on behalf of those entities (as a result of his decision to use his personal credit cards or home mortgage offset account to pay outgoings for his Associated Entities);
- (b) the proceeds of loans made to him by the Associated Entity; and
- (c) the proceeds of distributions made to him and which had been included in his assessable income.
130. Mr Buzadzic did not lead sufficient evidence to detail the structure of the various trusts, how the relevant companies declared divided income to those trusts, and how the income from those trusts was distributed each Year.
131. The Tribunal is unable to be satisfied that the amounts deposited into Mr Buzadzic's bank accounts and credit card accounts from the Associated Entities were not assessable, for example by being the proceeds of distributions made to him and which had already been included in his assessable income.
132. The Tribunal is similarly unable to be satisfied that any of the reductions recorded in Mr Buzadzic's loan accounts with the Associated Entities were referable to distributions made to him and which had already been included in his assessable income. Although Mr Buzadzic's income tax returns disclosed some amounts of assessable income referable to trust distributions, the evidence led did not explain how the distributions were made or applied, or the manner in which dividend payments were made by other Buzadzic Group companies to those trusts. The evidence led did not show how the dividends and distributions flowed from the entities in the Buzadzic Group to the accounts of each of Mr and Mrs Buzadzic and how those dividends and distributions were to be reconciled to the deposits in the bank accounts and the Buzadzic loan account reductions recorded in each entity's accounts. The forensic accountants report that had been suggested might have addressed these matters but failed to do so.
133. In the absence of any contemporaneous evidence (whether in the form of bank records, invoices or receipts) and a forensic analysis of the ledger accounts of the Associated Entities, the Tribunal is not satisfied that the identified deposits into Mr Buzadzic's accounts from the Associated Entities can be explained as reimbursements of expenses incurred by Mr Buzadzic for the business operations where no corresponding expense can be identified from the credit card statements for Mr Buzadzic's credit card accounts. Nor can the deposits be readily explained as the proceeds of loans made to Mr Buzadzic where there is no corresponding debit entry to Mr Buzadzic's loan account with the Associated Entities.
134. Aside from the generalised assertion that the deposits from the Associated Entities were reimbursements of unidentified expenses, no specific explanation was proffered by Mr Buzadzic for most of the deposits.
135. A number of Unexplained Deposits from Mynt Pty Ltd or from other owners of the Mynt Lounge had been credited to Mr and Mrs Buzadzic's bank accounts. The Commissioner increased the respective taxable income of Mr Buzadzic and Mrs Buzadzic by the amounts of these deposits. The evidence led did not explain the reasons for the deposits or whether the deposits had otherwise been included in the taxable income returned by the Applicants.
136.
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For the reasons discussed below the Tribunal is satisfied that the deposits into the accounts in the name of Mrs Buzadzic did not reflect amounts of assessable income of Mrs Buzadzic but in fact represented amounts that were controlled by and paid into the accounts at the direction of Mr Buzadzic. The character of these amounts in the hands of Mr Buzadzic, which have not been included in his assessable income, is unexplained.137. Also included in the Unexplained Deposits were deposits from Buz Cubby Pty Ltd's bank account into the bank accounts of Mr Buzadzic and Mrs Buzadzic respectively.
138. The Commissioner increased the respective taxable income of Mr Buzadzic and Mrs Buzadzic by the amounts of these deposits. Mr Buzadzic sought to explain that these deposits were loan repayments. The evidence provided to the Tribunal does not adequately, if at all, explain what the loans were, how they were recorded in the accounts of Mynt or Buz Cubby (as Trustee) and how the deposits were related to the repayment of such loans.
139. For the reasons discussed below the Tribunal is satisfied that the identified deposits did not reflect amounts of assessable income to Mrs Buzadzic but in fact represented amounts paid into the accounts at the direction of Mr Buzadzic. Like the amounts referred to in [135] above, the character of these amounts in the hands of Mr Buzadzic is unexplained.
140. Included in the Unexplained Deposits were deposits from Delrich Arch's bank account into the bank accounts of Mr Buzadzic and Mrs Buzadzic. The Commissioner increased the respective taxable income of Mr Buzadzic and Mrs Buzadzic by the amounts of these deposits.
141. For the reasons set out below, the Tribunal is satisfied that amounts paid into the bank accounts in the name of Mrs Buzadzic did not belong to her but belonged to Mr Buzadzic. The evidence provided to the Tribunal does not adequately explain, if at all, the reasons for the deposits or whether the deposits had otherwise been included in the taxable income returned by Mr Buzadzic. The Tribunal cannot determine whether the deposits reflected distributions made to Mr Buzadzic by Delrich Arch Pty Ltd as the Trustee of the Buzadzic Family Trust and if so, whether such a distribution had been included in the assessable income returned by Mr Buzadzic.
142. Included in the Unexplained Deposits were a number of deposits from companies in the WGBW Group into the bank accounts in the name of Mr Buzadzic and Mrs Buzadzic.
143. The Tribunal is satisfied that amounts paid into the bank accounts in the name of Mrs Buzadzic did not belong to her but belonged to Mr Buzadzic.
144. The evidence provided to the Tribunal does not adequately explain, if at all, the reasons for the deposits or whether the deposits had otherwise been included in the taxable income returned by Mr Buzadzic. Although Mr Buzadzic asserted that a deposit of $140,000 made on 30 May 2008 and a deposit made on 24 September 2009 ($15,000) were loan repayments, no evidence of the existence of the loan was provided. No records of the lender or borrower recording the existence of a loan to which this payment may have related were provided. Although the narrations in the bank statements indicate that some of these deposits were the proceeds of loans from the Associated Entities or the proceeds of repayments of loans made to the Associated Entities, the forensic accountants report did not assist in identifying a corresponding entry in the ledger account recording the balance of the loan between Mr Buzadzic and the Associated Entity. The Tribunal is not satisfied that Mr Buzadzic has discharged his onus of demonstrating that these amounts were not assessable to him.
145. Another deposit made on 25 March 2010 was asserted to be a reimbursement from an Associated Entity for a payment to an insurance provider (Arrivis) but no supporting documentation was provided. The Tribunal is not satisfied that Mr Buzadzic has discharged his onus of demonstrating that this amount was not assessable to him.
146. Two deposits were explained as being processed through the Buzadzic loan ledger account (deposits made on 9 May 2011 and 17 June 2011. The Commissioner conceded that the amounts deposited were recorded in the director's loan account' but this has the effect of increasing the discrepancy between the opening and closing balance. The Commissioner's proposition is difficult to follow and is not accepted. Where the
ATC 9842
source of an amount deposited was a borrowing, the amount deposited does not have the character of, and is not, income. Further, the amounts recorded in the ledger loan account form part of the relevant balance in that account and, being part of the make-up of the relevant balance that has led to the mismatch, cannot be seen as increasing the mismatch. However, the error in this case does not assist Mr Buzadzic because, as explained below, he has not demonstrated what on the balance of probabilities, his taxable income ought to have been.147. One deposit of $1,000 (made on 28 November 2012) was said to be transferred from Gordon Avenue Accident Repair Centre Account and the payment was charged to Director's Fees Account. The Tribunal was not directed to any evidence of records from the payer or provided with evidence of how this amount, if it formed part of Directors Fees may have been included in Mr Buzadzic's taxable income as returned by him. The explanation provided for another deposit of $1,000 (made on 17 May 2013 was I believe but cannot be certain that this was transferred from Geelong Towing Account .. and then incorrectly posted Loan-Geelong Towing, ledger account.. That explanation was no more than speculation and shed no light on the reasons for the deposit.
148. The Unexplained Deposits include a number of deposits into Mr Buzadzic's personal bank accounts and credit card accounts made by third parties or unidentified parties.
149. Mr Buzadzic was unable, in the vast majority of cases, to produce supporting documentation for the reasons for the deposits which were made many years ago. Mr Buzadzic sought to explain some deposits:
- (a) One deposit of $48,009.36 (made on 20 November 2007 from Arrivis Insurance trust account) was said to be in part (to the extent of $3,009.36) a premium refund for a vehicle he disposed of before the end of the insurance coverage period. The vehicle was not identified. No supporting documentation was provided. The balance of the deposit sum could not be explained.
- (b) Another two deposits of $42,984 and of $9,670 from Carringtons (Aust) Pty Ltd (made on 11 September 2006 and 7 November 2007) were speculated by Mr Buzadzic to be related to a motor vehicle he maintained for his personal use (being the proceeds of recovery from third parties for damage to the vehicle sustained in an accident). No contemporaneous documents were produced in support of this claim. No supporting statement was provided from Carringtons. Mrs Buzadzic's cross examination evidence was that deposits to the bank accounts in her name from Carrington's related to sales of household furniture to family friends. Given Mrs Buzadzic generally had limited knowledge of the deposits made into the bank accounts in her name and relied entirely upon her husband's instructions and directions in relation to deposits in those accounts, the Tribunal accords no weight to Mrs Buzadzic's responses on this issue, they were no more than speculation on her behalf. The evidence before the Tribunal was that Carringtons was a debt recovery agent for the panel beating businesses operated by the Buzadzic Group. Such recoveries would be related to the relevant business, and being deposited in private accounts calls for explanation beyond speculation.
- (c) Although Mr Buzadzic asserted that some of the amounts deposited into the bank accounts held in the names of Mr or Mrs Buzadzic were reimbursements of business expenses (denoted as rebates) initially paid for by Mr Buzadzic, no supporting documentation or record identifying the expenses said to be reimbursed were provided to the Tribunal. Four deposits were described as rebate payments from car dealers. Mr Buzadzic testified in cross examination that these rebates were reimbursements for training costs he incurred to train staff to use certain manufacturer's products. However, no corresponding outgoing was identified in any of the contemporaneous records which would support an inference that the rebates were reimbursements. Nor was any contemporaneous documentation provided to the Tribunal evidencing the reason the rebates were paid. The Tribunal is not satisfied that Mr Buzadzic has demonstrated that these deposits payments from suppliers
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were not assessable to him as ordinary income. - (d) One deposit of $130,000 (made on 1 August 2008) was said to be a refund of the purchase price of equipment not received. No evidence was provided to identify the equipment, or that Mr Buzadzic had paid any amount for equipment.
- (e) A deposit of $2,778.60 made on 27 August 2009 and another of $33,066 on 31 July 2012 were said to be insurance payouts for damage to cars privately owned by Mr Buzadzic. No evidence from the payers of the amounts was provided. A document purporting to be a tax invoice bearing dates 27/10/2017 and 7/8/2009 from Western General Bodyworks to Dawes Motor Underwriting Group for an amount payable of $2,778.60 was tendered on behalf of Mr Buzadzic. It is difficult to attach weight to the document to because of the conflicting dates and because it purports to show an amount payable to Western General Bodyworks rather than to Mr Buzadzic.
- (f) Three deposits of $1,363.64, $1,200 and $1,500 (made on 25 June 2010, 9 August 2010 and 12 July 2012) were said to be the repayment of a loan made by Mr Buzadzic to two personal friends (the deposits were from entities said to be owned by the friends). No supporting evidence recording the making of these alleged loans was provided. No evidence was provided from the alleged borrowers.
- (g) Mr Buzadzic sought to explain one deposit ($27,000 on 6 June 2011) as winnings from a horse race but could not recall either the horse, or the race (beyond asserting it was a race at Mornington).
- (h) One deposit (23 July 2012 of $25,000) was said to be the proceeds of a private sale of car parts from a car owned privately by Mr Buzadzic. No supporting evidence was provided from the purchaser of the parts. No supporting documents were provided.
150. The Tribunal does not accept the unsupported explanations for the deposits proffered by Mr Buzadzic. The Tribunal considers Mr Buzadzic's oral evidence concerning the deposits to be speculative and unreliable.
151. Only one of the explanations, concerning the sale of heritage number plates, could be accepted.
152. A deposit from a third party (made on 24 September 2007) was said to be the proceeds of the sale of a heritage number plate ($40,000) which, based on records obtained by the Commissioner from the South Australian government, Mr Buzadzic acquired some 18 months earlier. The Tribunal was provided with a note and a cheque docket from the purchaser who otherwise was not called to give evidence. Other documents provided to the Tribunal suggest that Mr Buzadzic purchased the heritage plate for $10,000. The half of the gain made on the sale of the plate would be required to be included in the calculation of Mr Buzadzic's net capital gain for the 2008 income year if the heritage plate is properly regarded as an antique and therefore a collectible (s 108-10). On the basis of the imperfect evidence before it, the Tribunal is satisfied that on the balance of probabilities, the plate is an antique and at least $15,000 of the $40,000 receipt was not assessable to Mr Buzadzic.
153. On 16 July 2010, a deposit of $19,500 was made into an account in the name of Mrs Buzadzic that was said in Mrs Buzadizc's witness statement to represent the proceeds of the sale of shares held by Mr Buzadzic in the Mynt Lounge but paid to Mrs Buzadzic's account. Mr Buzadzic proffered no explanation for this deposit. As explained above, the Tribunal is unclear as to the precise ownership of that interest and is unable to determine the extent to which the amount once paid to Mr Buzadzic (whether directly or constructively) constituted a gain derived by Mr Buzadzic on the disposal of an interest held by him or the distribution of a gain derived by the Trustee of the Buz Cubby Trust. In these circumstances, Mr Buzadzic has not discharged his onus of proving that that amount did not represent his assessable income.
154. A deposit of $25,000, made on 22 July 2010 in a bank account in the name of Mrs Buzadzic was said in Mrs Buzadizc's witness statement to represent a profit distribution from the Buz Cubby nightclub to Mr Buzadzic but paid to Mrs Buzadzic. Mr Buzadzic proffered no explanation for the deposit. Nor did he
ATC 9844
show how the distribution had been included in the taxable income he had returned.155. Mr Buzadzic's attempt to explain a deposit of $15,000 on 17 May 2010 into a bank account in the name of Mrs Buzadzic as a refund of part of the purchase price for a vehicle he bought for his personal use is not accepted. The contemporaneous records showed that Mr Buzadzic was not the purchaser of the vehicle which means the contention cannot be accepted as proven.
156. Mr Buzadzic provided no supporting documentation for the reasons for the remaining deposits made in the accounts in the name of Mrs Buzadzic.
157. A document on Woodman Joinery letterhead dated 28 April 2011 was tendered on behalf of Mr Buzadzic in the course of his re-examination. The document was purportedly signed by three individuals, one of whom was Mr Buzadzic. It stated:
Hereby we accept to personally guarantee the funds being borrowed from Danny Buzadzic to return in full the first week of July 2011 with the following interest portion:
Amount borrowed: $100,000
Amount to be repaid the first week of July: $110,000
158. It appears that Mr Buzadzic was seeking to rely upon this document as supporting the characterisation of a receipt in the account in the name of Mrs Buzadzic on 1 July 2010 for $110,000 from Woodman Joinery. No evidence from the representatives of Woodman Joinery was provided. Mr Buzadzic did not submit that he returned any part of the $110,000 as assessable income in his income tax return. Mr Buzadzic pointed to no evidence of funds being provided to Woodman Joinery from his bank accounts or otherwise from funds due to him, paid at his direction. Mr Buzadzic had no explanation for where or how the document had been located or why the document had not been provided earlier. Given the manner in which Mr Buzadzic dealt with funds within the Buzadzic Group, the Tribunal is unable to find on the basis of this document that Mr Buzadzic (as opposed to any of his Associated Entities) in fact made a loan to Woodman Joinery. Furthermore, even if the Tribunal were to accept that $100,000 of the $110,000 deposited into the account in Mrs Buzadzic's name represented the repayment of loan principle to Mr Buzadzic, Mr Buzadzic has not been able to discharge his onus of proving what his taxable income for the 2012 income year was.
Unverified Credit Entries - Mr Buzadzic
159. The Unverified Credit Entries remain substantially unverified and unexplained. The evidence provided to the Tribunal did not adequately explain the reasons for these credit entries to show that they were not income, or amounts representing income, or whether these amounts had otherwise already been included in the taxable income returned by Mr Buzadzic.
160. In this regard, the Tribunal cannot determine whether the amounts credited to Mr Buzadzic's director's loan account reflected the repayment of loans made by Mr Buzadzic to the Mynt or Cubby House businesses (whether such loans were made and if so how they were made, whether directly out of a bank account controlled by Mr Buzadzic or indirectly by Mr Buzadzic drawing down on his loan account with WGBW and directing WGBW to transfer funds to Mynt or Buz Cubby) or whether the credit entries reflected distributions made to Mr Buzadzic at the direction of the Trustee of the Buz Cubby Trust and if so, whether such a distribution had already been included in the assessable income returned by Mr Buzadzic or whether the credit entries reflected funds otherwise applied for Mr Buzadzic's benefit.
161. On the evidence provided, and absent the assistance of a forensic examination of the journals and ledgers for each entity tracing the provenance and origin of the credits, the Tribunal is not satisfied that the decreasing movements in Mr Buzadzic's loan accounts with each entity or the identified deposits are to be explained by the distributions made to him by the WGBW Group which were otherwise included in the taxable income he returned. This inability to be so satisfied is not assisted by the fact that the sum of the decreases in the balances owed by Mr Buzadzic exceeded the sum of the distributions he received. The Tribunal is not satisfied that Mr Buzadzic has discharged his onus of demonstrating that these amounts did not represent amounts of his assessable income.
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162. In so far as the differences between the closing and opening balance recorded in Mr Buzadzic's loan accounts are concerned, Mr Buzadzic contended that there was no difference once it was appreciated that the accounting ledger records provided to the Commissioner were incomplete.
163. The evidence before the Tribunal was that the MYOB ledgers provided by Mr Evans to the ATO were not complete. The evidence was that the records provided to the Commissioner did not include the alignment entries (including end of year adjustments that were processed by the external accountants to take account of year end matters) and that the finalised accounts for each Year did not disclose a discrepancy between the opening balance of the director's loan account as at the commencement of the Year and the closing balance of that account as at the end of the prior Year. If complete ledger records had been provided there would have been no difference between the closing balance from one Year and the opening balance in the next Year.
164. The Applicants relied on the fact that the finalised financial statements for each Year disclosed a closing balance that was equal to the opening balance of the following Year as showing that the amended assessments were excessive because there was no discrepancy between opening and closing balances.
165. The Tribunal concludes that there was no discrepancy between the opening balance of the director's loan account as properly recorded in each entity's accounts as at the beginning of the Year and the closing balance as at the end of the previous Year (based on the finalised complete books of account maintained by the external accountants). The Commissioner was in error in assuming such a discrepancy existed. However, to show error in the Commissioner's process of assessment is not sufficient to discharge the Applicant's burden of showing the amended assessments to him were excessive. Even if these balances in the finalised accounts are accepted, the entries made that led to those balances need to be explained if they are challenged, as is the case presently
166. The evidence led suggests that to align the external accountants' records with Buzadzic Group records year-end adjustments had been made to reflect at least three matters:
- (a) Distributions declared and paid at year end. The distributions involved dividend declarations by the companies to their shareholders and trust distributions by the trustees of the family trusts. Mr Evans did not prepare the documents to effect the distributions. Year-end distributions were not paid in cash but effected by book entries. Where the distributions were applied on behalf of Mr Buzadzic to reduce his liability to WGBW, the effect of the distribution was to reduce the balance of Mr Buzadzic's director loan account in WGBW's ledger.
- (b) Entries made to reflect transactions at year end to consolidate the director loan account balances into one entity - Western General Bodyworks. Because the other entities in the group tended to suffer cash shortfalls, during the Year, from time to time, Mr Buzadzic advanced moneys to those other entities by drawing on his home loan. In the accounts of these entities, the director loan account was a liability. At the same time, Western General Bodyworks did generate surplus cash and Mr Buzadzic drew on those surplus cash funds from time to time to fund his family's living expenses or direct WGBW to repay his home loan. In WGBW, the director loan account was an asset. Having many inter-entity loans made, in the words of Mr Kane, it is difficult to ascertain the amount of money that was owed between entities because this one owed this one so much, and this one owed this one so much. It was very difficult to control and understand which entities were supporting the other entity with regard to its own cash flows. As part of tidying up the accounts, the external accountants processed entries which had the result of transferring from Mr Buzadzic to Western General Bodyworks the liability owed by the other group entities (and instead of those entities owing moneys to Mr Buzadzic, those entities owed moneys to WGBW, thereby creating an asset in the accounts of WGBW and WGBW recording a decrease in the amount owed to it by Mr Buzadzic)[17]
Analogous to recording entries to reflect an assignment by Mr Buzadzic to WGBW of the debts owed to him by other Buzadzic Group entities
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- (c) Missed prior year adjustments. If these adjustments had not been properly made to the ledgers maintained by the client as at the end of the prior year, the prior year adjustments would also need to be processed.
167. To the extent that the adjustments related to the second and third of the above matters, the adjustments would not necessarily relate to, be sourced in or be explained by Mr Buzadzic contributing funds to the entities from undeclared sources of income. In particular, the missed prior year adjustments would not be referable to undeclared sources of income in the year of income in which the adjustments were in fact processed. Whether adjustments made to loan account balances as a result of Mr Buzadzic advancing funds to entities suffering a cash shortfall were referable to undeclared sources of income of Mr Buzadzic would depend on identifying Mr Buzadzic's source for those funds. If those funds were sourced by Mr Buzadzic borrowing from another party (for example, by drawing down on his home loan) those funds would not be sourced by Mr Buzadzic from any undeclared income. If however those funds were sourced by Mr Buzadzic as a result of other transactions, those funds might have been sourced by Mr Buzadzic from undeclared income.
168. The difficulty is that based on the evidence before it, the Tribunal cannot ascertain the extent to which the entries made to the director's loan accounts related to any of the three matters. The Tribunal was provided with alignment journal entries which listed the total debits and credits the external accountants instructed be made to the Buzadzic Group's internally maintained ledgers at the end of each Year. However the Tribunal was not provided with an explanation for the basis on which those debit and credit amounts had been determined and in particular how the debit adjustments to the director loan accounts had been calculated or evidence of the transactions which they were intending to reflect.
169. The year-end adjustments made by The Practice for each financial year in which it was involved were recorded in a Transaction Details Report. The Tribunal was provided with documents entitled Director's Loan Account Movement for the years of income 2008 to 2011. These documents were prepared for the purposes of these proceedings by a member of staff at Mr Hadded's accounting practice. The documents were said to summarise the adjustments made to the director's loan account balance by Mr Hadded's staff at the end of each financial year. The reason for each adjustment was not set out in those documents. A further set of document prepared for the purposes of the proceedings entitled Accountant's In House General Journal (Movements) contained a column entitled Details which purported to explain the reasons for the year-end adjustments made to the director's loan accounts. However:
- (a) in some instances the details provided were really not explanations at all. For example, the reason recorded for entries made in Batch 12 was This journal entry was posted to reconcile the inter-entity loan accounts. Ledger reports are unlocatable for WGBS and WGT; and
- (b) the details had been prepared by a member of Mr Hadded's staff (Ms Aksoy) who did not give evidence and except in two instances appears not to have relied upon contemporaneous work papers but drew conclusions based on the content of the MYOB files, financial statements and Transaction Details Report. In the absence of evidence from Ms Aksoy, the Tribunal is unable to ascertain the extent to which the details reflect opinions or assumptions made by Ms Aksoy and the reasoning to support those opinions. The Tribunal is unable to accord any weight to the Accountant's In-House General Journal (Movements) documents as evidence of the reasons for the adjustment entries.
170. No attempt had been made to demonstrate how any of the year-end adjustments were reflected in or reconciled with the amounts included in Mr Buzadzic's tax returns. Although it is likely that at least some of the year-end adjustments (and thus some of the differences between the closing balances recorded in the accounting files provided to the Commissioner and the opening balances recorded in the following year's financial statements) may be explained by the distributions of income that were included in Mr Buzadzic's income tax return, the Tribunal does not have a sufficiently
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reliable basis on which to quantify or ascertain the connection, if any, between the reductions in the loan account balances and the distributions made to Mr Buzadzic that may have been satisfied by an entry reducing his loan account balance. It may be accepted that the balance shown in the accounts of the entities properly disclose the balance owed by Mr Buzadzic and disclose the extent of that entity's claim against Mr Buzadzic. However, the year-end accounts do not of themselves explain the reasons for or the sources of the reductions recorded against Mr Buzadzic's loan account. The balance in the ledger account does not identify whether the source of the reduction recorded in that ledger account is to be found in a non-assessable receipt or entitlement or an assessable entitlement or receipt that has already been brought to account.171. Having provided incomplete information to the ATO during the course of the audit, to discharge his onus, it was incumbent on Mr Buzadzic to provide the Tribunal with evidence of the transactions which supported the adjusting entries made to his loan account and to demonstrate why those transactions did not involve or reflect amounts that were assessable to him, or if they were, that those amounts had been included in the taxable income he had returned. In this case the Tribunal was not provided with an adequate explanation of the manner in which the quantum of the adjustments had been determined. The Tribunal considers it possible, potentially even likely, that there exists an explanation for some if not all of the discrepancies identified by the Commissioner between opening and closing balances and it is possible that such an explanation might demonstrate that the adjustment made to align those balances reflected transactions that were not attributable to undeclared income. However, on the evidence before it, the Tribunal does not have a sufficient basis on which it might estimate the extent to which the adjustments made to align the opening and closing balances reflected or were sourced in such transactions.
172. The difficulty for Mr Buzadzic is that the Tribunal was not provided with coherent evidence of the basis on which the adjustments to loan account balances were made or calculated. The Tribunal cannot ascertain the extent to which those adjustments reflected amounts that were assessable to Mr Buzadzic or if they were assessable (because for example they reflected distributions made to him) how those assessable amounts had been included in his taxable income as returned by him. Notwithstanding requests made during the hearing, the transaction records provided did not explain the basis for these adjusting entries. Further, no evidence was provided to the Tribunal of the declaration of dividends to Mr Buzadzic or of resolutions by any trustee to make trust distributions to or in favour of Mr Buzadzic.
173. The Tribunal accepts that the finalised financial statements for each entity do not disclose a difference between the closing balance of one Year and the opening balance of the next Year. But whilst the Tribunal accepts that the final accounts of the entities show that the closing balances match the opening balances of the following Year, the evidence led does not demonstrate that the entries giving rise to the closing balances were properly made or, identify the nature of the transactions that those entries were intended to record, or to the extent they were, demonstrate that those entries were referable to dividends declared or distributions of net income of trust made to or on behalf of Mr Buzadzic, that had been included in the assessable income returned by Mr Buzadzic.
Unexplained Deposits and Unverified Credit Entries purporting to be in Mrs Buzadzic's favour
174. The Tribunal accepts Mrs Buzadzic as an honest witness and, to the extent that she testified as to matters within her direct knowledge, generally accepts her evidence. Mrs Buzadzic's testimony that she did not control the bank accounts in her name, that she signed deposit slips for those accounts as directed by Mr Buzadzic and that Mr Buzadzic directed the payments into and from those accounts was not only uncontradicted but positively affirmed by Mr Buzadzic, Mr Evans, Mr Kane, Mr Sterling and Mr Haddad. The Tribunal accepts that evidence.
175. The uncontradicted evidence before the Tribunal supports a finding that although the bank accounts were in the name of Mrs Buzadzic, she did not direct the payments into
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those accounts, she did not exercise control over those accounts and although she was permitted by Mr Buzadzic to draw on those accounts to meet personal and domestic expenses, she did not otherwise control or direct the payments made from those accounts and the moneys in those accounts were not hers. The accounts were controlled by Mr Buzadzic. He directed payments to be made from those accounts and directed the payments made into those accounts. Although Mrs Buzadzic at times signed deposit slips for those accounts, she did so under the direction of or at the request of Mr Buzadzic and/or his staff. The Tribunal is satisfied that the payments made into those accounts were made at the direction of and for the benefit of Mr Buzadzic and remained under the control of Mr Buzadzic. The deposits made as a result of Mrs Buzadzic signing deposit slips were effecting payments to Mr Buzadzic. The money in her personal bank accounts actually belonged to Mr Buzadzic, although he allowed her to use the accounts to pay for household expenses.176. As noted above, the Tribunal asked the parties what arises if Mrs Buzadzic were to be believed and the Respondents' reply is set out. The Respondents' submissions are not accepted.
177. First, evidence in one proceeding was to be accepted as evidence in the other. Both Mr Evans and Mr Buzadzic gave evidence as noted. As such there was no failure by Mrs Buzadzic to call Mr Buzadzic or Mr Evans.
178. Second Mr Buzadzic gave evidence and was cross examined after Mrs Buzadzic. It was open to the Commissioner to put any part of Mrs Buzadzic's testimony to Mr Buzadzic that he wished to challenge. It was not put to Mr Buzadzic that the amounts identified by Mrs Buzadzic as having been incurred by Mr Buzadzic on credit cards in her name were not incurred by him. To the contrary, Mr Buzadzic's evidence was that he did use the credit cards in Mrs Buzadzic's name.
Ms SHAND: When you travelled, did you take Leisa's credit card with you?---I've used it, yes.
Ms SHAND: When you travelled?---Yes, I've always taken - yes.
Ms SHAND: And is that when you travel with her or when you travel on your own?--- Both
Ms SHAND:So sometimes you take her credit cards with you?---Yes.
Ms SHAND:And where are you travelling to when you do that?---It could be anywhere. It could be interstate; it could be Sydney; it could be Queensland; it could be America. It could be anywhere.
Ms SHAND: In some people's experience, when you use a credit card, if it's over a certain amount, you then need to put a pin number in or you need a signature?---I don't know.
Ms SHAND: So I'm just asking you how would you use her credit card to make a substantial purchase?---Just scribble her name down or put a pin in.
Ms SHAND: So you would put her signature?---Yes.
Ms SHAND: And alternatively used her pin number?---It was the same as mine. My pin number is the same as hers
179. Third Mr Buzadzic's evidence was that the moneys belonged to him. This was not challenged.
180. Although Mrs Buzadzic had no direct knowledge of why that expenditure had been incurred (and therefore any characterisation she sought to give that expenditure is of no weight), she did have direct knowledge that the expenditure had not been incurred by her. That evidence was not contradicted and is accepted.
181. The Tribunal accepts that the moneys in the accounts in her name were not moneys under her control and that Mr Buzadzic controlled those moneys and used them as he saw fit. It follows that the deposits made into those accounts were moneys that belonged to Mr Buzadzic. The failure to explain the source of those deposits does not result in those sums being assessable to Mrs Buzadzic. Those moneys did not belong to her.
182. Based on the evidence before it, the Tribunal concludes that the deposit amounts did not represent moneys beneficially owned by Mrs Buzadzic but were moneys owned by Mr Buzadzic and which he permitted Mrs Buzadzic, as his spouse, to draw upon under a domestic family arrangement. The deposit
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amounts do not constitute assessable income of Mrs Buzadzic under s 6-5 of the1997 Assessment Act.[18]183. Mrs Buzadzic's witness statement included an attachment which purported to set out an explanation for some of the deposits made in the accounts in her name. The Commissioner is correct in observing that it was apparent from cross examination that she did not prepare that attachment and the explanations provided in that table were prepared by others. The table was based on information and belief, apparently from Mr Evans. It was apparent under cross examination that Mrs Buzadzic had merely relied on Mr Evans for the content recorded in her statement and she did not have personal knowledge of the explanations given in her evidence. Mr Evans was not in the business for most of the relevant period (prior to 2013) and did not give evidence on these amounts. Her witness statement was mostly phrased in terms of I believe where the basis of that belief was not supported by documentation or evidence from the payer.
184. The Tribunal does not rely upon or attach any weight to Mrs Buzadzic testimony which was based on her belief. That testimony consisted of conjecture or speculation or was based upon statements made to her by Mr Buzadzic or Mr Evans. Her evidence was not based on her direct knowledge. It was speculation and of no weight. Mr Evans could not himself give direct evidence of the affairs of the Associated Entities prior to 2013.
185. In her witness statement Mrs Buzadzic proffered explanations for the following third party deposits based on her recollection:
- (a) Two deposits from Carringtons (Aust) Pty Ltd made on 7 August 2007 (in the amount of $1,170) and 12 November 2009 (of $17,731.64) Mrs Buzadzic in her witness statement said that to the best of her memory, the payments were for the sale of furniture which she sold around the time of the sale of their home. In cross examination, she accepted that she moved house in September 2008. No evidence was provided from the alleged purchaser of the furniture. As set out above, Mr Buzadzic also received deposits into his account from this entity which he testified was a debt recovery agent. Given Mrs Buzadzic's limited knowledge of the operation of the accounts in her name, and the basis on which deposits were made in those accounts, the Tribunal accords no weight to the explanation proffered by Mrs Buzadzic which the Tribunal considers was no more than speculation on her behalf.
- (b) A deposit made on 12 May 2010 to the home loan account in her name (of $12,911.05) which was said by Mrs Buzadzic to be for the private sale of a boat. No supporting documentation was provided and no evidence was given by the alleged purchaser. In cross examination, Mrs Buzadzic testified that she was not sure how the sale was facilitated because it was organised by her husband. The Tribunal concludes that Mrs Buzadzic evidence was not based on her direct knowledge and attaches no weight to Mrs Buzadzic evidence in respect of this deposit.
- (c) A deposit made on 11 February 2011 by Mr Bjazevic to the home loan account in her name (of $11,149.40) which was said by Mrs Buzadzic to be in part settlement of an insurance claim for damage to a dining room table. Mrs Buzadzic said that Mr Bjazevic was a partner in Arrivis Insurance Brokers who handled all her insurances. Mrs Buzadzic's witness statement attached email exchanges with Arrivis Insurance. In cross examination Mrs Buzadzic was taken to further documents concerning these claims from the insurer, Vero Insurance. That correspondence indicated that the claims were paid between 17 August and 27 September 2010 and that the claim for the dining table and chairs was paid in September 2010. The payments were reflected as deposits into the home loan account at that time by the insurance company. During cross examination Mrs Buzadzic conceded that it may not have been for the dining table. The Tribunal concludes that Mrs Buzadzic evidence was not based on her direct knowledge of the deposit and attaches no weight to Mrs Buzadzic evidence in respect of this deposit.
- (d) Mrs Buzadzic's explanation for four deposits of $1,500 on 5 March 2008, $15,000 on 30 April 2008, $2,000 on 22 October 2008 and $1,200 on 3 November 2008) was that she believed they were
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proceeds from the private sale of furniture she advertised in the Trading Post. The Tribunal was not provided with any records of the advertisement. The payment of $15,000 was a Bpay payment to her credit card. Her oral testimony was that she did not know how credit transfers were made. She speculated that either she or her husband would have given the bank account details to the purchaser. Her testimony was that it was quite a while ago, both my husband and I would have dealt with the particulars [sic-purchasers]. The Tribunal concludes that Mrs Buzadzic had no actual recollection of the particular deposits and was speculating as to the reasons for these particular deposits. Her evidence is in the nature of conjecture and of no weight. - (e) Eight deposits were believed to relate to insurance payouts ($1,000 on 17 June 2009 [B-pay], $14,000 on 17 June 2009 [B-pay], $15,000 on 17 June 2009 said to relate to the theft/loss of a white gold Tiffany necklace with a diamond pendant), $7,500 on 24 March 2010 [B-pay] (said to relate to water damage to a Raymond Weil watch), $36,071.45 on 31 May 2010, $26,700 on 26 July 2010 , $20,000 on 11 August 2010 and $4,500 on 1 December 2010 (said to relate to storm damage to the family home). The Tribunal was not provided with any contemporaneous material relating to these claims. In the table that formed part of Mrs Buzadzic's statement, Mrs Buzadzic refers to brokers' statements in support of this explanation. There are two problems with the contended for support. First, the brokers statements were not provided to the Tribunal. Second, the amounts in that table that Mrs Buzadzic contended were confirmed by the brokers statements were less than the deposit amounts said to relate to the pendant and watch. In respect of the water damage, the payer as recorded on the deposit slip (CGU) was not the same as the provider of the home insurance (Vero). The records relating to the payouts from Vero indicated that the claims for flood damage to the home and contents were paid between 17 August and 27 September 2010. In cross-examination, Mrs Buzadzic conceded she had no idea and that we've made a mistake in saying where it came from. Mrs Buzadzic conceded in cross-examination that the deposit on 26 July 2010 was not from Vero but from Saab's auto and that the deposit slip for the 11 August 2010 amount made no reference to Vero and she could not explain why the deposit of 1 December 2010 was made to her credit card. The Tribunal concludes that Mrs Buzadzic's explanations for these deposits were no more than speculation on her behalf and of no weight.
186. The Commissioner submitted that the Unexplained Deposits in the credit card accounts in the name of Mrs Buzadzic could not be explained as reimbursements of business related expenses. In relation to the credit cards issued in Mrs Buzadzic's name, the Commissioner identified total expenses on Mrs Buzadzic's credit cards in the period 2007 to 2012 were approximately between $151,000 and $264,000 per Year, although lower in 2013. There were frequent substantial expenses incurred on those credit cards for luxury personal items including expenses at Louis Vuitton, Gucci, Tiffany's, Georg Jensen Jewellery, Lisa Ho, Myer, Chanel and Ms Louise as well as expenses incurred at Surfers Paradise, Hamilton Island, Bali, and Disneyland. Mrs Buzadzic's evidence was that those were not expenses incurred by her but were incurred by her husband. She speculated that the reason he incurred those expenses was that they were related to his business.
187. As set out above, the Tribunal attaches no weight to Mrs Buzadzic's statements about the reasons for the expenditure. They were not reflective of her direct knowledge. Mrs Buzadzic did not review the credit card statements issued in respect of the credit cards in her name and had no direct knowledge of each transaction made by Mr Buzadzic using those cards. She could not give evidence about those transactions or the reasons why they were made. Her attempts to do so were no more than speculation on her behalf and are of no weight.
188. Having seen Mrs Buzadzic give her testimony, the Tribunal accepts that she did not incur those expenses but that they were incurred by Mr Buzadzic. The Commissioner did not ask Mr Buzadzic as to whether he incurred those expenses. Mrs Buzadzic evidence was thus not contradicted by any other witness. The Tribunal
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accepts Mr Buzadzic's evidence that he used those credit cards, sometimes by using Mrs Buzadzic's physical card by falsifying her signature or using her pin number.Division 7A
189. The Commissioner contended that Division 7A applied with the result that the following amounts were assessable as deemed dividends:
- (a) the deposits from the Associated Entities. In relation to these amounts, Division 7A was said to apply in the alternative; and
- (b) the unpaid balance in Mr Buzadzic's director loan account as at the end of the income year
Deposits from Associated Entities
190. Division 7A does not apply to deem any deposits made by the Associated Entities in the accounts in the name of Mrs Buzadzic to be dividends paid to Mrs Buzadzic. This is because the moneys in those accounts did not belong to her. The deposits made to those accounts belonged to Mr Buzadzic who allowed his wife to draw on those funds to meet household expenses. There was no payment to Mrs Buzadzic.
191. Having regard to the reasons set out above, the Tribunal has found that aside from the identified exclusions, Mr Buzadzic has not discharged his burden of proving the deposit amounts assessed did not constitute his assessable income, outside of the application of Division 7A. Accordingly, there is no occasion for the consideration of Division 7A in respect of the deposit amounts.
Unpaid Loan Balances
192. The unpaid loan account Division 7A dividends and relevant distributable surpluses are set out in Table 10.
193. It is not disputed that the distributable surpluses of the Associated Entities exceeded the unpaid loan account amounts. Rather the dispute on this issue concerns the identification of the correct amount of the outstanding loan balances. The Commissioner appears to have identified the outstanding loan balances by reference to the incomplete MYOB files provided to him at audit which he then adjusted for four matters:
- (a) A reduction in the balance by any repayments made up to the respective entity's lodgement day (being the following May 15);
- (b) Offset an end of year credit balance to offset a later Year's debit balance;
- (c) Included credit and debit entries to account for discrepancies between loan closing and loan opening balances;
- (d) Allowing adjustment entries for the allocation of trust distributions that the Commissioner accepted reduced the loan balance with the private companies.
194. The adjustments specified at (b) to (d) above result from the reliance upon incomplete ledgers.
195. Given the findings of the Tribunal set out above, in particular:
- (a) The Tribunal is not satisfied that the Unverified Credit Entries did not reflect or were not sourced in transactions that had not resulted in Mr Buzadzic deriving assessable income that had not otherwise been returned. The result of this finding is that Mr Buzadzic has not shown that his amended assessment was excessive to the extent that it included an equivalent amount in his amended assessable income. To further assess Mr Buzadzic under Division 7A on the basis that these the credit entries did not reduce the outstanding balance owed by Mr Buzadzic would be to assess Mr Buzadzic on the same amount twice;
- (b) In so far as the year end adjustment were concerned, the Tribunal is not satisfied that these entries did not reflect or were not otherwise sourced in transactions that had given rise to assessable income to Mr Buzadzic that had not been returned by him. The result of this finding is that, Mr Buzadzic has not shown that his amended assessment was excessive to the extent that it included an equivalent amount in his amended assessable income. To further assess Mr Buzadzic under Division 7A on these year-end adjustment entries would be to assess Mr Buzadzic on the same amount twice;
- (c) The finding that the ledger accounts provided to the Commissioner were incomplete and that the closing balance of the amount claimed by each entity to be
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owed by Mr Buzadzic is disclosed in the entity's finalised accounts,the Tribunal finds that for the purpose of applying Division 7A the outstanding loan balances as at year end are the amounts disclosed in the finalised accounts for each entity. Because the Tribunal has no evidence to show these amounts were repaid prior to the lodgement date, the Tribunal finds that the amounts set out in Table 14 are assessable to Mr Buzadzic and ought to be included in his amended assessable income.
Table 14 Entity 2008 2009 2010 2011 2012 Total WGBW $4,404 $4,404 Western General Towing $5,631 $5,631 Geelong Collision Centre $11,411 $11,411 Geelong Towing Services Total $10,035 - $11,411 $21,446
196. The Applicants submitted that if Division 7A otherwise applied the Commissioner ought to exercise his discretion under s 109RB to disregard the result of that application because the result arose by reason of an honest mistake or inadvertent omission. The existence of an honest mistake or inadvertent omission is a precondition to the exercise of the discretion. The matters which must be considered in exercising the discretion are those set out in s109RB(3). The evidence before the Tribunal was that those advising Mr Buzadzic were highly aware of Division 7A and actively took steps at year end to declare dividends and make distributions to minimise its impact. Those advisors also compiled the finalised financial statements. They would have known that those accounts disclosed outstanding loan balances as at year end. The Tribunal does not find that the circumstances that led to the mistake or omission support a decision that the operation of the division ought to be disregarded.
Fraud or Evasion
197. The Applicants submitted that the amended assessments issued to them were excessive because they had been issued outside of the time limits provided for in s 170 of the 1936 Assessment Act and the Commissioner had no basis for forming that had been fraud or evasion for the purposes of item 5 of the table in s170(1). The Applicants accepted that the Commissioner had formed the opinion that there had been an avoidance of tax and that the avoidance had been due to evasion. However, the Applicants contended that there were defects in the formation of that opinion, with the consequence in their submission, that the Commissioner had not formed the requisite opinion for the purposes of s 170.
198. A taxpayer carries the onus of showing that there was no fraud or evasion or that the Commissioner had not formed the requisite opinion. There is no onus on the Commissioner to show that the assessment was correctly made.[19]
199. There being no dispute here that the Commissioner had formed the opinion that there had been evasion, the issue before the Tribunal is whether it is satisfied on the material before it, that the taxpayer has discharged the onus of showing that the opinion that was evasion should not have been formed.
200. Evasion for these purposes means more than the mere withholding of information or the mere furnishing of misleading information. Some blameworthy act or omission on the part
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of the taxpayer or those he is responsible for is required.[20]201. As a practical matter, a taxpayer may demonstrate that there was no fraud or evasion by showing that there was no amount omitted from taxable income; for example, by showing that the amounts included in their assessable income were not assessable.[21]
202. In this particular case, to discharge the onus regarding fraud and evasion, Mr Buzadzic needed to provide evidence as to the sources of the amounts deposited into the bank accounts. Based on the evidence before it, the Tribunal does not accept the explanations proffered by Mr Buzadzic for the deposits. The character of the amounts deposited remain unexplained and he has not proven the amounts to be non-assessable. In the absence of an accepted explanation for the amounts, Mr Buzadzic has failed to demonstrate the omission of these amounts from his assessable income were not attributable to a blameworthy act. Approached differently, the Tribunal has nothing on which it can evaluate the seriousness of any shortcoming, there is nothing on which the Tribunal can rest a conclusion that there was not such a blameworthy act.
203. Mr Buzadzic contended that there was no basis on which the Tribunal could be satisfied that he had engaged in fraud or evasion because he was a panel beater with limited education who relied upon his employees and external accountants in order to comply with his taxation obligations. He had no knowledge of the provisions of the Income Tax Assessment Act 1936 and could not have understood that unverified credit entries comprising discrepancies in loan accounts with various companies and discrepancies between closing and opening balances of some loan accounts were assessable income.
204. There are a number of difficulties with this submission. First, it does not lay a foundation to come to a conclusion that there was not a blameworthy act. Second, a taxpayer is responsible for the acts of his employees and agents. The blameworthy act may be that of the taxpayer personally or of those he is responsible for. Third, a taxpayer does not discharge their onus of showing an absence of evasion based on a contention about their subjective level of understanding of the operation of the income tax legislation. To allow otherwise would be to reward fiscal naivety. Fourth, the submission reflects confusion about the reason why the unverified credit entries and discrepancies between closing and opening balances result in amounts being included in Mr Buzadzic's assessable income. The Unverified Credit Entries comprise instances where the source of and reason for the reduction in Mr Buzadzic's loan account could not be explained. In the absence of an explanation of the source of the moneys (whether by way of a cash receipt, set-off, payment by direction or otherwise) which gave rise to the reductions, Mr Buzadzic has not discharged his onus of demonstrating that the moneys which funded those reductions were not amounts of his assessable income. Similarly by not providing evidence of the basis of the adjustments made to the loan accounts as part of the year end process, Mr Buzadzic has not discharged his onus of demonstrating that the source of those adjustments was not to be found in amounts that were his assessable income (for example, in the form of dividends).
205. For the reasons set out above, the Tribunal concludes that Mr Buzadzic received amounts (in the form of the deposits to the bank accounts in his name and in the name of Mrs Buzadzic) and received the benefit of amounts which were credited to his loan accounts. These amounts were not included in his returns, and aside from some isolated exceptions, were omitted without explanation. Having been assessed and having failed to demonstrate that he should not have been, the Tribunal has no basis on which it can be satisfied that the shortfall in his taxable income was not attributable to a blameworthy act. Accordingly
ATC 9854
the Tribunal is not satisfied that the Applicant has demonstrated that the Commissioner should not have formed the view that there had been fraud or evasion.206. On the basis of the authority in Denver Chemicals[23]
207. The findings made in relation to Mrs Buzadzic also have a bearing on the case of Mr Buzadzic.[24]
208. In these circumstances, notwithstanding there have been accepted errors in determining Mr Buzadzic's assessable income, the Tribunal finds that on the balance of probabilities, Mr Buzadzic has not shown that the amended assessments issued to him are otherwise excessive in the required way. He has not shown what his assessment should have been.
Penalties
209. Mrs Buzadzic was assessed to penalties at a rate of 50% of the tax shortfall amounts on the basis that the shortfalls in the relevant Years were caused by recklessness of Mrs Buzadzic, or by her tax agents, pursuant to s 284-90(1) of Schedule 1 to the Administration Act.[25]
210. For the reasons set out above, the Tribunal has concluded that the Unexplained Deposits in the accounts in Mrs Buzadzic's name did not belong to her. Accordingly there was no shortfall in tax in respect of Mrs Buzadzic, and no penalty can arise.
211. Mr Buzadzic was assessed to penalties on the following basis:
- (a) in relation to the Unexplained Deposits, the Unverified Credit Entries, and the capital gain for the sale of the KAR shares, the base penalty amount was set at a rate of 75% of the relevant tax shortfall amounts on the basis that those shortfalls were caused by an intentional disregard of the law by Mr Buzadzic or his tax agents, pursuant to s 284-90(1) of Schedule 1 to the TAA;
- (b) in relation to the deemed dividends, the base penalty amount was set at a rate of 50% of the relevant tax shortfall amounts on the basis that those shortfalls were caused by recklessness by Mr Buzadzic or his tax agents, pursuant to s 284- 90(1) of Schedule 1 to the TAA;
- (c) in relation to the undeclared interest received from the NAB term deposit, the base penalty amount was set at a rate of 25% of the relevant tax shortfall amounts on the basis that those shortfalls were caused by a lack of reasonable care by Mr Buzadzic or his tax agents, pursuant to s 284-90(1) of Schedule 1 to the TAA; and
- (d) the base penalty amounts in relation to the each of the tax Years ended 30 June 2008 to 30 June 2013 was to be increased by 20% under s 284-220(1)(c) of the Schedule 1 to the TAA as there had already been a prior imposition of a penalty.
212. The Tribunal does not propose to increase the penalty imposed in respect of the undisclosed interest. The failure to provide the accountants with the bank statements for the term deposit for two Years was careless and the amount was small in nature.
213. In so far as the balance of the amounts assessed to Mr Buzadzic are concerned, Mr Buzadzic's predicament resulted from the complex manner in which he conducted his and his entities' affairs - mixing business expenditure and personal expenditure on credit cards, moving moneys between his personal accounts and around the accounts of the Buzadzic Group entities and not always telling his bookkeeper and accountant of all amounts deposited into his personal accounts. He accessed moneys as he chose and appears to have assumed that service
ATC 9855
providers would clean up after him based on the information he gave to them. Mr Buzadzic's most significant service provider, Mr Hadded/The Practice, failed to make inquiries that they knew they should have: Mr Hadded admitted his firm had a practice of sending out a questionnaire to its clients to complete but did not send one to Mr Buzadzic because they were of the view that Mr Buzadzic would not respond. Mr Buzadzic provided no explanation for his conduct. The Tribunal is not satisfied that he has discharged his onus of proving on the balance of probabilities that his conduct in respect of the balance of the shortfall assessed to him was not attributable to an intentional disregard of the law. Because the taxpayer has provided no explanation for the amounts assessed to him that has been accepted by the Tribunal, and has provided no reason for excluding those amounts from his assessable income, the Tribunal is unable to be satisfied that the Commissioner's assessment of the taxpayer's conduct has resulted in a penalty assessment that is excessive. In these circumstances the Tribunal can be left with no option but leave the pre-existing basis on which penalty has been imposed undisturbed.214. Because it is not satisfied that the shortfall was not attributable to repeated culpable conduct the Tribunal does not consider it appropriate to remit the 20% uplift imposed under under s 284-220(1)(c) of Schedule 1 of the Administration Act.
215. The Tribunal is not satisfied that the penalty assessments issued to Mr Buzadzic are excessive.
Decision
216. In relation to proceedings No 2017/5901-7, the Tribunal affirms the decisions under review.
217. In relation to proceedings No 2017/5908-14, the Tribunal sets aside the decisions under review and allows the objections.
Annexure ABuzadzic Group
- 1. The Buzadzic Group consisted of:
- (a) Three family trusts being the D & L Buzadzic Trust, the Buzadzic Cubby Trust and the Buzadzic Family Trust
- (b) The Western General Bodyworks Group (or WGBW Group) of companies
- 2. The trustees of the three family trusts were:
- (a) Buzadzic Pty Ltd (Trustee of the D & L Buzadzic Trust)
- (b) Buz Cubby Pty Ltd (Trustee of the Buzadzic Cubby Trust)
- (c) Delrich Arch Pty Ltd (Trustee of the Buzadzic Family Trust and an object of the D & L Buzadzic Trust)
- 3. The Western General Bodyworks Group of companies comprised:
- (a) Footscray Towing Services Pty Ltd, the shares in which were held by Buzadzic Pty Ltd
- (b) Geelong Collision Centre Pty Ltd, the shares in which were held by Buzadzic Pty Ltd, as trustee for the D & L Buzadzic Trust
- (c) Gordon Avenue Accident Repair Centre Pty Ltd, the shares in which were held by Buzadzic Pty Ltd, as trustee for the D & L Buzadzic Trust
- (d) Geelong Towing Service Pty Ltd, the shares in which were held by Buzadzic Pty Ltd, as trustee for the D & L Buzadzic Trust
- (e) Logistic Car Rentals Pty Ltd, the shares in which were held by Mrs Buzadzic
- (f) Total Sports Network Pty Ltd, the shares in which were held by Mr Buzadzic and which was deregistered on 16 February 2012
- (g) Western General Auto Pty Ltd the shares in which were held by Mr Buzadzic and which was deregistered on 19 December 2010
- (h) Western General Bodyworks Pty Ltd, the shares in which were held by Buzadzic Pty Ltd
- (i) Western General Bodyworks Mentone Pty Ltd, the shares in which were held by Mr Buzadzic
- (j) Western General Bodyworks Sunshine Pty Ltd, the shares in which were held by Buzadzic Pty Ltd, as trustee for the D & L Buzadzic Trust
ATC 9856
- (k) Western General Towing Pty Ltd, the shares in which were held by Buzadzic Pty Ltd
- 4. In addition to the above:
- (a) During some of the relevant Years, Mr Buzadzic owned a significant proportion of the issued ordinary shares in Mynt Pty Ltd, which operated a nightclub known as the Mynt Lounge;
- (b) up until about 2011, Buz Cubby Pty Ltd (Trustee of the Buzadzic Cubby Trust) owned an interest in a nightclub called Cubby House; and
- (c) up until about 2014, Mr Buzadzic was associated with St Kilda Ink Pty Ltd which operated a tattoo parlour in St Kilda. It is unclear whether Mr Buzadzic or one of his Associated Entities owned shares in that company.
- 5. In these reasons, together with the Buzadzic Group, the additional entities in [4] above are referred to as the Associated Entities.
Footnotes
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[3]
[4]
[5]
[6]
[7]
[8]
[9]
[10]
[11]
[12]
[13]
[14]
[15]
[16]
[17]
[18]
[19]
[20]
[21]
[22]
[23]
[24]
[25]
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