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Le v Commissioner of Taxation [2021] FCA 303 (30 March 2021)

This is an appeal filed by the appellant contending that taxable income as declared was accurate and submitted that its unexplained wealth was explainable. The applicant contends that the Tribunal’s decision was irrational, illogical, or not based on findings or inferences supported by logical grounds, such that its decision was not authorized by S.43 of the  Administrative Appeals Tribunal Act 1975


The assessments were made on the basis of an opinion formed by the Commissioner that there had been an avoidance of tax by virtue of fraud or evasion.

The applicants’ case on appeal was that the Tribunal had failed to address key elements of the explanation which they had advanced and that the reasons provided contained an internal inconsistency and thus illogicality, as well as findings as to credit which was procedurally unfair to them.

Based on this starting premise, the applicants’ submission was that the amount of each assessment was the result of the inclusion in assessable income and, after the deductions mentioned, the taxable income of all debits from bank accounts on the basis they were unexplained income. On the merits in the Tribunal and, on the basis of an asserted omission of consideration, as part of their alleged error of law contention in the appeal, the applicants’ submission was that such an analysis did not give credit for cash deposits into the bank accounts.

It was put that the effect was that if cash were withdrawn from one account and deposited into another, the withdrawal itself had been counted as an “expense” (which required income to make). This explanation for assumed wealth formed on the basis as to why they submitted to the Tribunal that the assessments were excessive. They submitted that the Tribunal had not as it was obliged to do, responded to this submission.

More particularly, the applicants’ case in the Tribunal was that:

(1)It is wrong to assume that every withdrawal of cash from a bank account constitutes ‘expenditure’ because such withdrawals are equally consistent with transferring funds by withdrawing cash from one account and depositing it into another; and

(2) The [applicants’] evidence was that they frequently effected transactions in this way. Their evidence was that this was the means by which they transferred funds between accounts.

That evidence was supported by the bank statements for the accounts themselves which showed numerous transactions consistent with such explanation. If that explanation were accepted, then a substantial portion of what the objection decision concluded tobe ‘unexplained’ expenditure would be explained.

Issue: Should the appeal be allowed?



The whole point of the applicants’ explanation, offered but not considered by the Tribunal was to show that what to the Commissioner was unexplained accumulated wealth was from the non-income sources. The importance of addressing this explanation was that it was given in the context of uncontroversial evidence that the applicants had, before the period under assessing scrutiny, enjoyed a very large windfall gain ($500,000) from gambling.

The court does not accept the Commissioner’s submission that the asserted explanation was put at such a generalized level of abstraction that the Tribunal was justified in not engaging with it. Here, the error was in not considering the explanation as to why the debits in the bank account statements should not be equated with income.

A separate basis upon which the applicants submitted that the Tribunal had denied them procedural fairness or that its ultimate decision was unreasonable was that its conclusion as to their credibility was premised upon a false factual conclusion as to the acknowledgment of an understatement of interest income.

The Tribunal was not bound to accept Ms Le’s evidence on the subject of the derivation of interest and the sources of that interest, or any other subject for that matter. It was, however, bound to decide the review by a logical process of reasoning. On this, the Tribunal’s decision must be set aside.

Conclusion: Hence, the appeal should be allowed.

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