The Federal Court has upheld the issuance by the ATO of a Departure Prohibition Order (‘DPO’) preventing a taxpayer from leaving Australia.
An Australian tax resident, who lived and worked in Dubai in the construction industry, was subject to a ‘covert’ ATO audit, primarily due to his history of remitting and receiving several million dollars from Dubai.
In January 2017, the taxpayer returned to Australia, only to be served (when passing through customs) notices of amended assessments, raising tax liabilities of just under $4.5 million.
The taxpayer was also issued a DPO by the Commissioner, preventing him from leaving Australia, due to the significant tax liability, his poor compliance record, ad his limited links to Australia.
The taxpayer sought the order set side on the basis that the DPO was issued for an ‘improper purpose’, as he argued the aim of the order was to detain him to gather information about his financial position, rather than the collection of tax, as required under the relevant legislation.
He also claimed that the ATO did not have ‘reasonable grounds’ for the required belief that the tax liability would not be appropriately discharged.
The federal court dismissed the taxpayer’s application (and therefore upheld the DPO preventing him from leaving Australia), finding that the facts of the taxpayer’s circumstances and tax compliance history did not suggest and ‘improper purpose’ by the ato.
Additionally, the court held the Commissioner was authorised under the taxation Administration Act 1953 to gather information to facilitate in the recovery of a tax liability, and that the commissioner has ‘reasonable grounds’ to issue the DPO.
As the taxpayer, did not have the required assets to satisfy the debt in Australia he was a clear ‘flight risk’.
Ref: Bakri v DCT  FCA 20