RJ Borcherdt and GP Scott Trading as Nymboida Native Timbers and Commissioner of Taxation [2011] AATA 939 (23 December 2011)

Last Updated: 23 December 2011

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 939

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2010/1630-1

TAXATION APPEALS DIVISION		)
	Re		RJ BORCHERDT & GP SCOTT TRADING AS NYMBOIDA NATIVE TIMBERS ROBERT J BORCHERDT

Applicants

And

COMMISSIONER OF TAXATION

Respondent

DECISION

Tribunal

Senior Member Bernard J McCabe

Date 23 December 2011

Place Brisbane

Decision

The Tribunal affirms the objection decisions under review.

..............................................
Senior Member

CATCHWORDS

TAXATION ― diesel fuel credits ― diesel tax credits ― contra agreement exchanging fuel for cut logs ― forensic document analysis ― penalties ― decision affirmed.

Energy Grants (Credits) Scheme Act 2003

Fuel Tax Act 2006

Taxation Administration Act 1953, s 14ZZK

REASONS FOR DECISION

23 December 2011

Senior Member Bernard J McCabe

1. This case deals with a dispute over claims for diesel fuel credits and diesel tax credits available under the Energy Grants (Credits) Scheme Act 2003 and Fuel Tax Act 2006. The tax benefits are made available to eligible taxpayers as a form of subsidy for diesel fuel used in a business in some circumstances.
2. The applicants in proceedings 2010/1630 are the partners in a sawmilling business. One of the partners, Mr Robert Borcherdt, is also an applicant in respect of an objection decision made with respect to his own tax affairs. That objection decision is before the Tribunal pursuant to application 2010/1631. Mr Borcherdt represented both of the applicants (that is, he and his partner as members of the partnership, and himself as an individual applicant) at the hearing.
3. Both sets of proceedings arise out of the same facts. The partnership carried on a sawmilling business in rugged country in northern New South Wales. The partners traded under the business name “Nymboida Native Timbers”. They harvested timber from bushland on their own properties and other properties in the area. Mr Borcherdt also carried on a sawmilling business and a farming business on his own property under two different business names: Arbee Timbers and Arbee Agriculture. The periods under review are similar but not exactly the same: the period in question for the partnership is 1 October 2004 – 31 March 2008 while the period under review for Mr Borcherdt’s businesses is 1 January 2006 – 31 March 2008.
4. The businesses used heavy machinery like bulldozers and loaders. They also used generators to power sawmilling equipment. They operated a number of vehicles as well as pumps, chain-saws and other machinery. All of these appliances required fuel. A large portion of the fuel requirements for the various businesses was obtained from a local fuel distributor in Coutts Crossing. There was nothing irregular about this arrangement. But Mr Borcherdt claims he also arranged for fuel to be supplied by another company, Action Fuels. The dispute with the Commissioner arises out of the relationship with Action Fuels. The Commissioner conducted an extensive audit and decided to reject the claims for fuel tax credits and grants that were made in connection with supplies from Action Fuels. The Commissioner doubts that Action Fuels exists. He says in any event there is no reliable record of how much fuel was used for eligible uses by the partnership or
   Mr Borcherdt’s own businesses. The poor-record keeping is fatal to the various claims, I was told. Amended notices of assessment were issued which identified significant shortfalls. The Commissioner has also imposed penalties on the applicants. The applicants have asked the Tribunal to reconsider the objection decisions.

MR BORCHERDT’S EVIDENCE

5. I will begin by summarising the evidence of Mr Borcherdt. He explained in his oral evidence that he has a background in accounting. He has a masters’ degree as well as undergraduate qualifications. He moved to northern New South Wales a number of years ago and acquired property in the Nymboida area. Most of the land is heavily forested, although Mr Borcherdt runs stock on cleared sections of the property.
6. Mr Borcherdt says he entered into a partnership with Mr Glen Scott to conduct a timber harvesting and sawmilling business in 2004. Mr Scott was a member of a local family that had extensive experience in timber harvesting, sawmilling and earthmoving. Mr Scott’s father worked extensively for the partnership. Mr Scott’s brother conducted an earthmoving business of his own that also made a contribution to the business. Mr Borcherdt said both Mr Scott’s brother and Mr Scott Senior were in fact parties to the partnership. I do not need to resolve that issue for present purposes. The partnership effectively ended in January 2008 according to the evidence of Mr Scott - although it may not have formally concluded until after the period under review.
7. The partnership conducted its business on the properties owned by
   Mr Borcherdt and the Scotts and on a few other properties in the area. Timber was harvested and taken to sites where stockpiles were located adjacent to the portable sawmilling equipment. The sawmilling equipment was able to be moved to meet demand. At least one of those sites was located on Mr Borcherdt’s property, while another site was located on a property on Coalmine Rd. Mr Borcherdt also ran his own timber harvesting and agricultural businesses on his own property.
8. There was ultimately no dispute on the evidence that Mr Borcherdt acted as the managing partner of the partnership. The evidence of Mr Borcherdt and Mr Scott established Mr Borcherdt managed all of the relationships with suppliers and took care of the finance and administration, in addition to managing the affairs of his own businesses. Mr Borcherdt did not play a day-to-day role at the sites where the sawmilling operations took place. He said he visited those sites irregularly, although he was more likely to attend the site located on his own property. Mr Scott tended to work at the site on his own property; he said he visited Mr Borcherdt’s property infrequently. The two properties were not far apart in distance, but I note Mr Scott did not have a drivers’ licence at the time. I accept he would not necessarily have a clear idea of what was going on at the Borcherdt property. He certainly did not have a good idea of what was going on in the management of the partnership business. It was clear from his evidence that he was not a sophisticated businessman, and he trusted Mr Borcherdt to oversee the business.
9. I have already pointed out a proportion of the fuel used in the various operations of the applicants was supplied under an unremarkable arrangement with a local BP distributor. But Mr Borcherdt has also made claims under the various schemes that permit fuel credits and grants in respect of a large quantity of fuel he claims was supplied by a shadowy outfit known as Action Fuels. I describe it as a “shadowy outfit” because no one appears to be able to locate much in the way of evidence of Action Fuels’ existence.
10. The relationship is said to have come about like this. Mr Borcherdt was making one of his irregular visits to a worksite on his property in February or March 2006 when he became aware of two trespassers on the property: Greg McArdle and Paul Collins. When Messrs McArdle and Collins were challenged, they explained they were fishing nearby, and the previous owner had allowed them to access the property in the past. After offering this explanation for their presence to Mr Borcherdt, the conversation moved onto Mr Borcherdt’s sawmilling operations. It turned out Messrs McArdle and Collins had a range of interests that – by a happy coincidence – included timber distribution and a fuel supply business known as Action Fuels.
    Mr Borcherdt and the men rapidly struck up a rapport. They reached an agreement that Action Fuels would commence supplying fuel from its depot (which
    Mr Borcherdt thought might have been located in Tamworth) that would be paid for in a contra deal through the supply of logs by the Partnership and Mr Borcherdt.
    Mr Borcherdt said there was nothing unusual in a contra deal; he said that sort of thing happened all of the time “in the bush”. It was agreed that the price of cut logs would be $250 per cubic metre for the purposes of the agreement. He said that was his understanding of the going rate for cut timber, although it is unclear what research he did before arriving at that figure. It was further agreed the fuel price would not be any higher than the price charged by the BP distributor at Cootes Crossing.
11. At the hearing, Mr Borcherdt claimed the substance of the deal was recorded in a facsimile letter received from Action Fuels on its letterhead, but that letter has never been produced. Indeed, it seems the existence of the letter had not even been disclosed prior to the hearing. That is surpising. In any event, I have no evidence before me recording the terms of the arrangement. I only have the word of
    Mr Borcherdt.
12. Mr Borcherdt was supplied with a mobile telephone number for Action Fuels but he says he never used it during the life of the agreement. When the agreement concluded, it was suggested to him that the number was disconnected, or had never been connected. When he finally did try to contact Action Fuels on that number in March or April 2009, he was unsuccessful.
13. The circumstances in which the arrangement with Action Fuels came to be established do not ring true. Mr Borcherdt did not seem to know anything else about two strangers with whom he had entered into business without extensive negotiations. It seems most of the discussions in relation the deal, such as it was, were concluded on the day the men met Mr Borcherdt while they were trespassing on his property. He accepted in cross-examination that he had never heard of the men or their business before, and he was unaware of them having any other customers in the area. Yet he says he was happy to deal with them from that point and told them where the keys to the gate on the property were located so they could commence making deliveries. When challenged on the improbability of all of this, he insisted “that was the way business is done in the bush”.
14. The relationship effectively commenced in March 2006 when a delivery truck began making regular stops by the property to drop off large drums of oil at fuel dumps on the property adjacent to the mobile sawmills. It was unclear from the evidence how many fuel dumps were in existence. Mr Borcherdt initially referred to a fuel dump (in the singular) but as his evidence progressed he came to refer to dumps in the plural. It may be that one explanation for this was that there were several different sites on his property over time because the sites moved. Interestingly, Mr Borcherdt said the delivery trucks never had any trouble finding the sites to make deliveries even though they were not signposted because “people in the bush” were able to read the land and identify where operations were located some distance from the entrance to the property.
15. I have noted Mr Borcherdt’s evidence that he did not have regular contact with anyone from Action Fuels. The delivery vehicles would arrive on a regular basis and drop off barrels of fuel to replenish stocks at the fuel dumps, and they would take the cut logs as payment. They would leave behind any documentation, like delivery notes or invoices, in a receptacle located at the fuel dump. The receptacle also held an exercise book into which the driver would enter the details of the fuel delivery and the amount of logs removed. I note the exercise book has never been produced.
    Mr Borcherdt surmises that it was removed from the site by Mr McArdle or Mr Collins or someone else from Action Fuels when they came to remove their property (and other evidence of their existence) after they learned the Commissioner was inquiring into the supply arrangement.
16. Within the fuel dump (or dumps), the stockpile was broken into three parts: one for each of the businesses. Mr Borcherdt explained a complicated arrangement under which the fuel dump was to contain a constant number of drums full of fuel, known as the float. Each business had a number of those drums allocated to it. The drivers had to work out which part of the dump needed replenishing so that each business had its required amount of fuel in storage. Mr Borcherdt said that practice (along with the exercise book) enabled him to keep track of how much fuel was being delivered to and consumed by each business. He said he regularly attended at the dump and applied a code to the drums as part of the record-keeping process. Given the paucity of the record-keeping in other records, I was surprised by
    Mr Borcherdt’s explanation that he undertook this process because of “my audit background”.
17. Mr Borcherdt was not there to see the drivers arrive on most occasions, although he said he had subsequent conversations with Mr McArdle when he happened to be present when Mr McArdle arrived in the delivery truck to make a regular delivery. It seems passing strange that Mr McArdle would be driving the delivery truck himself given his other business interests, but that was the evidence. On one of those visits in May 2006, there was discussion about expanding the scope of the arrangement so that more fuel would be supplied and more logs would be collected. I understand that as part of the expanded arrangement, Action Fuels attended to some earthmoving work that would improve access to the property.
18. Not all of the fuel from Action Fuel was used by Mr Borcherdt and the various businesses on his own property. He had some of the fuel transferred by truck to the Coalmine Rd property where Mr Scott tended to work. But Mr Borcherdt insisted all of the fuel in respect of which claims were made was actually delivered, and it was all used in the businesses. He produced spread-sheets that purported to show how all of the fuel would have been used in the course of those businesses. He added he did not keep more detailed records in relation to usage, such as log books, on advice from the ATO business line. He also pointed out that other crucial records, like the exercise book that was kept in receptacle at the fuel dump, had mysteriously disappeared.
19. Mr Borcherdt was not a very convincing witness. He was evasive in the witness box. He also referred at the hearing to a number of documents that supported his case which had not previously been disclosed (although he says at least some of those documents were mentioned in the course of discussions with the ATO auditor who was not called to give evidence). Whenever challenged about the probability of his account, he would refer to the way in which business was done “in the bush” - although that explanation conveniently ignores the fact he and Messrs McArdle and Collins were not from the local area. His account of the details of the arrangement – the number of dumps, the way in which deliveries occurred, who made the deliveries and the way fuel was stored and accounted for in the dump, for example – appeared to change as he gave evidence. His references to the machines operated by the various businesses also appeared to change as he went along. (It was ultimately unclear how many bulldozers were operated by the various businesses, for example, or who owned them.) I say appeared to change because Mr Borcherdt’s discursive style of answering questions meant he was difficult to pin down on matters of detail.
20. I will return to my assessment of Mr Borcherdt’s evidence below.

MR SCOTT

21. Mr Scott said in his oral evidence he knew nothing about the arrangement with Action Fuels. Mr Brennan, for the Commissioner, said at the outset of the case it was inherently unlikely Mr Scott, a partner in the business, would be unaware of an arrangement of this nature. After hearing from Mr Scott, I disagree. It was plain from his evidence that he left all of these matters to Mr Borcherdt. He said it was entirely possible Mr Borcherdt could negotiate arrangements with suppliers without his knowledge. Moreover, Mr Scott agreed he rarely travelled to the Borcherdt property, so he was unlikely to be aware of the source of fuel that was stored there.
22. I do not think Mr Scott’s evidence establishes all of the partnership’s fuel came from the BP distributor during the relevant period. Some of it may have come from other sources organised by Mr Borcherdt. Mr Borcherdt says he told Mr Scott of the arrangement with Action Fuels at some point, but Mr Scott denies this was so. While I do not doubt Mr Scott’s honesty, I am not satisfied from his evidence that he had a clear recollection or understanding of his many discussions with Mr Borcherdt.
23. Mr Scott also gave evidence about the way in which the partnership used fuel. He said the partnership business used about 55 litres of diesel fuel each day when the mill was operating at maximum capacity. He agreed with Mr Borcherdt that he had never conducted a formal analysis of fuel consumption, and I am satisfied he did not take a direct role in the management of fuel supplies within the business so he was unfamiliar with the amount of fuel being ordered and paid for. He said the basis of his estimate was his experience of working with the machinery in question over a long period. He pointed out the milling equipment was not working at maximum capacity most of the time, and there were frequent stoppages because of rain. Some items of machinery might remain idle for weeks at a time, he said. Mr Brennan, for the Commissioner, pointed out it was difficult to see how the partnership could possibly have consumed between 178,760-192,085 litres of fuel (the amount referred to in the partnership statement of facts, issues and contentions) during the relevant period if the fuel was being consumed at a rate of 55 litres per working day.
24. Mr Scott’s estimate is inevitably an inexact one. As a practical matter, it is very difficult to reconstruct the fuel usage given the paucity of records. Mr Borcherdt attempted to do so in exhibit 17. He produced an excel worksheet at the hearing showing fuel consumption which was correlated with wage records. He argued the hours worked had a direct relationship with fuel consumption because fuel was only consumed while men were at work. The spread-sheet is difficult to follow, but I accept it shows much higher fuel consumption than Mr Scott estimated.
    Mr Borcherdt said Mr Scott’s estimates of daily fuel consumption were in any event too low. That sort of claim was not uncommon, he pointed out: “people in the bush tell lies about their equipment” in order to make it appear more efficient, he explained. It was apparently part of a tradition of telling tall stories. Mr Borcherdt said some machines actually used up to 29 litres of fuel per hour. He added that some work was also done by contractors provided by Action Fuels, and the fuel they consumed during the contract work came from the applicants’ fuel stocks. It is also unclear whether his calculations take account of the fact that at least some of the fuel used in the businesses was supplied by the BP distributor.

MR GELFE

25. The Commissioner also led evidence from Mr Gelfe, a security liaison officer with Telstra. Mr Gelfe was asked to investigate whether the number Mr Borcherdt said he obtained from Action Fuels was registered. The Commissioner had suggested at the outset of the hearing that the records would show the number was not registered during the life of the arrangement. The Commissioner said that fact suggested Mr Borcherdt’s evidence about receiving the number from Messrs McArdle and Collins at their first meeting was inherently unlikely. After questioning Mr Gelfe closely at the hearing, it became apparent there was a misunderstanding about his evidence. It turns out it is possible the number was registered and active at the relevant time, although it is no longer possible to determine who was the account holder. The number may have been allocated to Action Fuels or Messrs McArdle and Collins.

MR O’BRIEN

26. Mr O’Brien was called to give evidence by the Commissioner. He produced two statements that were tendered at the hearing. Mr O’Brien works for Forests NSW. He was called as an expert who could testify about the price of felled timber. The Commissioner led this evidence to demonstrate that the arrangement negotiated between Mr Borcherdt and Action Fuels was inherently unlikely. According to
    Mr O’Brien, prices paid for hardwood logs in the Coffs Harbour Price Zone (the “stumpage price”) varied depending on the species of timber and the size. He set out those prices in a stumpage price schedule that was exhibited to his statement (exhibit 21). I will not reproduce these figures in detail. Suffice to say they suggest the price negotiated between Mr Borcherdt and Action Fuels (ie $250 per cubic metre) was very generous. Mr Borchedt suggested the prices charged by Forests NSW were not a reliable guide to the prices that prevailed in private transactions. He referred (in exhibit 8, at p 14) to prices paid by private buyers in the Coffs Harbour area that more closely approximated the prices he said he obtained from Action Fuels. In fact, at most, that evidence establishes a wide variation in prices paid. It certainly does not suggest that $250 was the prevailing price. He also said he charged a higher price to include a component to finance the cost of remediation. He spoke on a number of occasions during the hearing about the importance of remedial work after timber harvesting concluded. I accept that may be a reasonable motivation for seeking a higher price but it does not explain why a buyer would pay more.
27. I accept there may be differences between prices charged by Forests NSW and those charged in transactions between private parties, but Mr O’Brien pointed out all of them were trading in the same market for felled timber. It follows the prices charged by Forests NSW were relevant, and those prices suggest, at a minimum, Mr Borcherdt was paying a very generous price that included a significant premium over the prevailing market price. There must be a question over whether that price was credible.

MS NOVOTNY

28. The Commissioner provided a report by Ms Novotony, a forensic document analyst. Ms Novotny had been asked to analyse the delivery slips and invoices that were provided by Mr Borcherdt. She was not called to give evidence at the hearing because she was unavailable, but there was no reason to doubt her credentials or expertise. Her report was set out at exhibit 28.
29. Ms Novotny’s evidence established that the delivery slips were probably all printed on one printer and the tax invoices were probably all printed on another printer. She was inclined to the view that a number of the delivery slips were printed on the same page, which tended to suggest at least some of them were printed as a run. That would be surprising if a slip was printed and provided with each delivery. Mr Borcherdt had an answer for that, however. He said the delivery driver did not know how much fuel was to be delivered on each occasion when he arrived. He could only determine how many drums of fuel would be offloaded on each occasion after he had examined the float in the fuel dump. He would leave the drums and take the information back to the office – wherever that was – and the slips would be printed out afterwards. It was possible a number of the slips might have been printed at the same time. The completed slips would then be delivered to the property and left in the receptacle alongside the exercise book on a subsequent trip.
30. Ms Novotny’s evidence does not establish the documents were falsified, but they do raise questions about what was going on. If Mr Borcherdt’s explanation of the casual way in which the arrangement with Action Fuels came to pass is accepted, there is nothing especially surprising about the delivery notices being generated in batches and delivered separately from the fuel itself. Like much else in this case, it may reflect a singular way of doing business.

DID THE ARRANGEMENT EXIST?

31. I was provided with a large volume of material by both sides. The Commissioner says a good deal of the evidence produced by Mr Borcherdt was effectively generated or prompted by the Commissioner’s allegations sometime after the period under review. The Commissioner says the material or information should have been provided significantly in advance of the hearing, and the fact it was not suggests the veracity of the material should be doubted. Mr Borcherdt, for his part, claims most of the material was provided to or at least discussed with the auditor, who was not called to give evidence despite Mr Borcherdt’s requests.
32. The Commissioner invited me to infer there was no arrangement with Action Fuels – the whole thing was a sham. He doubted the existence of Messrs McArdle and Collins, and doubted whether any fuel was provided (or logs traded) under an arrangement that would give rise to an entitlement to claim fuel credits or grants under the statutory schemes. I was effectively being asked to find that
    Mr Borcherdt made up the whole story. In the event, some of the “smoking guns” on which the Commissioner relied were less persuasive than he expected: the evidence from Mr Gelfe and Mr Scott, most obviously. But Mr Brennan, for the Commissioner, said that conclusion was still open to me given the improbability of Mr Borcherdt’s account and the fact that some parts of his explanation had only recently become available.
33. Mr Borcherdt stood by his story. He said he had been telling the whole story all along, but the auditor had not accurately reported what he said. He said the arrangement may be unfamiliar to persons from the city because “that’s the way they do business in the bush”. He said that contra deals and handshake arrangements that were never reduced to writing were a common feature of business relationships in rural areas like northern New South Wales. He also said he was less concerned about paperwork – he did not keep log books for individual pieces of machinery, for example – because that was the effect of advice he had received after telephoning the ATO business line. He says he was as surprised as everyone else when Action Fuels effectively disappeared when word of the Commissioner’s interest in the arrangement got out.
34. On balance, I am unable to confidently conclude Mr Borcherdt simply made up the whole arrangement with Action Fuels. I accept he may have obtained fuel from someone other than his local BP distributor. That other supplier may have been an entity trading as Action Fuels which has since vanished, perhaps because its principals were up to no good. He may have obtained the fuel under a contra agreement and logs may have been sold at the price identified. He may have obtained the quantities of fuel he claims, and he may have used all of the fuel for eligible uses. But the whole arrangement is murky, and it is impossible for me to be confident that it proceeded as Mr Borcherdt claimed. I have already raised questions over his performance as a witness; in the absence of appropriate corroborating documentary evidence apart from questionable invoices and delivery slips, I am not persuaded the Commissioner’s decision was excessive or should have been made differently. In those circumstances, s 14ZZK(b) of the Taxation Administration Act 1953 means the objection decision would stand.
35. Even if I accepted there was an arrangement with Action Fuels in the terms described by Mr Borcherdt, there is simply insufficient evidence to confirm how much fuel was obtained, and what it was used for. I note Mr Borcherdt says there is no specific requirement that an applicant keep log-books. I accept that is so, and note the claims in respect of fuel derived from the BP distributor have been allowed without log-book evidence. The obligation to keep records is not there to trip up businesses and deny them access to benefits that are otherwise available. But an applicant under these schemes is ultimately obliged to keep records that are capable of satisfying the Commissioner that fuel was obtained and applied to eligible uses. The amount of documentation required may vary with the situation. In some cases, minimal documents may be required because the fuel was clearly acquired and the end-use of the fuel is patently obvious. But where there is more doubt about the acquisition and use of the fuel, more evidence might legitimately be expected before the Commissioner (or the Tribunal upon review) could be satisfied.
36. In this case, we do not know for sure how much fuel was acquired. The loss of the exercise book which recorded all of these details is a particular blow to the applicants’ case: if that document were still available, the Commissioner might be more comfortable with Mr Borcherdt’s story. We also do not know for sure how the fuel was used. That is an issue where the amount of fuel that was supposedly acquired appears to be large relative to the expected needs of the business.
    Mr Borcherdt did attempt to demonstrate the business could and did use a large amount of fuel, but there must be some doubt about his figures, not least because they were extrapolated from labour records and plainly at odds with Mr Scott’s estimates. It follows that the claim for grants and credits in the period under review was properly disallowed.

PENALTIES

37. The Commissioner imposed administrative penalties on the applicants equal to 75% of the shortfall amounts on the basis that the applicants had made statements to the Commissioner that were false or misleading in material particulars as a consequence of an intentional disregard of a taxation law.
38. I have already explained that I am not satisfied the arrangement with Action Fuels existed in the way described by Mr Borcherdt. While I indicated I was not satisfied he made up the entire story, I am certainly not satisfied he has told me the whole truth either given the inherent improbability of some aspects of the account and his performance as a witness. Given that finding, I have no choice but to affirm the imposition of an administrative penalty at the rate of 75%. If the Tribunal is not satisfied the applicant has told the whole truth in its account, there must have been an intentional failure to comply with substantiation obligations. I have no doubt
    Mr Borcherdt knew the importance of accurately substantiating claims made by the applicant: he has a background in auditing and accounting.
39. I accept there was some dispute over what was required for the purposes of substantiation. Mr Borcherdt says he was told by ATO officers that logbooks were not required, and he points out the relevant taxation ruling does not include details about minimum standards of substantiation. The fact that substantiation requirements are not prescriptive does not relieve a taxpayer from the burden of keeping records that enable him to explain what happened. Mr Borcherdt must have known he was obliged to substantiate the relationship with Action Fuels, and he has failed to do so. He also failed to provide any clear evidence of how much fuel was used, and for what purpose.

CONCLUSION

40. The objection decisions are affirmed.

I certify that the 40 preceding paragraphs are a true copy of the reasons for the decision herein of Senior Member Bernard J McCabe

Signed: .....................................................................................

Associate

Dates of Hearing 21-23 November 2011

Date of Decision 23 December

Applicant Mr R Borcherdt

Counsel for the Respondent Mr V Brennan

Solicitor for the Respondent ATO Legal Services Branch