In a recent case, the Full Court had to consider whether or not a finding by the AAT that international funds transfers made as between the taxpayer and an overseas bank were advances in the nature of loans was not open on the evidence or that there was no evidence supporting the finding.

The Commissioner had alleged that the loans were shams and therefore the advances made by the overseas bank to the taxpayer was assessable income.

The Commissioner had been successful at first instance. The primary judge held that the taxpayer had not excluded the possibility that the transfers were in the way of income and it was not sufficient for the taxpayer to have led evidence which was consistent with the transfers having been loans. If there might also have been some other explanation for the transfers, the appellant ought not to have been held to have proved that the transfers were not income. The primary judge held that there was another explanation which he considered far more likely to represent the reality was that the transfers were a return of the taxpayer’s own funds and not a loan.

The Full Court pointed out that an appeal from the AAT could only be made if there was an error of law. The Federal Court not an appellate court of both fact and law. For the decision of the tribunal to have been an error of law it would have been necessary to show that the AAT’s finding was not open on the evidence. There is no error of law disclosed merely by reason that the finding was made upon primary materials which appeared to be evenly balanced. Although a differently constituted tribunal may have come to a different view about the facts, the evidence permitted to be found and their relevance to the ultimate issue this did not mean that the tribunal’s decision was not reasonably open on the material before it.

The Full Court held that the Tribunal’s decision was reasonably open on the material before it and therefore there was no error of law involved. Therefore the Tribunal’s finding that the advances were loans was reinstated.