Told the bank it was income. Told the ATO it was loan repayments.
The Tribunal saw right through it.
Endycott and Commissioner of Taxation [2026] ARTA 214 is a masterclass in how NOT to manage your tax affairs, and a reminder that safe harbour won’t save you if you didn’t play straight with your tax agent.
The Facts
Mr Endycott ran a commercial painting business turning over $6M+ annually through a complex group structure involving multiple trusts and entities [2,9].
He intermingled personal and business funds freely, used personal credit lines instead of a business overdraft because it was ‘too expensive’, and received multiple streams of periodic payments from group entities [81,191]. Payments he privately treated as salary but did not declare for tax purposes [427(i)].
The kicker: when applying for a NAB home loan, Mr Endycott declared those payments as income. When lodging his tax returns? Loan repayments [192,427(j)]. His returns showed taxable income of $13,170 (2015) and $20,000 (2016) [18,20].
The ATO’s amended assessments? $610,605 and $318,597 [348].
The Tribunal’s Findings
- Mr Endycott failed to discharge his onus under s 14ZZK of the TAA 1953. He couldn’t show the assessments were excessive OR what his correct income should have been [350–351].
- His expert forensic accountant’s report was rejected. The expert relied on unreliable records and was instructed to assume certain transactions weren’t income [169,188].
- He blamed his former accountant, Mr Cullen, for the entire mess but didn’t call him as a witness. The Tribunal drew an adverse inference, concluding Mr Cullen likely wouldn’t have corroborated Mr Endycott’s version of events [91].
- Safe harbour was denied. The conduct was found to be intentional disregard, not mere lack of reasonable care [430–431]. And even if it were, Mr Endycott couldn’t prove he gave Mr Cullen all relevant taxation information [432].
- The 75% base penalty for intentional disregard was upheld for both years, with a 20% uplift for 2016. No remission [443,457].
Practical Takeaways
1. You can’t tell the bank one thing and the ATO another. Inconsistent representations will be found and relied upon.
2. If you blame your accountant, you’d better call them as a witness. Failure to do so invites an adverse inference.
3. Safe harbour requires ALL relevant taxation information be given to the agent. No proof of that = no protection.
4. Expert reports are only as good as the records they’re built on. Garbage in, garbage out.
5. Intermingling personal and business funds doesn’t just create an accounting headache, it creates a tax compliance disaster with penalty consequences.
6. The onus under s 14ZZK is real. Chipping away at individual items in a default assessment isn’t enough. You must prove both limbs.
What’s your experience advising clients with intermingled finances?
General information only. This note was written as at 23 February 2026 and the law may have changed since. It is not legal or tax advice, does not take account of your circumstances, and must not be relied upon as a substitute for advice on your own matter.