Properly documenting large cash transactions

In federal court, a married couple complained that the tax office had assessed their income at CHF 142,000. The tax office examined the couple’s asset growth and income based on their official tax return – and concluded that there was insufficient income to fund the purchase of various motor vehicles. Their assets had not been liquidated to cover these expenses either. The deficit of CHF 142,000 was therefore assessed as income.

Cash loans must be documented via a receipt for tax purposes

The couple argued that they had received a cash loan from abroad of CHF 270,000 from the husband’s father for the purchase of the vehicles. Unfortunately, they could not present a receipt.

The court ruled that a non-interest-bearing and non-redeemable amount of CHF 270,000 in cash, without any written record of the loan, was highly unusual, even between parents and their children. In such cases, the onus is on the taxable person to prove that the tax authority’s claim is incorrect.

The couple was unable to prove the existence of the cash loan and was therefore ordered to pay tax on the full amount. (Source: BGE 2C_183/2017 dated 6/3/2017)

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