Facts
The Cantonal Tax Office of Aargau initiated a tax reassessment and penalty procedure against [A.Y.] and [B.Y.] in connection with the loan granted by [D. AG] to [C.] S.A.. The lower court lifted the tax reassessments, as it was of the opinion that there were no new facts. The Federal Court now had to decide whether the lower court had decided correctly.
[D. AG] granted loans to [C.] S.A. in the years 1999 and 2000 in the amount of CHF 140'613.90 and CHF 382'116.25. [C.] S.A. went bankrupt in 2001. The Cantonal Tax Office of Aargau taxed [A.Y.] and [B.Y.] for direct federal tax 2001 and cantonal and municipal taxes 2001, without making any offset in connection with the loan.
The Federal Court had to decide whether the lower court had correctly decided that there were no new facts to justify a tax reassessment. The court also had to examine whether the tax authority could assume the correctness and completeness of the tax return and whether the taxpayers had violated their duty to disclose.
Considerations
The Federal Court decided that the lower court had decided incorrectly. The tax authority could not simply assume the correctness and completeness of the tax return, as the taxpayers had violated their duty to disclose. The tax authority had to conduct further investigations to verify the correctness and completeness of the tax return.
The court also decided that the taxpayers had violated their duty to disclose by not properly declaring the loan to [C.] S.A.. The tax authority was therefore entitled to assume that the taxpayers had not filled out their tax return truthfully and completely.
The Federal Court concluded that…