The taxpayers have discontinued their appeal to the Full Federal Court against the decision of Jagot J in Yacoub v FCT (2012) 83 ATR 722 / [2012] AATA 401. The Federal Court’s decision, which now stands, had dismissed appeals by the taxpayers concerning the Commissioner’s decision to disallow an objection to a notice of assessment for the payment of GST regarding properties sold.
[LTN 100, 27/5/13]
Extract from [2012] AATA 401
CATCHWORDS – TAXATION – whether applicants liable for GST – whether business arrangements constituted a partnership – whether business arrangements a non-entity joint venture?
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39. Irrespective of these matters, the real difficulty for the applicants remains cl 2 of the 18 July 2007 agreement and the agreement between the parties to the venture to “share equally all costs, liabilities, mortgages and proceeds derived from any sale arising from the property”. By this provision the parties to the 18 July 2007 agreement placed themselves in a legal relationship by which they had: – (i) a mutual interest in the carrying on of the business for the purpose of profit or gain, (ii) mutual confidence that the parties will engage in the venture for joint advantage only, and (iii) sharing of profits and losses from the venture or a so-called community of profit and loss. As a matter of substance the parties thereby created between themselves a partnership both at general law and a tax law partnership as defined in s 995-1 of the ITAA 1997.
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46. The real issue in my view is para (b) of the definition of non-entity joint venture, which refers to a contractual arrangement that is entered into to obtain individual benefits for the parties, in the form of a share of the output of the arrangement rather than joint or collective profits for all the parties. By reason of the 18 July 2007 agreement and the variations it made to the Syndicate Agreement there was no such contractual arrangement between the parties. To the contrary, having regard to the 18 July 2007 agreement and the variations it made to the Syndicate Agreement, the contractual arrangement between the parties was for the sharing of the joint or collective profits for all the parties rather than individual benefits for the parties, in the form of a share of the output of the arrangement. My reasons for reaching this conclusion are the same as those set out above in respect of the partnership issue. Accordingly, there are no sustainable grounds for review of the Commissioner’s decision that Myej Lydbrook was not a non-entity joint venture. The Commissioner’s conclusion to this effect is correct.