The ATO on Wed 16.5.2012, released a Decision Impact Statement on the Full Federal Court’s decision in Allen (Trustee), in the matter of Allen’s Asphalt Staff Superannuation Fund v FCT [2011] FCAFC 118.
That decision upheld an earlier finding that a $2.5m capital gain distributed from a fixed trust to a super fund was “special income” under former s 273(7) of the ITAA 1936 and therefore taxable at 47%. However, the Full Court set aside the tax shortfall penalty after ruling that the taxpayers’ position was “reasonably arguable” pursuant to s 284-75 of Sch 1 to the TAA.
That decision now stands following the High Court’s refusal to grant the taxpayer special leave to appeal.
The Tax Office said it considers that the approach of the Full Court on the issue of “reasonably arguable position” is essentially consistent with its position in Miscellaneous Taxation Ruling MT 2008/2 and the majority decision in Cameron Brae Pty Ltd v FCT (2007) 67 ATR 178.
According to the Commissioner, the Full Court did not depart from nor overturn the fundamental propositions outlined by Hill J in Walstern Pty Ltd v FCT (2003) 54 ATR 423. Rather, the Tax Office considers that the reference in Allen’s Asphalt to the approach taken in Cameron Brae as being “somewhat less strict than that suggested by Hill J in Walstern“, as being specific to context and distinguishing Walstern on its facts. Accordingly, the Tax Office does not consider that any further changes are required to MT 2008/2.
[LTN 93, 16/5]