Category Archives: Tax Month – July 2012

*Re Fayle and FCT – PSI: taxpayer cannot re-litigate matter previously decided against him [26]

The AAT has exercised its powers to summarily dismiss an application by a taxpayer who sought to argue that he was carrying on a personal service business in respect of horticultural consultancy service provided by his family company to a related company. It did so essentially on the basis that the taxpayer was seeking to…

*Re Elliott and FCT – the “foreign transactions” exception to the 2-year amendment rule did not allow the assessment of foreign employment income [25]

The AAT has held that amended assessments issued to a taxpayer outside of the standard 2-year amendment period to include foreign employment income were unlawful. The matter concerned the 2006 and 2007 income tax returns of the taxpayer, a pilot, who had disclosed exempt foreign employment income for both years. The Commissioner issued assessments for…

Re Sanctuary Lakes Pty Ltd and FCT – Deductions of $18m denied in relation to restructure of golf resort complex [24]

The AAT has confirmed that a taxpayer, a member of an overseas property development group, was not entitled to deductions for over $18m in various outgoings incurred in connection with the development of a “golf course and resort style living” complex. The outgoings were incurred following the taxpayer’s restructuring when it ran into financial and…

*RACV Sales and Marketing Pty Ltd and Innovation Australia – Development of the ANCAP Crash Testing Methodology over 8 years held not R&D [23]

The AAT has held that a company’s activities were not research and development (R&D) activities as those activities are defined in s 73B(1) of ITAA 1936. RACV Sales and Marketing Pty Ltd (RACV Sales) was registered under s 39J of the Industry Research and Development Act 1986 (IRD Act) in respect of R&D activities in…

*Messenger Press Proprietary Limited & Ors v FCT – News Corp entitled to deductions for over $2bn in foreign exchange losses [22]

The Federal Court has held that some 20 News Corp group companies were entitled to over $2bn in foreign exchange losses in the 2001 and 2002 income years under Div 3B of the ITAA 1936 (as it then applied) that arose from the global restructure of the group in the early 1990s. Broadly, the losses…

*FCT v Rawson Finances Pty Ltd – Court overturns AAT: taxpayer fails to discharge onus of proving that deposits of $4.75m were only loans [21]

In a decision handed down on Tue 17.7.2012, the Federal Court allowed the Commissioner’s appeal and held that the taxpayer had not in fact discharged the onus of proving that amounts of over $4.75m deposited in its bank account from an overseas bank was not income. At first instance, in AAT Case [2011] AATA 628,…

*Collection Point Pty Ltd v FCT – Taxpayer’s FOI request for names of members with unclaimed moneys denied as ATO would have to write a new program to comply [20]

The Federal Court has denied a company’s request to the ATO under the FOI Act for information concerning unclaimed superannuation. The taxpayer helps clients to retrieve unclaimed superannuation from accounts where the superannuation fund cannot identify the person entitled to the account. The Commissioner maintains a register containing particulars of unclaimed money paid by superannuation…

Binetter v DCT (No 3) – Section 264 notice stands [19]

In a decision handed down on Fri 6.7.2012, the Federal Court refused a taxpayer’s application for judicial review of the Commissioner’s decision to issue a notice under s 264 of the ITAA 1936 that required her to furnish information and to produce documents. In an audit in 2010, the ATO identified certain bank deposits (totalling…

*Ferguson v FCT – Valid to lodge appeal to court on the substantive issue and an application to the AAT to review the shortfall penalty decision [18]

The Federal Court has dismissed the Commissioner’s application to strike out the taxpayer’s appeal to the Federal Court against the disallowance of objections to 2 amended assessments. The Commissioner sought the order on the basis that by the time the taxpayer had filed his appeal in the Court, the Commissioner had already commenced proceedings in…

*August v FCT – Profits on sale of property and land assessable as ordinary income [17]

The Federal Court has dismissed 2 taxpayers’ appeals and held that income they received as beneficiaries of a number of trusts was income according to ordinary concepts and not gains of a capital nature. This was a factually complex case. The taxpayers were beneficiaries of a number of trusts of which Toorak Management Pty Limited…