Category Archives: Tax Month – March 2015

Re HVZZ and FCT – Non-commercial loss deferral discretion – AAT confirms horse breeding losses cannot offset other income [28]

The AAT has affirmed the Commissioner’s decision not to exercise his discretion in s 35-55(1)(c) of the ITAA 1997 not to apply the non-commercial loss deferral rule to a taxpayer. The taxpayer applied for a private ruling on the exercise of the Commissioner’s discretion not to apply the non-commercial loss deferral rule in s 35-10(2) and to…

Re James and FCT – Entitlement to PAYG credits not reviewable by AAT [27]

The AAT has confirmed that the issue of a taxpayer’s entitlement to PAYG credits cannot be subject to review in an application before the AAT. In doing so, the AAT confirmed that a decision made by the Commissioner with respect to PAYG credits does form part of an assessment under s 6(1) of the ITAA 1936…

*Re Clemens, Jaczenko, Koustrup and FCT – Backpackers not residents of Australia – over 182 days but ‘usual place of above’ outside Australia [26]

The AAT has found that 3 foreign national backpackers had their usual place of abode outside of Australia for the year ended 30 June 2013 and were therefore not residents of Australia for tax purposes for that year. The backpackers were from Germany, Canada and Denmark. While in Australia, they worked at various places, went sightseeing, etc.…

Re WWXY and FCT – Profit from sale of property assessable as ordinary income [25]

The AAT has upheld a private ruling that the taxpayer was engaged in a business of property development and that the profit from sale of properties acquired with a profit-making purpose was ordinary income. This decision was reported at 2014 ATC ¶1-074. In 2006 and 2007, the taxpayer – the corporate trustee of a discretionary…

*Re Morrison and FCT – Superfund’s loan to Hua Wang Bank etc a sham; ‘fraud or evasion’; assess loan as benefits; no interest deductions [24]

The AAT has held that an arrangement between husband and wife taxpayers and a bank re a loan to purchase a property was a sham. The taxpayers financed the purchase for id=”mce_marker”.1m of an apartment on the Queensland Sunshine Coast in part by a loan of $600,000 from the St George Bank. The AAT said…

*FCT v Oswal (No. 3) – Taxpayer fails to stay Commissioner’s action to have mortgage declared void (because it was to ‘defraud creditors’) [23]

A taxpayer has been unsuccessful in her application to seek a stay of proceedings that were brought by the Commissioner in which he sought a declaration that a mortgage she registered over 2 of her properties was void on the basis that she entered into them with an intention to defraud her creditors, which included…

Roberts v DCT – No leave for taxpayer to appeal summary judgment [22]

The Federal Court has refused a taxpayer leave to appeal from an October 2013 judgment that granted the Commissioner summary judgment concerning the taxpayer’s outstanding tax debts. The taxpayer controlled several transport companies. He alleged that he sold 2 of the companies to an individual, which explained a number of payments to those companies and to the…

*Donoghue v FC of T – ‘conscious maladministration’ using legally privileged information resulted in assessments being set aside [21]

The Federal Court has held that income tax assessments issued to a taxpayer were invalid because the Commissioner had drawn upon information that was subject to legal professional privilege and received by the ATO from a third party without the authorisation of the taxpayer. The Commissioner’s process, which included a tax officer’s wilful disregard of…

FC of T v Moignard – Taxpayer did not establish not ‘presently entitled’ to the Trust’s gain beneficially or that the assessment was excessive [20]

The Commissioner has been successful in an appeal to the Federal Court against an AAT decision that an individual taxpayer was not assessable on sales proceeds deposited into his personal bank account. In that decision (reported at 2014 ATC ¶10-364), the AAT was satisfied that the sales proceeds were received in the taxpayer’s capacity as…

*FCT v McGrouther – Commissioner’s appeal allowed: taxpayers can withdraw s14ZYA notice that could lead to a deemed disallowance of an objection [19]

The Full Federal Court has unanimously allowed the Commissioner’s appeal from the decision in McGrouther v FCT [2014] FCA 1102. In that case, the Court ruled (as the taxpayers had sought), that the taxpayers could not withdraw a notice they had given the Commissioner under s 14ZYA of the Taxation Administration Act 1953 that triggers the…