The Federal Court has issued asset freezing orders against several taxpayers in respect of which the Commissioner had issued amended assessments totalling almost $33m in tax debts, including penalties.
The Deputy Commissioner sought orders freezing the assets of the first respondent (Mr Vasiliades) and against his wife, the second respondent (Ms Vasiliades), in respect of a share of the net proceeds of sale of a property located in Victoria which the Commissioner claimed belongs to Mr Vasiliades.
The Deputy Commissioner also sought orders against the third respondent (South Yarra Station Development Co Pty Ltd (SYSDC), a company of which Mr Vasiliades is the sole director and shareholder) and the fourth respondent (Falconbridge Pty Ltd, the trustee of a trust and of which Mr Vasiliades is the sole director and sole shareholder), being companies over which the Commissioner submitted that Mr Vasiliades has, or had, control and which hold or use a power of disposition over assets of Mr Vasiliades.
In around August 2008, Mr and Ms Vasiliades and their children left Australia, intending to live in Europe permanently. They have been non-residents of Australia since that time. Since August 2010, Mr and Ms Vasiliades have been resident in Europe.
From October 2011, the Commissioner audited the tax affairs of Mr Vasiliades, who subsequently made voluntary disclosures increasing his taxable income in the years in question. He later attempted to withdraw from that position and sought to amend his returns to decrease his liabilities as voluntarily disclosed.
The Commissioner did not accept Mr Vasiliades’ changed position and then issued amended assessments for the 2007 to 2010 income years totalling $20.4m.
The Commissioner sought orders against Ms Vasiliades in respect of a share of the net proceeds of sale of the property, which the Commissioner contended belongs to Mr Vasiliades.
The Court said it was satisfied that the Deputy Commissioner had a good arguable case that it could be said that Mr Vasiliades does have a contingent interest in a Trust that is controlled by a company (SYSDC) of which Mr Vasiliades is the sole director and shareholder. The Court said Mr Vasiliades does not hold substantial assets in Australia. He holds 50% of the shares in SYSDC (which previously held real property in Australia). He is a beneficiary of the Trust, and is the sole director and sole shareholder of the trustee, Falconbridge.
He does not hold or own any real property in his own name. However, the Commissioner contended that he is entitled to a share of the net proceeds of sale of a property held by his wife.
The Court considered it was appropriate that the Commissioner proceed to determine each objection, which had been filed in relation to the assessments, without delay. The Court was told that the Commissioner would determine the objections by no later than 28 November 2014. The Court said if the objections are not determined before that date, the taxpayers would have liberty to apply to discharge or vary one or more of the orders.
In the result, the Court ordered that:
- a freezing order be made against Mr Vasiliades until further order;
- until further order, SYSDC not dispose of, encumber or deal with its assets other than in the ordinary course of business, without first giving the Commissioner at least 14 days’ notice;
- Mr Vasiliades must not himself, and must not through any partner, employee, agent or other person acting on his behalf or on his instructions exercise any power of distribution in respect of the Trust including any power as a director of any trustee of the Trust;
- a freezing order, in final form, be made against Ms Vasiliades.
(DCT v Vasiliades & Ors [2014] FCA 1250, Federal Court, Gordon J, 24 November 2014.)
[LTN 229, 26/11/14]