The Federal Court has granted the Commissioner’s application for freezing orders against a taxpayer-company registered in the Cayman Islands that made a capital gain of over $12.7m from the sale of shares it held in a company engaged in mining operations in Western Australia. At the same time, the Court granted the Commissioner’s application for freezing orders against related Australian companies that held shares listed on the Australian Stock Exchange valued at over $20m. The Court made the orders notwithstanding that the $12m debt was not payable for another 11 months.
In granting the Commissioner’s application, the Court took into account, among other things, the following matters: the fact that a freezing order can be made even though the time for the payment of the tax debt has not yet arisen; that there was a danger the judgment could be wholly or partially unsatisfied (in view of the liquid nature of the taxpayer’s assets, the fact that it had never lodged returns in Australia and had no TFN); and the fact that the taxpayer was registered in the Cayman Islands and had a business office in Hong Kong, and that neither country has a bilateral collection policy or process with Australia.
Finally, in view of the circumstances, the Court ruled that substituted service of the relevant notices was justified. These circumstances included the fact that the “draconian nature” of the orders rendered it important they be brought to the attention of the relevant parties as quickly as possible so that they may have an opportunity to oppose, at the earliest opportunity, the continuation of the orders.
(FCT v Regent Pacific Group Limited & Ors [2013] FCA 36, Federal Court, Siopis J, 23 January 2013.)
[LTN 20, 31/1/13]