The ATO on Thur 27.3.2014, issued a Decision Impact Statement on the Federal Court’s decision in Ultra Thoroughbred Racing Pty Ltd v FCT [2013] FCA 1300. In that case, the Federal Court upheld the action of the applicant, “Ultra Thoroughbred Racing Pty Ltd”, to prevent Racing Victoria Limited from paying money to the Commissioner under a garnishee order against prize money of some id=”mce_marker”m won by a horse in the Cox Plate and the Caulfield Guineas. The ATO said the Commissioner considered the decision turned on its own particular facts and did not have broader implications for the Commissioner’s use of garnishee notices.

[FJM Note:    the individual who did have an outstanding tax debt, was also the registered owner of the horse, in conformity with racing rules, but by contract it had allowed the company to become the managing owner of the horse, incurring all its expenses and entitled to all its winnings. See ‘scope note’ below.]

[LTN 59, 27/3/14]

Scope Note from [2013] FCA 1300

TAXATION – taxpayer owing tax debt – section 260-5 garnishee notice issued to third party – contract between taxpayer and racehorse owner for taxpayer to be managing owner of racehorse – whether prize winnings belonged to the taxpayer or to the racehorse owner – whether contract created entitlement in the racehorse owner to prize winnings from inception – purpose of section 260-5 notices – Taxation Administration Act 1953 s 260-5.