In a judgment of the Federal Court dated 15 March 2012, the Court has granted a stay of Federal Court proceedings on a CGT issue pending conclusion of related proceedings in the Supreme Court of Qld. The stay was granted until the earlier of resolution of the Supreme Court proceeding or 1 March 2014 or further earlier order.
In the Supreme Court proceedings, the taxpayer has claimed relief against several parties (including claims against her ex-husband for allegedly misappropriated dividends from ABC Learning Centres Limited) totaling just over $77.5m.
In March 2011, the Federal Court had declined to grant the taxpayer a temporary stay of taxation appeals. The appeals concerned tax assessments for the years ended 30 June 2001 to 30 June 2008, inclusive. In each income year, amounts corresponding to the dividends declared by ABC Learning Centres Limited were paid by ABC into a bank account with Westpac in the names of the taxpayer and her then husband. According to the Federal Court, in each of the Supreme Court proceeding and the taxation appeals, the taxpayer has alleged that she had no control over the Westpac account and was only permitted to access the funds held in it on the instructions and at the direction of her then husband. The ATO contends the dividends are assessable income of the taxpayer under s 44 of the ITAA 1936. The Federal Court has now noted that the dividend issue has been resolved between the taxpayer and the Commissioner “in a consensual way” and the parties have agreed that those appeals should be dismissed.
What remains is a CGT issue concerning a purported disposal of the taxpayer’s shares, which through an amended appeal statement to the Federal Court, the taxpayer denies or alternatively, and having regard to issues which are identical to those now pleaded in the amended statement of claim in the Supreme Court proceeding, that any agreement purporting to permit the sale of her shares by a third party was void ab initio and a nullity.
The Court said the Commissioner has made application for a temporary stay of the taxation appeals and that application has been supported by the taxpayer.
The Court was of the view there should not to be a hearing of the remaining taxation appeal, having regard to the issues, which are now presented in the Supreme Court proceeding by amendment as well as in this proceeding. For these reasons, the Court ordered that the proceedings instituted in the Federal Court concerning the remaining CGT issue be stayed until the resolution of the Supreme Court proceeding or 1 March 2014 (the date by which the Supreme Court proceeding is estimated to conclude) or further earlier order.
(Groves v FCT (No 4) [2012] FCA 658, Federal Court, Logan J, 15 March 2012.)
[LTN 120, 25/6]