The Federal Court has dismissed the taxpayer’s appeal and confirmed the decision of the AAT at first instance in AAT Case [2013] AATA 239, Re IOOF Holdings Limited and FCT that for the purposes of undertaking its review of the Commissioner’s deemed disallowance of the taxpayer’s objection against the Commissioner’s failure to make a private ruling (in relation to its claim for a deduction under the consolidation rules re rights to future income), it was not open to the AAT to apply the provisions of Pt 3-90 before the relevant retrospective amendments were made that modified the consolidation tax cost setting and rights to future income rules adversely to its interests.
Before the Federal Court, the taxpayer essentially contended when considering whether transitional provisions are exhaustive, there is a presumption that a statute is not intended to take away existing rights in the absence of clear evidence of Parliament’s intention to displace accrued rights. Further, it claimed that it could have received an unfavourable ruling before 31 March 2011 and commenced legal proceedings to challenge the ruling before that date and that if a tribunal ultimately found in its favour, its entitlement to the deductions [would] be preserved.
However, in dismissing the taxpayer’s appeal, the Court emphasised that the application provisions in the 2012 Amending Act were intended to deal exhaustively with which [ever] version of the ITAA 1997 applied in respect of all acquisitions made by consolidated groups from 1 July 2002 and that [it was] the retrospective form and content of the 2012 Amending Act that was of significance.
In particular, it noted that the only exception to the main application provisions in Item 50 of the 2012 Amending Act was that described in Item 51 and that the exception could only apply where a private ruling was issued before 31 March 2011 or written advice was given before 31 March 2011 under an Annual Compliance Agreement.
Finally, the Court also found it was of no significance that Item 51 does not refer to taxpayers who have appeals on foot. Accordingly, the Court concluded that in terms of the chronology of events, the taxpayer’s appeal should be dismissed as it was not issued with a private ruling before 31 March 2011 that had effect in relation to the application of s 701-55(5C) or (6) of the ITAA 1997, before it was amended by the 2012 Amending Act.
(IOOF Holdings Limited v FCT [2013] FCA 1189, Federal Court, Middleton J, 15 November 2013.)
[LTN 223, 18/11/13]