The ATO on Mon 19.3.2012, released a Decision Impact Statement on the Full Federal Court’s decision in Leighton v FCT [2011] FCAFC 96. In that case, the Full Federal Court held that a non-resident individual was not liable to be assessed under the former s 98(3) of the ITAA 1936 in relation to trading activities conducted through stockbrokers in Australia. The Commissioner subsequently lodged an application for special leave to appeal to the High Court against the decision.
The ATO said the Full Court’s decision was based on “common ground between the parties that over the relevant years [the 2 foreign resident companies involved] were each carrying on a business of trading in shares, with the shares being trading stock of those businesses”. Therefore, the ATO said it accepts that once that conclusion was reached, it followed that the income would be derived by the companies from the sale of trading stock, and not the income of a trust estate (on which former s 98(3) would operate).
[FJM note: In the DIS, the Commissioner concludes that if the facts hadn’t been agreed in this form, and it had been established that the nominee held the relevant shares as well as the proceeds of sale as nominee, then the outcome could be different.]
[LTN 53, 19/3]