In a complex case, the Court of Appeal of the Supreme Court of Queensland has unanimously rejected a taxpayer’s appeal against his conviction for 9 offences of dishonesty evading tax under schemes involving payments of some $1.6m over a 5-year period. The schemes operated through related companies the taxpayer controlled by which deductions were claimed by the companies for various payments and by which the payments found their way into the taxpayer’s hands in the form of alleged loans. The main company in the group was involved in buying and selling mining equipment.
On appeal against his conviction after a trial before a jury in the District Court at Southport, the taxpayer argued that the trial judge had erred in dismissing his claim that he had “no case to answer”. Instead, he claimed that once the sham arrangements were disregarded, a proper characterisation of the payments would have resulted in them being deductible to the companies and non-assessable in the taxpayer’s hands in any event, essentially on the basis that they were deductible remuneration or FBT payments. He also claimed that he could not be convicted of “aiding and abetting” the companies in making the payments as he was the controlling mind of the companies and therefore they were a single entity which precluded a charge of “aiding and abetting”.
However, in unanimously dismissing the taxpayer’s appeal, the Court of Appeal held that the trial judge had correctly considered the “no case submission” by reference to the test of whether there was sufficient evidence which could be taken into account by the jury in its deliberations and whether that evidence was capable of supporting a verdict of guilty. It also found that the trial judge was correct in rejecting the taxpayer’s argument that the evidence was incapable of excluding the claim that the payments made by the companies were deductible remuneration of the taxpayer. Instead, it agreed with the finding that they were non-deductible assessable dividends in his hands. The Court also found, among other things, that there was no credence to the taxpayer’s claim that he could not be convicted of aiding and abetting the companies he controlled because, at common law, a company and its directors were separate legal entities. (R v Jo [2012] QCA 356, Supreme Court of Queensland, Court of Appeal, Muir and Fraser JJA, Fryberg J, 18 December 2012.)
[LTN 9, 15/14/12]