The Federal Court (Logan J) has granted the Commissioner a stay of certain orders made in the Full Federal Court’s August 2012 decision in Unit Trend Services Pty Ltd v FCT [2012] FCAFC 112 until the determination by the High Court of the Commissioner’s application for special leave to appeal, and if special leave to appeal is granted, until the determination of the appeal by the High Court. The stay concerned the use by the taxpayer of the margin scheme with respect to commercial and residential properties and also as to costs.
In its majority decision, the Full Federal Court had partially allowed both the taxpayer’s appeal and Commissioner’s cross-appeal from a 2010 decision of the AAT in which it was found that the taxpayer was entitled to use the margin scheme for some acquisitions of property, but did not have approved valuations for others, and that the GST anti-avoidance provisions did not apply.
The majority found that in relation to the application of the GST anti-avoidance provisions, for all settlements up to and including 16 March 2005, Div 165 did not operate because it was excluded as the GST benefit on the end purchaser transactions was attributable to relevant choices made by the taxpayer.
On 14 March 2013, the Commissioner’s special leave application was heard before a 5-member Full High Court and it is understood the Court effectively treated it as if it were an appeal. The Court reserved its decision. Logan J said “That, to me, makes this case truly an exceptional one, where the High Court has been moved to deal with it, in effect, as if there had been a grant of special leave (although, of course, it may ultimately dispose of the case simply by not granting special leave).
When I weigh that against the effect of interest on overpayments, the ordinary ability of a litigant successful in a case to have the fruits of the judgment, and the relative lack of prejudice in terms of a delayed start to the administrative processes, I consider that this is a case where there ought to be a stay”.
(Unit Trend Services Pty Ltd v FCT [2013] FCA 333, Federal Court, Logan J, 5 April 2013.)
[FJM Note: The High Court has handed down its decision in this matter on 1 May 2013 in the Commissioner’s favour – finding that the anti-avoidance provisions did apply (see next month’s report).]
[LTN 77, 24/4/13]