• Test case funding program

    Table 4.6 lists cases funded by the ATO under the test case litigation program, 2012–13.

    The Commissioner has released decision impact statements in a number of these cases.

    For more information about the program or to view a decision impact statement on a particular case, visit ato.gov.auExternal Link

    Table 4.6 Test case litigation, 2012–13

    Case

    Issue

    Outcome, clarification obtained and status

    ATO Reference 13/942

    Test case funding agreed between the parties by way of a test case funding deed

    This is the Commissioner's appeal to the Full Federal Court from the decision of the Federal Court.

    The issue is whether the taxpayers conduct amounted to the promotion of a 'tax exploitation scheme' under the promoter penalty provisions.

    As at 30 June 2013, the appeal had not been heard.

    ATO Reference 13/957

    Funding provided by way of consent to a costs order against the Commissioner in accordance with the policy to generally fund appeals by the Commissioner against adverse AAT decisions

    This is the Commissioner's appeal to the Federal Court from the decision of the AAT.
    The issue is whether the assets of a taxpayer's spouse should be included in the 'maximum asset value test' because the spouse is an entity connected with the taxpayer.

    As at 30 June 2013, the appeal had not been heard.

    ATO Reference 2013/580

    Funding provided by way of consent to a costs order against the Commissioner in accordance with the policy to generally fund appeals by the Commissioner against adverse AAT decisions

    This is the Commissioner's appeal to the Federal Court from the decision of the AAT.

    The issue is whether 'special circumstances' existed for the Commissioner to exercise the discretion to disregard or allocate to another year excess superannuation contributions made by the taxpayer.

    As at 30 June 2013, the appeal had not been heard.

    Commissioner of Taxation v Boyn [2013] FCA 232

    Funding provided by way of consent to a costs order against the Commissioner in accordance with the policy to generally fund appeals by the Commissioner against adverse AAT decisions

    This was the Commissioner's appeal to the Federal Court from the decision of the AAT [2012] AATA 660.

    The issue concerned whether the correct method of calculating tax payable in respect of the taxable component of an employment termination payment had been applied by the taxpayer.

    The Federal Court found in favour of the Commissioner on 20 March 2013.

    The Court held that the definition of 'employment termination remainder' places a cap on the amount of taxable income that can be the employment termination remainder and cannot be more than the taxable income.

    Commissioner of Taxation v Robert Nash [2013] FCA 336

    Funding provided by way of consent to a costs order against the Commissioner in accordance with the policy to generally fund appeals by the Commissioner against adverse AAT decisions

    This was the Commissioner's appeal to the Federal Court from the decision of the AAT [2012] AATA 719.

    The issue was whether a taxpayer is entitled to claim a deduction for 'general interest charge' in each year in which it is accrued or in the year in which it is assessed.

    The Federal Court found in favour of the Commissioner on 16 April 2013.

    The Court confirmed the Commissioner's view that general interest charge is only incurred and therefore deductible in the year in which it is assessed.

    Commissioner of Taxation v Sanctuary Lakes [2013] FCAFC 50

    Funding provided by way of consent to a costs order against the Commissioner in accordance with the policy to generally fund appeals by the Commissioner against adverse AAT decisions

    This was the Commissioner's appeal to the Full Federal Court from the decision of the AAT [2012] AATA 404.

    The case concerned whether the AAT had erred in finding that because the taxpayer had a reasonably arguable position they should not be penalised for failure to take reasonable care.

    The Full Federal Court found in favour of the taxpayer on 24 May 2013, holding that, while having a reasonably arguable position and taking reasonable care are independent tests, the existence of a reasonably arguable position is not an irrelevant consideration for determining whether a penalty for failure to take reasonable care ought to be remitted. While the taxpayer has applied for special leave to appeal to the High Court on the substantive issue in the case, that application is not funded under the test case litigation program.

    Commissioner of Taxation v Pham [2013] FCA 579

    Funding provided by way of consent to a costs order against the Commissioner in accordance with the policy to generally fund appeals by the Commissioner against adverse AAT decisions

    This was the Commissioner's appeal to the Federal Court from the decision of the AAT [2013] AATA 24.

    The issue was whether the decision of the AAT to order that certain evidence and information pertaining to the hearing would not be disclosed or published was a proper exercise of the AAT's power.

    The Federal Court found in favour of the Commissioner on 13 June 2013.

    It was held that the AAT has jurisdiction to make non-publication orders but that the AAT had no evidence to support its finding that the taxpayer's defence in criminal proceedings would be compromised without a non-publication order.

    ATO Reference 2012/4435

    Funding provided by way of consent to a cost order against the Commissioner in accordance with the policy to generally fund appeals by the Commissioner against adverse AAT decisions

    This was the Commissioner's appeal to the Federal Court from the decision of the AAT.

    The issue was whether the taxpayer was entitled to fuel tax credits under the Fuel Tax Act 2006 on fuel in equipment hired to contractors.

    The Commissioner discontinued the proceedings on 28 May 2013.

    ATO Reference 2013/551/5522

    Funding provided by way of consent to costs orders against the Commissioner in accordance with the policy to generally fund appeals by the Commissioner against adverse AAT decisions

    These were the Commissioner's appeals to the Federal Court from decisions of the AAT.

    The issue is whether the AAT had correctly identified the relevant 'arrangement' for the purposes of applying the scrip for scrip roll-over provisions and whether participation in the arrangement was available on substantially the same terms for all relevant shareholders in the entity.

    As at 30 June 2013, the appeals had not been heard.

    ATO Reference 13/869

    Funding provided by way of consent to a cost order against the Commissioner in accordance with the policy to generally fund appeals by the Commissioner against adverse AAT decisions

    This was the Commissioner's appeal to the Federal Court from the decision of the AAT.

    The issue was whether the AAT had jurisdiction to consider the excessiveness of amended income tax assessments that were not objected to by the taxpayer, but that were, in error, referred to by the Commissioner in objection decisions relating to other assessments.

    As at 30 June 2013, the appeal had not been heard.

    ATO Reference 11/3071

    Test case funding agreed between the parties by way of a test case funding deed

    This is the taxpayer's appeal to the Federal Court from the Commissioner's objection decision.

    The issue is whether members of a constitutionally protected superannuation fund are required to pay the superannuation surcharge.

    As at 30 June 2013, the appeal had been heard and the decision reserved.

    ATO Reference 12/213

    Test case funding agreed between the parties by way of a test case funding deed

    This is the taxpayer's appeal to the Federal Court from the Commissioner's objection decision.

    The issue involves whether, in respect of its endorsement as a public benevolent institution, there is a requirement that the taxpayer directly dispenses aid to people in need of relief.

    As at June 30 2013, the matter had been heard and reserved.

    Commissioner of Taxation v Bruce McWilliam [2012] FCAFC 105

    Test case funding agreed between the parties by way of a test case funding deed

    This was the Commissioner's appeal from the decision of the AAT [2012] AATA 142.

    The issue was whether an employee under an employee share scheme acquires a 'right' when they can require the issue of options to purchase shares or whether the employee acquires that right only upon the issue of options under the employee share scheme.

    The Full Federal Court found in favour of the taxpayer on 8 August 2012.

    The Full Federal Court was not persuaded that a right to require the taxpayer's employer to issue him with share options is different to a right to acquire a beneficial interest in those shares.

    ATO Reference 2012/2389

    Test case funding approved by way of consent to a costs order against the Commissioner

    This is the Commissioner's appeal to the NSW Court of Appeal from the decision of the Supreme Court of NSW.

    The issue is whether the Commissioner had established 'exceptional circumstances' to warrant a departure from the liquidator's entitlement to indemnity costs under the court rules, along with whether the Commissioner is only liable to pay the liquidator's costs up to and including the date he concedes the liquidator's claim.

    At June 30 2013, the matter had been heard and reserved.

    ATO Reference 12/3527

    Test case funding agreed between the parties by way of a test case funding deed

    This was the taxpayer's appeal against the Commissioner's objection decision.

    The issue was whether the taxpayer was entitled to be endorsed as a public benevolent institution under the Fringe Benefits Tax Assessment Act 1986.

    The proceedings were discontinued prior to hearing.

    ATO Reference 2012/2700

    Test case funding approved on condition, if the matter proceeds to litigation (in-principle approval)

    Whether the general anti-avoidance rules contained in Part IVA of the Income Tax Assessment Act 1936 apply to the retention and alienation of income from a personal services business.

    As at 30 June 2013, this matter was not yet in litigation.

     

    Commissioner of Taxation v Kassem & Secatore [2012] FCAFC 124

    Test case funding approved by way of consent to a costs order against the Commissioner

    This was the Commissioner's appeal to the Full Federal Court from the decision of the Federal Court [2012] FCA 152.

    This case concerns whether payments recorded by the Commissioner in the taxpayer's running balance account and later allocated to pay its superannuation guarantee charge debts are unfair preferences.

    The Full Federal Court found in favour of the taxpayer on 31 August 2012.

    The Full Federal Court held that the payments were unfair preferences as the Commissioner received more than he would in the winding up of the taxpayer.

    The payments recorded in the taxpayer's running balance account were not paid in respect of superannuation guarantee charge liabilities and so could not be afforded any status of priority.

    Commissioner of Taxation v Park [2012] FCAFC 122

    Test case funding approved by way of consent to a costs order against the Commissioner

     

    This was the Commissioner's appeal to the Full Federal Court from a decision of the Federal Magistrates Court [2011] FMCA 544.

    The issues were whether purchase monies 'due' to the tax debtor vendor (the taxpayer) created an obligation on the third-party purchaser to pay the Commissioner pursuant to a garnishee notice and whether security under a mortgage over land extends to the proceeds of sale of the land.

    The Full Federal Court found in favour of the Commissioner on 31 August 2012.

    The Full Federal Court held that at the instant the monies became owing by the third-party purchaser to the taxpayer the third-party purchaser fell under a statutory obligation to pay the monies to the Commissioner. The security under a mortgage over land does not extend to the proceeds of sale of the land.

    ATO Reference 2012/4687

    Test case funding approved by way of deed funding

     

    This is the taxpayer's appeal to the Federal Court from the Commissioner's objection decision and application for declaratory relief.

    The issue is whether the taxpayer's liquidators are required to retain relevant tax amounts (in full or in part) from the proceeds of a sale of land.

    A further issue was whether section 254 of the Income Tax Assessment Act 1936 imposes an incontestable tax and is therefore unconstitutional.

    As at 30 June 2013, the matter had been heard and the decision reserved.

     

    ATO Reference [2013/550]

    Test case funding agreed between the parties by way of a test case funding deed

    This is the Deputy Commissioner's appeal to the NSW Court of Appeal from a decision of the NSW District Court.

    The issue is whether the Deputy Commissioner can commence or continue with recovery proceedings on director penalty notices issued before 1 July 2010 under (now repealed) section 222AOE of the Income Tax Assessment Act 1936

    As at 30 June 2013, the appeal had not been heard.

    ATO Reference [13/959/1035]

    Test case funding agreed between the parties by way of a test case funding deed

    These are the Commissioner's appeals to the Full Court of the Family Court from decisions of the Family Court [2013] FamCA 118.

    The issue is whether the Commissioner, having been given permission by the Court to inspect and copy documents from the court file for the purpose of conducting an audit of the tax affairs of the taxpayer's ex-spouse, should be subject to an implied undertaking not to make use of the documents for a purpose not related to the litigation between the parties.

    As at 30 June 2013, the appeals had not been heard.

      Last modified: 03 Oct 2014QC 42605