• A snapshot of interesting and significant cases

    Commissioner of Taxation v. Bargwanna (2012) 244 CLR 655; 2012 ATC 20-312; (2012) 82 ATR 273 (Bargwanna case)

    (High Court: Income Tax: Charities: Commissioner's Appeal: Favourable to ATO)

    In the High Court of Australia, the Bargwanna case was a favourable decision. The case concerned whether a fund established for charitable purposes should be refused endorsement as an income tax exempt entity on the basis that the fund was not applied for the purposes for which it was established.

    On 29 March 2012, the High Court held that a charitable trust is required to be applied for its charitable purposes. The ATO test case funded this matter in order to clarify the law. The Decision Impact Statement is being drafted.

    Roy Morgan Research Pty Ltd v. Federal Commissioner of Taxation (2011) 244 CLR 97; 2011 ATC 20-282; (2011) 80 ATR 1 (Roy Morgan)

    (High Court: Constitutional: Superannuation: Taxpayer's appeal: Favourable to ATO)

    The taxpayer's appeal in Roy Morgan was unsuccessful.

    The taxpayer's appeal from a decision of the Full Federal Court concerned whether interviewers were employees of the taxpayer, and whether the Superannuation Guarantee Charge was constitutional.

    The High Court found that the Superannuation Guarantee Charge is a tax and is imposed for a public purpose. For further information, see the ATO's Decision Impact Statement.

    Commissioner of Taxation v. Multiflex Pty Ltd [2011] HCATrans 320

    (High Court Special Leave: GST refunds: Commissioner's application: Adverse to ATO)

    The ATO's special leave application was rejected. The issue concerned whether the ATO was required to refund GST amounts where suspicion on reasonable grounds is held that the taxpayer is engaged in fraud and no assessments have yet issued. The Full Federal Court had found that the ATO has no proper or lawful basis to withhold GST refunds (see Federal Commissioner of Taxation v. Multiflex Pty Ltd (2011) 197 FCR 580; 2011 ATC 20-292; (2011) 82 ATR 153).

    The High Court refused to grant special leave to appeal on 9 December 2011. This matter was test case funded. The Government announced on 15 February 2012 it would amend the law to ensure the ATO's discretion to delay refunding certain amounts to taxpayers pending necessary verification of their claims. Tax and Superannuation Laws Amendment (2012 Measures No .1) Act 2012 received royal assent on 28 June 2012.

    For further information, refer to the ATO's decision impact statement.

    Commissioner of Taxation v. RCI Pty Ltd [2012] HCATrans 029 (RCI 2012)

    (High Court Special Leave: Part IVA: Commissioner's application: Adverse to ATO)

    One of the more significant tax cases in the past year was that of RCI 2012, which concerned whether the general anti-avoidance provisions applied to a scheme that reduced a capital gain.

    The High Court refused to grant special leave on 10 February 2012. The Full Court had found that if the scheme had not been entered into or carried out, it was a reasonable assumption that the taxpayer would not have proceeded with the transactions and, therefore, it did not obtain any tax benefit (see RCI Pty Ltd v. Federal Commissioner of Taxation [2011] FCAFC 104; 2011 ATC 20-275).

    On 1 March 2012, the Government announced that it will introduce amending legislation dealing with the operation of the 'tax benefit' provisions of Part IVA of the ITAA 1936. For further information, see the ATO's Decision Impact Statement.

    Federal Commissioner of Taxation v. Futuris Corporation Ltd (2012) 205 FCR 274; 2012 ATC 20-306

    (Full Federal Court: Income Tax: Part IVA: Adverse to the ATO)

    The Commissioner did not seek special leave having regard to the decisions in Commissioner of Taxation v AXA Asia Pacific Holdings Ltd (2010) 189 FCR 204; 2010 ATC 20-224; (2010) 81 ATR 180 (AXA) and RCI 2012 in relation to the tax benefit test in Part IVA of the ITAA 1936. This was a case where the primary judge held that there was no tax benefit even though the dominant purpose of entering into the scheme was the obtaining of a tax benefit. For further information refer to the ATO's Decision Impact Statement.

    Perfek Pty Ltd v. Deputy Commissioner of Taxation; Lansell House Pty Ltd v. Deputy Commissioner of Taxation [2011] HCATrans 247

    (High Court Special Leave: GST free supplies: Taxpayer's application: Favourable to ATO)

    This was the taxpayers' special leave application to the High Court from a decision of Full Federal Court (Lansell House Pty Ltd v. Federal Commissioner of Taxation (2011) 190 FCR 354; 2011 ATC 20-239; (2011) 79 ATR 22) regarding whether a product known as 'mini ciabatte' is subject to GST on the basis that it is a cracker. The High Court refused to grant special leave to appeal on 2 September 2011.

    MTAA Superannuation Fund (RG Casey) Building Property Pty Ltd v. Federal Commissioner of Taxation (2012) 203 FCR 415; [2012] FCAFC 89

    (AAT to FFC: GST lease GST free and refunds: Favourable to ATO)

    This was the taxpayer's appeal to the Full Federal Court from a decision of the Administrative Appeals Tribunal as to whether supplies made by the taxpayer previously treated as taxable were GST free under the GST Transition Act, and if so whether the GST paid should be refunded by the ATO.

    Sciberras v. Commissioner of Taxation [2011] AATA 509

    (AAT: Deductions for case expenses: Favourable to ATO)

    The majority of decisions come from the Administrative Appeals Tribunal and concern income tax issues such as whether to allow deductions - for example, car expenses.

    In this case, the taxpayer was a fuel-tanker driver. He claimed deductions for car expenses incurred in relation to travelling between his home and place of work on the basis that a collection of tools and equipment weighing over 39 kilos was required in the event that the taxpayer would need to repair his truck.

    The Tribunal held that the items transported were not part of the work of driving, the work was not preformed with them and the terms of employment did not require their use. The deduction was disallowed.

      Last modified: 15 Feb 2013QC 26462