Confidential v Commissioner of Taxation (436)

[2009] AATA 436

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Confidential
vCommissioner of Taxation

Tribunal:

Member: Mr A Sweidan, Senior Member

Subject References:
Income Tax
loans by companies to shareholders
deemed dividends
whether legislation applies to treat loans as dividends
whether arrangements were a sham

Legislative References:
Income Tax Assessment Act 1936 - Div 7A

Case References:
Federal Commissioner of Taxation v Dalco - (1989) 168 CLR 614
Gauci v Federal Commissioner of Taxation - (1975) 135 CLR 81
Trautwein v FCT - (1936) 56 CLR 63
Danmark Pty Ltd v FCT, Forestwood Pty Ltd v FCT - (1944) 7 ATD 333
McCauley v FCT - 88 ATC 4605
Symon, Public Trustee v Symon - [1944] SASR 102
Emu Brewery Mezzanine Ltd (In Liq) v Australian Securities and Investments Commission - (2006) 32 WAR 204
Snook v London & West Riding Investments Ltd - (1967) 2 QB 786
Raftland Pty Ltd v Commissioner of Taxation - [2008] HCA 21
Hart v FCT - (2003) 131 FCR 2003
BRK (Bris) Pty Ltd v Federal Commissioner of Taxation - 2001 ATC 4111
Commissioner of Taxation v Starr and Hopkins - (2007) 164 FCR 436
Walstern v Commissioner of Taxation - (2003) 138 FCR 1

Hearing date: 9, 12 and 13 March 2009
Decision date: 12 June 2009

Perth

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DECISION

76. The Tribunal is of the view that the correct or preferable decision in these applications is that:

75.1

The objection decisions of the respondent made on 22 March 2006 in respect of the Notices of Amended Assessment issued to the applicant on 30 May 2005 for the years ended 30 June 1999 and 30 June 2000 be set aside;

75.2

There be substituted decisions that:

75.2.1

In the year of income ended 30 June 1999 the applicant received a deemed dividend of $95,159.42 from XYZ Pty Ltd;

75.2.2

In the year of income ended 30 June 2000 the applicant received a deemed dividend of $19,598.44 from XYZ Pty Ltd;

75.2.3

Additional tax of 50% of the tax shortfall is payable in each year of the relevant years; and

75.3

The matter be remitted to the respondent for further consideration in accordance with a direction that amended assessments be issued to the applicant to give effect to the Tribunal's decision.