Commissioner of Taxation v Mochkin [2003] FCAFC 15

FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation v Mochkin [2002] FCAFC 15 INCOME TAX – Income Tax Assessment Act 1936 (Cth), Part IVA – company established to carry on a sharebroking business previously conducted by taxpayer – identification of scheme – whether taxpayer entered the scheme for the dominant purpose of obtaining a tax benefit – fact that scheme has tax advantages not inconsistent with finding that the taxpayer's dominant purpose was not to obtain a tax benefit. Taxpayer causes "finder's fee" to be paid to company he controls – fee generated by taxpayer's own efforts – finding that the taxpayer entered a scheme for the dominant purpose of obtaining a tax benefit – whether finding should be upheld. INCOME TAX – whether officer had authority to make determination pursuant to Part IVA of the Income Tax Assessment Act 1936 (Cth) – whether decision-maker failed to realise that he had a discretion not to make a determination. INCOME TAX – Income Tax Assessment Act 1936 (Cth), s 25 – whether income paid to corporation "derived" by taxpayer conducting the business of the corporation.

Income Tax Assessment Act 1936, ss 25(1), 177A, 177C, 177F Taxation Administration Act 1953 (Cth), s 8(1) Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404, cited. Federal Commissioner of Taxation v Peabody (1994) 181 CLR 359, cited. Federal Commissioner of Taxation v Consolidated Press Holdings Ltd (No 1)(1999) 91 FCR 524, cited. Federal Commissioner of Taxation v Consolidated Press Holdings Ltd (2001) 207 CLR 235, cited. Hart v Commissioner of Taxation [2002] ATC 4608, cited. Eastern Nitrogen Ltd v Commissioner of Taxation (2001) 108 FCR 27, cited. Vincent v Commissioner of Taxation (2002) 193 ALR 686, cited. Peate v Federal Commissioner of Taxation (1964) 111 CLR 443, cited. Tupicoff v Federal Commissioner of Taxation (1984) 4 FCR 505, cited. Bunting v Commissioner of Taxation (1989) 24 FCR 283, cited. Case W58 (1989) 89 ATC 524, distinguished. Federal Commissioner of Taxation v Squatting Investment Co Ltd (1954) 88 CLR 413, cited. Scott v Federal Commissioner of Taxation (1966) 117 CLR 514, cited. O'Reilly v The Commissioners of the State Bank of Victoria (1983) 153 CLR 1, cited. Garnac Grain Co Inc v HMF Faure & Fairclough Ltd [1968] AC 1130, cited. Re Reference Under Section 11 of Ombudsman Act 1976 for an Advisory Opinion; Ex parte Director-General of Social Services (1979) 2 ALD 86, cited. Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353, cited. Citibank Ltd v Federal Commissioner of Taxation (1988) 83 ALR 144, cited. Permanent Trustee Co of New South Wales v Commissioner of Taxation (1940) 6 ATD 5, cited. Brent v Federal Commissioner of Taxation (1971) 125 CLR 418, cited. Hadlee & Sydney Bridge Nominees Ltd v Commissioner of Inland Revenue (NZ) [1993] AC 524, not followed. Federal Commissioner of Taxation v Everett (1980) 143 CLR 440, cited. Liedig v Commissioner of Taxation (1994) 50 FCR 461, cited. COMMISSIONER OF TAXATION v MOCHKIN V 389 of 2002 SACKVILLE, MERKEL & KENNY JJ MELBOURNE 21 FEBRUARY 2003