Commissioner of Taxation v Linter Textiles Australia Ltd (in liquidation) [2003] FCAFC 63

FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation v Linter Textiles Australia Ltd (in liquidation) [2003] FCAFC 63 INCOME TAX – deductions for prior year losses – taxpayer and shareholder both in liquidation – whether winding up order affected beneficial ownership of shares – meaning of "beneficial ownership" – whether continuity of rights to dividends and return of capital affected by winding up order. CORPORATIONS LAW – insolvency – effect of winding up on beneficial ownership of company's assets – whether making of a winding up order in relation to parent company has the result that parent company ceases to be the beneficial owner of its assets including the shares it holds in subsidiary company – meaning of "beneficial ownership" to be determined by context.

WORDS & PHRASES– "beneficial ownership" Bankruptcy Act 1966 (Cth) Corporations Law 1992 (Cth) s 468(1), s 468(4), s 471(2), s 474(2), s 477(1), s 477(2)(c), s 482(1) Income Tax Assessment Act 1936 (Cth) s 36(1) s 79E, s 80(4), s 80(5), s 80(6), s 80A(1), s 80A(2), s 80A(3), s 80DA, s 80G, s 103(2)(b), s 103A(4) Federal Commissioner of Taxation v Casuarina Pty Ltd (1970-71) 127 CLR 62 – considered In re Oriental Inland Steam Co; Ex parte Scinde Railway Co [1873-1874] LR 9 Ch App 557 – considered Inland Revenue Commissioners v Olive Mill Ltd (in liquidation) [1963] 1 WLR 712 – considered Wood Preservation Ltd v Prior [1969] 1 WLR 1077 – considered KLDE Pty Ltd v Commissioner of Stamp Duties (Qld) (1984) 155 CLR 288 – considered Haque v Haque [No 2] (1965) 114 CLR 98 – considered Ayerst (Inspector of Taxes) v C & K (Construction) Ltd [1976] AC 167 – not followed Commissioner of Stamp Duties (Qld) v Livingston [1965] AC 694 – considered J Sainsbury PLC v O'Connor (Inspector of Taxes) [1991] 1 WLR 963 - considered Re Frederick Inns [1993] IESC 1 – considered Re Yaohan Hongkong Corporation Ltd (in liquidation) [2000] HKCA 437 – considered Federal Commissioner of Taxation v Brian Hatch Timber Co (Sales) Pty Ltd (1971-1972) 128 CLR 28 – considered Franklin's Selfserve Pty Ltd v Federal Commissioner of Taxation (1970) 125 CLR 52 – followed Federal Commissioner of Taxation v St Hubert's Island Pty Ltd (1977-1978) 138 CLR 210 – considered O'Donovan McPherson The Law of Company Liquidation (4th Ed) 1999 Ford, Austin and Ramsay Ford's Principles of Corporations Law (10th Ed) 2001 Goode Principles of Corporate Insolvency Law (2nd Ed) 1997 Meagher, Heydon and Leeming Meagher, Gummow and Lehane Equity: Doctrines and Remedies (4th Ed) 2002 Callaway "The Ownership of the Assets of Companies in Liquidation" (1976) 5 ATR 61 Gummow "Equity: Too Successful"(2003) 77 ALJ 30 COMMISSIONER OF TAXATION v LINTER TEXTILES AUSTRALIA LTD (IN LIQUIDATION) (ACN 002 936 487) N 1017 OF 2002 HILL, GOLDBERG & CONTI JJ 14 APRIL 2003 SYDNEY