Commissioner of Taxation (Cth) v Baxter [2003] FCAFC 119

FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation (Cth) v Baxter [2003] FCAFC 119

TAXES & DUTIES – sales tax – importation of yacht – whether 'applied to own use' – where lease entered into prior to importation

Customs Act 1901 (Cth) ss 68, 71A, 71B Sales Tax Assessment Act 1992 (Cth) ss 16, 23, 28, Sch 1, Table 1, AD10, AD13c, Note 1, Table 2

Baxter v Commissioner of Taxation (Cth) [2002] FCA 1256 affirmed Baxter v Commissioner of Taxation (No 2) [2002] FCA 1351 affirmed Max Factor & Co Inc v Commissioner of Taxation (Cth) (1971) 124 CLR 353 cited COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA v MATTHEW ALEXANDER BAXTER N1200 OF 2002 HEEREY, EMMETT & HELY JJ 30 MAY 2003 SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N1200 OF 2002

BETWEEN: COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

APPLICANT

AND: MATTHEW ALEXANDER BAXTER

RESPONDENT

JUDGES: HEEREY, EMMETT & HELY JJ

DATE OF ORDER: 30 MAY 2003

WHERE MADE: SYDNEY

THE COURT ORDERS THAT:

1. the appeal be dismissed;

2. the appellant pay the respondent's costs.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY N1200 OF 2002

BETWEEN: COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

APPLICANT

AND: MATTHEW ALEXANDER BAXTER

RESPONDENT

JUDGES: HEEREY, EMMETT & HELY JJ

DATE: 30 MAY 2003

PLACE: SYDNEY

REASONS FOR JUDGMENT THE COURT:

Introduction

1 In 1997, the respondent, Matthew Alexander Baxter, ordered a Swan 60 yacht from a Finnish company Oy NAUTOR Ab ('the Finnish company'). The Finnish company built the yacht and shipped it to Australia where it was unloaded at the Port of Sydney on 28 September 1998. On 24 September 1998, while the ship was still at sea, Mr Baxter entered into a lease of the yacht to Michael Bell Marine Aust Pty Ltd ('MBM') for a term of two years 2 The appellant, Commissioner of Taxation ('the Commissioner'), assessed the yacht to sales tax under AD13c of Table 1 of Sch 1 to the Sales Tax Assessment Act 1992 (Cth)('the Assessment Act') on the basis that the yacht was 'applied to own use' in taxable circumstances on or about 28 September 1998. It emerged that the Commissioner contended there was an 'application to own use' ('AOU') 'by a person who obtained the goods under quote'. 3 The primary judge (Gyles J) found that the assessment was excessive in so far as it related to the hull and mast of the yacht (the sails were purchased by Mr Baxter in Australia): Baxter v Commissioner of Taxation (Cth) [2002] FCA 1256 and Baxter v Commissioner of Taxation (No 2) [2002] FCA 1351. The Commissioner appeals.