Commissioner of Taxation v Star City Pty Limited [2009] FCAFC 19

FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation v Star City Pty Limited [2009] FCAFC 19

TAXATION – Appeal against decision to disallow an objection to a notice of assessment of penalty for tax shortfall – Whether prepayment of rent was a loss or an outgoing of capital or of a capital nature – Whether prepayment of rent formed part of consideration for grant of casino licence, use of casino site or exclusivity period – Whether documentary evidence of circumstances surrounding making of prepayment irrelevant to proper characterisation of prepayment as loss or outgoing of capital or revenue period – Whether primary judge erred in ruling documents tendered as inadmissible – Whether primary judge erred in finding that schemes did not fall within the definition of "scheme" in s 177A(1) of Income Tax Assessment Act 1936 (Cth) – Whether taxpayer obtained a tax benefit within the meaning of s 177C of Income Tax Assessment Act 1936 (Cth) in relation to schemes. Held – prepayment of rent was an outgoing of a capital nature

Income Tax Assessment Act 1936 (Cth) ss 51(1), 82KZM, 177A, 177C, 177D, 177F, 177F(1)(b), 226, Pt IVA Income Tax Assessment Act 1997 (Cth) s 8‑1 Casino Control Act 1992 (NSW) ss 6, 7, 9, 10, 114, 117 Taxation Administration Act 1953 (Cth) ss 14ZZO(b)(i), 284‑145, Pt 4‑25

Broken Hill Pty Co Ltd v Federal Commissioner of Taxation (2000) 43 ATR 204 considered City Link Melbourne Limited v Commissioner of Taxation (2004) 141 FCR 69 considered Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 cited Colonial Mutual Life Assurance Society Limited v Federal Commissioner of Taxation (1953) 89 CLR 428 applied Commissioner of Taxation v Citylink Melbourne Limited (2006) 228 CLR 1 applied Commissioner of Taxation v Cooling (1990) 22 FCR 42 considered Commissioner of Taxation (Cth) v Peabody (1994) 181 CLR 359 cited Damberg v Damberg (2001) 52 NSWLR 492 referred to Esso Australia Resources Ltd v Commissioner of Taxation (1988) 84 FCR 541 cited Federal Commissioner of Taxation v Broken Hill Pty Co Ltd (2001) 179 ALR 593 considered Federal Commissioner of Taxation v Consolidated Press Holdings Ltd (2001) 207 CLR 235 referred to Federal Commissioner of Taxation v Hart (2004) 217 CLR 216 cited Hallstroms Proprietary Limited v Federal Commissioner of Taxation (1946) 72 CLR 634 referred to Inland Revenue Commissioner v Duke of Westminster [1936] AC 1 cited JB Chandler Investment Company Ltd (in liq) v Commissioner of Taxation (1993) 47 FCR 588 cited Jupiters Limited v Deputy Commissioner of Taxation (2001) 148 ATR 511 considered Jupiters Limited v Commissioner of Taxation (2002) 118 FCR 163 referred to Li Pei Ye v Crown Limited [2004] FCAFC 8 referred to Rotherwood Pty Ltd v Commissioner of Taxation (1996) 64 FCR 313 considered Sun Newspapers Limited v Federal Commissioner of Taxation (1938) 61 CLR 337 applied Tyco Australia Pty Ltd v Federal Commissioner of Taxation (2007) 67 ATR 63, [2007] FCA 1055 referred to