Mills v Commissioner of Taxation [2011] FCAFC 158

FEDERAL COURT OF AUSTRALIA

Mills v Commissioner of Taxation [2011] FCAFC 158 Citation: Mills v Commissioner of Taxation [2011] FCAFC 158

Appeal from: Mills v Commissioner of Taxation [2011] FCA 205

Parties: ANDREW VINCENT MILLS v COMMISSIONER OF TAXATION

File number: NSD 379 of 2011

Judges: DOWSETT, EDMONDS AND JESSUP JJ

Date of judgment: 8 December 2011

Date of corrigendum: 24 February 2012

Catchwords: INCOME TAX – Part IVA Income Tax Assessment Act 1936 (Cth) – s 177EA: scheme for disposition of membership interest in a corporate tax entity in respect of which frankable distribution has been paid, is payable or expected to be paid as a result of which imputation benefits would be received or could reasonably be expected to be received by relevant taxpayer – membership interests consisting of preference shares in corporate tax entity stapled to interest-bearing note issued out of foreign branch of corporate tax entity – relevant frankable distributions being interest on stapled note paid out of foreign branch – interest deductible in foreign branch country – distribution rate set by reference to franking credit or, if not available, by grossed up cash component – whether corporate tax entity entered into or carried out the scheme for a purpose (not including an incidental purpose) of enabling taxpayer to obtain an imputation benefit Held: Corporate tax entity had relevant purpose not being an incidental purpose.

Legislation: Income Tax Assessment Act 1936 (Cth) ss 44(1), 46G-46M, 177EA Income Tax Assessment Act 1997 (Cth) ss 202-40, 202-45; Divs 203 – 205, 215 of Pt 3-6; Div 974 of Pt 6-1 Taxation Administration Act 1953 (Cth) Pt IVC Banking Act 1959 (Cth) Taxation Laws Amendment Act (No 3) 1998 (Cth) (No 47 of 1998) New Business Tax System (Debt and Equity) Act 2001 (Cth) (No 163 of 2001) New Business Tax System (Consolidation and Other Measures) Act 2003 (Cth) (No 16 of 2003) Tax Laws Amendment (2007 Measures No 3) Act 2007 (Cth) (No 79 of 2007) Explanatory Memorandum to Tax Laws Amendment (2007 Measures No 3) Act 2007 (Cth) Explanatory Memorandum and Supplementary Explanatory Memorandum to Taxation Laws Amendment Act (No 3) 1998 (Cth)