Sanctuary Lakes Pty Ltd v Commissioner of Taxation [2013] FCAFC 50

FEDERAL COURT OF AUSTRALIA

Sanctuary Lakes Pty Ltd v Commissioner of Taxation [2013] FCAFC 50 Citation: Sanctuary Lakes Pty Ltd v Commissioner of Taxation [2013] FCAFC 50

Appeal from: [2012] AATA 404

Parties: SANCTUARY LAKES PTY LTD v COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

File number: VID 520 of 2012

Parties: COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA v SANCTUARY LAKES PTY LTD

File number: VID 521 of 2012

Judges: EDMONDS, GREENWOOD AND GRIFFITHS JJ

Date of judgment: 24 May 2013

Catchwords: INCOME TAX – whether loss on sale of memberships in golf club and loss on forgiveness of debt are allowable deductions under s 8-1 of Income Tax Assessment Act 1997 (Cth) – whether pecuniary obligation to undertake development works under an agreement is deductible in the year in which agreement entered into or in subsequent year when obligation became payable under agreement – whether amount to meet statutory obligation deductible when agreement entered into or in subsequent year when obligation became payable under agreement PENALTIES – imposition of penalties for failure to take reasonable care – imposition of penalties for statements not reasonably arguable – whether penalties correctly imposed as independent standards – whether the Tribunal took into account an irrelevant consideration (namely its finding that the taxpayer's position was reasonably arguable) in exercising its discretion under s 298-20 of Sch 1 of Taxation Administration Act 1953 (Cth) to remit penalty for failure to take reasonable care – whether Tribunal failed to apply the correct test required by s 298-20 of Sch 1 of Taxation Administration Act 1953 (Cth) in so remitting penalty for failure to take reasonable care – whether the exercise of the Tribunal's discretion under s 298-20 of Sch 1 of Taxation Administration Act 1953 (Cth) otherwise miscarried