Advanced Holdings Pty Limited as Trustee for The Demian Trust v Commissioner of Taxation [2021] FCAFC 135

Federal Court of Australia

Advanced Holdings Pty Limited as Trustee for The Demian Trust v Commissioner of Taxation [2021] FCAFC 135 Appeal from: Advanced Holdings Pty Limited as trustee for The Demian Trust v Commissioner of Taxation [2020] FCA 1479 STVJ & Ors v Commissioner of Taxation (Administrative Appeals Tribunal) Davies J, 15 October 2020

File numbers: NSD 1286 of 2020 NSD 1293 of 2020 NSD 1326 of 2020 NSD 1327 of 2020

Judgment of: LOGAN, MCKERRACHER AND PERRAM JJ

Date of judgment: 4 August 2021

Catchwords: TAXATION – income tax – deductibility of borrowings and related fees – whether repayments of borrowings and fees were on revenue or capital account – where company is in the business of property development and property is the company's trading stock – where original loans obtained for the purchase of the properties were repaid from a facility agreement – where liabilities under the facility agreement were then repaid from the proceeds of sale of the properties – whether a proportion of an excess amount of repayments under the facility agreement referrable to the drawdowns used to discharge the original loans is deductible as a 'revenue borrowing' TRUSTS AND TRUSTEES – construction of joint venture agreement – joint venture to develop and sell residential property – where the first joint venturer is the legal owner of the property and the second joint venturer provides finance – whether the joint venture agreement should be construed as granting a 50% beneficial interest in the property to the second joint venturer held on trust for it by the first joint venturer – in circumstances where the joint venture agreement made no express provision for the creation of a trust TRUSTS AND TRUSTEES – validity of notices of appointment and removal of trustees in accordance with trust deed – whether the power to appoint one or more trustees was predicated on the removal of one or more trustees – whether the objective intention of the deed of appointment was to effect both the removal and appointment of the trustees EVIDENCE – retirement of old corporate trustee and appointment of new corporate trustee by various deeds and notices – where only some documents produced in evidence and others only referred to in company minutes – where primary judge was not satisfied that the documents in evidence demonstrated a valid change of trustee – whether provisions of the Evidence Act 1995 (Cth) or the Corporations Act 2001 (Cth) concerning the prima facie proof of matters stated in company records compels a different conclusion – extent to which references to the operative documents in company minutes could be evidence of the efficacy of the underlying documents themselves