Lonsdale Sand & Metal Pty Ltd v Commissioner of Taxation [1998] FCA 155

FEDERAL COURT OF AUSTRALIA INCOME TAX - assessable income - whether forgiven loan deemed to be dividend under s 108 Income Tax Assessment Act 1936 - consideration of word 'credit' - adequacy of consideration and documentation in relation to forgiven loan - whether loan commenced outside statute of limitations period - consideration of substantive effect of forgiving loan in circumstances - effect of legitimate commercial reason - forgiveness of loan deemed to be dividend and therefore assessable income. Income Tax Assessment Act 1936, s 108 Limitations of Actions Act 1936 (SA), ss 35(a), 48(3)(b)(ii) Law of Property Act 1936 (SA), s 15 Deputy Federal Commissioner of Taxation v Black (1990) 25 FCR 274, distinguished Webb v Federal Commissioner of Taxation (1922) 30 CLR 451, considered James v Federal Commissioner of Taxation (1924) 34 CLR 405, considered Commissioner of Taxes (Victoria) v Nicholas (1938) 59 CLR 230, considered MacFarlane v Federal Commissioner of Taxation (1986) 13 FCR 356, applied LONSDALE SAND AND METAL PTY LTD v COMMISSIONER OF TAXATION SG 62 of 1997 MANSFIELD J ADELAIDE 5 MARCH 1998

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY SG 62 of 1997

BETWEEN: LONSDALE SAND AND METAL PTY LTD

Applicant

AND: COMMISSIONER OF TAXATION

Respondent

JUDGE: MANSFIELD J

DATE OF ORDER: 5 March 1998

WHERE MADE: ADELAIDE

THE COURT ORDERS THAT: 1. Appeal dismissed. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY SG 62 of 1997

BETWEEN: LONSDALE SAND AND METAL PTY LTD

Applicant

AND: COMMISSIONER OF TAXATION

Respondent

JUDGE: MANSFIELD J

DATE: 5 March 1998

PLACE: ADELAIDE