Harts Australia Limited v Commissioner of Taxation [2001] FCA 761

FEDERAL COURT OF AUSTRALIA

Harts Australia Limited v Commissioner of Taxation [2001] FCA 761

TAXATION – agreement between taxpayer company and associated company to transfer to the taxpayer company, tax deductible losses incurred by associated company – whether failure to specify the particular amount of the losses transferred resulted in the agreement being ineffective for the purposes of s 80G of the Income Tax Assessment Act 1936 (Cth)

PRACTICE AND PROCEDURE – appeal – primary judge answered separate questions as a preliminary issue – facts agreed upon only for the purpose of the preliminary issue - whether inappropriate to answer separate questions Income Tax Assessment Act 1936 (Cth) ss 80G, 80G(6)(c), 80G(6A), 80G(7), 80G(13), 80G(16)

TCN Channel Nine Pty Ltd v Australian Mutual Provident Society (1982) 42 ALR 496 - cited Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390 - cited Codelfa Construction Pty Ltd v State Rail Authority of New South Wales (1982) 149 CLR 337 - cited Prenn v Simmonds [1971] 1 WLR 1381 - cited Director of Fisheries (Northern Territory) v Arnhem Land Aboriginal Land Trust [2001] FCA 98 - applied HARTS AUSTRALIA LIMITED v COMMISSIONER OF TAXATION Q81 of 2000 JUDGES: LEE, FINN AND MERKEL JJ DATE: 22 JUNE 2001 PLACE: MELBOURNE (HEARD IN BRISBANE)

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY Q81 of 2000

On appeal from a Judge of the Federal Court of Australia

BETWEEN: HARTS AUSTRALIA LIMITED

APPELLANT

AND: COMMISSIONER OF TAXATION

RESPONDENT

JUDGES: LEE, FINN AND MERKEL JJ

DATE: 22 JUNE 2001

WHERE MADE: MELBOURNE (HEARD IN BRISBANE)

THE COURT ORDERS THAT: 1. The appeal be allowed. 2. The answers to the Separate Questions given by the primary Judge be set aside and the following answers be substituted: "1. Whether the document annexed to Exhibit 2 and marked 'A1' may constitute an agreement for the purposes of section 80G(6)(c) of the Income Tax Assessment Act ('the Act'), insofar as it does not specify an amount to be transferred" Inappropriate to answer "2. Whether, if the answer to question 1 is 'yes', and assuming that the agreement was otherwise valid, the effect of that agreement was spent by the transfer from Bomilsco Pty Ltd to the Applicant of the sum of $190,295.00, as evidenced by the 1993 tax return for the Applicant." Inappropriate to answer "3. Whether the document annexed to Exhibit 2 and marked 'A2' may constitute an agreement for the purposes of section 80G(6)(c) of the Act, insofar as it does not specify an amount to be transferred." Inappropriate to answer "4. Whether, if the answer to question 3 is 'yes' and assuming that the agreement was otherwise valid, the effect of that agreement was spent by the transfer from Bomilsco Pty Ltd to the Applicant of the sum of $12,290.00, as evidenced by the 1996 tax return for the Applicant." Inappropriate to answer. 3. The parties bear their own costs of and incidental to the appeal.