Burke v Commissioner of Taxation [2004] FCA 126

FEDERAL COURT OF AUSTRALIA

Burke v Commissioner of Taxation [2004] FCA 126 INCOME TAX ASSESSMENT – whether income tax should be paid upon a capital gain made from the sale of AMP Ltd shares – whether shares received in AMP Ltd upon demutualisation of the AMP Society are an 'interest in rights under a life insurance policy' and so within the ambit of s 118-300 Income Tax Assessment Act 1997 (Cth).

Income Tax Assessment Act 1936 (Cth) s 121AS Income Tax Assessment Act 1997 (Cth) ss 102-5, 104-5, 104-10, 108-5, 118-300, 995-1 Life Insurance Act 1995 (Cth) ss 9, 204, 205 PHILIP DAMIAN BURKE v COMMISSIONER OF TAXATION S 805 of 203 MANSFIELD J 1 MARCH 2004 ADELAIDE

IN THE FEDERAL COURT OF AUSTRALIA

SOUTH AUSTRALIA DISTRICT REGISTRY S 805 OF 2003

BETWEEN: PHILIP DAMIAN BURKE

APPLICANT

AND: COMMISSIONER OF TAXATION

RESPONDENT

JUDGE: MANSFIELD J

DATE OF ORDER: 1 MARCH 2004

WHERE MADE: ADELAIDE

THE COURT ORDERS THAT: 1. The application is 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 S 805 OF 2003

BETWEEN: PHILIP DAMIAN BURKE

APPLICANT

AND: COMMISSIONER OF TAXATION

RESPONDENT

JUDGE: MANSFIELD J

DATE: 1 MARCH 2004

PLACE: ADELAIDE

REASONS FOR JUDGMENT 1 The applicant has been granted an extension of time in which to appeal from a decision of the Administrative Appeals Tribunal (the Tribunal) given on 24 September 2003. The Tribunal affirmed a decision of the Commissioner of Taxation to include in the assessable income of the applicant for the financial year ended 30 June 1999 a capital gain of $8733. 2 The capital gain arose in the following way. In 1961, the applicant took out a policy of life assurance with the Australian Mutual Provident Society (AMP). By reason of having taken out that policy, he also became a member of AMP. He thereby became entitled to membership rights in AMP, but only so long as the policy remained in force. The principal rights of members under the bylaws of AMP and under general company law were as follows: · to attend, speak at and demand a ballot at, general meetings; · to vote at general meetings; · to elect and remove directors; · to requisition general meetings; · potentially, to participate in a share of surplus assets of AMP if AMP were to be wound up; · and in the case of members who were participating policy holders, to be considered by the board for participation in annual or other periodic distributions of surplus.