Futuris Corporation Limited (ACN 004 336 636) v Commissioner of Taxation [2006] FCA 1096

FEDERAL COURT OF AUSTRALIA

Futuris Corporation Limited (ACN 004 336 636) v Commissioner of Taxation [2006] FCA 1096 TAXATION – transaction purported to attract Div 19A of Pt IIIA of Income Tax Assessment Act 1936 (Cth) – Commissioner determined Div 19A did not apply in part – notice of amended assessment issued to increase taxable income by $19 million – objection disallowed – objection decision appealed TAXATION – Pt IVA scheme involving same transaction – Commissioner determined that taxpayer had obtained a tax benefit – Commissioner made determination under s 177F of Act that included all of the amount of that tax benefit in the taxable income of the applicant – that amount added to taxable income of first amended assessment – notice of second amended assessment issued – taxpayer objection that second amended assessment double counted an amount of $19 million - objection disallowed – objection decision appealed TAXATION – Commissioner issued second amended assessment on the view that any overstated amount could be reduced pursuant to s 177F(3) of the Act – privative clause – challenge to decision under s 39B of Judiciary Act 1903 (Cth) – whether Commissioner's reliance on s 177F(3) resulted in an invalid decision – whether Commissioner failed to make bona fide attempt to exercise power of assessment – whether the second amended assessment failed to create a definitive liability by way of alleged double counting – whether Commissioner afforded protection under ss 175 and 177 of Act Held: Commissioner did not engage in double counting - in light of appeal proceedings in relation to both assessments Commissioner entitled to defer compensation adjustment – no evidence of bad faith –assessment created definitive liability

Income Tax Assessment Act 1936 (Cth) s 25(1), s 59(2), Pt IIIA, Div 19A, s 166, s 167, s 170(2)(b), s 174(1), Pt IVA, s 175, s 177(1), s 177B, s 177C(1), s 177F(3), (5), s 204(1) Judiciary Act 1903 (Cth) s 39B Taxation Administration Act 1953 (Cth) Pt IVC, Div 5