Tolich v Commissioner of Taxation [2007] FCA 1195

FEDERAL COURT OF AUSTRALIA

Tolich v Commissioner of Taxation [2007] FCA 1195 TAXATION – avoidance of tax – tax benefit under Income Tax Assessment Act 1936 (Cth) – where applicants entered into a schemes as defined in s 177A(1) of the Act – where schemes incurred substantial losses and outgoings which were claimed as deductions – whether losses and outgoings fall within s 51(1) of the Act – where schemes operated in part in overseas territories – whether losses and outgoings with respect to overseas territories within s 79D of the Act – whether Part IVA of the Act applies to claimed deductions with respect to losses and outgoings insofar as they relate to overseas territories – whether Part IVA of the Act applies generally to deductions claimed in respect of losses and outgoings of schemes – whether participants obtained tax benefits from schemes – where participants in schemes made some actual cash outlays – whether actual cash outlays claimed as deductions should not be disallowed in any event – whether schemes entered into for dominant purpose of obtaining tax benefit – approach to s 177D(b). PRACTICE AND PROCEDURE – where six proceedings before Court – where proceedings arise from same factual matrix – where substantial common issues between proceedings – whether appropriate to hear matters together. Held: appropriate for matters to be heard together – deductions for losses and outgoings with respect to overseas territories not reduced by s 79D of the Act – Part IVA applicable to schemes – participants obtained tax benefits – to the extent that participants in schemes made actual cash outlays deductions should not be disallowed – schemes entered into and carried out for dominant purpose of obtaining tax benefit. Bills of Exchange Act 1909 (Cth) s 21 Export Market Development Grants Act 1974 (Cth) Income Tax Assessment Act 1936 (Cth) ss 51, 79D, 177D, 177F Taxation Administration Act 1953 (Cth) s 14ZZ Australian Trade Commission v Disktravel [1999] FCA 48 considered Australian Trade Commission v Disktravel (1999) 91 FCR 374 considered Calder v Commissioner of Taxation (2005) 226 ALR 643 cited Commissioner of Taxation v Consolidated Press Holdings Ltd (2001) 207 CLR 235 cited Commissioner of Taxation v Cooke (2004) 55 ATR 183 cited Commissioner of Taxation v Hart (2004) 217 CLR 216 cited Commissioner of Taxation v Sleight (2004) 136 FCR 211 considered Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 cited Esquire Nominees Ltd v Federal Commissioner of Taxation (1973) 129 CLR 177 considered Federal Commissioner of Taxation v French (1957) 98 CLR 398 considered Federal Commissioner of Taxation v Mitchum (1965) 113 CLR 401 cited Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404 cited Federal Commissioner of Taxation v United Aircraft Corporation (1943) 68 CLR 525 considered Nathan v Federal Commissioner of Taxation (1918) 25 CLR 183 considered Peabody v Commissioner of Taxation (1993) 40 FCR 531 cited Travel Vision International Pty Ltd and Australian Trade Commission AAT No 12540 [1988] AATA 11 considered MATE TOLICH v COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA WAD 47 OF 2005 DOMENIC PRINCI v COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA WAD 48 OF 2005 KEVIN DORN v COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA WAD 49 OF 2005 VINCENT PRINCI v COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA WAD 50 of 2005 ALLEN PRINCE v COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA WAD 57 of 2005 KEVIN SLEIGHT v THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA WAD 59 of 2005