Lenzo v Commissioner of Taxation [2007] FCA 1402

FEDERAL COURT OF AUSTRALIA

Lenzo v Commissioner of Taxation [2007] FCA 1402

INCOME TAX – deductions – outgoings incurred in plantation investment - scheme comprising prospectus, management and lease agreements, loan agreement, indemnity agreement and round-robin arrangement between manager and lender – whether tax benefit derived in connection with scheme – dominant purpose for entry into scheme – objective criteria – matters to be considered – investment structure – approach to consideration of relevant factors – alternative finance available to like effect as scheme finance – whether tax benefit unique to scheme – scheme not entered into for dominant purpose of tax benefit – commercial benefit of scheme – expert evidence as to financial returns and benefits on a pre-tax basis

Income Tax Assessment Act 1936 (Cth) s 177F(1), s 177A, s 177C, s 177D Taxation Administration Act 1953 (Cth)

Puzey v Commissioner of Taxation (2002) 51 ATR 616 cited Commissioner of Taxation v Sleight (2004) 136 FCR 211 cited Calder v Commissioner of Taxation (2005) 59 ATR 655 cited Commissioner of Taxation v Hart (2004) 217 CLR 216 cited

GINO LENZO v COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA WAD 95 OF 2005

FRENCH J

7 SEPTEMBER 2007

PERTH

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY WAD 95 OF 2005

BETWEEN: GINO LENZO

Applicant

AND: COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

Respondent

JUDGE: FRENCH J DATE OF ORDER: 7 SEPTEMBER 2007

WHERE MADE: PERTH

THE COURT ORDERS THAT:

1. The applicant's appeal against the decisions of the Commissioner disallowing his objections to the amended assessments issued on 7 September 2001 in respect of the years of income ended 30 June 1998, 30 June 1999 and 30 June 2000 is allowed. 2. Each of the respondent's decisions disallowing the applicant's objection for the years of income ended 1998, 1999 and 2000 are set aside. 3. It is declared that the applicant is entitled to the deductions disallowed in each of the relevant years of income. 4. The respondent is directed to further amend the amended assessments to give effect to these orders. 5. The respondent is to pay the applicant's costs of the proceedings. 6. Liberty to apply for such further or other orders as may be necessary to give effect to the preceding orders.