Lawrence v Commissioner of Taxation [2008] FCA 1497

FEDERAL COURT OF AUSTRALIA

Lawrence v Commissioner of Taxation [2008] FCA 1497

INCOME TAX – Series of transactions involving diminutions (on revenue account) in value of shares held by companies in which taxpayer the only shareholder and corresponding increases (on capital account) in value of shares held by another company on trust for discretionary beneficiaries confined to taxpayer and his family – Whether constituted "schemes" – Whether schemes were by way of or in the nature of dividend stripping – Whether schemes had substantially the effect of schemes by way of or in the nature of dividend stripping – Whether schemes had tax avoidance as dominant purpose – Whether schemes involved distribution of profits – Whether s 177E of Income Tax Assessment Act 1936 (Cth) had operation in context of transactions by which taxpayer expressly entitled to reduce assessable income under other provisions.

PENALTIES – Whether "scheme benefit" obtained from schemes – Whether schemes entered into with dominant purpose of getting a scheme benefit – Calculation of "base penalty amount" – Whether reasonably arguable that adjustment provision does not apply – Whether base penalty amount should be reduced upon voluntary disclosure of scheme details.

Income Tax Assessment Act 1936 (Cth) ss 44, 109D, 109E, 109N, 177A, 177E, 177F Taxation Administration Act 1953 (Cth) s 14ZZ; Schedule 1: ss 284-15, 284-145(1), 284-160, 284-225

Commissioner of Taxation v Black (1990) 25 FCR 274 Commissioner of Taxation v Consolidated Press Holdings Limited (No 1) (1999) 91 FCR 524 Commissioner of Taxation v Consolidated Press Holdings Ltd (2001) 207 CLR 235 Commissioner of Taxation (Cth) v Patcorp Investments Limited (1976) 140 CLR 247 CPH Property Pty Ltd v Commissioner of Taxation (1998) 88 FCR 21 Federal Commissioner of Taxation v Starr (2007) 164 FCR 436 Walstern Pty Ltd v Commissioner of Taxation (2003) 138 FCR 1