Fitzroy Services Pty Ltd v Commissioner of Taxation [2013] FCA 471

FEDERAL COURT OF AUSTRALIA

Fitzroy Services Pty Ltd v Commissioner of Taxation [2013] FCA 471 Citation: Fitzroy Services Pty Ltd v Commissioner of Taxation [2013] FCA 471

Parties: FITZROY SERVICES PTY LTD v COMMISSIONER OF TAXATION

File number: NSD 172 of 2012

Judge: EDMONDS J

Date of judgment: 20 May 2013

Catchwords: INCOME TAX – deductions claimed for management fees paid to associated companies and interest and charges paid to foreign bank – whether loans from foreign bank a sham – whether novation of original debt and assumption of new liability – no evidence of services provided for management fees – whether interest and charges incurred deductible under s 8-1 or s 25-25 of Income Tax Assessment Act 1997 (Cth) – power to issue amended assessment – whether fraud or evasion – shortfall penalties – whether base penalty amount should be calculated by reference to intentional disregard of taxation laws or recklessness

Legislation: Income Tax Assessment Act 1997 (Cth) ss 8-1, 25-25, 40-880 Income Tax Assessment Act 1936 (Cth) ss 170, 222A–226ZB, 227, 204 Taxation Administration Act 1953 (Cth) ss 8AAG, 14ZZK; Sch 1: Div 284, ss 298-20, 280-100, 280-160

Cases cited: Deputy Commissioner of Taxation v Hua Wang Bank Berhad [2010] FCA 1014 cited Richard Walter Pty Ltd v Commissioner of Taxation (1996) 67 FCR 243 approved Sharment Pty Ltd & Ors v Official Trustee in Bankruptcy (1988) 18 FCR 449 cited Raftland Pty Ltd v Commissioner of Taxation (2008) 238 CLR 516 considered Re Securitibank Ltd (No 2) [1978] 2 NZLR 136 approved Price v Parsons (1936) 54 CLR 332 cited Boydell v James (1936) 36 SR (NSW) 620 cited Olsson v Dyson (1969) 120 CLR 365 Federal Commissioner of Taxation v Total Holdings (Aust) Pty Ltd (1979) 43 FLR 217 discussed Federal Commissioner of Taxation v E A Marr and Sons (Sales) Limited (1984) 2 FCR 326 discussed Associated Minerals Consolidated Ltd v Federal Commissioner of Taxation (1994) 53 FCR 115 cited R v Meares 1997) 37 ATR 321 approved Gashi v Commissioner of Taxation [2012] FCA 638 approved House v R (1936) 55 CLR 499 cited