Burton v Commissioner of Taxation [2018] FCA 1857

FEDERAL COURT OF AUSTRALIA

Burton v Commissioner of Taxation [2018] FCA 1857 File number: WAD 170 of 2017

Judge: MCKERRACHER J

Date of judgment: 27 November 2018

Catchwords: TAXATION – appeal from an objection decision of the Commissioner of Taxation – where the taxpayer made gains from investments in the United States – where tax was paid in the United States on the gains realised – where the gains were also taxable under Australian tax law as capital gains – where the Commissioner denied the taxpayer a foreign income tax offset against his tax liability in Australia on the gains to the extent of half of the United States tax paid – issue as to what constitutes double taxation – consideration of Australia's foreign income tax offset provisions in Div 770 of the Income Tax Assessment Act 1997 (Cth), particularly s 770-10(1) – construction of the terms 'included in' and 'in respect of' in s 770-10(1) – whether the Commissioner's construction is inconsistent with Art 22(2) of the Convention between the Government of Australia and the Government of the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income Held: an amount cannot be said to have been doubly taxed where it is not an amount included in assessable income Held: the construction of s 770-10(1) adopted by the Court is not inconsistent with Art 22(2) of the Convention and the 'general principles' it espouses

Legislation: Income Tax Assessment Act 1936 (Cth) ss 121EF, 121EG(3A), 160AB, 175A, Pt IVA Income Tax Assessment Act 1997 (Cth) ss 4-10, 4-15(1), 24-45, 25-45, 102-5, 102-5(1), 104-10, 110-25, 115-25, 115-100(a), 115-215, 116-20, 995-1(1), 770-1, 770-5, 770-5(1), 770-10, 770-10(1), 770-10(2), 770-15, 770-75, 770-75(2)(b)(i), Subdivs 115-A, 115-B, 770-B, Div 770, Pt 3-1 International Tax Agreements Act 1953 (Cth) ss 4(2), 5 Taxation Administration Act 1953 (Cth) ss 14ZU, 14ZZ Tax Laws Amendment (2007 Measures No. 4) Act 2007 (Cth)