Advanced Holdings Pty Limited as trustee for The Demian Trust v Commissioner of Taxation [2020] FCA 1479

Federal Court of Australia

Advanced Holdings Pty Limited as trustee for The Demian Trust v Commissioner of Taxation [2020] FCA 1479 File numbers: NSD 803 of 2018; NSD 988 of 2018; NSD 848 of 2018; NSD 989 of 2018; NSD 849 of 2018; NSD 1009 of 2018; NSD 850 of 2018; NSD 1010 of 2018; NSD 851 of 2018; NSD 599 of 2019; NSD 985 of 2018; NSD 1172 of 2019; NSD 986 of 2018; NSD 1173 of 2019 NSD 987 of 2018;

Judgment of: DAVIES J

Date of judgment: 15 October 2020

Catchwords: TAXATION – appeals under pt IVC of the Taxation Administration Act 1953 (Cth) – whether beneficial interest in joint venture property created in joint venturers by joint venture agreement – no intention in joint venture agreement to create trust relationship – whether repayments under loan facility on revenue account – where loan facility replaced earlier loans used to acquire trading stock – whether original borrowings on revenue account – Avco Financial Services Ltd v Commissioner of Taxation (Cth) [1981] HCA 6; 150 CLR 510, Thiess Toyota Pty Ltd v Commissioner of Taxation [1978] 1 NSWLR 723 and Federal Commissioner of Taxation v Cadbury-Fry Pascall (Aust) Ltd (in vol liq) (1979) 10 ATR 55 distinguished – even if original borrowings were on revenue account subsequent refinancing was not in substitution but was undertaken to augment the capital of the taxpayer and related companies – borrowings and fees on borrowing facility not deductible expenses TRUSTS AND TRUSTEES – whether valid appointment of trustee company – interpretation of trust deed and trust documents – no valid appointment of purported trustee company – whether company held property on constructive trust or as trustee de son tort – no trust arose on facts of case – company held property in its own right TAXATION – circularity of present entitlements of beneficiaries under trust distribution – consideration of whether trustee liable to trustee beneficiary non-disclosure tax under s 102UK of Income Tax Assessment Act 1936 (ITAA 1936) (Cth) – whether trust falls within "family trust" exclusion in s 102UC – family trust election validly made – election satisfied test in s 272-80(4A) of sch F of ITAA 1936 to apply to earlier year – whether s 99A of ITAA 1936 applies in context of circular present entitlements – construction of s 99A – trustee liable to taxation on additional income under s 99A of the ITAA 1936 as a result of circular entitlements