Mills v Commissioner of Taxation [2012] HCA 51

HIGH COURT OF AUSTRALIA

FRENCH CJ, HAYNE, KIEFEL, BELL AND GAGELER JJ

ANDREW VINCENT MILLS APPELLANT

AND

COMMISSIONER OF TAXATION RESPONDENT

Mills v Commissioner of Taxation [2012] HCA 51 14 November 2012 S225/2012

ORDER

1. Appeal allowed with costs.

2. Set aside the orders of the Full Court of the Federal Court of Australia made on 8 December 2011 and, in their place, order that:

(a) the appeal be allowed with costs; and

(b) the orders of Emmett J made on 11 March 2011 be set aside and, in their place, order that:

(i) the appeal be allowed with costs;

(ii) the objection decision dated 12 January 2010 be set aside; and

(iii) the objection dated 29 December 2009 against the determination of 14 December 2009 under s 177EA(5)(b) of the Income Tax Assessment Act 1936 (Cth) be allowed and the determination be set aside.

On appeal from the Federal Court of Australia

Representation

A H Slater QC with D F C Thomas and G S Antipas for the appellant (instructed by Herbert Smith Freehills)

N J Williams SC with J O Hmelnitsky for the respondent (instructed by Australian Government Solicitor)

Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Mills v Commissioner of Taxation

Taxation – Income tax – Equity interests – Imputation system – Schemes to reduce income tax – Power of Commissioner under Income Tax Assessment Act 1936 (Cth), s 177EA to make determination that no imputation benefit to arise – Whether "having regard to the relevant circumstances" scheme entered into or carried out for purpose of enabling taxpayer to obtain imputation benefit – Whether purpose an "incidental purpose" – Relevance of distribution being traceable to source not taxed in Australia – Relevance of scheme resulting in reduced cost of capital to whether scheme results in "change" in financial position.