Bluebottle UK Ltd & Ors v Deputy Commissioner of Taxation & Anor [2006] NSWSC 706

58 ACSR 536 Reported Decision : 201 FLR 375 63 ATR 464

New South Wales Supreme Court

CITATION : Bluebottle UK Ltd & Ors v Deputy Commissioner of Taxation & Anor [2006] NSWSC 706

HEARING DATE(S) : 19/06/06

JUDGMENT DATE : 14 July 2006

JUDGMENT OF : Gzell J

DECISION : Equtiable assignee and company entitled to declarations that equitable assignments were effective, that the dividends are payable under the irrevocable direction and that the Commissioner's notice under the Income Tax Assessment Act 1936 (Cth), s 255 had no force or effect.

CATCHWORDS : TAXES AND DUTIES - Income Tax - Directors' resolution that dividend be paid on specified date - Whether a declaration and debt arose on resolution under the Corporations Act 2001(Cth), s 254V(2) or a determination and debt arose on payment under s 254V(1) - Notice served on company by Commissioner of Taxation under the Income Tax Assessment Act 1936 (Cth), s 255 requiring retention of money coming to it on behalf of specified non-resident shareholders - Subsequent equitable assignments by the shareholders to another non-resident not within the scope of s 255 who gives an irrevocable direction to the company to pay the dividends to another - Non-resident shareholders give notice to company of the assignments - Whether legal assignments under the Property Law Act 1974 (Qld), s 199(1) - Whether effect of equitable assignments is that when debt for dividends arise, there is a moment when legal title to the dividend vests in the non-resident shareholders such that s 255(1) operates or whether the equitable title arises eo instanti with no scintilla temporis in the assignee and s 255(1) has no operation - Whether the assignors or assignee can sue for the dividends - Whether the assignor is a necessary party to a suit for the dividends - Whether the company was liable to pay money to the non-resident shareholders thereby enlivening s 255(2) - Whether s 255(1)(b) limits the requirement to retain to moneys coming to the company on behalf of the non-resident shareholders and does not apply to a dividend paid from the company's own money - Under historical analysis, s 255 was aimed at payments of royalties to non-residents