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Test case litigation register

Attention This document has changed over time. View its history.

as at 13 September 2018

INFORMATION

The Test Case Litigation Register (the Register) contains information about:

  • Cases approved for test case funding and their impact and status.
  • Cases declined for test case funding and the reasons why.
  • A list of all test case funded matters and their outcomes.

The Register is published after each Panel meeting takes place where applications are considered for funding.

Test Case Panel meeting dates and closing application dates

  • 25 September 2018 meeting: closing date for applications is 4 September 2018
  • 27 November 2018 meeting: closing date for applications is 6 November 2018
  • 26 February 2019 meeting: closing date for applications is 5 February 2019
  • 7 May 2019 meeting: closing date for applications is 16 April 2019
  • 16 July 2019 meeting: closing date for applications is 25 June 2019

For queries related to the Test Case Litigation Register or the Test Case Litigation Program more generally please contact:

APPROVED MATTERS IN PROGRESS

ATO reference: 005/2017-18
VenueFederal Court of Australia
IssueWhether the amount incurred by the trustee of the Trust for the allocation to it of 18 gaming machine entitlements under Part 4A of the Gaming Regulations Act 2003 was capital or of a capital nature, and therefore not deductible, under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997).
Why does the issue involve uncertainty and/or contention?There is contention around whether the outgoing is on capital or on revenue account.
Impact on other taxpayers and mitigation strategiesThe case will directly impact the tax treatment of Gaming Machine Entitlements for all taxpayers operating in the Victorian gaming machine industry, but also may set a precedent for a broader section of the community where the use of licences are involved.
StatusThe matter was heard by the Full Federal Court on 11 May 2018.
ATO reference: 008/2018
VenueFederal Court
IssueWhether the taxpayer, the holder of a working holiday maker visa, is subject to tax that is other or more burdensome than the tax to which Australian nationals, in the same circumstances, are or may be subjected, in breach of Australia's non-discrimination clause in its tax treaty with the United Kingdom.
Why does the issue involve uncertainty and/or contention?This matter involves testing of new provisions (inserted by the Income Tax Rates Amendment (Working Holiday Maker Reform) Act 2016) in respect of contentions that they are inconsistent with Australia's tax treaty obligations.

The case has the potential to establish principles of law that go beyond the working holiday maker provisions, particularly in relation to the operation of the non-discrimination clauses in Australia's tax treaties.
Impact on other taxpayers and mitigation strategiesThe non-discrimination clause also exists in other jurisdictions' tax treaties and as such, the international community will be interested in the outcome of this case. A decision on this provision may have precedential value for other working holiday makers in the same circumstances.
StatusThe matter has been listed for hearing on 3 and 4 December 2018.
ATO reference: Commissioner of Taxation for the Commonwealth of Australia v. Tomaras Ors B 9/2018
VenueHigh Court of Australia
Issue
  1. The scope of the presumption that the Crown is not bound by a statute and in particular:
    1. Whether, as held by the Full Family Court in the context of construing section 90AE of the Family Law Act 1975 (FLA), the presumption that members, servants and agents of the executive government, and property held by it or on its behalf, are not bound by general words in a statute 'applies only to provisions which impose an obligation or restraint on the Crown';
    or alternatively,
    1. As contended by the Commissioner the presumption is engaged in all circumstances where a statute regulates the conduct or rights of persons, or regulates the use of property, and those regulated persons or property could include the executive property owned by or on its behalf.
Assuming there was a presumption that the Crown was not bound by section 90AE of the FLA, whether that presumption was rebutted.
Why does the issue involve uncertainty and/or contention?The case concerns the proper scope of operation of section 90AE of the FLA and whether the section empowers the court to make orders as part of a property settlement requiring the Commissioner to substitute for one person who has a tax liability owed to the Commonwealth another person.

This matter raises fundamental questions concerning the proper construction of section 90AE of the FLA against the background of the tax statutes constituting a code the scheme of which confines the liability to pay income tax to persons who are assessed under the tax law who then in turn are person upon whom the tax laws confers the rights of objection, review and appeal.

The Commissioner will contend that the operation of the tax acts would be rendered highly problematic if a substitution order under section 90AE of the FLA could be made against the Commissioner or the Commonwealth in respect of tax-related liabilities.
Impact on other taxpayers and mitigation strategiesThis case is of fundamental public importance as it affects the imposition and recovery of taxation and the exercise by a taxpayer of objection, review and appeal rights.

The uncertainty regarding the proper scope of operation of section 90AE of the FLA is a longstanding issue that has been arisen in a number of past family law matters but the present matter is the first time the issue has received appellate consideration.

Whilst this case concerns the rights of the Commissioner as they relate to the taxation liabilities of parties to a marriage, the determination of this case may also have bearing on the extent to which section 90AE of the FLA can impact on other debts owed to the Commonwealth e.g. in a social security context.
StatusThe matter was heard by the High Court of Australia on 10 August 2018
ATO reference: 004/2017-18
VenueFederal Court of Australia
IssueWhether the taxpayers are liable to make payments to jockeys pursuant to paragraph 12(8)(a) of the Superannuation Guarantee (Administration) Act 1992 (Cth) (SGAA) and as such, are considered to be the employers of those jockeys for superannuation guarantee purposes.
Why does the issue involve uncertainty and/or contention?It is not clear from the remuneration practices in place in the industry as to who is the employer of the persons covered by paragraph 12(8)(a) of the SGAA.
Impact on other taxpayers and mitigation strategiesIt is anticipated that this issue is limited to the particular industry.
StatusProceedings have been adjourned to 29 October 2018.
ATO reference: Comptroller-General of Customs v Zappia, section S 91/2018
VenueHigh Court of Australia
IssueWhether an employee of a licensed warehouse is capable of having, or being entrusted with, the possession, custody or control of dutiable goods under section 35A of the Customs Act 1901 (Cth) (Customs Act).
Why does the issue involve uncertainty and/or contention?The Full Court of the Federal Court of Australia determined that a whole class of persons, being employees, are excluded from the ambit of section 35A of the Customs Act. The interpretation is inconsistent with the manner in which section 35A of the Customs Act has previously been administered.
Impact on other taxpayers and mitigation strategiesThe decision could give rise to a number of adverse administrative consequences, including:
  • there may be a number of demands which have issued that might arguably be invalid;
  • it may be difficult to argue that section 35A of the Customs Act can ever be construed as applying to an employee;
  • the decision may have implications for directors who are officers of a corporation; and
  • a narrowing of the class of persons which demands can be issued to may impact the ability to protect revenue. Specifically, it limits the Commissioner's ability to mitigate the risks associated with phoenix practices.
Also, section 60 of the Excise Act 1901 (Cth) is an equivalent provision to section 35A of the Customs Act, so the same consequences may arise in Excise cases.
StatusThe matter was heard by the High Court of Australia on 10 August 2018
ATO reference: 002/2017-18
VenueAdministrative Appeals Tribunal
IssueThe dispute concerns:
  1. Whether a invalidity pension that commenced being paid prior to 20 September 2007, under the rules of a Commonwealth Government military superannuation scheme, is:
    1. a superannuation income stream as defined in section 307-70 of the Income Tax Assessment Act 1997 (ITAA 1997) and sub-regulation 995-1.01(1) of the Income Tax Assessment Regulations 1997 (ITAR 1997) such that the pension payments are superannuation income stream benefits, or
    2. not a superannuation income stream meaning that the payments are superannuation lump sums as defined in section 307-65 of the ITAA 1997.
  2. Whether a invalidity pension that commenced being paid after 19 September 2007, under the rules of a Commonwealth Government military superannuation scheme, is:
    1. a superannuation income stream as defined in section 307-70 of the ITAA 1997 and subregulation 995-1.01(1) of the ITAR 1997 such that the pension payments are superannuation income stream benefits; or
    2. not a superannuation income stream meaning that the payments are superannuation lump sums as defined in section 307-65 of the ITAA 1997.
Why does the issue involve uncertainty and/or contention?There is little in the way of existing case law on whether or not military superannuation invalidity payments are superannuation income streams or superannuation lump sums under the ITAA 1997 and ITAR 1997 following amendments that were made with effect from 1 July 2007.
Impact on other taxpayers and mitigation strategiesA Tribunal decision on these issues will provide guidance to other ex-ADF members in similar situations as to how their invalidity pensions payable from a Commonwealth military superannuation scheme should be properly taxed. There have been a number of requests for Private Rulings on this issue. In the event the invalidity pensions are not found to be superannuation income streams the pension payments will be taxable as superannuation lump sums.
StatusIssues 1 and 2 involve different taxpayers.

he matters are set for hearing between 12 and 14 December 2018, respectively.
ATO reference: 003/2017-18
VenueFederal Court of Australia
IssueWhether, in each of the 2010-11 and 2011-12 income years, the taxpayer is only entitled under subsection 770-10(1) of the ITAA 1997 to claim, as a Foreign Income Tax Offset (FITO), the amount of foreign income tax paid in respect of an amount that was included in their assessable income.
Why does the issue involve uncertainty and/or contention?The ATO view on the application of FITO provisions is set out in ATO ID 2010/175 Foreign income tax offset: entitlement where foreign capital gain is only partly assessable in Australia. The outcome of the litigation is expected to provide case law authority on the operation of the FITO provisions. In particular that FITO is limited to the amount of foreign income tax paid 'in respect of an amount that is all or part of an amount' which is included in a taxpayer's assessable income (the Commissioner's 'apportionment approach').

There are no existing precedents and this area of law is unclear and has not been tested.
Impact on other taxpayers and mitigation strategiesThe number of taxpayers affected by the decision is limited to the number of taxpayer's claiming FITO.
StatusThe matter was heard on 2 May 2018.
ATO reference: 001/2015
VenuePre-litigation
IssueWhether the anti-avoidance rules contained in Part IVA of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936) applies to the alienation of income from the provision of personal services. Specifically, whether and to what extent Part IVA of the ITAA 1936 places limits on the ability of the taxpayer in providing professional services through an interposed entity to distribute income from those services to other entities.
Why does the issue involve uncertainty and/or contention?The Commissioner's views on the incorporation of medical practices are contained in various Rulings, which set out factors to be considered in determining whether a taxpayer derives income from personal services. These include the nature of the taxpayer's activities, the extent to which the income depends on the taxpayer's skill and judgement, the extent of income producing assets used to derive the income and the number of employees and others engaged.

The uncertainty in relation to the arrangement in this case includes what may be regarded as 'arm's length remuneration' for the personal services conducted by the taxpayer on behalf of the interposed entity, and whether the income of the interposed entity can be said to be derived from a business structure
Impact on other taxpayers and mitigation strategiesThe matter concerns the application of Part IVA of the ITAA 1936 to arrangements where the services of an individual are provided through an entity rather than directly by the individual. As it is increasingly common for professional medical practices to be carried on through company or trust structures, it has potential significance for the wider medical industry, in particular smaller practices using a simple company/trust structure.
StatusThe matter is progressing through pre-litigation.

DECLINED MATTERS

ATO reference: 020/2017-18
Panel Meeting Date17 July 2018
Issue
  1. Whether the development and sale of a duplex is in the ordinary course of a business and hence potentially trading stock - section 70-10 of the Income Tax Assessment Act 1997 (Cth) ("ITAA 1997").
  2. Whether the intention of the builder influences the outcome (this was not raised during the objection process).
  3. Whether the activities conducted were done in the form of an adventure or concern in the nature of trade and hence an enterprise - section 9-20 of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) ("GST Act").
  4. Whether the intention of the taxpayer and the circumstances that result in a change in intention to a profit making undertaking prevents the utilisation of the capital gains tax provisions.
  5. What form does a call on a guarantor to make a payment pursuant to a guarantee need to take for the guarantor to be able to claim a capital loss?
  6. Whether a document provided to the auditor but not lodged by the taxpayer should result in the application of the penalty provisions under subsection 284-75(3) of the Taxation Administration Act 1953 (Cth) ("TAA 1953"), and whether the auditor represents the Commissioner.
Panel reasonsThe Panel considered the basis of the Applicant's proposed appeal and were of the view that this matter would turn on the facts and could be resolved by way of ordinary dispute mechanisms. Furthermore, the Panel concluded that there was no question of law in the application and therefore there would be no potential for a precedential decision.
ATO reference: 019/2017-18
Panel Meeting Date17 July 2018
IssueWhether cryptocurrencies (such as Bitcoin, Bitcoin Cash, Ethereum and Storj Coins) are "foreign currency" for the purposes of section 995-1 of the ITAA 1997.
Panel reasonsThe Panel observed the issues as raised in the application did not appear to raise any points of significant public interest. These factors made the application inappropriate for funding on the basis that the proposed court proceedings appeared to be an attempt to seek judicial advice and would be unlikely to result in useful precedent in the absence of a substantive dispute.

Some consideration was given as to whether the Panel might consider a similar application in future where appropriate facts were present. The Panel concluded that judicial guidance testing the Commissioner's published view on the definition of cryptocurrency would be useful .
ATO reference: 018/2017-18
Panel Meeting Date17 July 2018
IssueWhether section 83 of the NSW Trustee and Guardianship Act 2009 (NSW) allows a taxpayer to treat a share portfolio received by him under a deceased estate as a dwelling for taxation purposes within the ITAA 1997.
Panel reasonsThe Panel observed that the application of the law to the facts is clear in that the capital gain was made on the sale of shares and not the sale of the dwelling. The Panel also noted that the approach of the taxpayer in treating the proceeds of sale as representing the dwelling itself for income tax purposes was a misinterpretation of the NSW Trustee and Guardianship Act and may result in a benefit not intended by the law.
ATO reference: 016/2017-18
Panel Meeting Date17 July 2018
Issue
  1. Whether the assessment for the year ended 30 June 2016 is excessive; and
  2. For that purpose, whether the Outgoings, in whole or in part:
    1. were incurred in gaining or producing the Interest Income for the purposes of section 8-1(1)(a) of the Income Tax Assessment Act 1997 (Cth) (the ITAA 1997);
    2. were necessarily incurred in carrying on a business for the purpose of gaining or producing the applicant's assessable income for the purposes of section 8-1(1)(b);
    3. were losses or outgoings of capital, or of a capital nature for the purposes of section 8-1(2)(a).
Panel reasonsThe Panel was of the view that there was little scope for judicial clarification noting that the law in relation to section 8-1 of the ITAA 1997 is clear and this matter would involve the application of settled principles to fact. For this reason, the Panel considered that there was insufficient public interest in further law clarification to warrant funding.
ATO reference: 015/2017-18
Panel Meeting Date17 July 2018
Issue
  1. Whether the capital gain made by the Applicant in the year ended 30 June 2014 in relation to its proportionate share in a partnership's land asset can be disregarded under subsection 23AH(3) of the Income Tax Assessment Act 1936 (ITAA 1936); and
  2. Whether gross partnership distributions the Applicant for the years ended 30 June 2005 to 2014 are non-assessable non-exempt (NANE) income under subsection 23AH(2) of the ITAA 1936.
Panel reasonsThe Panel considered that the issues were narrowly confined and the taxpayer's circumstances were factually unique. The Panel ultimately considered that litigating the issues would not result in law clarification to a substantial section of the public and lacked significant commercial implications.
ATO reference: 013/2017-18
Panel Meeting Date8 May 2018
Issue
  1. Whether the shares held by the applicant prior to 29 December 2015 were trading stock when he ceased to be an Australian resident.
  2. Whether the applicant is entitled to a net deduction for the value of the shares which he held immediately before he became a non-resident of Australia for tax purposes.
Panel reasonsThe Panel noted that the Commissioner gives a purposive interpretation of section 70-110 of ITAA 1997, whereas the applicant favours a literal construction. The Panel considered that the applicant may achieve a benefit not intended by the law as a result of the literal approach.

Further, the Panel noted that the policy of the Program is generally not to fund applications in the Administrative Appeals Tribunal (AAT) as a decision of the AAT does not provide a precedent and achieve the level of law clarification the program has been established to maintain.
ATO reference: 012/2017-18
Panel Meeting Date13 April 2018
Issue
  1. Whether the applicant trust is entitled to a deduction for a foreign exchange loss under former Division 3B of the ITAA 1936 for the 2013 income year.
  2. Whether the applicant trust had incurred a capital loss in the 2013 income year.
Panel reasonsThe Panel observed that this matter turns on its facts, that any question of law that does exist relates primarily to provisions that have already been repealed, and, consequently, that the matter is unlikely to establish any clarification or precedent.
ATO reference: 010/2017-18
Panel Meeting Date6 March 2018
IssueWhether any supply made by the taxpayer, involving the receipt of consideration from an insurance company, is deemed to have occurred for no consideration as a consequence of the application of the rules in Division 78 of A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST Act).
Panel reasonsThe Panel observed that the law relating to this matter is clear and free from ambiguity and the legal issue is not one that is uncertain or requiring judicial clarification.

The Panel also noted that there is no apparent impact on industry and the outcome the Applicant is pursuing is not an outcome intended by the law. The Panel also considered the contentions put forward could result in a benefit not intended by the law.
ATO reference: 011/2017-18
Panel Meeting Date6 March 2018
Issue
  1. Whether the Commissioner is bound by the recital of facts found in an objection decision in proceedings under Part IVC of the Taxation Administration Act 1953 (TAA).
  2. Whether the taxpayer discharged her statutory burden of proving that the assessment was excessive as required by section 14ZZO of the TAA.
Panel reasonsThe Panel considered that the issues have a narrow application to the broader public and agreed that these are well settled areas of law.

The Panel also consider that the contentions put forward by the Applicant could result in a benefit not intended by the law.
ATO reference: 009/2017-18
Panel Meeting Date4 October 2017
Issue
  1. Where the Commissioner identifies in a private ruling application that there are relevant facts relating to future events which have not been included in the scheme identified in the private ruling application, are the missing facts information that the Commissioner is obliged to request from the taxpayer?
  2. Are the missing facts assumptions about future events upon which the Commissioner could exercise his discretion to decline to issue a private ruling?
Panel reasonsThe Panel observed that the narrowness of the scenario in this case and the uncertainty of whether it involves a potential Part IVA of the ITAA 1936 issue meant there was less likelihood that it would be of great value and application, and so not sufficient to warrant funding.
ATO reference: 006/2017-18
Panel Meeting Date22 September 2017
Issue
  1. Whether under the Renewable Remote Power Generation Program (RRPGP), a RRPGP grant to the Applicant is an assessable recoupment under:
    1. subsection 20-20(2) of the ITAA 1997; or
    2. subsection 20-20(3) of the ITAA 1997.
Panel reasonsThe Panel observed that the uncertainty about how the law operates in relation to the provisions was addressed in the hearing before the Federal Court at first hearing.

The panel did not consider that there were any remaining issues of uncertainty, nor did the Applicant's grounds of appeal raise any new arguments or issues which would cast uncertainty on the operation of the law to the facts.

FINALISED APPROVED MATTERS

ATO reference: 007/2017-18
VenueFull Federal Court
IssueWhether the Liquidator is prevented or excused from complying with a coercive notice issued under section 353-10 of Schedule 1 to the TAA by reason of the Harman Obligation as described in Hearne v Street [2008] HCA 36.
Decision or outcomeIn a unamimous decision, the Full Federal Court held that the Harman obligation does not prevent or excuse a person owing the Obligation from complying with a valid notice issued under paragraph 353-10 (1)(c) of Schedule 1 to the TAA. Nor does it prevent the Commissioner in receipt of such documents under a section 353-10 of Schedule 1 to the TAA notice, from using those documents in the lawful exercise of his powers and functions vested in the Commissioner.
Why did the issue involved uncertainty and/or contention?The issue was one of statutory construction of section 353-10, purpose and whether the implied undertaking in Harman was engaged. At the time, there was no decision that section 353-10 was constrained by the Harman Obligation as articulated in Harman v Secretary of State for Home Department [1983] 1 AC 280.

There are investigations where the Commissioner, particularly at audit, is aware that the Court, or the parties to litigation, may hold information that may be relevant to an audit, litigation or collection and recovery action in respect of a taxpayer or their associates.

Given the uncertainty of the law and the possible sanction of contempt, the Commissioner takes a conservative approach to information-gathering when it comes to documents that may be subject to the Harman Obligation.

In some cases, the Commissioner will approach the Court for leave to be released from the implied undertaking but in the majority of cases, the Commissioner proceeds to make an assessment on the basis of information in his possession, even though the Court, or parties to the litigation, may have access to better or fuller information.
StatusThe was handed down on 20 March 2018.
Name: Tomaras & Tomaras and Anor and Commissioner of Taxation [2017] FamCAFC 216
VenueFull Court of the Family Court of Australia
IssueWhether section 90AE of the FLA enables the Family Court of Australia and the Federal Circuit Court to make an order substituting one party to a marriage for the other party in relation to a taxation debt.
Decision or outcomeThe question was posed in a case stated to the Full Family Court.

The Full Court decided the question in the affirmative.

In particular, the Full Court found that there is no place for the presumption that statutory provisions in general terms do not bind the Crown if the provision properly construed confers a benefit on the Crown.
Why did the issue involve uncertainty and/or contention?This case concerned the proper scope of operation of section 90AE and specifically whether the section empowers the court to make orders as part of a property settlement requiring the Commissioner to substitute for one person who has a tax liability owed to the Commonwealth another person.
StatusThe decision was handed down on 13 October 2017.

The Commissioner has appealed the decision to the High Court. Information about the High Court proceedings can be located above under the heading "Approved Matters in Progress".
Name: Commissioner of Taxation v Primary Health Care NSD613/2017
VenueFederal Court of Australia
Issue
  1. Whether the Tribunal erred in law in the exercise of its discretion in subsection 14ZX(1) of the TAA to treat an objection lodged after the period in which the objection is required to be lodged has passed as if it had been lodged within that period, by failing to consider the inability of the Applicant to consider whether to amend the assessments of other taxpayers in the event that the objection is allowed as a species of prejudice to the Applicant which the Tribunal is required to take into account.
  2. Whether the Tribunal erred in law in the exercise of its discretion under subsection 14ZX(1) of the TAA because, on the facts as found, it was not reasonably open to the Tribunal to regard the Respondent's explanation for the delay in lodging objections to the assessments for the relevant income years as a factor which weighed in favour of the exercise of the discretion in subsection 14ZX(1) of the TAA.
Decision or outcomeThe Commissioner's appeal was dismissed.

The Court held that the Tribunal did not conclude that the prejudice was irrelevant, the Tribunal considered the prejudice that may be suffered and concluded that it should be given no real weight, what occurred was 'an explicit consideration of the Commissioner's prejudice argument'.

The Commissioner had contended that a mere change in professional advice could not be a factor that pointed towards a favourable exercise of the discretion, however, the court found that what occurred was not a mere change, and the change had in fact been prompted by the Commissioner's own actions and change of view.
Why did the issue involve uncertainty and/or contention?This case concerned the Commissioner's decision not to exercise his discretion to treat an objection as if it had been lodged within the required timeframe and more specifically his reasons for making this decision.

In particular, this case considered several fundamental factors that the Commissioner takes into consideration when determining whether an extension of time for lodging an objection should be granted, specifically the:
  1. prejudice that would be experienced by the Commissioner if an extension of time was granted; and
  2. reasons for the extent of delay in lodging the objection and the circumstances surrounding the delay.
The Full Court rejected the Commissioner's application of these factors to the facts in this case and upheld the Tribunal's decision.

The facts of this case are unique to the taxpayer.

A decision impact statement will be issued by the ATO in due course.
StatusThe decision was handed down on 24 August 2017.
Name: Commissioner of Taxation v Kamal Jayasinghe [2017] HCA 26
VenueHigh Court of Australia
IssueWhether foreign source income payments received by the taxpayer were derived while the taxpayer was engaged by the United Nations Office of Project Services (UNOPS) are exempt from income tax pursuant to regulations made under the International Organisations (Privileges and Immunities) Act 1963 (Cth) (IOPI Act).

Specifically, whether the foreign source income payments are exempt from taxation as being salaries and emoluments received by the taxpayer as a person who 'holds an office' in an international organisation pursuant to paragraph 6(1)(d) of the IOPI Act.
Decision or outcomeThe Commissioner's appeal was allowed in full.

The High Court held that the taxpayer was not entitled to exemption from taxation in the income years in question, as he was not a person who held an office in an international organisation within the meaning of subparagraph 6(1)(d)(i) of the IOPI Act, and that the Commissioner was not bound to exempt the taxpayer from taxation by reason of subsection 357-60(1) of Schedule 1 to the TAA and Taxation Determination TD 92/153 Income tax: who is a 'person who holds an office' as specified in various regulations made under the International Organisations (Privileges and Immunities) Act 1963?
Why did the issue involve uncertainty and/or contention?The matter clarifies the interpretation and construction of the meaning of 'holds an office' in relation to the international law framework underpinning the IOPI Act. The matter resolves uncertainty around the concept of an office holder and if an office holder can include all persons participating in the work of the UN.

The decision confirms the Commissioner's view and application of TD 92/153 to 'a person who holds an office' in finding the taxpayer to be an employee of the UN and not an expert or consultant and further, whether the Determination applies for the purpose of paragraph 357-60(1)(a) of Schedule 1 to the TAA.
StatusThe decision was handed down on 9 August 2017.

The Australian Taxation Office (ATO) is consulting with the Department of Foreign Affairs and Trade in relation to this decision.

A Decision Impact Statement was issued on 28 November 2017.
Name: Denmark Community Windfarm Ltd v Commissioner of Taxation [2017] FCA 478
VenueFederal Court of Australia
IssueWhether the Renewable Remote Power Generation Program (RRPGP) grant to the taxpayer is an assessable recoupment under:
  1. subsection 20-20(2) of the ITAA 1997; and/or
  2. subsection 20-20(3) of the ITAA 1997.
Decision or outcomeThe Taxpayer's appeal was dismissed.

The Federal Court found the grant had been received as recoupment of an outgoing and therefore is treated as an assessable recoupment under both subsections 20-20(2) and 20-20(3) of the ITAA 1997, even if the payment was treated as being on capital account.
Why did the issue involve uncertainty and/or contention?There were 3 points of contention in this matter:
  1. Whether the grant received by the Taxpayer is received by way of indemnity pursuant to subsection 20-20(2) of the ITAA 1997;
  2. Given that Subdivision 328-D of the ITAA 1997 is not included in the table in section 20-30, whether the words 'can deduct' in subsection 20-20(3) of the ITAA 1997 apply to include an amount as an assessable recoupment when the relevant deduction for decline in value has been claimed under Subdivision 328-D of the ITAA 1997, but would have been able to be deducted under Division 40; and
  3. Whether the words 'the loss or outgoing' in both subsections 20-20(2) and 20-20(3) of the ITAA 1997 mean that these subsections are ineffective in their application to assessable recoupments when the corresponding deductions are claimed for decline in value because the deduction claimed in these instances is not 'the loss or outgoing' but rather an amount calculated by the application of a formula in the legislation.
StatusA decision was handed down on 10 May 2017.

The taxpayer subsequently appealed the decision to the Full Court of the Federal Court . On 5 February 2018 the Full Court dismissed the appeal and affirmed the initial judgment.

If you think that you have an issue which may be an issue that the ATO seeks to test, please contact the Test Case Litigation Program at testcaselitigationprogram@ato.gov.au.

DISCLAIMER: There is no guarantee that a case will produce the law clarification sought and that the litigation underway may have consequences for other taxpayers.

Last updated: 13 September 2018


Test case litigation register history   Top  
   Date   Version 
    1 April 2013   Original document   
    1 July 2013   Updated document   
    8 October 2013   Updated document   
   20 December 2013   Updated document   
   25 March 2014   Updated document   
    1 July 2014   Updated document   
   26 September 2014   Updated document   
   15 December 2014   Updated document   
   30 March 2015   Updated document   
   26 June 2015   Updated document   
   14 September 2015   Updated document   
   26 November 2015   Updated document   
   21 January 2016   Updated document   
   18 May 2016   Updated document   
   11 July 2016   Updated document   
   29 August 2016   Updated document   
   21 November 2016   Updated document   
    6 December 2016   Updated document   
   16 March 2017   Updated document   
   12 May 2017   Updated document   
   18 August 2017   Updated document   
    6 December 2017   Updated document   
   19 March 2018   Updated document   
   27 March 2018   Updated document   
   17 May 2018   Updated document   
   30 August 2018   Updated document   
 You are here ®  14 September 2018   Current document   


 


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