Anglo American Investments Pty Ltd (Trustee) v Commissioner of Taxation [2022] FCA 971

TAXATION – appeal from taxation objection decision under Pt IVC of the Taxation Administration Act 1953 (Cth) (TAA) – ss 8-1 and 25-35 Income Tax Assessment Act 1999 (Cth) (IAA) – where Commissioner issued amended assessments of income tax and penalty assessments in relation to claims for the write off of purportedly “bad” debts, “management fees” and “interest” said to be incurred in respect of purported “loans” – where burden falls on taxpayer to establish that the Commissioner’s assessments were excessive – where the taxpayer failed to establish on the balance of probabilities the alleged debts existed during the relevant income year or that the debts were in fact “bad” – where taxpayer failed to establish on the balance of probabilities that the alleged “management fees” were actually rendered or incurred in the income years claimed – where taxpayer failed to establish on the balance of probabilities that purported loans were actually made, the proceeds of the loans were used in producing assessable income or that the interest claimed was in relation to the alleged loans – application dismissed

TAXATION – appeal from taxation objection decision under Pt IVC of the TAA – s 8-1 IAA – where value of “management fees” and interest were no more than an ex post facto constructions designed to be fiscally convenient for tax purposes – where deductions claimed amounted to shams – whether conduct of the controlling mind and will of the taxpayers, an experienced accountant, amounted to fraud or wilful blindness – held: in fixing the amounts of alleged “management fees” and interest charges, the controlling mind and will of the taxpayers was mistaken to the point of wilful blindness as to the ability to claim deductions in issue

TAXATION – Pt IVA of the Income Tax Assessment Act 1936 (Cth) (ITAA) – where Commissioner alleged that interest and facilities fees were incurred for the purpose of producing a tax benefit – where taxpayer established in relation to a limited subset of loans that the dominant purpose of each loan was to obtain working capital to carry on its business – held: Pt IVA has no application in relation to the interest and facility fee deductions upon which the taxpayer succeeded in discharging its onus in establishing that such deduction were deductible under s 8-1 of the IAA

TAXATION – power of Commissioner to make an original assessment following expiry of limitation in s 171A ITAA – whether taxpayer had a “tax loss” – held: s 171A ITAA was not a source of statutory authority for the making assessments for the 2001, 2002 and 2004 income years

TAXATION – deemed notices of assessment under s 166A(3) of ITAA – whether the taxpayer was a “full self-assessment taxpayer” – taxpayer not a “full self-assessment taxpayer” within the meaning of the ITAA

TAXATION – tax shortfall penalties – appeal from taxation objection decision under Pt IVC of the TAA – s 284-90 of sch 1 to TAA – whether intentional disregard or recklessness appropriate – where conduct of controlling mind and will of taxpayers amounted to wilful blindness to application of income tax legislation – held: recklessness penalty appropriate

Full decision here