Melbourne Corporation of Australia Pty Ltd v Commissioner of Taxation [2022] FCA 972

TAXATION – appeal from taxation objection decision under Pt IVC of the Taxation Administration Act 1953 (Cth) (TAA) – s 8-1 Income Tax Assessment Act 1999 (Cth) (IAA) – where Commissioner issued amended assessments of income tax and penalty assessments in relation to claims for “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 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 the 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 – 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