Artboard 1Icon/UI/CalendarIcons/Ionic/Social/social-pinterest

Taxation – Disputes and Litigation

We provide strategic, technical and pragmatic solutions for the management of federal and state tax disputes.

Taxation – Disputes & Litigation

We focus on the facts (as evidence) to support the legal position taken and prepare for litigation from the outset – strengthening your position for settlement discussions and an early resolution.

Expertise

Our expertise includes:

  • obtaining rulings
  • reviewing specific tax positions and currency of advice
  • compliance advice
  • voluntary disclosure
  • end to end management of Part IVC disputes
  • litigation support and services at all stages (from inception to appeals)
  • freedom of information
  • alternative dispute resolution.

Experience

Our taxation disputes and litigation experience includes the following:

Airport Link v Commissioner of Taxation

Settled prior to hearing.

Bird and Scott as trustees of the Mewcastle Superannuation Fund v Commissioner of State Revenue [2016] QSC

PAYROLL TAX GROUPING PROVISIONS – in aligned proceedings with the Garnishee application, the Mewcastle SMSF trustees sought exclusion from a wider group – on various grounds including that the SMSF was not an ‘employer’ and had never carried on a business. The Supreme Court considered the statutory definitions and the regime as intended by the Legislature. The Court considered that it was bound to apply traditional Judicial Review grounds. 

Bridgehampton Pty Ltd v Commissioner of State Revenue [2016]

PAYROLL TAX AND SUBCONTRACTORS – following a ‘Decision’ made by the Commissioner to slavishly adhere to an internal practice statement aligning the Queensland position with that in NSW/Victoria – an appeal was filed (and is currently before the Supreme Court) to contest the constitutional validity of particular provisions of the Payroll Tax Act 2008 (Qld). 

Can Barz and anor v Commissioner of State Revenue [2016] QSC 059

PAYROLL TAXES – GARNISHEES OF TRUSTEES OF SUPERANNUATION FUND – a successful Application to set aside an attempt made by the Commissioner to intercept funds on the sale of an asset by a SMSF.

Currently the subject of an Appeal by the Commissioner of State Revenue.

Chevron Australia Holdings Pty Ltd v Commissioner of Taxation (No 4) [2015] FCA 1092 (23 October 2015)

CONSTITUTIONAL LAW – power to make laws with respect to taxation – whether Income Tax Assessment Act 1997 (Cth) Subdiv 815-A was retroactive – whether sections 815-10 to 815-30 invalid as imposing an arbitrary exaction and therefore not answering the description of a law with respect to taxation – Constitution section 51(ii).

INCOME TAX – international taxation – transfer pricing – application of Div 13 of Pt III of the Income Tax Assessment Act 1936 (Cth) – application of Subdiv 815-A of the Income Tax Assessment Act 1997 (Cth).

INTERNATIONAL LAW – double taxation treaty between Australia and the United States of America – Art 9 – associated enterprises – when an entity gets a transfer pricing benefit – section 815-15(1)(c) of the Income Tax Assessment Act 1997 (Cth).

Chevron Australia Holdings Pty Ltd v Commissioner of Taxation (No 5) [2015] FCA 1310 (26 November 2015)

COSTS – whether interests of justice required that earlier orders as to costs in respect of two interlocutory hearings be vacated and the respondent be ordered to pay the applicant’s costs of those interlocutory hearings – whether the respondent should not be entitled to his costs in relation to certain expert reports such that each party bear its own costs relating to expert evidence.

Chevron Australia Holdings Pty Ltd v Commissioner of Taxation [2014] FCA 230, (No 2) [2014[ FCA 707, (No 3) [2014] FCA 999, (No 4) [2014] FCA 1092, (No 5) [2015] FCA 1310


Chevron Australia Holdings Pty Ltd v Commissioner of Taxation [2017] FCAFC 62 (21 April 2017)

INCOME TAX – transfer pricing – whether consideration exceeded arm’s length consideration – consideration that might have been reasonably expected between independent parties dealing at arm’s length – meaning of property – meaning of consideration – what constitutes arm’s length consideration for acquisition of property.

INCOME TAX – whether determinations excessive – whether decision by delegate without authority makes assessment excessive.

CONSTITUTIONAL LAW – retrospective effect of taxation legislation – whether retrospectivity results in arbitrary and incontestable tax.

Citigroup Pty Limited v Commissioner of Taxation [2010] FCA 1796


Citigroup Pty Limited v Commissioner of Taxation [2010] FCA 826 (9 August 2010)

INCOME TAX – Hong Kong bond transactions involving stripping and sale of interest coupons immediately following subscription for bonds – Hong Kong profits tax on proceeds of sale giving rise to foreign tax credits in Australia: Part IVA of Income Tax Assessment Act 1936 (Cth) (‘ITAA 1936’) – whether schemes entered into or carried out by taxpayer for dominant purpose of obtaining tax benefit in the form of foreign tax credits so as to entitle Commissioner to cancel tax benefit.
Held: Part IVA applied.

Section 204(3) of ITAA 1936 – general interest charge – whether taxpayer liable for general interest charge between date tax due and payable and date of amended determination of foreign tax credits allowed.
Held: general interest charge did not apply.

Clark v Commissioner of Taxation [2009] FCA 1401

TRUSTS – creation of a new-trust – acquisition of trust with capital losses and subsequent absorption of capital losses (prior to implementation of the trust loss provisions) – onus of proof – sufficiency of evidence establishing losses. (Presently awaiting appeal decision being handed down by Full Federal Court).

Clark v Commissioner of Taxation [2010] FCA 415

INDEMNITY COSTS under Order 23 found to apply equally to the Commissioner of Taxation as it does to other litigants in the Federal Court. The Federal court (and later the Full Federal Court) ordered that the costs of Mr Clark be paid to him on a full indemnity basis.

CALDERBANK OFFER – whether the Commissioner acted “reasonably” in rejecting a walk away offer to settle on appealable objection decision arising under section 14ZZ of the Taxation Administration Act 1953 (Cth).

Clark v Commissioner of Taxation [2011] FCAFC 5

TRUSTS – the Commissioner appealed the decision at first instance to the Full Federal Court. We successfully defended the decision of the judge in the Federal court and the appeal of the Commissioner was dismissed. 

Commissioner of Taxation of the Commonwealth of Australia v Resource Capital Fund III LP (No 2) [2014] FCAFC 54

TAXATION – final orders dismissing appeal and determining costs.

Commissioner of Taxation v Citigroup Pty Ltd (Includes Corrigendum dated 18 May 2011) [2011] FCAFC 61 (10 May 2011)

TAXATION – Income Tax – foreign tax credit arising from scheme entered into in Hong Kong – credit would not have been allowable in absence of scheme – whether it would be concluded that taxpayer entered into scheme for predominant purpose of obtaining credit – whether scheme involved benefits independent of credit – whether credit was no more than condition of viability of scheme.

TAXATION – Income Tax – General interest charge – amended assessment removing taxpayer’s entitlement to foreign tax credit – whether tax which should have been paid on original date thereby became unpaid nunc pro tunc – whether tax deemed to have been paid.

Commissioner of Taxation v Clark

HIGH COURT SPECIAL LEAVE APPLICATION – following the loss before the Full Federal court the ATO requested leave to appeal that decision to the High Court of Australia. That leave was refused.

Commissioner of Taxation v Donoghue (2015) 237 FCR 316

LEGAL PROFESSIONAL PRIVILEGE AND DOCUMENTS ACCESS BY THE COMMISSIONER TO RAISE ASSESSMENTS – an appeal by the Commissioner to the Full Federal Court against the decision of Logan J. striking down assessments issued on the basis of tainted documents which were obtained by the ATO from a former disgruntled solicitor.

In 2011, documents were provided to the Commissioner by a disgruntled former solicitor who had acted for the taxpayer in earlier proceedings. Orders were sought that the assessments be set aside on the basis of mal-administration – i.e. the documents were knowingly used by the Commissioner despite the possibility of attracting legal professional privilege.

The decision of the primary judge was reversed on appeal and an application for Special Leave to the High Court was unsuccessful (2016 HCASL 131). 

Commissioner of Taxation v Gloxinia Investments (Trustee) [2010] FCAFC 46 (24 May 2010)

TAXATION AND REVENUE LAW – A New Tax System (Goods and Services Tax) Act 1999 (Cth) – application for declaratory relief – whether grant of Strata Lot Leases from municipal council to developer considered to be a supply by way of "long-term leases" under section 195-1 of GST Act – where property comprising strata lots previously held by developer under prior lease – where under the terms of prior lease, upon registration of strata leasehold plan, the prior lease was to be surrendered and Strata Lot Leases to be granted – Strata Lot Leases properly characterized as a supply by way of long-term leases – appeal dismissed.

Commissioner of Taxation v Messenger Press Proprietary Limited [2013] FCAFC 77

TAXATION – income tax – deductibility of loss to extent to which attributable to currency exchange rate fluctuations – deduction available only when loss realised – what amounted to realisation of loss – whether necessary for there to have been a transaction involving the exchange of Australian and foreign currencies – whether deduction available where foreign currency debt discharged by tender of promissory note, in that currency, obtained by expenditure in Australian currency, or equivalent.

Commissioner of Taxation v Resource Capital Fund III LP [2014] FCAFC 37

DOUBLE TAXATION TREATIES – United States Double Taxation Convention – taxation of gains derived from disposition of shares in a company owning real property (mining tenements) situated in Australia by a limited partnership formed outside both Australia and the United States but comprised of limited partners being predominantly United States residents – whether gain derived by limited partnership or limited partners for the purpose of the Convention.

INCOME TAX – Div 855 of Pt 4-5 of Income Tax Assessment Act 1997 (Cth) – whether capital gains derived by a foreign resident to be disregarded – whether “principal asset test” in s 855-30 passed – consideration of what is to be valued and compared as the criterion for passing the test.

Commissioner of Taxation v Resource Capital Fund IV LP [2013] FCAFC 118

INCOME TAX – section 255 Income Tax Assessment Act 1936 (Cth) – construction and operation of section where a person has control of foreign currency belonging to non-resident taxpayers – whether expression “money” in section 255(1) includes foreign currency.

Commissioner of Taxation v Resource Capital Fund IV LP [2019] FCAFC 51

TAXATION – where provisions of the income tax law which refer to a company are read as also referring to a corporate limited partnership – where partners of a corporate limited partnership are jointly and severally liable to pay any amount that would be payable by the partnership – whether a corporate limited partnership is an entity which is liable to pay income tax – whether assessments issued to corporate limited partnerships should be treated as being assessments issued to all partners of each partnership.

CONSTITUTIONAL LAW – competency to object – where a corporate limited partnership is treated as a separate “taxable” entity – whether a corporate limited partnership is competent to object to an assessment – where liability is imposed on the individual partners without separate assessment – whether the imposition of joint and several liability on the individual partners would be an incontestable tax and unconstitutional.

TAXATION – ordinary income – source of income – where corporate limited partnerships made a gain from the sale of shares in a company –  where value of the shares depended upon the value of a mine located in Australia – where disposal of shares was pursuant to a scheme of arrangement approved by the Federal Court of Australia – whether profits had an Australian source.

TAXATION – double taxation agreement – residence of limited partnership – Division 855 of the Income Tax Assessment Act 1997 (Cth) – taxable Australian real property – mining, quarrying or prospecting right – whether limited partnerships could be residents of the United States – whether limited partnerships could rely on Taxation Determination TD 2011/25 for protection from Australian income tax – whether general purpose leases and a miscellaneous licence issued pursuant to the Mining Act 1978 (WA) were taxable Australian real property because they each constituted a “mining, quarrying or prospecting right” – whether general purpose leases were a lease of land.

Daihatsu Australia Pty Limited v Commissioner of Taxation [2001] FCA 588 (24 May 2001) 

INCOME TAX – assessment – determinations under section 136AD of the Income Tax Assessment Act 1936 (Cth) – notice of amended assessment – validity – conclusiveness – application of sections 175 and 177 of the Income Tax Assessment Act 1936 (Cth) – "Hickman principle" – whether bona fide attempt to assess – whether assessment made in bad faith – whether failure to issue position paper raises inference of bad faith – whether failure to comply with Taxation Rulings raises inference of bad faith.

INCOME TAX – transfer pricing – determinations made by Commissioner that taxpayer not dealing at arm's length – calculation of arm's length price – application of section 136AD of the Income Tax Assessment Act 1936 (Cth).

Dowling v Commissioner of Taxation, [2014] FCA 252

SUPERANNUATION – EXCESS CONTRIBUTIONS TAX. Whether the taxpayer ought to be subject to tax on the excess contributions paid following receipt of incorrect advice from accountants and bank.

Foxtel Management Pty Ltd v Commissioner of Taxation [2000] FCA 1128 (14 August 2000)

TAXATION – whether the " Foxtel Magazine" is a "program of entertainments" or a "program of amusements" within the meaning of Item 100(2)(b) of the Sales Tax (Exemptions and Classifications) Act 1992 (Cth) – whether the Magazine is a "program" – whether a television show is "an entertainment" or "an amusement", so that the Magazine could be said to be a "program of entertainments" or a "program of amusements".

Gloxinia Investments Limited as Trustee for Gloxinia Unit Trust v Commissioner of Taxation [2009] FCA 641 (12 June 2009)

This proceeding concerns the question of whether or not an assignment of a leasehold of residential premises in an apartment building is an input taxed supply within the meaning of the A New Tax System (Goods and Services Tax) Act 1999 (Cth) (the GST Act). Specifically, it involves the construction of provisions of Subdivision 40-C of Division 40 of Part 3-1 of Chapter 3 of the GST Act.

Hornsby Shire Council and Commissioner of Taxation [2008] AATA 1060 (26 November 2008)

Taxation – GST – meaning of supply - acquisition of quarry in accordance with notice in the Gazette – whether some form of action is required for the purposes of section 9-10(1) of the GST Act – acquisition in consequence of a right analogous to a statutory put option – whether a legal obligation was incurred under para (g) of subsection (2) – surrender under para (d) of subsection (2) – relevance of deed of release in respect of the compensation which was paid.

Kelly v Commissioner of Taxation [2012] FCA 423

ASSIGNMENT OF INTEREST IN PARTNERSHIP – the appellant (a solicitor in a law firm) made two assignments of his partnership interest to separate trusts. He successfully argued that the second assignment was effective and that his income was effectively diverted to his family discretionary trust.

Kelly v Commissioner of Taxation [2013] FCAFC 88

ASSIGNMENT OF PARTNERSHIP INTEREST – an (unsuccessful) appeal by Mr Kelly against the trial judge’s refusal to find that the first assignment of the partnership interest was effective.

Messenger Press Proprietary Limited v Commissioner of Taxation [2012] FCA 756

TAXATION – Income tax – deductions – currency exchange gains & losses – whether currency exchange loss had been incurred – where taxpayer had loaned sums of money from related companies denominated in Australian dollars, US dollars and pounds sterling – where taxpayer had later discharged liabilities under the loans and incurred further liabilities by receiving and endorsing promissory notes and by issuing an unsecured demand note – where taxpayer had later discharged its foreign currency liabilities by endorsing further promissory notes that had the effect of exchanging the foreign currency liabilities for Australian currency liabilities – where the taxpayer claimed to have suffered losses as a result of adverse movements in relevant exchange rates during the period of foreign currency indebtedness – where no exchange of cash, coin or deposit funds held by banks ever took place – whether Division 3B of the Income Tax Assessment Act 1936 (Cth) applies to gains and losses arising from exchanges of liabilities denominated in foreign currency for liabilities denominated in Australian dollars where neither set of liabilities otherwise qualifies as ‘money’ – whether the concept of a ‘currency exchange loss’ in Division 3B is limited to a loss arising from the execution at different times of two opposite exchange transactions where there has been an adverse movement in the intervening period, or whether that concept can encompass other losses that relate to exchange rate fluctuations – whether the losses claimed by the taxpayer were ‘currency exchange losses’.

TAXATION – Income tax – deductions – currency exchange gains & losses – requirement under Division 3B of the Income Tax Assessment Act 1936 (Cth) that currency exchange gains and losses be incurred ‘under an eligible contract’ – whether an unsecured demand note of 6 June 1991 was an eligible contract or evidence of an eligible contract – whether the eligible contract must be in force during the entirety of the conduct giving rise to the currency exchange gain or loss – whether a currency exchange gain or loss may arise under multiple eligible contracts – whether any currency exchange losses arose ‘under’ any eligible contract.

TAXATION – Income tax – deductions – currency exchange gains & losses – requirement under Division 3B of the Income Tax Assessment Act 1936 (Cth) that currency exchange gains and losses be ‘of a capital nature’ – whether interest had been ‘capitalised’ by being added to the principal by accounting method – whether there had been an account stated that led to the creation of a new debt in which the principal and interest components had merged – whether, alternatively, the liability to pay interest was on revenue account and therefore deductible under s 8-1 of the Income Tax Assessment Act 1997 (Cth).

TAXATION – Income tax – relevance of commercial and accountancy practice – whether expert evidence about the manner in which foreign currency liabilities are accounted for is relevant to the question of whether there has been a currency exchange gain or loss.

Mussalli v Commissioner of Taxation [2020] FCA 544

TAXATION – income tax – deductibility – payments made upon entering into lease and licence agreements of franchise restaurants – payments described as prepayments of rent – whether payments were capital in nature or on revenue account – substance and form – characterisation of advantage sought – consideration of general principles – Income Tax Assessment Act 1997 (Cth) s 8-1 – Income Tax Assessment Act 1936 (Cth) section 82KZMD.

Petroulias v Commissioner of Taxation (No 2) [2012] FCA 950 (23 February 2012)

Read more here.

Petroulias v Commissioner of Taxation [2012] FCA 919 (1 February 2012)

Read more here.

Ransley v Commissioner of Taxation [2016] FCA 778

TAXATION – whether civil proceedings should be stayed pending resolution of related criminal proceedings – where proceedings involve common issues – whether prejudice established.

Ransley v Deputy Commissioner of Taxation [2018] FCA 1796

TAXATION – tax treatment of net profits realised from sale and exchange of shares – whether net profits assessable as ordinary income or on capital account – appeal to Court and application for review to Tribunal – concurrent hearing – applicant involved in business operation or commercial transaction – shares held and sold on revenue account – profits assessable as ordinary income – application for review and appeal to be dismissed.

TAXATION – administrative penalties – recklessness – whether taxpayer’s position reasonably arguable – safe harbour exemption inapplicable – penalty upheld.

Resource Capital Fund III LP v Commissioner of Taxation [2013] FCA 363

DOUBLE TAXATION TREATIES – United States Double Taxation Convention – principles of and materials in aid of interpretation – taxation of gains derived from disposition of shares in a company owning real property (mining tenements) situated in Australia by a limited partnership formed outside both Australia and the United States but comprised of limited partners being predominantly United States residents – whether gain derived by limited partnership or limited partners for the purpose of the Convention – reconciliation with any inconsistency under Australia’s domestic law – Div 5A of Pt III of Income Tax Assessment Act 1936 (Cth).

INCOME TAX – Div 855 of Pt 4-5 of Income Tax Assessment Act 1997 (Cth) – whether capital gains derived by a foreign resident to be disregarded – whether “principal asset test” in s 855-30 passed – consideration of what is to be valued and compared as the criterion for passing the test – hypotheses and methodologies of valuation to be adopted.

Resource Capital Fund IV LP v Commissioner of Taxation [2013] FCA 801

INCOME TAX – section 255 Income Tax Assessment Act 1936 (Cth) – construction and operation of section where a person has control of foreign currency belonging to non-resident taxpayers – whether expression “money” in section 255(1) includes foreign currency.

Resource Capital Fund IV LP v Commissioner of Taxation [2018] FCA 756


Revlon Manufacturing Limited v Commissioner of Taxation of the Commonwealth of Australia [1995] FCA 1751 (14 December 1995) 

Taxation – Sales Tax Assessment Act (No.1) 1930 – taxpayer sells cosmetics by wholesale on "ex-warehouse" basis – assessment altering the "amount" of the sale value in context where other services provided for a separate fee – determination of "amount" under ss. 18(1)(a) and 18A requires consideration of both the form and substance of the transaction and is to be determined in the light of the legislative intention that goods be taxed at their full wholesale value.

Taxation – anti-tax avoidance provision s.18A(1)(b) – whether the "purpose" of entering an agreement was securing that the "amount" of the sale value was less than could be reasonably expected – subjective purposive element whilst question of "amount" is an objective inquiry – assessment of "amount" pursuant to s.18A(4) is not a mathematical exercise but requires a value judgment – task of tribunal on appeal is to determine the amount for itself.

Taxation – validity of notice of assessment – reliance by Commissioner upon sections of Act not referred to in notice – plain from notice that Commissioner was altering sale value – ignore error of form and of limited dimensions under falsa demonsratio principle – liability to sales tax not dependent on assessment, but arises by virtue of the Act itself.

Taxation – additional tax payable by force of s.45(2) – Commissioner entitled to remit all or part of additional tax (s.47(3)) – Tribunal entitled to review discretionary decision to remit only if amount left payable after remission exceeds 20% per annum – here additional tax was 40% of tax over 8 years – no power to review.

Taxation – s.12B(1) Sales Tax Procedure Act – whether Commissioner has "required payment of the tax" prior to expiration of 3 year limitation period – whether letters sent to applicant by the Commissioner satisfied s.12B(3) – letters failed to specify that an "amount of tax is payable".

Revlon Manufacturing Ltd v Commissioner of Taxation [1997] FCA 28 (6 February 1997)

TAXATION AND REVENUE – sales tax – cosmetics used as testers, samples and other selling aids to promote merchandise – whether goods were applied by the taxpayer for its own use.

CONTRACTS – construction and interpretation of contracts – uncertainty – abandonment – whether condition was void for uncertainty – whether contract reflected the parties' common intention.

Tao Bai v Commissioner of Taxation

HIGH COURT SPECIAL LEAVE APPLICATION – fraud/evasion – Commissioners ability to extend time without providing adequate reasons or any proper foundation. 

Triumph II Investments Ireland Limited v Commissioner of Taxation

Settled prior to hearing.

TT-Line Company Pty Ltd v Commissioner of Taxation [2009] FCA 658 (18 June 2009)

TAXATION – A New Tax System (Goods and Services Tax) Act 1999 – s 9-15 – whether rebate paid under the Bass Strait Passenger Vehicle Equalisation Scheme attracts GST – meaning of “specifically covered” in s 9-15(3)(c) – meaning of “consideration” in s 9-15.

White Industries Australia Ltd v Commissioner of Taxation [2003] FCA 599 (13 June 2003)

TAXATION – notices of amended assessment – where notices issued in November 2001 – where further 'notices' issued in December 2001 – effect of further 'notices' – whether further 'notices' supersede or replace notices of amended assessment.

White Industries Australia Ltd v Commissioner of Taxation [2003] FCA 915 (20 June 2003)

Read more here.

Recent Posts

22 December 2020 - Knowledge

Tribunal gives hope to small businesses that have been refused JobKeeper

#Taxation – Disputes & Litigation

The Administrative Appeals Tribunal recently overturned the Commissioner of Taxation’s decision to deny a small business access to JobKeeper and substituted a decision that the applicant is entitled to the scheme.

13 November 2020 - Knowledge

JobKeeper claims for sole traders

#Taxation – Disputes & Litigation

Sole traders who have been denied JobKeeper should be aware that the Administrative Appeals Tribunal is currently considering whether the Commissioner of Taxation's approach in denying certain JobKeeper claims is valid.

18 August 2020 - Knowledge

Company directors – managing your taxation obligations

#Taxation – Disputes & Litigation, #COVID-19

Under the expanded director penalty regime, company directors are now liable for all of a company's PAYG liability, GST, luxury car tax, wine equalisation tax liabilities and superannuation guarantee charge liabilities.

25 March 2020 - Knowledge

COVID-19 – a ‘taxing’ time for everyone

#Taxation – Disputes & Litigation, #COVID-19

The Australian government has been quick to respond to the rapidly changing economic climate due to the COVID-19 pandemic. In particular, the Australian Taxation Office has introduced a number of tax relief measures in a bid to assist taxpayers with cash-flow and solvency strains resulting from this outbreak. We look at the wider ranging and associated initiatives foreshadowed.

27 November 2019 - Knowledge

ATO crackdown – wealthy Australians on the tax office hit list

#Taxation – Disputes & Litigation, #Corporate & Commercial Law

In his next push to combat tax avoidance and strengthen tax governance, the Commissioner of Taxation is allocating significant resources and will be giving close attention to the business activities of high wealth private groups.