|Catchwords:||TAXATION – appeal from objection decision of the Commissioner – capital gains tax – Part IVA Income Tax Assessment Act 1936 – whether applicant entered into scheme for the dominant purpose of obtaining a tax benefit
TAXATION – Part IVA schemes – revaluation of assets and declaration of dividend equal to amount of increase in value of assets – shareholder a related subsidiary company – payment of dividend largely funded by unsecured inter-company loan – shareholder subsequently injected additional equity into company which declared dividend – shareholder subsequently transferred shares to another subsidiary
TAXATION – Part IVA – manner in which scheme carried out – form and substance of scheme – time at which scheme carried out
At issue was a dividend by the applicant of US$318,000,000 in October 1998, made pursuant to a scheme within the meaning of Part IVA, which reduced the value of the shares and the capital gain.
Stone J dismissed the application by RCI Pty Ltd and found for the commissioner that they had obtained a tax benefit, or would but for s 177F of ITAA 1936, have obtained such a benefit in connection with a scheme within the meaning of Part IVA of the ITAA 1936 applies. Furthermore, the dominant purpose test was satisfied.
Brisbane Barrister – David Cormack