Recent Case Update

Recent Case Update

Recent Case Update

Editor: The following Case Summaries are taken from the notes for the June 2016 edition of Tax on the Couch.

TBCL and Commissioner of Taxation [2016] AATA 264
The AAT has held that the parents of their 22 year old child were not in an ‘interdependency relationship’ with him and, therefore, they were not ‘death benefit dependants’ of their con (and so could not receive the death benefit lump sum from his superannuation fund tax-free).

Davan Developments Pty Ltd v HLB Mann Judd (SE Qld) Pty Ltd [2016] QCA 90
The Queensland Court of Appeal has held that a practice of accountants, business and financial advisers was not negligent in lodging a tax return with the ATO which resulted in the taxpayer being assessed as liable to pay GST, income tax and penalties in respect of a transfer of land.

In any event, the alleged wrongdoing had not caused the taxpayer to suffer any loss.

Commissioner of Taxation v Rawson Finances Pty Ltd (No 2) [2016] FCA 402
Editor: The following case shows the lengths the ATO is willing to go in order to get evidence when they don’t believe the taxpayer.

The Court ended up being willing to order that evidence be requested from a foreign national, but was not willing to order that the taxpayers basically hand over complete control of their finances to the ATO (for example, via a power of attorney) so that the ATO could take them down!

The Federal Court has held that a letter of request should be sent to the judicial authorities of Israel pursuant to the Foreign Evidence Act 1994 (Cth) to take (or cause to be taken) the evidence of the Chairwoman of the Board of Mercantile Discount Bank to establish whether the Australian taxpayer had in fact borrowed from, and paid interest to, that bank.

However, the Court would not make:

  • An order requiring the taxpayer to provide a consent to the bank producing nominated documents and waiving unconditionally any rights of secrecy, privacy or confidentiality in respect of the documents sought; nor
  • An order that the taxpayer provide to the Commissioner any signature, document, permission or authority (including a power of attorney or other authority) required by the bank and any assistance reasonably required in order for the bank to release any documents falling within nominated categories of documents.

Those orders would infringe the taxpayer’s two directors privilege self-incrimination.

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