mdroth/huggingface-course_section-5_zst huggingface dataset:
Case: JB Chandler Investment Company Ltd v Federal Commissioner of Taxation (1993) 47 FCR 588
Outcome: considered
Several points must be made about these contentions. First, the findings of fact made in one case provide no guidance to the decision in another. Yet, in essence, that is the path the Commissioner's argument by reference to Jupiters would have me take. Secondly, and no less fundamentally, the Commissioner's contention that Star City and the CCA did not undertake a real commercial negotiation should be rejected. Taken as a whole, the negotiations between the parties are properly described as "hard bargaining". It would be wrong to approach that negotiation piecemeal and say of part of it that Star City was free to choose its own terms and in that particular respect simply because the particular point was not shown to be the subject of extended debate or negotiation. As it happens, however, both the amount to be paid as rent and the terms on which rental would be paid were points of critical centrality in the negotiations between Star City and the CCA and matters about which the CCA (not Star City) had the ultimate decision. The Commissioner's contention that the rent payable during the "Primary Rental Period" was not the result of hard bargaining is without foundation: cf JB Chandler Investment Company Ltd v Federal Commissioner of Taxation (1993) 47 FCR 588 at 598 and Jupiters at [56]. 111 A summary of the Bid Process is set out in the Annexure to these reasons. In referring to these facts and matters, I should not be taken as accepting that separately or collectively they form part of the "factual matrix" or assist in the identification or characterisation of the advantage sought by the Prepayment: see [129] below. All the documents contain are successive statements by parties to a difficult and complex commercial negotiation and, in particular, the stance each took in the bidding process at that time. The documents record nothing more that the state of the negotiations as they developed. 112 This description of the history of the negotiations between the parties reveals that each side of the negotiation (unsurprisingly) sought to obtain the best commercial result it could. For the State parties (the CCA and the Treasury), commercial considerations required payment of as much money as could be obtained as soon as it could be obtained. But there are two considerations that remained consistent: the Casino would operate on leased land owned by the State and rent would be paid for use of those Premises. The outgoing now in question is the payment that was made for the use of those Premises for 12 years.
Case: John Fairfax &amp; Sons Pty Ltd v Federal Commissioner of Taxation [1959] HCA 4 ; (1959) 101 CLR 30
Outcome: followed
The sections contain two "positive limbs": outgoings are deductible to the extent that they are incurred in gaining or producing assessable income (the first limb) or necessarily incurred in carrying on a business for the purposes of gaining or producing assessable income (the second limb): Ronpibon Tin NL and Tongkah Compound NL v Federal Commissioner of Taxation [1949] HCA 15 ; (1949) 78 CLR 47 at 57; FCT v Payne [2001] HCA 3 ; (2001) 202 CLR 93 at 98; Fletcher v Federal Commissioner of Taxation [1991] HCA 42 ; (1993) 173 CLR 1 at 16-17 and John Fairfax &amp; Sons Pty Ltd v Federal Commissioner of Taxation [1959] HCA 4 ; (1959) 101 CLR 30 at 40. The sections also relevantly contain one "negative limb": outgoings are not deductible to the extent that they are outgoings of capital or of a capital nature.
Case: Jupiters Ltd v Deputy Commissioner of Taxation (2001) 48 ATR 511
Outcome: distinguished
The Commissioner made a number of arguments founded ultimately in the decision of Dowsett J in Jupiters Ltd v Deputy Commissioner of Taxation (2001) 48 ATR 511, affirmed by [2002] FCAFC 206 ; (2002) 118 FCR 163. Those arguments picked up the language of Dowsett J in his reasons for decision and sought to apply it to the facts of this case. So, for example, it was said that there was not, in this case, " hard bargaining" about the terms of the lease and, in particular, the rental payments: cf Jupiters at [56].
Case: Jupiters Ltd v Deputy Commissioner of Taxation [2002] FCAFC 206 ; (2002) 118 FCR 163
Outcome: cited
Instead, the payment secured the use of the Premises for the purposes of generating income from the casino. There was no allegation and could be no allegation that the Prepayment of rent was a sham. The two leases (the Construction Lease and the Freehold Lease) were necessary and existed, the rent was an agreed amount, was payable and was paid. Although labels can never be determinative ( Jupiters Ltd v Deputy Commissioner of Taxation [2002] FCAFC 206 ; (2002) 118 FCR 163 at [26] ; South Australian Battery Makers at 655 and Commissioner of Taxation (Cth) v Broken Hill Pty Co Ltd (2000) 179 ALR 593 at [36]), the Prepayment was in this case, as it was described a prepayment of rent. 109 The Commissioner made a number of arguments founded ultimately in the decision of Dowsett J in Jupiters Ltd v Deputy Commissioner of Taxation (2001) 48 ATR 511, affirmed by [2002] FCAFC 206 ; (2002) 118 FCR 163. Those arguments picked up the language of Dowsett J in his reasons for decision and sought to apply it to the facts of this case. So, for example, it was said that there was not, in this case, " hard bargaining" about the terms of the lease and, in particular, the rental payments: cf Jupiters at [56].
Case: Krampel Newman Partners Pty Ltd v Commissioner of Taxation [2003] FCA 123 ; (2003) 126 FCR 561
Outcome: followed
As was explained by Ryan J in Krampel Newman Partners Pty Ltd v Commissioner of Taxation [2003] FCA 123 ; (2003) 126 FCR 561 at [120] , s 226L applies: "the same level of penalty as ss 224, 225 and 226 for schemes entered into for the sole or dominant purpose of avoiding tax, but in respect of which the Commissioner has not applied any of the anti-avoidance provisions because the schemes are ineffective under the ordinary provisions of the [1936 Act or the 1997 Act ] eg s 51 [of the 1936 Act ]." (Internal citation and quotation marks omitted.) See also Starr v Commissioner of Taxation 2007 ATC 4080 at [45].
Case: L Schuler AG v Wickman Machine Tool Sales Ltd [1973] UKHL 2 ; [1974] AC 235
Outcome: applied
Finally, the Commissioner's reference to and reliance upon the parties' prior and subsequent conduct is misplaced. Where, as here, the language in context is not ambiguous, the Court may not look at the prior and subsequent conduct of the parties to interpret the Occupational Licence Agreement: Administration of Papua and New Guinea v Daera [1973] HCA 59 ; (1973) 130 CLR 353 at 446 (per Gibbs J); Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24 ; (1982) 149 CLR 337 at 348 (per Mason J) and L Schuler AG v Wickman Machine Tool Sales Ltd [1973] UKHL 2 ; [1974] AC 235 at 261; cf Sinclair, Scott &amp; Co Ltd v Naughton [1929] HCA 34 ; (1929) 43 CLR 310 at 327; Farmer v Honan [1919] HCA 13 ; (1919) 26 CLR 183 at 197. Such conduct cannot be used to generate disputes about the meaning of unambiguous terms. Such an approach would be inconsistent with the " general test of objectivity [that] is of pervasive influence in the law of contract" : Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (No 2) [2004] HCA 55 ; (2005) 218 CLR 471 at [31] - [36] and, in particular at [34] quoting Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 549 (per Gleeson CJ).
Case: Macquarie Finance Ltd v Commissioner of Taxation [2005] FCAFC 205 ; (2005) 146 FCR 77
Outcome: followed
The process of identifying a 'tax benefit' is prescribed by s 177C. It requires an assessment of what might reasonably be expected to have happened if the scheme had not been entered into or carried out. This process has been described as the identification of the 'alternative postulate': Hart at [66] and Macquarie Finance Ltd v Commissioner of Taxation [2005] FCAFC 205 ; (2005) 146 FCR 77 at [204] . This is an objective assessment: Calder v Commissioner of Taxation (2005) 226 ALR 643 at [95]; Macquarie at [212]; Pridecraft Pty Ltd v Federal Commissioner of Taxation (2004) 213 ALR 450 at [64]-[65].
Case: Ocelota Pty Ltd v Water Administration Ministerial Corp [2000] NSWSC 370
Outcome: cited
Both parties conducted the litigation on the basis that cl 2.1 of the Construction Lease and cl 2.1 of the Freehold Lease required SHCP to make the Prepayment which, without mutual agreement, was non-refundable. That is to say, the litigation was conducted on the basis that the agreements made between the CCA and SHCP left no room for the operation of s 144 of the Conveyancing Act 1919 (NSW). It is unnecessary therefore to examine issues of the kind considered by Hodgson CJ in Ocelota Pty Ltd v Water Administration Ministerial Corp [2000] NSWSC 370 and the authorities cited in [72] and [75] of that decision. 12 On 14 December 1994, a suite of documents was signed or executed by Star City, SHCP, the CCA and the Treasurer of NSW ("the Transaction Documents"). Neither the identity of the parties to nor the express terms of the Transaction Documents are in dispute. Before identifying the Transaction Documents, it is necessary to understand the statutory framework in which they were executed. 13 In New South Wales, the conduct and playing of a game of chance or a game that is partly a game of chance and a game requiring skill and the use of gaming equipment is lawful when the game is conducted and the gaming equipment is provided in a casino by an operator that is the holder of a licence for that casino under the Casino Control Act 1992 (NSW) ("the Casino Control Act ): see s 4(1) (read with s 3) of the Casino Control Act . In 1994, the Casino Control Act , so far as is relevant, contained the following provisions.
Case: Payne ; Fletcher v Federal Commissioner of Taxation [1991] HCA 42 ; (1993) 173 CLR 1
Outcome: followed
The sections contain two "positive limbs": outgoings are deductible to the extent that they are incurred in gaining or producing assessable income (the first limb) or necessarily incurred in carrying on a business for the purposes of gaining or producing assessable income (the second limb): Ronpibon Tin NL and Tongkah Compound NL v Federal Commissioner of Taxation [1949] HCA 15 ; (1949) 78 CLR 47 at 57; FCT v Payne [2001] HCA 3 ; (2001) 202 CLR 93 at 98; Fletcher v Federal Commissioner of Taxation [1991] HCA 42 ; (1993) 173 CLR 1 at 16-17 and John Fairfax &amp; Sons Pty Ltd v Federal Commissioner of Taxation [1959] HCA 4 ; (1959) 101 CLR 30 at 40. The sections also relevantly contain one "negative limb": outgoings are not deductible to the extent that they are outgoings of capital or of a capital nature.
Case: Pridecraft Pty Ltd v Federal Commissioner of Taxation (2004) 213 ALR 450
Outcome: followed
The process of identifying a 'tax benefit' is prescribed by s 177C. It requires an assessment of what might reasonably be expected to have happened if the scheme had not been entered into or carried out. This process has been described as the identification of the 'alternative postulate': Hart at [66] and Macquarie Finance Ltd v Commissioner of Taxation [2005] FCAFC 205 ; (2005) 146 FCR 77 at [204] . This is an objective assessment: Calder v Commissioner of Taxation (2005) 226 ALR 643 at [95]; Macquarie at [212]; Pridecraft Pty Ltd v Federal Commissioner of Taxation (2004) 213 ALR 450 at [64]-[65].
Case: Ronpibon Tin NL and Tongkah Compound NL v Federal Commissioner of Taxation [1949] HCA 15 ; (1949) 78 CLR 47
Outcome: followed
The sections contain two "positive limbs": outgoings are deductible to the extent that they are incurred in gaining or producing assessable income (the first limb) or necessarily incurred in carrying on a business for the purposes of gaining or producing assessable income (the second limb): Ronpibon Tin NL and Tongkah Compound NL v Federal Commissioner of Taxation [1949] HCA 15 ; (1949) 78 CLR 47 at 57; FCT v Payne [2001] HCA 3 ; (2001) 202 CLR 93 at 98; Fletcher v Federal Commissioner of Taxation [1991] HCA 42 ; (1993) 173 CLR 1 at 16-17 and John Fairfax &amp; Sons Pty Ltd v Federal Commissioner of Taxation [1959] HCA 4 ; (1959) 101 CLR 30 at 40. The sections also relevantly contain one "negative limb": outgoings are not deductible to the extent that they are outgoings of capital or of a capital nature.
Case: Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51 ; (1979) 144 CLR 596
Outcome: followed
Thirdly, even if the letter were to be considered as part of some relevant factual matrix, it would not assist in resolving the question of the proper construction of the Occupational Licence Agreement. The letter was an attempt by Star City to gain leverage in its bargaining with the CCA in circumstances where it was the preferred candidate for the grant of the casino licence and, if successful, would be required to pay the Prepayment. The letter was an attempt by Star City to secure repayment of the Prepayment if a possible legal challenge to the grant of such a licence, by an opposition bidding consortium associated with the late Mr Kerry Packer, had been successful. Such a challenge was made although it was unsuccessful: Darling Casino Ltd v New South Wales Casino Control Authority [1997] HCA 11 ; (1997) 191 CLR 602. Negotiations of this nature are evidence of no more than the expectations of the parties and cannot be used to construe the meaning of the written agreement: Secured Income Real Estate (Australia) Ltd v St Martins Investments Pty Ltd [1979] HCA 51 ; (1979) 144 CLR 596 at 606 and Codelfa at 352.
Case: Sinclair, Scott &amp; Co Ltd v Naughton [1929] HCA 34 ; (1929) 43 CLR 310 at 327
Outcome: considered
Finally, the Commissioner's reference to and reliance upon the parties' prior and subsequent conduct is misplaced. Where, as here, the language in context is not ambiguous, the Court may not look at the prior and subsequent conduct of the parties to interpret the Occupational Licence Agreement: Administration of Papua and New Guinea v Daera [1973] HCA 59 ; (1973) 130 CLR 353 at 446 (per Gibbs J); Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24 ; (1982) 149 CLR 337 at 348 (per Mason J) and L Schuler AG v Wickman Machine Tool Sales Ltd [1973] UKHL 2 ; [1974] AC 235 at 261; cf Sinclair, Scott &amp; Co Ltd v Naughton [1929] HCA 34 ; (1929) 43 CLR 310 at 327; Farmer v Honan [1919] HCA 13 ; (1919) 26 CLR 183 at 197. Such conduct cannot be used to generate disputes about the meaning of unambiguous terms. Such an approach would be inconsistent with the " general test of objectivity [that] is of pervasive influence in the law of contract" : Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (No 2) [2004] HCA 55 ; (2005) 218 CLR 471 at [31] - [36] and, in particular at [34] quoting Australian Broadcasting Corporation v XIVth Commonwealth Games Ltd (1988) 18 NSWLR 540 at 549 (per Gleeson CJ).
Case: Starr v Commissioner of Taxation 2007 ATC 4080
Outcome: cited
As was explained by Ryan J in Krampel Newman Partners Pty Ltd v Commissioner of Taxation [2003] FCA 123 ; (2003) 126 FCR 561 at [120] , s 226L applies: "the same level of penalty as ss 224, 225 and 226 for schemes entered into for the sole or dominant purpose of avoiding tax, but in respect of which the Commissioner has not applied any of the anti-avoidance provisions because the schemes are ineffective under the ordinary provisions of the [1936 Act or the 1997 Act ] eg s 51 [of the 1936 Act ]." (Internal citation and quotation marks omitted.) See also Starr v Commissioner of Taxation 2007 ATC 4080 at [45]. 164 Accordingly, s 226L is concerned with schemes where the taxpayer's actual sole or dominant purpose is to obtain a tax benefit: Starr v Commissioner of Taxation 2007 ATC 4080 at [52]. If, contrary to the views I have expressed earlier, the Prepayment was not deductible under s 51(1) of the 1936 Act or s 8-1 of the 1997 Act , the evidence does not support the contention that Star City's actual sole or dominant intention was to obtain a tax benefit. On the contrary, its sole and dominant purpose was to be the successful bidder for the casino licence. A necessary precondition to the application of s 226L is not satisfied. 165 The third requirement that Star City's position is not reasonably arguable is also absent. I consider that, viewed objectively, Star City's arguments were open to be argued on rational grounds to be correct. Accordingly, at the most, the appropriate penalty rate is 25%. 166 The Commissioner imposed penalties under s 284-145 of Part 4 - 25 of the Taxation Administration Act 1953 (Cth) ("the TAA") on the basis that but for the application of Pt IVA of the 1936 Act , Star City would have obtained a scheme benefit from a scheme. The Commissioner considered that there was no basis for reduction of penalty from the "base penalty amount" under s 284-160(a)(i) because a reasonably arguable position did not exist. Accordingly, the Commissioner imposed penalties at a rate of 50%.
Case: Vincent v FCT [2002] FCAFC 291 ; (2002) 124 FCR 350
Outcome: followed
That the series of steps identified must constitute of itself one and only one "scheme", "plan" or "arrangement" (see ss 177A(3) and (5) and FCT v Consolidated Press Holdings Ltd [2001] HCA 32 ; (2001) 207 CLR 235 at 254 [52] and 264 [96]) is made clear by the fact that the dominant purpose under s 177D of the 1936 Act is usually determined at the time the scheme is entered into: FCT v Mochkin [2003] FCAFC 15 ; (2003) 127 FCR 185 at [45] ; Vincent v FCT [2002] FCAFC 291 ; (2002) 124 FCR 350 at 372-373. In other words, the scheme must be identified and the identified scheme must exist from the outset.
Case: W Nevill &amp; Co Ltd v Federal Commissioner of Taxation [1937] HCA 9 ; (1937) 56 CLR 290
Outcome: cited
In Walstern Pty Ltd v Commissioner of Taxation [2003] FCA 1428 ; (2003) 138 FCR 1 at [77] , Hill J after referring to W Nevill &amp; Co Ltd v Federal Commissioner of Taxation [1937] HCA 9 ; (1937) 56 CLR 290, said that: " ... it cannot be said that the question whether a payment is a one-off payment or whether it is a recurrent payment is a matter irrelevant to whether the outgoing is capital. In a case such as the present where the payment operates to create the capital of a trust fund the outlay will ordinarily be seen as capital both because of the lasting qualities enjoyed and the fact that what is being made is a final payment to secure future benefits. However, if a contribution is one of a number of 'recurrent' contributions for employees, so that it can be seen to be part of the ordinary flow of business expenditure of a taxpayer, the character of the outlay will take on a different complexion. It is important to bear in mind that the evidence of Mr Medich was that he and his brother wanted to draw money out of Walstern and establish a fund for investment and that it was decided to do so by contributing two amounts of $1 million. This evidence is highly significant in determining whether the contributions were recurrent or really represented a once and for all contribution of $2 million to set up a fund although made in two annual instalments each of $1 million."
Case: Walters v Commissioner of Taxation [2007] FCA 1270
Outcome: followed
Whether the scheme identified by the Commissioner is a scheme within the meaning of s 177A is a question of fact: Walters v Commissioner of Taxation [2007] FCA 1270 at [59] - [60] . Where there is no evidence of an express agreement or arrangement, the question is whether an inference as to the existence of a scheme can be drawn from all the facts proved: EA Greenwood (NSW) Pty Ltd v FCT 80 ATC 4039 at 4041-2; (1980) 10 ATR 571 at 573-574 citing Federal Commissioner of Taxation v Cooper Brookes (Wollongong) Pty Ltd (1979) 10 ATR 128 (Full Court of the Federal Court).
Case: Wilkie v Gordian Runoff Ltd [2005] HCA 17 ; (2005) 221 CLR 522
Outcome: followed
Clause 5.2 cannot be considered in isolation. The whole of the Occupational Licence Agreement is relevant together with the other documents to which it refers and which were executed "contemporaneously": Chacmol Holdings Pty Ltd v Handberg (2005) 215 ALR 748 at [63] - [78] (per North and Dowsett JJ) (collecting and discussing authority for the proposition that contemporaneously executed contracts forming part of the same transaction should be construed as one instrument). It was not suggested that anything turns on the order in which documents were executed or that "contemporaneously" means anything more precise than "bearing the same date". The other documents fitting this description of being executed "contemporaneously" include the documents listed in [19] above as having been executed on 14 December 1994. Further, construction of an agreement as a whole necessarily involves giving effect to each part of it in relation to all other parts of it: Australian Broadcasting Commission v Australasian Performing Right Association Ltd [1973] HCA 36 ; (1973) 129 CLR 99 at 109 (per Gibbs J) and Wilkie v Gordian Runoff Ltd [2005] HCA 17 ; (2005) 221 CLR 522 at [15] - [16] .
Case: Decor Corporation Proprietary Limited v Dart Industries Inc [1991] FCA 655 ; (1991) 33 FCR 397
Outcome: cited
I am prepared to treat the appellant's submissions as an application for leave to appeal and deal with it accordingly. It is, as I explained to the appellant, well established that the Court will only grant leave to appeal from an interlocutory decision of the Federal Magistrates Court if the person seeking that leave can show that there is sufficient doubt as to the correctness of the judgment of the Federal Magistrates Court to warrant review and, secondly, assuming the judgment below to be wrong, that substantial injustice would be suffered by the applicant if leave to appeal were refused: see Decor Corporation Proprietary Limited v Dart Industries Inc [1991] FCA 655 ; (1991) 33 FCR 397. 17 The Court is only in a position, when hearing appeals from the Federal Magistrates Court, to act on the evidence that was before the Tribunal and that was, in turn, considered by the Federal Magistrates Court. This Court is not, save in exceptional cases, in a position to receive additional evidence that was not placed before the Tribunal. It is concerned to determine whether, in conducting the judicial review of the Tribunal's decision, the Federal Magistrates Court erred in law. 18 The appellant's notice of appeal, which I will treat as a draft notice of appeal, alleged that the Federal Magistrate erred because, first, the appellant was not given enough time to submit all the documents which he had. Secondly, that he considered the decision given by the Federal Magistrates Court was "inappropriate". Thirdly, that the circumstances in which the country of Pakistan has recently found itself led to him feeling very threatened for his life. He asked that this Court review his case "deeply". Whilst one may have a good deal of sympathy with an appellant who comes from a country such as Pakistan where there is considerable political turmoil at present, it can only intervene, as I have already said, if it finds error on the part of the Federal Magistrate.