Case: Norman v Federal Commissioner of Taxation [1963] HCA 21 ; (1963) 109 CLR 9
Outcome: cited
Specifically as to the s 160ZA(4) issue, the Commissioner submitted to be flawed an alternative proposition that the Lend Lease case, to the effect that the capital gain on disposal of the Westpac shares (postulated of course by the Commissioner) was to be disregarded, under what it described controversially as the 'anti-overlap' provisions of that subsection, for the following reasons: (i) it could not be said rightly that dividends would be included in assessable income 'as a result of the disposal of the asset' , here being of course the Westpac shares, because 'inclusion in the taxable income resulted from the later circumstance that payments were in fact received from Westpac'; once received, so the submission continued, those payments were said by the Commissioner 'properly to be characterised under the income tax provisions as assessable income'; however the dividends declared and paid by Westpac to Lend Lease at the material times were said by the Commissioner not to be included in Lend Lease's income 'as a result of the disposal of the asset' within the meaning of s 160ZA(4); (ii) 'as at the date of disposal of the Westpac shares it could not have been said that any amount "will" be included in assessable income' of Lend Lease, since '[t]here is no certainty that dividends will be paid in the future depending, as dividends do, on availability of distributable profits and discretion of the Board of Directors', and moreover until a dividend is declared, any such declaration can only be 'in the eye of the law a possibility only' : Norman v Federal Commissioner of Taxation [1963] HCA 21 ; (1963) 109 CLR 9 at 40 (Windeyer J). 79 The Commissioner criticised what was described by Lend Lease as 'the transaction having constituted one of mere deferred delivery for a discounted purchase price', for the reason that the description was merely a 'beguiling oversimplification', and as not in any event reflective of the case propounded by Lend Lease. As I have earlier outlined, the Lend Lease case was to the effect that the FPA, though entered into on 7 June 1996, constituted a contract for the sale of the Westpac shares whereby until completion thereof on 30 April 2000, ownership of the Westpac shares would remain with Lend Lease, and would therefore not pass to County Natwest, such that Natwest would not acquire any beneficial interest in the Westpac shares prior to completion of the FPA. Consequently the Commissioner's submissions in derogation of the case propounded by Lend Lease as one based simply on the notion of a 'mere deferred delivery agreement' did not appear to advance the Commissioner's case relevantly or materially for present purposes. 80 The Commissioner emphasised in any event that it is the market value of the 'property other than money' received as 'the consideration in respect of a disposal of an asset' which falls to be addressed in order to calculate a capital gain, being a market value to be determined 'at the time of disposal' (see again ss 160ZD(1)), that time being that of entry into the FPA. The Commissioner referred in that context also to s 160U(3) of the Tax Act.