The Federal Court’s decision in Commissioner of Taxation v Warner [2015] FCA 659 has clarified that the Australian Taxation Office’s (ATO) coercive powers requiring a taxpayer to produce documents and information to the ATO prevail over section 486 of the Corporations Act 2001 (Cth) (CA) (section 486 provides that a Court order must first be obtained before a creditor is authorised to inspect the books of a company).

Research and development expenditure not incurred

In Commissioner of Taxation v Desalination Technology Pty Limited [2015] FCAFC 96, the Full Federal Court upheld the Commissioner’s appeal from the earlier decision of Justice Perram in the Federal Court. That earlier decision was the result of an appeal by the Commissioner, on a question of law, from the decision of the Administrative Appeals Tribunal (AAT) in favour of the taxpayer (DST). 

SFC released consultation conclusions on supervisory assistance. The Hong Kong Securities and Futures Commission (SFC) released consultation conclusions on proposed amendments to the Securities and Futures Ordinance (SFO). The amendments would provide assistance to regulators outside of Hong Kong upon request by making inquiries and obtaining certain records and documents from licensed corporations or their related corporations. The proposed supervisory assistance will be subject to both existing and new legislative safeguards.

The High Court today granted special leave to the Commissioner of Taxation (Commissioner) to appeal against the decision of the Full Court of the Federal Court in Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) [2014] FCAFC 133. The appeal is likely to be heard later this year.

Significance

The High Court has granted special leave to appeal the decision in Commissioner of Taxation v Australian Building Systems Pty Ltd(in liq) [2014] FCAFC 133 which held that a liquidator is not required to retain funds from the proceeds of sale of an asset to pay tax before an assessment is issued.

Practical Implications

On 17 April 2015, the Commissioner of Taxation successfully sought special leave to appeal the decision in Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq) [2014] FCAFC 133 to the High Court.

Australia is a member of both the Basel Committee and the G20 and in November, Brisbane was host to the G20 Leaders' Summit.

The agenda focussed on increasing global growth, jobs and economic stability.  Despite the positive G20 intentions, David Cameron was quoted as saying "red warning lights are once again flashing on the dashboard of the global economy".

A recent decision of the Full Federal Court gives liquidators comfort that they are not required to set money aside to meet the future tax obligations of a company until those obligations have been assessed by the Tax Office. Although liquidators must retain money 'sufficient to pay tax which is or will become due', this obligation only applies to tax liabilities that have been assessed and are presently payable or payable in the future, not to liabilities that might be created by future assessments.

In brief: The Full Federal Court has held that a liquidator has no obligation to retain monies on account of tax until a notice of assessment has been issued. While the decision is a win for taxpayers (and creditors of insolvent entities), it remains to be seen how the Commissioner of Taxation will respond. Partner Katrina Parkyn (view CV), Senior Associate Joanne Langford and Associate Jay Prasad report on the decision.

In February 2014, we issued an alert concerning our clients' successful outcome in Australian Building Systems v Commissioner of Taxation [2014] FCA 116.  That matter concerned important considerations around a liquidator's liability for a capital gain made during the liquidation.  Today, the Full Federal Court unanimously dismissed an appeal brought by theCommissioner of Taxation (Commissioner of Taxation v Australian Building Systems Pty Ltd (in Iiq) [2014] FCAFC 133).