Hua Wang Bank Berhad v Commissioner of Taxation (No 19) [2015] FCA 454

Hua Wang Bank Berhad v Commissioner of Taxation (No 19) [2015] FCA 454

The expression in s 70-40(2) 'was not taken into account under this Division ... at the end of the last income year' refers to trading stock being taken into account as part of the Commissioner's assessment process. Because s 70-40 operates only as an input to the s 70-35 calculation of assessable income and deductions, a taxpayer's standalone valuation or election is insufficient. Therefore, if no assessment has been issued for the preceding income year, the value of the taxpayers' shares at the start of the year in dispute is nil.

Jurisdiction
Australia
Judgment Date
15 May 2015
Procedural Posture
Taxation Proceedings Concerning Trading Stock Under Div 70 of the Income Tax Assessment Act 1997 (cth) / Determination of Remaining Statutory Interpretation Issue After Earlier Judgment; Orders Made on Trading Stock Issue
Outcome
The Commissioner's construction was preferred. Declarations and directions were made in NSD 652-656 of 2011; objection decisions were remitted on the trading stock issue and the Applicants were ordered to pay the Commissioner's costs of the trading stock debate on 4 May 2015.
Legal Topics
['div 70 of the Income Tax Assessment Act 1997 (cth)' 'trading Stock' 'value of Trading Stock at Start of Income Year' 'assessable Income and Deductions' 'statutory Interpretation']
['taxation'] ['div 70 of the Income Tax Assessment Act 1997 (cth)' 'trading Stock' 'value of Trading Stock at Start of Income Year' 'assessable Income and Deductions' 'statutory Interpretation']

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Procedural Posture

Taxation Proceedings Concerning Trading Stock Under Div 70 of the Income Tax Assessment Act 1997 (cth) / Determination of Remaining Statutory Interpretation Issue After Earlier Judgment; Orders Made on Trading Stock Issue

Legal Issues

  1. 1 ["What is meant by the words in s 70-40(2) of the Income Tax Assessment Act 1997 (Cth), 'was not taken into account under this Division ... at the end of the last income year'." 'Whether taking trading stock into account for s 70-40 requires assessment by the Commissioner or can be satisfied by the taxpayers electing a valuation method and working out the value of their trading stock.']

Ratio Decidendi

The expression in s 70-40(2) 'was not taken into account under this Division ... at the end of the last income year' refers to trading stock being taken into account as part of the Commissioner's assessment process. Because s 70-40 operates only as an input to the s 70-35 calculation of assessable income and deductions, a taxpayer's standalone valuation or election is insufficient. Therefore, if no assessment has been issued for the preceding income year, the value of the taxpayers' shares at the start of the year in dispute is nil.

Court Disposition

The Commissioner's construction was preferred. Declarations and directions were made in NSD 652-656 of 2011; objection decisions were remitted on the trading stock issue and the Applicants were ordered to pay the Commissioner's costs of the trading stock debate on 4 May 2015.

Orders

  • ["Declare that s 70-40(2) of the Income Tax Assessment Act 1997 (Cth) requires the value of the taxpayers' shares in each year in dispute to be valued at nil if no assessment has been issued for the preceding income year." 'Direct the taxpayers to make elections under s 70-45 in respect of each item of trading stock...