Spassked Pty Limited v Commissioner of Taxation [2003] FCAFC 282

Spassked Pty Limited v Commissioner of Taxation [2003] FCAFC 282

The interest incurred by Spassked Pty Limited was not shown, by reference to objective facts or subjective expectation, to have been incurred in gaining or producing assessable income, as the deliberate structure ensured Spassked would not receive dividends for the foreseeable future and the outgoings were intended to generate group tax losses, not income. Consequently, the outgoing was not deductible under s 51(1) of the Income Tax Assessment Act 1936 (Cth).

Parties
Appellant, Cross Respondent: Stanley Park Limited (ACN 008 432 997); Appellant, Cross Respondent: Industrial Equity Limited (ACN 004 617 164); Appellant, Cross Respondent: Spassked Pty Limited (ACN 003 255 847); Respondent, Cross Appellant: Commissioner of Taxation
Jurisdiction
Australia
Judgment Date
08 December 2003
Procedural Posture
Appeal / Full Federal Court on Appeal From a Single Judge
Outcome
Appeals dismissed. Cross appeals allowed in part.
Legal Topics
Income Tax Deductions, Interest Expenses, Group Company Tax Losses, Business Purpose, Tax Avoidance
Taxation Law Income Tax Deductions Interest Expenses Group Company Tax Losses Business Purpose Tax Avoidance

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Parties

Stanley Park Limited (ACN 008 432 997)

Appellant, Cross Respondent

Industrial Equity Limited (ACN 004 617 164)

Appellant, Cross Respondent

Spassked Pty Limited (ACN 003 255 847)

Appellant, Cross Respondent

Commissioner of Taxation

Respondent, Cross Appellant

Procedural Posture

Appeal / Full Federal Court on Appeal From a Single Judge

Legal Issues

  1. 1 Whether interest incurred by Spassked Pty Ltd was an allowable deduction under s 51(1) of the Income Tax Assessment Act 1936 (Cth)
  2. 2 Whether losses were available to be transferred pursuant to s 80G of the Act
  3. 3 Whether the structure and conduct showed the interest was incurred in gaining or producing assessable income or otherwise

Ratio Decidendi

The interest incurred by Spassked Pty Limited was not shown, by reference to objective facts or subjective expectation, to have been incurred in gaining or producing assessable income, as the deliberate structure ensured Spassked would not receive dividends for the foreseeable future and the outgoings were intended to generate group tax losses, not income. Consequently, the outgoing was not deductible under s 51(1) of the Income Tax Assessment Act 1936 (Cth).

Court Disposition

Appeals dismissed. Cross appeals allowed in part.

Orders

  • The appeals of Stanley Park Limited, Industrial Equity Limited and Spassked Pty Limited are dismissed.
  • The appellants pay the respondent Commissioner's costs of the appeals.