Mayfield v Commissioner of Taxation [No 2] [1961] HCA 58

Mayfield v Commissioner of Taxation [No 2] [1961] HCA 58

There was an arrangement, planned by Adamson and joined in by the Mayfield family, Beesley, Eynesbury, Argo and Kentish, to avoid tax on distributions by the old F. R. Mayfield Ltd. Section 260 therefore applied, the share transfers were void against the Commissioner, and the dividends of £48,000 and £1,200 were assessable to the former shareholders proportionally to their shareholdings immediately before the transfers. Eynesbury's share was income for calculating its undistributed profits tax liability, and the assessments were not out of time because Eynesbury's was an original assessment and the other taxpayers had not made full and true disclosure of the material facts.

Jurisdiction
Australia
Procedural Posture
Taxation Appeals / Appeals Against Amended Assessments for the Individual Taxpayers and an Original Assessment for Eynesbury Ltd.
Outcome
Appeals dismissed with costs.
Legal Topics
['income Tax' 'tax Avoidance' 'income Tax and Social Services Contribution Assessment Act 1936 1953 S. 260' 'private Company Distributions' 'undistributed Profits Tax' 'amended Assessments']
['taxation Law'] ['income Tax' 'tax Avoidance' 'income Tax and Social Services Contribution Assessment Act 1936 1953 S. 260' 'private Company Distributions' 'undistributed Profits Tax' 'amended Assessments']

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Procedural Posture

Taxation Appeals / Appeals Against Amended Assessments for the Individual Taxpayers and an Original Assessment for Eynesbury Ltd.

Legal Issues

  1. 1 ['Whether s. 260 of the Income Tax and Social Services Contribution Assessment Act 1936-1953 applied to the arrangement involving transfers of shares in Mayfield Holdings Ltd. to Argo Investments Ltd. and Kentish Investments Ltd.' 'Whether the dividends of £48,000 and £1,200 distributed by Mayfield Holdings Ltd. after the share transfers were income of the former shareholders proportionally to their pre-transfer shareholdings.' 'Whether Eynesbury Ltd. was liable for undistributed profits tax on its share of those dividends.' 'Whether the assessments or amended assessments were out of time under s. 170 (2) and (3).']

Ratio Decidendi

There was an arrangement, planned by Adamson and joined in by the Mayfield family, Beesley, Eynesbury, Argo and Kentish, to avoid tax on distributions by the old F. R. Mayfield Ltd. Section 260 therefore applied, the share transfers were void against the Commissioner, and the dividends of £48,000 and £1,200 were assessable to the former shareholders proportionally to their shareholdings immediately before the transfers. Eynesbury's share was income for calculating its undistributed profits tax liability, and the assessments were not out of time because Eynesbury's was an original assessment and the other taxpayers had not made full and true disclosure of the material facts.

Court Disposition

Appeals dismissed with costs.

Orders

  • ['Order in each case: Appeal dismissed with costs.']