Oakey Abbatoir Pty Ltd v Commissioner of Taxation [1984] FCA 316

Oakey Abbatoir Pty Ltd v Commissioner of Taxation [1984] FCA 316

The arrangement constituted a non-commercial, artificial, and circular tax avoidance scheme, which fell within s.260 of the Income Tax Assessment Act 1936. Section 260 was applicable, rendering the arrangement ineffective for the purpose of avoiding tax, and exposing the appellant to additional tax under s.104.

Parties
Appellant/cross Respondent: Oakey Abattoir Pty. Ltd.; Respondent/cross Appellant: The Commissioner of Taxation
Jurisdiction
Australia
Judgment Date
05 October 1984
Procedural Posture
Appeal / Decision on Appeal From Single Judge of the Supreme Court of Queensland
Outcome
appeal dismissed; cross-appeal dismissed
Legal Topics
Income Tax, Tax Avoidance, Application of S.260, Distribution by Prepayment of Interest, Convertible Notes, Division 7 of Part III of the Income Tax Assessment Act 1936
Taxation Law Income Tax Tax Avoidance Application of S.260 Distribution by Prepayment of Interest Convertible Notes Division 7 of Part III of the Income Tax Assessment Act 1936

Case Brief

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Parties

Oakey Abattoir Pty. Ltd.

Appellant/cross Respondent

The Commissioner of Taxation

Respondent/cross Appellant

Procedural Posture

Appeal / Decision on Appeal From Single Judge of the Supreme Court of Queensland

Legal Issues

  1. 1 Whether the prepayment of interest on convertible notes constituted a sufficient distribution under Division 7 of Part III of the Income Tax Assessment Act 1936 to avoid additional tax under s.104.
  2. 2 Whether the scheme was a sham or had commercial justification.
  3. 3 Whether the payment was interest within the meaning of s.82R(6).

Ratio Decidendi

The arrangement constituted a non-commercial, artificial, and circular tax avoidance scheme, which fell within s.260 of the Income Tax Assessment Act 1936. Section 260 was applicable, rendering the arrangement ineffective for the purpose of avoiding tax, and exposing the appellant to additional tax under s.104.

Court Disposition

appeal dismissed; cross-appeal dismissed

Orders

  • The appeal be dismissed.
  • The appellant pay the respondent's costs of the appeal.