Fortunatow v Commissioner of Taxation [2019] FCA 1247

Fortunatow v Commissioner of Taxation [2019] FCA 1247

The AAT erred by construing s 87-20(2) too broadly, treating the involvement of intermediaries as fatal to the unrelated clients test even where the applicant advertised directly to the public. s 87-20(2) only excludes cases where offers or invitations are made solely through intermediaries; it does not preclude the test where advertising to the public occurs alongside availability through intermediaries. The error was material and requires remittal for reconsideration.

Jurisdiction
Australia
Judgment Date
12 August 2019
Procedural Posture
Appeal on Questions of Law / Judgment
Outcome
Appeal allowed
Legal Topics
['personal Services Income' 'personal Services Business Tests' 'unrelated Clients Test' 'construction of S 87 20(1)(b) and S 87 20(2)']
['taxation'] ['personal Services Income' 'personal Services Business Tests' 'unrelated Clients Test' 'construction of S 87 20(1)(b) and S 87 20(2)']

Case Brief

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Procedural Posture

Appeal on Questions of Law / Judgment

Legal Issues

  1. 1 ['Proper construction and application of s 87-20(2) and its interaction with s 87-20(1)(b) of the Income Tax Assessment Act 1997 (Cth) concerning the unrelated clients test for a personal services business']

Ratio Decidendi

The AAT erred by construing s 87-20(2) too broadly, treating the involvement of intermediaries as fatal to the unrelated clients test even where the applicant advertised directly to the public. s 87-20(2) only excludes cases where offers or invitations are made solely through intermediaries; it does not preclude the test where advertising to the public occurs alongside availability through intermediaries. The error was material and requires remittal for reconsideration.

Court Disposition

Appeal allowed

Orders

  • ['The appeal be allowed.' 'The decision of the Administrative Appeals Tribunal be set aside.' "The applicant's application for review be reconsidered by the Administrative Appeals Tribunal according to law." "The first respondent pay the applicant's costs, as agreed or assessed."]