Blank v Commissioner of Taxation [2014] FCA 87

Blank v Commissioner of Taxation [2014] FCA 87

The Glencore profit participation arrangements did not give rise to non-share equity interests because the aggregate scheme relied on by the Commissioner was not a financing arrangement for GI or GH, so the payments were not dividends or non-share dividends. However, under the IPPA 2005 the applicant held no...

Source-derived case information.

Jurisdiction
Australia
Judgment Date
21 February 2014
Procedural Posture
Income Tax Appeal Against Objection Decisions / Reasons for Judgment; Substantive Orders Deferred Pending Short Minutes
Outcome
Commissioner's ordinary income head of assessability succeeded; parties ordered to provide short minutes to give effect to the reasons and matter listed for pronouncement of orders.
Legal Topics
['deferred Compensation' 'ordinary Income' 'dividends and Non Share Dividends' 'eligible Termination Payments and Employment Termination Payments' 'cost Base and Market Value' 'debt and Equity Rules']
['taxation Law' 'income Tax' 'capital Gains Tax'] ['deferred Compensation' 'ordinary Income' 'dividends and Non Share Dividends' 'eligible Termination Payments and Employment Termination Payments' 'cost Base and Market Value' 'debt and Equity Rules']

Source-derived case record

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Procedural Posture

Income Tax Appeal Against Objection Decisions / Reasons for Judgment; Substantive Orders Deferred Pending Short Minutes

Legal Issues

  1. 1 ['Whether amounts paid to the applicant under Glencore profit participation arrangements were assessable as dividends or non-share dividends under s 44(1) of the Income Tax Assessment Act 1936 (Cth).' 'Whether the amount was ordinary income as deferred compensation or otherwise.' 'Whether the amounts paid were assessable as eligible termination payments or employment termination payments.' "If not otherwise assessable, what cost base applied for capital gains tax purposes to the applicant's interest in the profit participation arrangements."]

Ratio Decidendi

The Glencore profit participation arrangements did not give rise to non-share equity interests because the aggregate scheme relied on by the Commissioner was not a financing arrangement for GI or GH, so the payments were not dividends or non-share dividends. However, under the IPPA 2005 the applicant held no property interest in GS and was granted a contractual right to deferred compensation; the money constituting the amount payable was the reward for services and was ordinary income. As the applicant was a cash basis taxpayer, that income was derived when paid to him or applied on his behalf by GI. The payments were not made in consequence of termination of employment merely because...

Court Disposition

Commissioner's ordinary income head of assessability succeeded; parties ordered to provide short minutes to give effect to the reasons and matter listed for pronouncement of orders.

Orders

  • ['On or before 4:00 pm on Wednesday, 26 February 2014, the parties provide short minutes of order to give effect to these reasons by way of email to chambers; if the parties cannot agree, each party provide short minutes by the same time and date.' 'The matter be listed for pronounciation of orders on Thursday, 27...