Michael May (led by Dominic O’Sullivan KC) appeared for the Appellants, instructed by HLS Tax Law.
This case was an appeal of the primary judge’s decision to uphold the Commissioner of Taxation’s determinations under Part IVA of the Income Tax Assessment Act 1936 (Cth) (ITAA) to cancel identified tax benefits from two transactions made by the appellants. These transactions were the sale of Billabong International Ltd shares to a related company, and the sale of Plantic Technologies Ltd shares to an unrelated company, on the condition that loans to Plantic by the appellants and related companies be waived or forgiven.
The appellants submitted that the primary judge erred in finding:
1. That, under s 177D of the ITAA, the Billabong International Ltd share sale was a scheme for the dominant purpose of enabling a relevant person to obtain a tax benefit
2. That, under s 177E of the ITAA, the debt forgiveness schemes in relation to the Plantic Technologies Ltd share sale were schemes having the effect of dividend stripping
3. That the exception at s 230-460(13) of the Income Tax Assessment Act 1997 (Cth) (ITAA 1997) applied to the expired economic performance clauses contained in the Plantic Technologies Ltd share sale agreement
The majority (McElwaine and Hespe JJ) held that the appellants’ appeal in relation to the application of s 177D of the ITAA and Div 230 of the ITAA 1997 should be dismissed. However, they also held that the primary judge erred in his application of s 177E to one of the debt forgiveness schemes.
The judgment can be read by clicking here
