Today the High Court, by majority, has dismissed an appeal by the Commissioner of Taxation in Commissioner of Taxation v Australian Building Systems Pty Ltd (in liq)  HCA 48.
The dispute concerned whether the retention obligation in s 254(1)(d) of the Income Tax Assessment Act 1936 (Cth) only arises after the making of an assessment (or deemed assessment) in respect of the relevant income, profits or gains. The liquidators of Australian Building Systems Pty Ltd argued that the obligation to retain sufficient monies to cover tax on a capital gain arising from the sale of real property did not crystalise until an assessment had issued. The liquidators were successful at first instance, and on appeal to the Full Court of the Federal Court. Although the High Court disagreed with the reasoning of the Full Court of the Federal Court in some respects, ultimately the Comissioner’s appeal was dismissed. The High Court ruled that the retention obligation in s 254(1)(d) operates in a similar fashion to s 255(1)(b) and that the retention obligation only arises after an assessment or deemed assessment has been made in respect of the relevant income, profits or gains.
Shane Doyle QC and Michael Trim appeared for Australian Building Systems Pty Ltd, instructed by Thomson Geer.