• DIRECT TAXATION

Federal Court of Australia

Allen (Trustee), in the matter of Allen's Asphalt Staff Superannuation Fund Vs. Commissioner of Taxation 2010 FCA 1276 (Decided on 22.11.2010)

Special income - Section 273(7) Income Tax Assessment Act 1936 (Cth) - Appeal against the decision made by the Commissioner of Taxation disallowing objection against amended assessment and penalty assessment - Failure of applicant to declare distribution from trustee of fixed trust to superannuation fund as "special income" under section 273(7) Income Tax Assessment Act 1936 (Cth) - Common ground that relevant distribution was distribution of capital gain - Whether distribution constituted "special income" and the penalty correctly imposed under section 284-75 Taxation Administration Act 1953 (Cth)

Held, in the circumstances of the instant case, the income derived by the Super Fund as a result of its acquisition of a fixed entitlement to income of the Fixed Trust was "special income" within the meaning of s 273(7) of the ITAA 1936. Accordingly, there was a shortfall amount in the income tax return of the applicant. The basis on which the applicant treated the income in the tax return was not reasonably arguable. Application dismissed with costs and the Commissioner’s objection decision be affirmed.

• COMPANY LAWS

Federal Court of Australia

Deputy Commissioner of Taxation Vs. S.J. Bambra Pty Ltd, in the matter of S.J. Bambra Pty Ltd 2010 FCA 1245 (Decided on 15.11.2010)

Winding up on the grounds of insolvency - Failure of the Defendant to meet a creditor's statutory demand for payment of a debt - Section 459P of the Corporations Act 2001 (Cth) - Application filed by a director of the defendant seeking adjournment of the application for a winding up order for a period of three to four weeks in order to allow him to obtain funding to satisfy the debt - Whether the order of winding up be adjourned and the period of three to four weeks be granted to the defendant to obtain funding to satisfy the debt.

Held, according to the circumstances of the instant case, the Defendant was given plenty of opportunities and time to put its house in order and obtain the funding. But the funding was still not obtained. However, the unsecured creditors, as submitted by Counsel for the Defendant, were not exposed by the defendant continuing to operate as the Form 519 had been filed by the Commissioner and the world at large knew that the Defendant was subject to a winding up order. Again, the company through it's director proffered an undertaking that it would not sell, transfer, encumber, dispose or otherwise dissipate any of it's assets in the period of the stay, save for it's assets required in the operation of the ordinary course of business it conducted. Hence, on these grounds, notwithstanding the forceful submissions of the Commissioner, the Defendant was granted extension of the stay granted by Registrar. However, extension of 14 days was reduced until 4:00pm on 16 November 2010.