ABB Australia Pty Limited v Commissioner of Taxation

ABB Australia Pty Limited, a company incorporated under the laws of New South Wales, was engaged in a dispute with the Commissioner of Taxation regarding the withholding tax liability on a dividend declared and paid to ABB Zurich, a non-resident Swiss company. The dispute involved the assignment of the right to receive the dividend from ABB Zurich to Barclays Bank Limited (BZW), a non-resident English company, and subsequently to Barclays Australia Limited (BAL), a resident Australian company. The central issue was whether ABB Australia was required to deduct withholding tax from the dividend payment and, if so, whether it fulfilled this obligation. The court needed to determine the legal implications of the assignment of the dividend right and whether the necessary statutory requirements for withholding tax deductions were met.

The court considered whether the assignment of the dividend right from ABB Zurich to BZW, and subsequently to BAL, was effectively communicated to ABB Australia. The court noted that while the assignment agreements were in writing and governed by English law, the requisite written notice under the Conveyancing Act 1919 (NSW) and the Law of Property Act 1925 (UK) was not provided to ABB Australia. The court held that since ABB Australia did not receive the required written notice of the assignment, it was not obligated to make the withholding tax deduction on the dividend payment. Consequently, the court found ABB Australia liable for the unpaid withholding tax, additional tax penalties, and general interest charges.

The court concluded that the application by ABB Australia to avoid liability for the withholding tax should be dismissed. The court ordered that ABB Australia pay the Commissioner’s costs associated with the proceedings. The court's decision hinged on the lack of proper notification of the dividend assignment to ABB Australia, which is a statutory requirement under the relevant Australian and English property laws.