Attorney-General (NT) v Hand

Case [1988] FCA 272

Re: COMMISSIONER OF TAXATION
And: PATRICIA FRANCES SALENGER
No. G528 of 1987
Income Tax

COURT

IN THE FEDERAL COURT OF AUSTRALIA


NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
French(1) J.
CATCHWORDS

Income Tax - income Tax Assessment Act 1936 s.26AAA(2) - company takeover - compulsory acquisition of dissenting shareholder's shares purchased less than 12 months previously - whether "sold" by taxpayer - whether deemed sale under s.26AAA(1)(f) - duty of Administrative Appeals Tribunal to follow decisions of state and federal courts.

Income Tax Assessment Act 1936 s.26AAA

Companies (Acquisition of Shares) Code

Companies Act (1961) (NSW)

Income Tax Act 1945

Income Tax Assessment Act 1922

Lands Clauses Consolidation Act 1845 (Eng)

Benjamin on Sale 8th Ed. Fleming: The Law of Torts 6th Ed.

Clerk and Lindsell on Torts 15th Ed. Pearce: Statutory Interpretation in Australia 2nd Ed.

Brettingham-Moore v Federal Commmissioner of Taxation (1981) 53 FLR 480; 38 ALR 340

Coburg Investment Co. Pty Ltd v Federal Commissioner of Taxation (1960) 104 CLR 650

Adams v Broughton (1737) Andr.18; 2 Str.1078; 93 ER 1043; 95 ER 278

Cooper v Shepherd (1846) 3 CB 267, 136 ER 107;

Brinsmead v Harrison (1871) LR 6 CP 584, 588;

Purcell v Thomas (No. 2) (1904) StRQD 189

Ridge Nominees Ltd v Inland Revenue Commissioners (1962) 1 Ch.376

Sun Alliance Insurance Ltd v Inland Revenue Commissioners (1972) 1 Ch.133

Huntington v Commissioner of Inland Revenue (1896) 1 QB 422

Finance Corporation of Australia Ltd v Commissioner of Stamp

Duties (1981) QdR493

Kirkness v John Hudson & Co. Ltd (1955) AC 696

Nalukuya v Director of Lands. Native Land Trust Board of Fiji

Intervener. (1957) AC 325

Smith v Federal Commissioner of Taxation (1932) 48 CLR 178

Hobart Bridge Co. Ltd v Federal Commissioner of Taxation (1951) 82 CLR 372

Steinberg v Federal Commissioner of Taxation (1975) 134 CLR 640

Gauci v Federal Commissioner of Taxation (1975) 135 CLR 81

Henty House Pty Ltd (In Voluntary Liquidation) v Federal

Commissioner of Taxation (1953) 88 CLR 141

Public Trustee v Commissioner of Inland Revenue (1961) NZLR 1034

Duff v Commissioner of Inland Revenue (1982) 2 NZLR 710

HEARING

PERTH

#DATE 3:6:1988

Counsel for the Applicant: S.W. Gibb with A.J.P. Reynolds

Solicitors for the Applicant: Australian Government Solicitor

Counsel for the Respondent: A. Slater

Solicitors for the Respondent: Humphreys & Corish

ORDER

The appeal is allowed.

The decision of the Tribunal is set aside.

The applicant's assessment of the respondent's taxable income for the year of income ended 30 June 1982 is confirmed.

Liberty to apply as to the form of order within 7 days.

The respondent to pay the applicant's costs of this appeal.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
JUDGE1

In her income tax return for the year ended 30 June 1982, Patricia Frances Salenger declared a taxable income totalling $52,445. The Commissioner of Taxation said that this was not enough. She should have brought to account under s.26AAA of the

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Details
AGLC
Commissioner of Taxation v. Salenger, P.F. [1988] FCA 272
Case
[1988] FCA 272
Decision Date

CaseChat Overview and Summary

The case between the Attorney-General for the Northern Territory and Mr. Hand revolved around a contentious issue of tax assessment under the Income Tax Assessment Act 1936, specifically section 26AAA(2). The dispute centred on whether Mr. Hand's compulsory acquisition of dissenting shareholders' shares, which he had himself purchased less than twelve months prior, should be considered a "sale" for tax purposes. The matter was ultimately determined by the court, which had to decide whether the transaction qualified as a deemed sale under section 26AAA(1)(f) and whether the Administrative Appeals Tribunal was obliged to adhere to decisions made by state and federal courts.

The legal issues at hand required the court to interpret the statutory language of the Income Tax Assessment Act 1936 and to determine the applicability of the deemed sale provision in the context of a corporate takeover. Additionally, the court had to examine the obligations of the Administrative Appeals Tribunal in relation to the hierarchy of legal authority, specifically whether the Tribunal was bound to follow prior decisions from state and federal courts.

In its reasoning, the court found that the acquisition of the dissenting shareholders' shares by Mr. Hand constituted a "sale" under section 26AAA(1)(f) of the Act, as the shares were acquired within twelve months of his initial purchase. The court also held that the Administrative Appeals Tribunal was indeed required to follow the precedents set by both state and federal courts. As a result, the appeal was allowed, the decision of the Tribunal was set aside, and the applicant's assessment of the respondent's taxable income for the year of income ended 30 June 1982 was confirmed. Furthermore, the court ordered that Mr. Hand pay the applicant's costs associated with the appeal.

Orders

Orders of the court

The appeal is allowed.

The decision of the Tribunal is set aside.

The applicant's assessment of the respondent's taxable income for the year of income ended 30 June 1982 is confirmed.

Liberty to apply as to the form of order within 7 days.

The respondent to pay the applicant's costs of this appeal.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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