BOWDEN & BOWDEN

The parties to this proceeding were the applicants, Bowden & Bowden, and the respondent, the Commissioner of Taxation. The dispute concerned the Commissioner's assessment of additional income tax and penalties against the applicants for the 2015, 2016, and 2017 income years. The matter came before Macmillan J of the Federal Court of Australia.

The primary legal issue before the Court was whether the Commissioner had correctly applied the general anti-avoidance provisions of Part IVA of the *Income Tax Assessment Act 1936* (Cth) to the applicants' tax arrangements. Specifically, the Court was required to determine if the dominant purpose of entering into or carrying out the relevant schemes was to obtain a tax benefit, and if so, whether that benefit should be cancelled.

Macmillan J found that the Commissioner had discharged the onus of proof resting upon him to establish that the dominant purpose of the applicants in entering into the schemes was to obtain a tax benefit. His Honour considered the objective circumstances surrounding the transactions, including the lack of commercial rationale apart from the tax advantages, the timing of the arrangements, and the involvement of advisors. The Court applied the principles established in cases such as *FCT v Hart* and *FCT v Bywater*, focusing on the objective identification of the dominant purpose.

The Court therefore upheld the Commissioner's assessments and dismissed the applicants' appeal.