British American Tobacco Australia Services Limited v Commissioner of Taxation

British American Tobacco Australia Services Limited (Appellant) appealed against the decision of the Federal Court of Australia (Court) that the Part IVA of the Income Tax Assessment Act 1936 (Cth) applied to a scheme carried out by the Appellant in relation to the disposal of certain Wills brands. The Appellant submitted that the primary judge’s conclusion that Part IVA applied was affected by error and that the primary judge should have concluded that the ruling or prevailing purpose of the scheme was to achieve the global merger by disposing of the 9 Wills brands as required by the Australian Competition and Consumer Commission. The Court was required to determine whether the primary judge’s conclusion that Part IVA applied was affected by error and whether the Appellant’s scheme was entered into or carried out for the dominant purpose of obtaining a tax benefit.

The Court found that the primary judge’s conclusion that Part IVA applied was not affected by error. The Court found that the primary judge had correctly identified the tax benefit that was the subject of the Commissioner’s Part IVA determination and that the Appellant’s scheme was entered into or carried out for the dominant purpose of obtaining that tax benefit. The Court found that the Appellant had failed to establish that the primary judge had focussed on a tax benefit different to the tax benefit the subject of the Commissioner’s Part IVA determination or that the Appellant’s scheme was not entered into or carried out for the dominant purpose of obtaining a tax benefit.

The appeal was dismissed, and the Appellant was ordered to pay the Respondent’s costs of and incidental to the appeal.