Collie and Commissioner of Taxation (Taxation)

This matter concerned an appeal by the applicant, Mr. Collie, against amended income tax assessments issued by the Commissioner of Taxation. The dispute centred on whether Part IVA of the *Income Tax Assessment Act 1936* (Cth) applied to schemes entered into by the applicant, and whether a tax benefit was obtained. The applicant contended that due to his personal circumstances and asset protection strategies, he did not derive the disputed income and was not entitled to any trust income, thus Part IVA should not apply. He also argued that the dominant purpose of the schemes was not to obtain a tax benefit. The case was heard by Deputy President O'Loughlin KC of the Administrative Appeals Tribunal.

The Tribunal was required to determine two primary legal issues. Firstly, whether a relevant tax benefit, as defined by section 170C of the *Income Tax Assessment Act 1936* (Cth) as it stood prior to 2012 amendments, was obtained by the applicant. Secondly, the Tribunal had to consider whether the dominant purpose of the schemes entered into by the applicant was to enable him to obtain such a tax benefit, thereby engaging Part IVA. The applicant also raised a subsidiary argument that his personal circumstances meant it could not reasonably be expected that income would be appointed to him or that he would beneficially own assets of material value.

The Tribunal found that while the applicant's personal circumstances and the arrangements put in place were noted, the evidence provided did not assist in deciding the matters in dispute and was given no weight. The Tribunal determined that the applicant had assessable amounts in respect of the Income Earning Trusts' taxable income for the 1997 and later years pursuant to Part IVA, but these amounts were less than the Commissioner's determination of the relevant tax benefits. The Tribunal also concluded that a penalty at the rate of 50% was appropriate, applied to the corrected shortfalls, and that there were no grounds to remit any penalty.

The objection decisions under review were set aside and remitted to the Commissioner to be remade in accordance with the Tribunal's reasons. The penalty was to be recalculated by reference to the reduced tax benefit.