Commissioner of Taxation v Commercial Nominees of Australia Limited

The Commissioner of Taxation appealed to the High Court of Australia against a decision of the Full Federal Court concerning the deductibility of prior year losses by a superannuation fund. The dispute centred on whether the trustee of the superannuation fund, Commercial Nominees of Australia Limited, was entitled to claim losses incurred in earlier income years as allowable deductions in a subsequent income year, despite amendments made to the trust deed between the periods when the losses were incurred and the year of income in question.

The High Court was required to determine whether the amendments to the trust deed constituted a re-settlement of the trust, thereby breaking the continuity of the superannuation fund for the purposes of Part IX of the *Income Tax Assessment Act 1936* (Cth). The core legal issue was whether the fund maintained sufficient continuity between the period in which the losses were incurred and the year of income for the losses to remain available as deductions.

The Court held that the amendments to the trust deed did not amount to a re-settlement of the trust in a manner that would break the continuity of the fund. The judges applied principles relating to the continuity of trusts, considering various indicia that demonstrate whether a trust has remained the same entity over time. They found that the essential character and purpose of the superannuation fund had been preserved, notwithstanding the changes to its governing deed. The appeal was dismissed with costs.