Commissioner of Taxation v Rowntree

In the Federal Court of Australia, the Commissioner of Taxation brought proceedings against Dr Rowntree, Mr Donkin, and Mr Manietta, alleging that each had engaged in conduct that resulted in them or another entity being a promoter of a tax exploitation scheme in each of the 2009, 2010, 2011, and 2012 tax years, in contravention of s 290-50(1) of Schedule 1 to the Taxation Administration Act 1953 (Cth). The court had to determine whether each respondent engaged in conduct that resulted in them or another entity being a promoter of a tax exploitation scheme, and whether each scheme involved tax evasion within the meaning of s 290-55(6) of the same Act, so that the 4-year limitation period did not apply.

The court found that the schemes involved the purchase of carbon or REDD credits that did not exist at the time of the purchase, and that the investors claimed tax deductions for the full price of the credits in the year of entry into the purchase contract. The court held that each respondent had a substantial role in marketing or promoting the tax exploitation scheme, and that the investors' sole or dominant purpose for entering into the scheme was to obtain a tax benefit that was not reasonably arguably available at law. The court also found that the schemes involved tax evasion, as the Commissioner did not bring the proceeding within the four-year period provided in s 290-55(4) of the Act. Therefore, the limitation period did not apply, and each respondent could be liable for a civil penalty under s 290-50 of the Act as a promoter of the tax exploitation scheme.

The court ordered that the proceeding be listed for a case management hearing on 16 October 2020, and that the parties file and serve their outlines of evidence of the lay witnesses and their experts' affidavits by a specified date. The court also ordered that the Commissioner serve his evidence and an amended statement of claim on Mr Manietta's trustee in bankruptcy and him at his residential address as recorded in the Commonwealth electoral roll. The court made findings of fact that affected Mr Manietta on the basis that it was satisfied of those facts on the balance of probabilities, having regard to the matters specified in s 140 of the Evidence Act 1995 (Cth).