David Lynton as trustee for the David Lynton Superannuation Fund (Taxation)

This matter concerned an appeal by David Lynton, as trustee for the David Lynton Superannuation Fund, against objection decisions made by the Commissioner of Taxation. The dispute centred on the Commissioner's disallowance of tax benefits claimed by the Fund in relation to share trading activities undertaken during the 2012 and 2013 income years. The decision was made by Senior Member Egon Fice of the Administrative Appeals Tribunal.

The primary legal issues before the Tribunal were whether the impugned share trading transactions constituted a "scheme" for the purposes of section 177EA of the *Income Tax Assessment Act 1936* (ITAA 1936), and whether the Commissioner correctly disallowed the tax benefits, specifically imputation credits, arising from these transactions. A further issue was whether section 207-145 of the *Income Tax Assessment Act 1997* (ITAA 1997) applied to deny franking credits on shares held for less than 45 days as part of back-to-back transactions.

The Tribunal found that the share trading activities constituted a scheme under section 177EA of the ITAA 1936, and that each transaction could be viewed as a scheme in itself. The Tribunal disagreed with the taxpayer's argument that dividend or distribution washing was not contemplated by the ITAA 1936, noting that while subsequent legislation in the ITAA 1997 addressed these specific topics, it did not supersede the broader anti-avoidance provisions of section 177EA. The Tribunal concluded that the sole purpose of the transactions was to obtain an imputation benefit, as they provided no other economic benefit and likely resulted in an economic detriment without the claimed tax offset. Consequently, the Tribunal found that section 177EA(5)(b) was enlivened, and the Commissioner correctly determined that no imputation benefit arose from the distributions. The Tribunal also found that section 207-145 of the ITAA 1997 applied to deny franking credits on dividends from shares held for less than 45 days.

The Tribunal affirmed the Commissioner's objection decisions for the 2012 and 2013 income years, upholding the disallowance of the claimed tax benefits.