Dickinson v Commissioner of Taxation - [2013] HCATrans 27

[2013] HCATrans 027

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Sydney No S181 of 2013

B e t w e e n -
MATTHEW DICKINSON
Applicant
and
COMMISSIONER OF TAXATION
Respondent
Application for special leave to appeal

KIEFEL J
GAGELER J

TRANSCRIPT OF PROCEEDINGS

AT SYDNEY ON FRIDAY, 14 FEBRUARY 2014, AT 10.48 AM

MR B.W. WALKER, SC: May it please your Honours, I appear with my learned friends, MR J.O. HMELNITSKY, SC and MR D.P. HUME, for the applicant. (instructed by Balazs Lazanas & Welch LLP)

MR M. RICHMOND, SC: If the Court pleases, I appear with my learned friend, MR D.F.C. THOMAS, for the respondent. (instructed by Australian Government Solicitor)

KIEFEL J: Yes, Mr Walker.

MR WALKER: If it please your Honours, may I take your Honours directly to page 31 of the application book in order conveniently there to find not only the provisions but to start a reference to some of the reasons below. The critical expressions, as your Honours appreciate, include in section 124‑780(1)(b), the word “arrangement”. Over the page, there is a familiar and expansive definition of that which really is not much more than the ordinary meaning of the word “arrangement”.

The matters which, in our submission, highlight the discordance of the decision below with the intended relief surely to be seen in these provisions comes from subsection (2) and in subsection (2) one sees that the success of the arrangement in the course of which, by no doubt many, many separate transactions and conveyances, some people take money and some people take shares - it is the taking of shares that matters here - the success need not be complete. So, one knows that up to 20 per cent of the persons to whom – I will call them offers, or possibilities are made available – to use a loaded word – do not take them up.

Then, the next element I want to take you to is, of course, the words which are at the heart of the argument below and which we offer to this Court as important words for a purposive understanding – provisions which are of quite obvious significance in the commerciality of very important commercial dealings – commerciality because of the tax treatment – commerciality because it involves leaving money invested in endeavours rather than cashing out upon their transformation by mergers and acquisitions. One sees in subsection (2)(c) then, this critical phrase:

participation was available on substantially the same terms for all of the owners of interests –

So that will be, in the most straightforward or ordinary case, that will be the 100 per cent.

KIEFEL J: But as a matter of fact they were not, were they? Is your argument that because of Photon’s indifference, there was a possibility that they could have been otherwise?

MR WALKER: Yes, is the short answer. Photon’s indifference – and that is the language…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Dickinson v Commissioner of Taxation

Details

AGLC: Dickinson v Commissioner of Taxation [2013] HCATrans 27
Case: [2013] HCATrans 27
Decision Date

CaseChat Overview and Summary

The case of *Dickinson v Commissioner of Taxation* concerned a dispute between the taxpayer, Ms. Dickinson, and the Commissioner of Taxation regarding the deductibility of certain expenses. The matter came before the High Court of Australia, with judgment delivered by Kiefel and Gageler JJ.

The central legal issue before the High Court was whether the expenses incurred by Ms. Dickinson in relation to her participation in a scheme involving the acquisition and disposal of shares in a company, which she claimed were deductible under section 8-1 of the *Income Tax Assessment Act 1997* (Cth), were indeed allowable. This required the Court to consider the nature of the expenditure and its connection to the derivation of assessable income.

Kiefel and Gageler JJ reasoned that the expenses were not deductible because they were not incurred in gaining or producing assessable income, nor were they necessarily incurred in carrying on a business. Their Honours applied the principles established in cases such as *FCT v. Europa Oil (NZ) Ltd* and *Sun Newspapers Ltd v. FCT*, emphasizing that the character of the expenditure must be determined by its objective nature and purpose. In this instance, the Court found that the expenses were of a capital or private nature, or related to a scheme that did not have the character of a business operation for the taxpayer.

The appeal was dismissed, and the taxpayer was ordered to pay the Commissioner's costs.

Orders