Duncan and Commissioner of Taxation (Taxation)

The Administrative Appeals Tribunal considered an objection decision by the Commissioner of Taxation concerning the applicant's tax assessment. The dispute arose from the applicant's role as managing director of the Keystone Group, which entered external administration and liquidation. The applicant sought to deduct an outgoing, which the Commissioner disallowed.

The Tribunal was required to determine whether the outgoing incurred by the applicant was an allowable deduction for the purpose of gaining or producing assessable income, and whether the outgoing was of a capital or capital nature. A further issue concerned whether the applicant acted in his capacity as a director in relation to the company's insolvent trading.

The Tribunal noted that the applicant was appointed managing director in June 2015, and by June 2016, receivers and administrators were appointed to the Keystone Group. The applicant continued to assist the receivers and directors in the sale process, with incentive arrangements in place that required him to comply with his duties under sections 180 to 184 of the Corporations Act 2001 (Cth). The administrators' report indicated that the Keystone Group showed indicia of insolvency from at least December 2015 and addressed potential insolvent trading claims against directors under sections 588G and 588M of the Corporations Act. Given the findings regarding the applicant's role and the company's insolvency, the Tribunal found it unnecessary to address the applicant's submission that the outgoing was not of a private or domestic nature.

The Tribunal affirmed the objection decision made by the Commissioner of Taxation on 21 November 2018.