Grant and Commissioner of Taxation (Taxation)

The applicant, Mr Grant, sought to challenge income tax assessments made by the Commissioner of Taxation. The dispute concerned whether certain income was ordinary income derived by Mr Grant or trust income, and whether Part IVA of the *Income Tax Assessment Act 1936* (Cth) applied to the arrangements in question. Mr Grant contended that due to his personal circumstances and asset protection measures, including the NVI Scheme, he did not derive the disputed income, was not entitled to trust income, and that Part IVA did not apply. The Commissioner argued that the moneys that passed were Mr Grant's money and not loans, and that he had failed to prove otherwise.

The court was required to determine whether the moneys that moved between entities, including to Mr Grant, constituted loans or distributions of income by trustees. This characterisation was critical for assessing whether the income was ordinary income under section 6-5 of the *Income Tax Assessment Act 1997* (Cth) or section 25(1) of the *Income Tax Assessment Act 1936* (Cth), or alternatively, trust income under section 97 of the 1936 Act. A further issue was whether the arrangements were entered into with the dominant purpose of obtaining a tax benefit, thereby attracting the application of Part IVA.

The court considered the essence of a loan, which is an obligation to repay. It noted that a loan can be established orally, by conduct, or through a combination of both, and that book entries can suffice as evidence. The absence of a formal contract document was not determinative. The court found that the applicant's submissions regarding the capacity of the Tribunal to impose a deferred time for payment under section 25-510 were not supported by the authorities.

The objection decisions under review were set aside and remitted to the Commissioner to be remade in accordance with the court's reasons.