Kelly v Commissioner of Taxation (No 2)

In the Federal Court of Australia, Kelly v Commissioner of Taxation (No 2) involved the taxpayer, Mr Kelly, contesting the Commissioner's determination that a superannuation payment he received was not an allowable deduction. The central legal issues were whether Mr Kelly was an employee for the purposes of the Superannuation Guarantee (Administration) Act 1992, and whether he was entitled to the quantum meruit for services provided to the trustee company. The court was required to determine if the superannuation payment was an allowable deduction under section 290-60 of the Income Tax Assessment Act 1997, and whether the constitution of the trustee company justified remuneration for Mr Kelly's services. The Court held that the superannuation deduction was not allowable, and the Commissioner's determination was upheld.

The Court found that Mr Kelly's applications to review the Court's reasons and conclusions, and to revoke leave for the Commissioner to claim that the superannuation deduction was not allowable, should be refused. The Court determined that there had been no oversight or error in the earlier decision, Kelly No 1, and that any challenge to those conclusions should be made through an appeal rather than a review. The Court exercised its discretion under rule 17.01(3) of the Federal Court Rules 2011 to order that Mr Kelly pay the Commissioner's costs associated with the unsuccessful applications, while each party bore their own costs for the proceeding. The Court's final orders included a variation to the deemed objection decision, a remission to the Commissioner to amend the assessment, and a direction for the entry of costs.