Lock v Commissioner of Taxation

In Lock v Commissioner of Taxation, the applicants, trustees of two superannuation funds, challenged the decisions of the Australian Prudential Regulation Authority (APRA) that their funds were non-complying superannuation funds for the years 1994-1995 and 1995-1996. The applicants argued that they did not acquire any assets from members of the funds, and therefore did not contravene section 66(3) of the Superannuation Industry (Supervision) Act 1993. The applicants further argued that if there was an acquisition, it was of units in the trust, not the underlying real estate, and thus avoided the application of section 66(1) of the Act.

The court had to determine whether the applicants' acquisition of units in a trust owning real estate, under their control, constituted a contravention of section 66(3) of the Act. The court also had to consider whether the acquisition of units in the trust, rather than the underlying real estate, avoided the application of section 66(1) of the Act. The applicants argued that section 66(3) only applied to acquisitions by the trustee of a regulated superannuation fund, but the court noted that section 66(3) also proscribes conduct by persons other than the trustee. The court further noted that section 66(3) prohibits not only entering into or commencing to carry out a scheme, but also carrying out any part of the scheme with the intention that the acquisition would avoid the application of section 66(1) of the Act.

The court found that the applicants' acquisition of units in a trust owning real estate, under their control, constituted a contravention of section 66(3) of the Act. The court also found that the acquisition of units in the trust, rather than the underlying real estate, did not avoid the application of section 66(1) of the Act. The court concluded that the acquisition was part of a scheme with the intention that it would avoid the application of section 66(1) of the Act, and therefore constituted a contravention of section 66(3) of the Act. The appeal was dismissed, and the applicants were ordered to pay the respondent's costs of and incidental to the appeal.