Michael John Hayes Trading Pty Ltd as trustee of the MJH Trading Trust and Commissioner of Taxation (Taxation)
[2023] AATA 3005
•20 September 2023
Michael John Hayes Trading Pty Ltd as trustee of the MJH Trading Trust and Commissioner of Taxation (Taxation) [2023] AATA 3005 (20 September 2023)
Division:TAXATION AND COMMERCIAL DIVISION
File Number: 2017/2813
Re:Michael John Hayes Trading Pty Ltd as trustee of the MJH Trading Trust
APPLICANT
AndCommissioner of Taxation
RESPONDENT
File Number: 2017/2812
Re:John Hayes Trading Pty Ltd as trustee of the JPH Trading Trust
APPLICANT
AndCommissioner of Taxation
RESPONDENT
File Number: 2017/2814
Re:Bryan Hayes Trading Pty Ltd as trustee of the BGH Trading Trust
APPLICANT
AndCommissioner of Taxation
RESPONDENT
File Number: 2017/2815
Re:Paul Hayes Trading Pty Ltd as trustee of the PAH Trading Trust
APPLICANT
AndCommissioner of Taxation
RESPONDENT
DECISION
Tribunal:F D O’Loughlin KC, Deputy President
Date:20 September 2023
Place:Melbourne
The Commissioner’s objection decisions are set aside and in lieu thereof the objections are allowed in full.
....................[sgd]....................................................
F D O’Loughlin KC, Deputy President
CATCHWORDS
TAXATION — whether dividends were part of a dividend stripping operation within the meaning of s 207-155 of the1997 Assessment Act — whether dividends were paid as part of a scheme entered for a tax avoidance purpose — decision set aside and substituted
LEGISLATION
Corporations Act 2001 (Cth)
Income Tax Assessment Act 1936 (Cth)
Income Tax Assessment Act 1997 (Cth)
CASES
BBlood Enterprises Pty Ltd v F. C. of T. & B&F Investments Pty Ltd as Trustee for the Illuka Park Trust v F. C. of T. [2023] FCAFC 89
BBlood Enterprises Pty Ltd vF. C. of T. [2022] FCA 1112
CPH Property Pty Ltd v F. C. of T. (1998) 88 FCR 21
Deputy Commissioner of Taxation v Black (1990) 25 FCR 274
Esquire Nominees Limited v F. C. of T. (1973) 129 CLR 177
F. C. of T. v Consolidated Press Holdings Ltd (No 1) (1999) 91 FCR 524
F. C. of T v Consolidated Press Holdings Ltd (2001) 207 CLR 235
Lawrence v F. C. of T. (2009) 175 FCR 277
Lawrence v F.C. of T. [2008] FCA 1497Taxpayer v F.C. of T. [2010] AATA 497
REASONS FOR DECISION
F D O’Loughlin KC, Deputy President
BACKGROUND
The present applications concern whether fully franked dividends paid in May 2010[1] by each of four Hayes Group Operating Companies[2] to the Applicants constituted distributions ‘made as part of a dividend stripping operation’ within the meaning of s 207-155 of the 1997 Assessment Act.[3]
[1]The present dispute is a long history. An audit of the Hayes brothers’ affairs began in March 2014. A position paper was issued in May 2015 and reasons for audit decisions were given in September 2015. Objections were lodged in November 2015 and were decided in March 2017. Applications were lodged for review in the Tribunal were in May 2017 that were held pending the outcomes in Trustee for the Michael Hayes Family Trust v F. C. of T. [2019] FCA 426 and F. C. of T v The Trustee for the Michael Hayes Family Trust (2019) 273 FCR 567.
[2]Malacorp Pty Ltd (“Malacorp”), Fuentes Pty Ltd (“Fuentes”) MJB&P Pty Ltd (“MJB&P”) and MBJP Hayes Investments Pty Ltd (“Hayes Investments”) collectively, and each an Operating Company.
[3]The Income Tax Assessment Act 1997 (Cth).
Each of the four Hayes Group Operating Companies had profits available for distribution to shareholders. Each of them also had franking account balances to enable the dividends that were paid to be franked, and each of them paid significant dividends to new shareholders (the Applicants) in respect of newly created and issued shares.
The Applicants are companies who act as trustees of four trusts that are treated as companies by the Assessment Acts[4] for some tax purposes. The four (trustee) companies were acquired in February 2010 by members of the Hayes family and shortly thereafter became trustees of trusts that were formed with particular features or attributes (so as to attract the Trading Trust rules[5]) to participate as Trading Trusts in a reorganisation of the Hayes Group[6] late in the 2010 Year.[7]
[4]The 1997 Assessment Act and the Income Tax Assessment Act 1936 (Cth) (the “1936 Assessment Act”).
[5]1936 Assessment Act, Division 6C.
[6]The Family of Cecil and Shirley Hayes and the companies, trusts, partnership and superannuation entities connected with them listed in paragraph 28 below.
[7]A Year being a year of income, normally (as is applicable in the present circumstances) a 12 month period that ends on 30 June in a calendar year.
Shortly after the Applicants were formed, in different combinations two of the Applicants each acquired 10 Z Class shares (shares with special rights) for $1 per share in three of the four Hayes Group Operating Companies,[8] and the other two Applicants[9] each acquired 10 Z Class shares for $1 per share in each of the four Hayes Group Operating Companies. The Z Class shares acquired ‘proved to be a good bargain’.[10] Later, on the day the Applicants acquired those shares, the four Hayes Group Operating Companies declared and paid fully franked dividends totalling $8,008,459.72 to the holders of the Z Class shares.
[8]The MJH Trading Trust acquired 10 Z Class shares in each of Fuentes, MJB&P and Hayes Investments and the PAH Trading Trust acquired 10 Z Class shares in each of Malacorp, MJB&P and Hayes Investments.
[9]The BGH Trading Trust and the JPH Trading Trust.
[10]Adopting an expression used by Gibbs J in Esquire Nominees Limited v F. C. of T. (1973) 129 CLR 177 at p 184 which is apt in the present setting.
In their 2010 Year income tax returns, each Applicant included the franked dividend amounts and the associated franking credit amounts in its assessable income and claimed tax offsets[11] on account of those franking credits. The effect of the tax offset was to shelter the franked dividends from tax: in cash flow and economic terms the franked dividends were received free of any tax burden. Each Applicant contends it was entitled to the tax offsets claimed.
[11]Pursuant to 1997 Assessment Act, s 207-20.
The Commissioner disagrees. He says that all of the dividends that were paid to the Applicants were distributions made as part of a dividend stripping operation[12] because those dividends were paid pursuant to a scheme that:
(a)was by way of, or in the nature of, dividend stripping; or
(b)had substantially the effect of a scheme by way of, or in the nature of, dividend stripping,
with the effect that the amounts of the franking credits associated with the dividends are not included in the Applicants’ assessable income,[13] and the Applicants are not entitled to tax offsets for these amounts,[14] while the dividends received remain included in the Applicants’ assessable incomes.
[12]Meeting the terms of the 1997 Assessment Act, s 207-145(1)(d).
[13]By operation of 1997 Assessment Act, s 207-145(1)(e).
[14]By operation of 1997 Assessment Act, s 207-145(1)(f).
At the core of the dispute is whether the relevant purpose in carrying out the 2010 Hayes Group reorganisation was tax avoidance. The Applicants contend that it was not, and that the purpose was to secure better asset protection features of the asset ownership arrangements within a group of family entities, and to streamline those arrangements. The Commissioner contends the purpose was to avoid tax.
The Commissioner does not allege that the transactions were shams. He accepts that the transactions entered into produced the legal and or equitable effect they purport to have produced. Further, the Commissioner has not sought to apply Part IVA of the 1936 Assessment Act to a tax benefit comprising an assumed payment of a dividend to any alternative recipient, or to any amount of tax benefit that may otherwise have arisen for Hayes family members or entities, or to arrangements that allowed loans to be made by entities that were treated as companies for some purposes but not Division 7A[15] purposes.
[15]1936 Assessment Act, Division 7A.
The transactions entered into to pay the challenged dividends to the Applicants and to use the funds representing those dividends after the dividends were paid were of a kind that would naturally attract curiosity. Those transactions were:
(a)designed and/or formulated:
(i)by solicitors;[16];
[16]Cleary Hoare.
(ii)having particular regard to various 1936 Assessment Act rules that are not of common application; and
(iii)to pass corporate wealth to an unexpected new owner in an unusual way;
(b)the subject of professional advice;
(c)effected by executing documents, entering accounting journals, and executing and passing BPNs;[17] and
[17]Bearer Promissory Notes.
(d)executed in a short space of time, and in a choreographed manner and order.
(i)Each Operating Company that issued the newly created Z Class shares observed constitutional and the Corporations Act[18] obligations and offered the new shares first to existing shareholders. Each offer was declined. On the same day that these offers were made and declined, the Applicants took up the opportunity to acquire the previously offered and declined Z Class shares. Dividends were paid on the same day.
(ii)The funds representing the dividends paid were earmarked to be provided by the dividend recipient Applicant to either:
·a Hayes brother (or group of brothers jointly) by way of loan, so he (or they) could repay debts owed to the Operating Company paying the dividend or another related entity; or
·by way of loan directly back to the Operating Company paying the dividend or another related entity,
such that the funds represented by the dividend were returned (by way of loan or debt repayment) to the Operating Company that paid the dividend or another related entity.
(iii)Each dividend payment, loan or debt repayment transaction was effected by passing a BPN. The dividend payments were effected by passing one or more BPNs with an aggregate face value equal to the dividend amount paid, with each BPN having a face value reflecting the intended next use of the funds represented by the BPN. Ultimately each BPN was passed back to the issuer/obliged party as part of a further transaction, whereupon the BPN being held by its obliged party was cancelled.
[18]The Corporations Act 2001 (Cth).
The transactions were effected in accordance with advice received, and having regard to the evidence, including that of the accounting adviser and tax agent Mr Miller, it can be concluded that the entities that entered into and effected the transactions or the individuals who caused that to happen were to various extents unaware of the finer details of the significance or effect of all of what they were doing and of the relevant taxation and other rules serviced by the form, manner and order of the transactions entered.
The parties do not dispute the transactions that were entered into or carried out. Further, they agree that those transactions and the circumstances in which they were entered into or carried out mean that at least some elements of what is necessary to constitute a dividend stripping operation are satisfied. The parties agree:
(a)the four Hayes Group Operating Companies had retained profits (and three of them current Year profits as well);
(b)had those profits been distributed without changes to shareholding structures, tax liabilities would have arisen;
(c)new shares in the Hayes Group Operating Companies were acquired by new shareholders (the Applicants);
(d)dividends were paid to the new shareholders shortly after the Applicants acquired the new shares;
(e)the dividends were paid following external advice, careful planning of the steps taken with all relevant parties acting in concert; and
(f)if the requisite tax avoidance purpose is not present then neither of the the s 207-155(a) (first limb) or (b) (second limb) tests apply.
The parties dispute the proper answers to three questions.
(a)Whether the Applicants received the dividends free of tax (in the relevant sense)?
(b)Whether the pre-existing shareholders received non-taxable or capital amounts in full or sufficiently partial substitution for the dividends paid to the new shareholders?
(c)Whether the required sole or dominant purpose was to avoid tax?
Resolution of the dispute calls for an understanding of family asset and business ownership arrangements involving a number of family members, partnership, trust and corporate entities, the advice the family had received, reorganisation steps taken in 2007 and 2010, and their effect. To the extent relevant, the context in which events happened may also permit an understanding of the goals of, and advice given by, the advisors involved in formulating and effecting the transactions in dispute. These factual matters also need to be viewed in the context of what the authorities say the elements of dividend stripping operations are.
The legislation
The reach of s 207-155 is critical to resolution of the present disputes. Section 207-155 is in the following terms:
207-155 When is a distribution made as part of a dividend stripping operation?
A distribution made to a * member of a * corporate tax entity is taken to be made as part of a dividend stripping operation if, and only if, the making of the distribution arose out of, or was made in the course of, a * scheme that:
(a)was by way of, or in the nature of, dividend stripping; or
(b)had substantially the effect of a scheme by way of, or in the nature of, dividend stripping.
Section 207-155 is part of a suite of rules directed to prevent manipulation of ‘the imputation system in a manner that is not permitted under the income tax law [by]…cancel[ling] the effect of the gross-up and tax offset rules’.[19] Viewed holistically, the dividend imputation rules and their associated integrity rules seek to align the benefit of imputation credits with those who are sufficiently the owners of the shares and in a sense entitled to the company profits.
[19]1997 Assessment Act, s 207-140.
The dividend stripping authorities
Consistent explanations of the elements of a dividend stripping operation or a scheme of that nature or effect have been given by courts here and in the United Kingdom over an extended period.
The Consolidated Press Full Court appeal decision[20] summarised Australian and United Kingdom authorities[21] to the effect that there are six common characteristics of dividend stripping operations:
(a)‘a target company, which had substantial undistributed profits creating a potential tax liability either for the company or its shareholders;’
(b)‘the sale or allotment of shares in the target company to another party …;’
(c)‘the payment of a dividend to the purchaser or allottee of the shares out of the target company’s profits;’
(d)‘the purchaser escaping Australian income tax on the dividend so declared (whether by reason of a s 46 rebate, an offsetting loss on the sale of the shares, or the fact that the shareholders were resident outside Australia);’
(e)‘the vendor shareholders receiving a capital sum for their shares in an amount the same as or very close to the dividends paid to the purchasers (there being no capital gains tax at the relevant times).’ And
(f)careful planning ‘with all the parties acting in concert, for the predominant if not the sole purpose of the vendor shareholders, in particular, avoiding tax on a distribution of dividends by the target company.’[22]
[20]F. C. of T. v Consolidated Press Holdings Ltd (No 1) (1999) 91 FCR 524, French, Sackville and Sundberg JJ.
[21](1999) 91 FCR 524 [132]–[137].
[22]F. C. of T. v Consolidated Press Holdings Ltd (No 1) (1999) 91 FCR 524 [136]-[137] (French, Sackville and Sundberg JJ) referring to Gibbs J in F. C. of T. v Patcorp Investments Ltd (1976) 140 CLR 247 and his honour’s references there to Bell v F. C. of T. (1953) 87 CLR 548; Newton v F. C. of T. (1958) 98 CLR 1 (PC); Hancock v F. C. of T. (1961) 108 CLR 258; F. C. of T. v Ellers Motor Sales Pty Ltd (1972) 128 CLR 602, and to See CJ Vincent, “Dividend Stripping: stricto sensu or strictly senseless” (1989) 24 Taxation in Australia 82, at p 92. These references were endorsed in BBlood Enterprises Pty Ltd vF. C. of T. [2022] FCA 1112 (BBlood) at [311] and [312] by Thawley J.
The Full Court agreed with and endorsed the Consolidated Press summary in its Lawrence appeal decision[23] and again in its BBlood appeal decision,[24] the latter also endorsing the Lawrence appeal decision.
[23]Lawrence v F. C. of T. (2009) 175 FCR 277 [42]–[43].
[24]BBlood Enterprises Pty Ltd v F. C. of T. and B&F Investments Pty Ltd as Trustee for the Illuka Park Trust v F. C. of T. [2023] FCAFC 89, Moshinsky, Colvin and Hespe JJ.
The hallmark among the six characteristics of dividend stripping operations is the tax avoidance purpose, which possibly explains why rules to address dividend stripping operations are now found in general anti-avoidance rules and franking credit anti-manipulation rules and were previously found in a provision denying entitlements to inter-corporate dividend rebates. That characteristic of dividend stripping schemes and operations is pivotal to resolving the present disputes.
Further, the emphasis is on the ‘purpose of the vendor shareholders, in particular, avoiding tax on a distribution of dividends by the target company’.[25] This emphasis in effect acknowledges that the recipient of a dividend enjoying the benefit of credits, rebates or tax offsets in connection with the dividend is a feature of the tax system. Enjoying this feature of the tax system is not of itself determinative. Subject to meeting applicable at-risk rules, franking credit tax offsets would be available in the same amount to an original shareholder and a new shareholder in a company, so the fact a new shareholder obtains a tax offset benefit, of itself, is not determinative. In the Lawrence primary decision[26] the Court concluded that in both the Plaster Plus and Zinkris schemes ‘… the profits of the target company would effectively have been disposed of, and would no longer have been a potential source of income tax obligation, either for the taxpayer or for anybody else’[27] and that the amount of loan capital available to the family members associated with the dividend stripping operations was substantially all of the profit stripped from the target companies. There, the focus was the dual features of the original shareholder enjoying the benefit of the amount of the dividend that escaped tax and the relevant profits never being taxable in anyone’s hands.
[25](1999) 91 FCR 524 [137].
[26]Lawrence v F. C. of T. [2008] FCA 1497, Jessup J.
[27][2008] FCA 1497 [84].
A beneficial tax effect (to use a neutral expression) of a series of transactions can be seen in terms of degree. At one end might be deferral of imposition of tax liability for the same taxpayer group without altering its quantum. Moving toward the other end might be shifting a tax liability to a different taxpayer group without altering its quantum. And at the other end might be removal of otherwise taxable amounts from the tax system completely. The closer a given setting is to the complete removal of taxable amounts from the tax system, the easier it will be to find that the requisite tax avoidance purpose is made out. This is particularly so in circumstances where the remaining elements of a dividend stripping operation are present.
There are two schools of thought concerning how the relevant purpose is to be determined.
(a)In the BBlood primary decision,[28] Thawley J noted that:
(i)Hill J’s observations in the Consolidated Press primary decision[29] (namely, that it is relevant to ask what conclusion an objective observer would reach as to why the scheme had taken place) were endorsed by the High Court in its Consolidated Press decision;[30]
(ii)the relevant test is the purpose of the vendor shareholders (who can be taken to include the existing shareholders) of the company pregnant with profits said to underly the dividend stripping operation, see [17(f)] above;
(iii)the conclusions of the assumed objective observer must be directed to the purposes of those shareholder entities determined by reference to objective facts and circumstances;
(iv)such an enquiry is but one tool in the process of determining purpose;
(v)there is no reason to exclude evidence of the individuals involved in the transactions concerning their subjective reasons for doing what was done; and
(vi)there isn’t anything other than an actual tax avoidance purpose that is relevant.[31]
(b)In the dividend stripping context, the BBlood Full Court referred to the Consolidated Press Full Court decision[32] and observed that ‘… whether a scheme is by way of or in the nature of dividend stripping did not involve an enquiry into the subjective purpose of any participant in the scheme. The purpose of the scheme was to be assessed objectively’.[33] The BBlood appeal decision also endorsed the six features of a dividend stripping operation, and suggested caution is required in accepting the conclusion that the second limb (s 207-155(b)) of the definition of a dividend stripping operation could involve an operation both with and without the payment of a dividend - as was endorsed by Thawley J in the BBlood primary decision and as is urged upon the Tribunal in the present matter.
[28]BBlood Enterprises Pty Ltd vF. C. of T. [2022] FCA 1112 Thawley J at [315].
[29]CPH Property Pty Ltd v F. C. of T. (1998) 88 FCR 21.
[30]F. C. of T v Consolidated Press Holdings Ltd (2001) 207 CLR 235 [132] and [125].
[31][2022] FCA 1112 [315].
[32](1999) 91 FCR 524 [174].
[33][2023] FCAFC 89 [108]. C.f. where the purpose to be established is of a person, a subjective test might be undertaken: see [2023] FCAFC 89 at [47], [50], and [55].
The Consolidated Press decisions are important. The underlying dispute concerned the dividend stripping rules in s 177E of the 1936 Assessment Act.[34] In that setting the Commissioner urged upon the Consolidated Press Full Court that:[35]
[34]The BBlood dispute was not a s 177E dispute but the statutory language is very similar.
[35](1999) 91 FCR 524 [105]–[107].
105 … The substantive purpose of the transaction was to confer a capital receipt upon the vendor shareholders which represented, in substance, profits of the UK companies. It was also to enable CPIL(B) to ‘strip’ the UK companies of their profits. The transaction did not lose its character as a dividend stripping scheme merely because the motive for the transaction was to reorganise a group of companies. It was not a requirement of a dividend stripping scheme that the objective purpose of the scheme be the avoidance of tax by the vendor shareholders.
106 In the alternative, the Commissioner argued that if, contrary to his submissions, an objective purpose of some kind was required for the operation of s 177E, it was only necessary to establish that the purpose was to enable the purchaser to strip the target of its distributable dividends. Moreover, the relevant purpose did not have to be the sole or dominant purpose; it was sufficient that the relevant purpose be a substantive, or not incidental, purpose of the scheme. A substantive, or not incidental, purpose of this transaction was to enable CPH and MLG to receive capital instead of distributions of profits and to allow CPIL(B) to strip the UK companies of their profits.
107In any event, the scheme had ‘substantially the effect of a scheme by way of or in the nature of dividend stripping’, within the meaning of s 177E(1)(a)(ii), in relation to both UK companies. According to the Commissioner, the characteristics of the scheme identified by him showed that the scheme had the relevant effect. The primary judge had reached a contrary conclusion with respect to CPIL(UK), but his Honour (so it was said) had overlooked the fact that there had been current year profits available for distribution.
in response to which the Full Court said:[36]
168 When the concept of a ‘dividend stripping’ scheme or arrangement was introduced into the ITAA in 1972, it was on the basis, expressed in the Explanatory Memorandum, that the concept had a widely understood connotation. This was also the basis for the use of the expression ‘scheme by way of or in the nature of dividend stripping’ in s 177E(1)(a). There is no other explanation for Parliament’s disinclination to define or clarify the expression.
169 The widely understood connotation was explained in the pre-1981 case law to which we have referred. The so-called dividend stripping cases invariably had as their dominant, if not exclusive, purpose the avoidance of tax that otherwise would or might be payable by the vendor shareholders in respect of the profits of the target companies. The apparent exceptions, such as Slutzkin, are readily explicable on the basis that the particular scheme, insofar as it involved vendor shareholders, was complete before the dividend stripper began its operations and thus could not itself be described as a dividend stripping operation. The case law preceding the 1981 Act strongly supports the view that Parliament framed s 177E(1)(a) on the basis that dividend stripping operations necessarily involve a predominant tax avoidance purpose.
170 This conclusion is reinforced by the extrinsic materials to which we have also referred. The Explanatory Memorandum and second reading speech accompanying the 1981 Bill emphasised that Part IVA, which includes s 177E, was concerned with ‘tax avoidance arrangements that ... are blatant, artificial or contrived’. According to the Explanatory Memorandum, Part IVA was not designed to catch arrangements of a normal business or family kind. Section 177E itself was to be a ‘self-contained code, within the framework of Part IVA” and was to deal with “dividend-stripping schemes of tax avoidance and certain variations on such schemes’.
171 These carefully formulated observations, in our opinion, clearly indicate that s 177E was intended to apply only to schemes which can be said to have the dominant purpose of tax avoidance. The section was not intended, in our view, to apply to a ‘scheme’ entered into or carried out primarily for business or other purposes unconnected with avoidance of tax, even if the scheme is implemented in a manner that produces taxation advantages: Spotless, at 425, per McHugh J. (We recognise, of course, that a taxpayer may have the dominant purpose of avoiding tax consistently with the pursuit of commercial gain in the course of carrying on a business: Spotless, at 415.) Since the section is directed at vendor shareholders participating in or benefiting from dividend stripping schemes, the required tax avoidance purpose is ordinarily that of enabling the vendor shareholders to receive profits of the target company in a substantially (if not entirely) tax-free form, thereby avoiding tax that would or might be payable if the target company’s profits were distributed to shareholders by way of dividends.
172 We accept that the concept of a tax avoidance ‘purpose’ is itself ambiguous. Depending on the statutory context, it can refer to the subjective intentions of particular persons. This was held to be the case, for example, with s 80B(5)(c) of the ITAA, which referred to an arrangement being entered into ‘for the purpose, or for purposes that included the purpose of enabling the company to take into account’ certain losses: K Porter & Co Pty Ltd v Federal Commissioner of Taxation (1977) 19 ALR 510, at 517, per Stephen and Murphy JJ; Federal Commissioner of Taxation v Students World (Australia) Pty Ltd [1978] HCA 1; (1978) 138 CLR 251, at 266-267, per Mason J.
173 Section 177D of the ITAA, on the other hand, in terms posits an objective test. The question posed by that provision is whether, having regard to the eight objective factors specified in s 177D(b), a reasonable person would conclude that the taxpayers entered into or carried out the scheme for the dominant purpose of enabling the taxpayers to obtain a tax benefit in connection with the scheme: Spotless, at 422. The expression ‘dominant purpose’ (which is the sense in which “purpose” is used in s 177D(b): see s 177A(5)) means ‘the ruling, prevailing, or most influential purpose’: Spotless, at 416.
174In our view, the first limb of s 177E(1) embraces only a scheme which can be said objectively to have the dominant (although not necessarily the exclusive) purpose of avoiding tax. The requirement of a tax avoidance purpose flows from the use by Parliament of the undefined expression ‘a scheme by way of or in the nature of dividend stripping’. What is important is the nature of the scheme, not the subjective motives or intentions of any of the participants or the beneficiaries. The purpose of the scheme is to be assessed from the perspective of the reasonable observer, having regard to the characteristics of the scheme and the objective circumstances in which the scheme was designed and operated.
[36](1999) 91 FCR 524 [168]–[174].
The Consolidated Press Full Court:
(a)observed[37] that the objective examination of the circumstances of the relevant transaction had been correctly considered by the primary judge, Hill J, to have been a corporate reorganisation effected for commercial purposes albeit there were advantageous taxation effects. Amounts that what may otherwise have been received as taxable dividends were received as a non-taxable capital sum. In those circumstances the dominant purpose of the scheme was not to enable shareholders to avoid paying tax on dividends from company profits; and
(b)noted:[38]
176… The documentation attending the scheme was consistent with the object of restructuring the group so as to overcome the threat of double taxation, while still maintaining a future stream of dividends to the Australian controllers. Had the scheme not been entered into, the UK companies would have been exposed to double taxation in respect of future earnings. By contrast, as the primary judge pointed out, the UK companies were under no immediate obligation to distribute their accumulated profits.
177 The scheme involved the distribution of assets of far greater value than the accumulated and current year profits of the UK companies. As we have observed, this fact suggests that the scheme is not one by way of or in the nature of dividend stripping. In the circumstances of this case, it reinforces the conclusion that the dominant purpose of the scheme was to avoid threatened double taxation, rather than to convert the taxpayer’s entitlement to dividends into receipt of a capital sum. This conclusion is also reinforced by the fact that the taxpayer received assessable capital gains as the consideration for the transfer of the shares in the UK companies.
178For these reasons, the scheme was not by way of or in the nature of dividend stripping and therefore was not within the first limb of s 177E(1)(a) of the ITAA.
[37](1999) 91 FCR 524 [175].
[38](1999) 91 FCR 524 [176]–[178].
In the Consolidated Press primary decision, Hill J noted that any tax advantages to the stripper (e.g. rebates, the contemporary equivalent being tax offsets for franking credits) are not an essential ingredient in a dividend stripping scheme, a connection between the stripper and the shareholder is not critical either, and what is required is an enquiry as to whether a reasonable observer looking at the transaction would conclude that the essential character of the transaction was dividend stripping. And what differentiates a dividend stripping scheme from a scheme which is not, e.g. a mere reorganisation, is whether ‘it could be predicated that it would only have taken place to avoid the shareholders in the target company becoming liable to pay tax on dividends out of the accumulated profits of the target company’.[39]
[39](1999) 91 FCR 524 [105].
The Consolidated Press High Court decision did not comment on the methodology adopted to determine the purposes of the transactions, but the High Court did:
(a)endorse the result that both Hill J and the Full Court reached concerning absence of tax avoidance;[40]
(b)describe the tax avoidance purpose as the hallmark of a dividend stripping scheme;[41] and
(c)note that if there was a difference in approach between Hill J and the Full Court in formulating the tax avoidance predication test, the Full Court’s formulation:
that s l77E was intended to apply only to schemes which can be said to have the dominant purpose of tax avoidance; the required tax avoidance purpose ordinarily being that of enabling the vendor shareholders to receive profits of the target company in a substantially tax-free form, thereby avoiding tax that would or might be payable if the target company’s profits were distributed to shareholders by way of dividends[42]
is preferrable.
[40](2001) 207 CLR 235 [134].
[41](2001) 207 CLR 235 [133].
[42](2001) 207 CLR 235 [129] referring to the Consolidated Press Full Court decision at (1999) 91 FCR 524, p 569.
FACTS
Informed by the authorities noted above, the evidence led[43] permits the findings of fact set out below upon which the present applications are determined.
[43]Annexure A Is a catalogue of the evidence and other materials provided to the Tribunal.
Hayes Group
Following the 2010 Year reorganisation, the Hayes Group comprised:
(a)the Hayes family being Cecil (now deceased) and Shirley and their four sons Michael, John, Bryan and Paul;[44]
[44]Michael, John, Bryan and Paul Hayes referred to collectively as the Hayes brothers and at times each of them referred to individually as a Hayes brother.
(b)a number of trust entities,[45] namely;
[45]Particulars of the entities are set out in Annexure B.
(i)the Applicants (formed and/or acquired in 2010):
· the MJH Trading Trust (with Michael John Hayes Trading Pty Ltd as trustee);
· the JPH Trading Trust (with John Hayes Trading Pty Ltd as trustee);
· the BGH Trading Trust (with Bryan Hayes Pty Ltd as trustee); and
· the PAH Trading Trust (with Paul Hayes Trading Pty Ltd as trustee);
(ii)the family trusts (formed and/or acquired in 2007):
· Michael Hayes Family Trust (with Michael Hayes Family Pty Ltd as trustee);
· John Hayes Family Trust (with John Hayes Pty Ltd as trustee);
· Bryan Hayes Family Trust (with Bryan Hayes Pty Ltd as trustee); and
· Paul Hayes Family Trust (with Paul Hayes Pty Ltd as trustee);
(iii)the fixed trusts (formed and/or acquired in 2010):
· MJH Fixed Trust (with Michael Hayes Family Pty Ltd as trustee);
· JPH Fixed Trust (with John Hayes Pty Ltd as trustee);
· BGH Fixed Trust (with Bryan Hayes Pty Ltd as trustee); and
· PAH Fixed Trust (with Paul Hayes Pty Ltd as trustee);
(iv)the rural unit trusts (formed and/or acquired in 2010):
· MJH Rural Unit Trust (with Michael Hayes Family Pty Ltd as trustee);
· JPH Rural Unit Trust (with John Hayes Pty Ltd as trustee);
· BGH Rural Unit Trust (with Bryan Hayes Pty Ltd as trustee); and
· PAH Rural Unit Trust (with Paul Hayes Pty Ltd as trustee);
(v)CWH Family Trust (with Marclef[46] as trustee);
[46]Marclef Pty Ltd.
(vi)Hayes Discretionary Trust (with Grawlex[47] as trustee); and
[47]Grawlex Pty Ltd.
(vii)OilsPlus Unit Trust (with Grawlex as trustee);
(c)The four Hayes Group Operating Companies (excluding companies that only acted as trustees of trusts), namely:
(i)Malacorp, whose shareholders were John, Bryan, Paul and Shirley Hayes;
(ii)Fuentes, whose shareholders were Michael, John and Bryan Hayes;
(iii)MJB&P, whose shareholders were Michael, John, Bryan and Paul Hayes; and
(iv)Hayes Investments, whose shareholders were Michael John Hayes Family Pty Ltd, John Hayes Pty Ltd, Bryan Hayes Pty Ltd and Paul Hayes Pty Ltd;
(d)three superannuation funds, namely
(i)MJH Superannuation Fund (with Marclef as trustee);
(ii)Malacorp Pty Ltd Superannuation Fund (with Malacorp as trustee); and
(iii)Lady Hayes Superannuation Fund (Self-Managed Superannuation Fund for Julie Kathleen, Julie Margaret, Narelle and Tanya);
(e)partnerships, namely,
(i)Hayes Partnership, whose partners were Michael, John, Bryan and Cecil (now deceased) Hayes;
(ii)MJBP Hayes Rural Partnership, whose partners were Michael Hayes Family Pty Ltd, John Hayes Pty Ltd, Bryan Hayes Pty Ltd and Paul Hayes Pty Ltd;
(iii)B&J&P&M Hayes Partnership, whose partners were Michael, John, Bryan, and Paul Hayes; and
(iv)Haysen Partnership, whose partners were CMW Family Trust and Haymor 17 Pty Ltd.
Hayes Group advisors
The Hayes Group has had external legal and accounting service providers and advisors:
(a)Tim Hine & Co (Mr Timothy Hine) (accounting services);
(b)PMW[48] (Mr Raymond Miller) (accounting services);
(c)CPT Lawyers[49] (Mr Andrew Kermode); and
(d)Cleary Hoare Solicitors (Messrs loannou and Bailey).
[48]At the time the firm was Pigot Miller Wilson, it is now pmwPlus.
[49]Campbell Paton and Taylor Lawyers.
Before 2009, CPT Lawyers handled both personal legal affairs of the Hayes family and the business affairs of the Hayes Group. The nature of the work was fairly minor and transactional. The work included preparing wills, conveyancing and business transactions such as litigation and debt recovery actions. CPT Lawyers did not provide the Hayes Group or individuals within it with asset protection, succession planning or taxation advice.[50]
[50]Affidavit of Michael John Hayes dated 30 September 2020 (“First Michael Hayes Affidavit”) [26]–[31].
Cecil Hayes engaged Mr Hine, sometime around 1992 to carry out both his personal and business accountancy work. The other Hayes family members, and over time Hayes Group entities also engaged Mr Hine.[51] Mr Hine provided advice concerning structuring new business ventures and property purchases, the formation of partnerships, settlement of trusts, and incorporation of corporate entities.[52] Mr Hine’s advice was accepted and acted upon if it appeared to the Hayes family that ‘[the advice] sounded rational and suited their needs.’[53]
[51]Affidavit of Timothy Hine dated 30 September 2020 (“Hine Affidavit”) [19], [24], [36].
[52]First Michael Hayes Affidavit, p 4; Affidavit of John Patrick Hayes dated 30 September 2020 (“John Hayes Affidavit”), p 3; Affidavit of Bryan Gregory Hayes dated 29 September 2020 (“Bryan Hayes Affidavit”), p 3; Affidavit of Paul Andrew Hayes dated 30 September 2020 (“Paul Hayes Affidavit”), p 3.
[53]First Michael Hayes Affidavit [22].
This arrangement continued until Mr Hine closed his accountancy practice in 2007 to take up the role of Chief Financial Officer at Oilsplus[54] of which Hayes Group member, Grawlex (in its capacity as trustee for the Hayes Discretionary Trust), was the majority unitholder.[55]
[54]Oilsplus Unit Trust.
[55]Hine Affidavit [4], [47].
In the first half of 2007 Mr Hine advised Michael and Bryan that he was moving away from his accountancy practice to take up the position as Chief Financial Officer for Oilsplus. On the recommendation of CPT Lawyers, the Hayes Group engaged Mr Miller of PMW to take over their accountancy work.[56] Mr Miller has remained as accountant to the Hayes Group and family since.[57]
[56]First Michael Hayes Affidavit [23].
[57]First Michael Hayes Affidavit [25].
Mr Miller was asked to undertake a review of the anything that needed to be done before the end of the 2007 Year. Mr Miller conducted that review and reported back to the Hayes brothers. In summary Mr Miller had initial concerns related to the:
(a)risks associated in the transport, fuel storage and distribution and primary production industries in which the family businesses operated;
(b)direct and indirect ownership of assets by the Hayes brothers as individuals; and
(c)lack of clarity of inter-entity loans, loans to shareholders and associates and unpaid present entitlements.[58]
[58]Affidavit of Raymond Miller dated 30 September 2020 (“First Miller Affidavit”) [15].
Mr Miller made a series of recommendations following that review, including that:[59]
(a)each Hayes brother have a discrete family trust for which a new corporate trustee would be established (Family Trusts) ‘to eliminate the possibility of personal liability to each family should any part of the family operation be attacked by outside creditors or other persons who may wish to sue the family operation’;
(b)each family member’s salary and wage income from the business operations be held at $35,000 each (which was less than 10% of total income for each family member) to allow for further superannuation deductions;
(c)a separate superannuation fund be set up for contributions made on behalf of each family members’ spouse; and
(d)further discussions be held regarding distributions to family members’ children.
[59]Applicants’ Tribunal Documents (“AT”), AT-314 Letter from Derek Pigot & Associates dated 27 June 2007.
Mr Miller’s objectives were to ‘spread the wealth within the families, develop conduits to enable the funds owing to, or by, each family to be traced, while protecting the risk aspect and limiting the impact of Division 7A.’[60]
[60]First Miller Affidavit [22]; AT-314.
Implementing this advice, the following steps were taken:
(a)discrete family trusts[61] were established for each brother to receive distributions and dividends;
[61]See Annexure B under the heading ‘The Family Trusts’.
(b)while departing from the recommended amounts to be paid by way of salary, the wages and total income of each Hayes brother in the 2008 Year were as set out in Table 1.[62]
[62]AT-330 2008 to 2019 Individual Income Spreadsheets.
Table 1
Hayes brother
Wages
Total income
Michael Hayes
$63,995
$224,756
John Hayes
$78,705
$258,393
Bryan Hayes
$93,280
$270,733
Paul Hayes
$78,705
$166,569
(c)during the 2007 Year, Lady Hayes Superannuation Fund was set up and $54,847 was contributed for each of Julie Kathleen, Julie Margaret and Narelle;[63]
(d)‘children of the Specified Beneficiaries’ were included as ‘General Beneficiaries’ of each of the Family Trusts, which were executed on 27 June 2007;[64]
(e)Hayes Investments was established to receive trust distributions from the CWH Family Trust and Hayes Discretionary Trust; and
(f)significant concessional contributions were made to superannuation funds.[65]
[63]Balance of Members Funds at the beginning of the 2007 Financial Year was nil. See Note 3 to the Lady Hayes Superannuation Fund Financial Statements for the Year Ended 30 June 2007 at AT-353. See also First Miller Affidavit [285].
[64]T-Documents T-15 Michael Hayes Family Trust Deed [1.9.2]; T-14 John Hayes Family Trust Deed [1.9.2]; T-13 Bryan Hayes Family Trust Deed [1.9.2]; T-16 Paul Hayes Family Trust Deed [1.9.2].
[65]First Miller Affidavit [21].
Family Trusts and Corporate Trustees
The arrangements to establish family trusts with corporate trustees for each brother were identical in form (with necessary adaptation to identify the relevant Hayes brother and his family). The arrangements for the Michael Hayes Family Trust (which is typical of all four Family Trusts) were as follows:
(a)Michael Hayes Family Pty Ltd[66] was incorporated on 25 June 2007;
(b)the share capital of Michael Hayes Family Pty Ltd was two shares fully paid at $1 issue price. The sole shareholder and director was Michael Hayes;[67]
(c)the Michael Hayes Family Trust was settled on 27 June 2007;
(d)the settlor was Mr Miller;
(e)the trustee was Michael Hayes Family Pty Ltd; and
(f)the specified beneficiaries were Michael Hayes and his wife and the general beneficiaries were their children.[68]
[66]For the other family trusts, the corporate trustees does not include the word ‘family’ in its name. See Supplementary T-Documents ST-29; ST-31; ST-34.
[67]Supplementary T-Documents ST-26.
[68]T-Documents T-15.
Hayes Investments
In addition to the flexibility introduced by the Family Trusts Mr Miller came to the view superannuation contributions would result in tax savings for the Hayes brothers. Said to be ‘to that end’, was a recommendation that a company be incorporated as an investment vehicle to receive trust distributions.
Hayes Investments was incorporated on 25 June 2007.
(a)The share capital was eight shares fully paid at $1 issue price. The ordinary members were the trustees of the Family Trusts.
(b)The directors are the Hayes brothers.[69]
[69]T-Documents T-39.
Miller’s ongoing concerns
While the steps taken shortly after Mr Miller began advising the Hayes Group looked to the future, or stopped the perceived problem from compounding, Mr Miller remained concerned regarding the risk presented both by the nature of the businesses undertaken by entities within the Hayes Group and the quantum of retained earnings within the Hayes Group Operating Companies which were not addressed by any of his recommendations.
Engaging Cleary Hoare and Cleary Hoare advice
In late 2009 Mr Miller attended the Count Financial Services Annual Conference in Adelaide.[70] Mr Ioannou, a principal at the law firm Cleary Hoare presented at the conference. His presentation was generally directed to asset protection strategies. The presentation included discussion of an asset protection structure in or by which trading companies with retained profits moved those profits to non-trading entities keeping them safe from the usual risks of business while allowing the trading companies continued access to the relevant funds for working capital.[71]
[70]First Miller Affidavit [34].
[71]First Miller Affidavit [37]–[38].
After hearing Mr Ioannou’s presentation, Mr Miller then arranged a meeting between representatives of Cleary Hoare, Michael and Bryan Hayes, Mr Hine and himself on 20 January 2010. To enable Cleary Hoare to prepare for the meeting, Mr Miller provided Cleary Hoare with information relating to the structure and financial position of the Hayes Group.[72] Mr Miller wrote:
[72]First Miller Affidavit [46]; Affidavit of Adrian Mason Bailey dated 18 June 2021 (“Bailey Affidavit”) [8]; Annexure AMB-1; Affidavit of John Ioannou dated 18 June 2021 (“Ioannou Affidavit”) [6].
As per our recent correspondence please find attached to this letter a summary of all the entities relating to Hayes Group outlining the following information for each entity:
·Shareholders/Partners
·Percentage of holdings or shares held
·Profit for the 2009 financial year
·Retained Earnings at 30 June 2009
·Property Owned
Furthermore to this please also find attached a diagram outlining the above information as well as a copy of the Financial Report for the Year Ended 30 June 2009 for each of these entities.
Could you please review the above provided information and offer guidance regarding estate planning and asset protection.
Additionally, recent conversations have also been held regarding CWH Family Trust. As you are already aware, there is currently an unpaid present entitlement in the Trust, with debit loans to associates also present. These loans have been on the balance sheet of CWH Family Trust for a number of years, dating back further than 5 years.
We have requested assistance from you in regards to how to treat this matter. Therefore to assist you in understanding this matter further, please find attached a summary of the balance sheet for CWH Family Trust for the past five years, outlining the movement between each year. [73]
[73]AT-318.
Messrs Ioannou and Bailey met with Mr Miller, Michael and Bryan Hayes and gave preliminary advice. After that meeting Mr Miller spoke with Michael Hayes and told him;
the advice was above [his] technical level and [he] would be relying on Cleary Hoare as the experts. [He] had confidence in their work based on Ioannou’s presentation at the conference, [his] colleague’s comments about Cleary Hoare and the discussion at the office earlier that day.[74]
[74]First Miller Affidavit [53].
Messrs Ioannou and Bailey proposed a formal engagement at a projected cost of $232,100. Mr Miller was surprised by the quote and gave evidence that:
I received a client agreement from Cleary Hoare and arranged a meeting with Michael and Bryan. I later met with Michael and Bryan to discuss the arrangement and the fee agreement. The biggest point for discussion was the fee of approximately $200,000. The proposed fee was a surprise to everyone including me. It was much higher than we had anticipated or that I had experienced for professional advice. I explained that the advice was foreign to me. I had never used a public trading trust and wasn’t aware of them. I explained that technically this work was above our level of expertise and that the work involved a lot of detail. I explained that I had reference checked Cleary Hoare and those references confirmed them to be a reputable firm. I can’t recall who proposed it but one of us rationalised the fee on the basis that it was like an insurance premium of $50,000 for each brother’s family and everyone agreed that it sounded sensible.[75]
[75]First Miller Affidavit [54].
The engagement was accepted as proposed at the projected cost. The retainer agreement projected that fees of $202,100.00 would relate to:
1. Dealing with the Oilsplus Unit Trust so that it has the power to distribute to discretionary beneficiaries.
2. Dealing with issues in relation to asset protection and the protection of both the retained earnings within entities within [the] group and the corresponding value [of interest held] in those entities [by] individuals.
3. Addressing loans and entitlements between your current structures so as to simplify interactions between your current structures.
and $30,000.00 would relate to ‘taking instructions, attending interviews with clients and provision of advice’ with up to 20% of the pre GST fee remitted to PMW for accountancy work involved in the restructure. The cover letter suggested that approximately 70% of the Cleary Hoare fee would be directly tax deductible as tax advice. The basis for that representation is questionable.
Messrs Ioannou and Bailey gave advice in a letter dated 22 January 2010[76] setting out recommendations emerging from the 20 January 2010 meeting. The recommendations had five broad topics, namely:
[76]Annexure JI-1 to Ioannou Affidavit p 345.
(a)Oilsplus Unit Trust and its power to distribute to discretionary beneficiaries;
(b)protection of:
(i)assets and retained earnings within entities of the Hayes Group; and
(ii)the corresponding value of the interests in the entities held by the brothers as individuals;
(c)loans and entitlements between the current structures;
(d)written advice on stamp duty, capital gains tax, Division 7A, self-managed superannuation fund’s investment in the trading trusts, value shifting provisions and asset protection work in relation to the Corporations Act and Bankruptcy Act; and
(e)personal asset holding planning and succession planning within the Hayes Group.
In summary:
(a)for the Oilsplus Unit Trust, Cleary Hoare recommended that the Trust Deed be updated to incorporate discretionary provisions to maximise commercial and taxation flexibility;
(b)for the protection of the assets and retained earnings within entities of the Hayes Group and corresponding value of interests in entities held by individuals, Cleary Hoare recommended:
(i)creating new entities (which when implemented were the Applicant Trading Trusts with the Family Trusts and Fixed Trusts as unitholders);
(ii)creating a new class of shares (Z Class) in the Operating Companies and issuing those Z Class shares to the new entities;
(iii)the Operating Companies declaring and paying discretionary dividends on the Z Class shares; and
(iv)the Z Class shareholder lending amounts back to the Operating Companies;
(c)for the loans and entitlements between the current structures, Cleary Hoare recommended:
(i)the trusts in the group pay the total amount of unpaid present entitlements to corporate beneficiaries ($4.6 million), which would be funded via entering into loan agreements and repaying the loans over seven years using dividends declared;
(ii)incorporating Public Trading Trusts that are taxed at the same rate as a company but still regarded as a trust eligible for discount capital gains; and
(iii)having the Public Trading Trusts lend funds to the borrowers so they could use the funds to repay their loans; and
(d)for the personal asset holding planning and succession planning within the Hayes group, Cleary Hoare recommended that:
(i)each of the Hayes brothers gift a sum of money equal to the value of the equity in the real property that they held in their own name or in a partnership with others to their respective Family Trusts, by way of a BPN; and
(ii)the gifted sum be lent by the Family Trust back to the Hayes brother, by passing the BPN.[77]
[77]AT-257; AT-265; AT-273; AT-281.
Steps taken to implement the Cleary Hoare advice
The Cleary Hoare advice and recommendations concerning protecting assets and retained earnings are central to the present applications. There was a degree of overlap with dealing with the loans and entitlements between the current structures. Implementing those recommendations entailed the following steps.
On 16 February 2010 four companies were incorporated, each with a single director and shareholder as set out in Table 2.
Table 2
Company
Director
Shareholder
Michael John Hayes Trading Pty Ltd
Michael Hayes
Michael Hayes
John Hayes Trading Pty Ltd
John Hayes
John Hayes
Bryan Hayes Trading Pty Ltd
Bryan Hayes
Bryan Hayes
Paul Hayes Trading Pty Ltd
Paul Hayes
Paul Hayes
On 24 February 2010 four groups of events occurred:
(a)four fixed trusts were formed, with trustees and beneficiaries as set out in Table 3.[78]
[78]Trust Deeds at T-DocumentsT9-T12.
Table 3
Trust
Trustee
Unitholders
MJH Fixed Trust
Michael Hayes Family Pty Ltd
Michael Hayes Family Pty Ltd in its capacity as trustee of the Michael Hayes Family Trust, as to a 95% share;
Grawlex in its capacity as trustee of the MJH Superannuation Fund, as to a 5% share
JPH Fixed Trust
John Hayes Pty Ltd
John Hayes Pty Ltd in its capacity as trustee of the John Hayes Family Trust, as to a 95% share;
Malacorp as trustee of the Malacorp Pty Ltd Superannuation Fund, as to a 5% share
BGH Fixed Trust
Bryan Hayes Pty Ltd
Bryan Hayes Pty Ltd in its capacity as trustee of the Bryan Hayes Family Trust, as to a 95% share;
Malacorp in its capacity as trustee of Malacorp Pty Ltd Superannuation Fund, as to a 5% share
PAH Fixed Trust
Paul Hayes Pty Ltd
Paul Hayes Pty Ltd in its capacity as trustee of the Paul Hayes Family Trust, as to a 95% share;
Malacorp in its capacity as trustee of the Malacorp Pty Ltd Superannuation Fund, as to a 5% share
(b)the four Trading Trusts (the Applicants) were formed, with trustees and unitholders as set out in Table 4.[79]
[79]Trust Deeds at T-Documents T5–T8.
Table 4
Trust
Trustee
Unitholders
MJH Trading Trust
Michael John Hayes Trading Pty Ltd
Michael Hayes Family Pty Ltd as trustee for the Michael Hayes Family Trust, as to 80 units
Michael Hayes Family Pty Ltd as trustee of the MJH Fixed Trust, as to 20 units
JPH Trading Trust
John Hayes Trading Pty Ltd
John Hayes Pty Ltd as trustee for the John Hayes Family Trust, as to 80 units
John Hayes Pty Ltd as trustee of the JPH Fixed Trust, as to 20 units
BGH Trading Trust
Bryan Hayes Trading Pty Ltd
Bryan Hayes Pty Ltd as trustee for the Bryan Hayes Family Trust, as to 80 units
Bryan Hayes Pty Ltd as trustee of the BGH Fixed Trust, as to 20 units
PAH Trading Trust
Paul Hayes Trading Pty Ltd
Paul Hayes Pty Ltd as trustee for the Paul Hayes Family Trust, as to 80 units
Paul Hayes Pty Ltd as trustee of the PAH Fixed Trust, as to 20 units
(c)four rural unit trusts were formed with trustees and unitholders as set out in Table 5.[80]
[80]Trust Deeds at T-Documents T17-T20.
Table 5
Trust
Trustee
Unitholder
MJH Rural Unit Trust
Michael Hayes Family Pty Ltd
Michael John Hayes Trading Pty Ltd in its capacity as trustee of the MJH Trading Trust
JPH Rural Unit
John Hayes Pty Ltd
John Hayes Trading Pty Ltd in its capacity as trustee of the JPH Trading Trust
BGH Rural Unit Trust
Bryan Hayes Pty Ltd
Bryan Hayes Trading Pty Ltd in its capacity as trustee of the BGH Trading Trust
PAH Rural Unit Trust
Paul Hayes Pty Ltd
Paul Hayes Trading Pty Ltd in its capacity as trustee of the PAH Trading Trust
(d)a new partnership was formed between the trustees of the four rural units trusts (the New Hayes Partnership). The New Hayes Partnership continued the business operated by the Old Hayes Partnership with the livestock, plant and equipment used by the Old Hayes Partnership.
In the lead up to 7 May 2010, Mr Miller prepared a series of calculations, that included of debts owed by the Hayes brothers either individually or collectively to related parties. These calculations would form the basis of preparation of BPNs that would be used to pay dividends and then be used to create loans and/or retire pre-existing debt.
On 7 May 2010 two of the new Trading Trusts (the Applicants) acquired 10 Z Class shares in three of the Hayes Group Operating Companies and the other two new Trading Trusts each acquired 10 Z Class shares in the four Hayes Group Operating Companies as noted above. The steps taken to issue these shares reveal the choreographed nature of the process and the precision in the planning. In each case, at consented to short notice the Operating Company’s constitution was amended to allow for the issue of Z Class shares for $1 per share. After the constitutions were amended, on the same day:
(a)offers were made to existing shareholders to take up Z Class shares;
(b)all offers were declined;
(c)the new Trading Trusts were offered the opportunity to take up 10 Z Class shares; and
(d)those offers were accepted.
Also on 7 May 2010, notices of intention to pay dividends in respect of the Z Class shares were given to shareholders by at least two of the Operating Companies,[81] consents to that course of action were given. Significant dividends were declared and made payable that day by all four Operating Companies in respect of the Z Class shares.
[81]Malacorp and Fuentes.
Tables 6 sets out the relevant profits and the aggregate dividends paid. All dividends were fully franked.
Table 6
Operating company
30 June 2009 retained profits
Profits as at date of dividend
Dividend
Malacorp
$3,163,779.39
$2,907,471.00
$2,907,471.00
Fuentes
$3,057,917.42
$3,217,064.00
$2,833,287.00
MJB&P
$210,973.01
$309,000.00*
$309,000.00
Hayes Investments
$1,960,366.77
$1,958,701.72
$1,958,701.72
Total Dividend Paid
$8,393,036.59
$8,008,459.72
*Note: the profits to the date of the dividend were not disclosed in Mr Miller’s first affidavit. The 2010 Year financial statements reveal 2010 Year profits after tax of $117,482.38, and retained profits at 30 June 2010 of $19,455.39, so, when the 30 June 2009 retained profits are taken into account, it can be accepted that there were sufficient profits to the date of the dividend to pay the amount of the dividend paid. Mr Miler’s second affidavit refers to various parties’ interests in aggregate MJB&P profits of $309,000.00.
Table 7 sets out the amounts of the dividends paid by each Hayes Group Operating Company to each holder of Z Class shares (each Applicant).
Table 7
Operating Company
Dividends paid to
Dividends paid totals
MJHTT
JPHTT
BGHTT
PAHTT
Malacorp
$969,157
$969,157
$969,157
$2,907,471
Fuentes
$944,429
$944,429
$944,429
$2,833,287
MJB&P
$77,250
$77,250
$77,250
$77,250
$309,000
Hayes Investments
$489,675.43
$489,675.43
$489,675.43
$489,675.43
$1,958,701.72
Totals
$1,511,354.43
$2,480,511.43
$2,480,511.43
$1,536,082.43
8,008,459.72
Paying the dividends to the Applicants
The process by which the dividends were paid referred to below also reveals the choreographed nature of the process and the precision in the planning.
As noted above the dividends paid by the Hayes Group Operating Companies were all satisfied by passing one of more BPNs with an identifying number. The total dividend paid to an Applicant Trading Trust was, at times, discharged by two BPNs. Splitting the dividend into these smaller amounts facilitated execution of the plan to use parts of some of the gross dividends in different ways. Parts of some dividends were to be advanced by the recipient Applicant directly back to the BPN issuer (usually the dividend-paying Hayes Group Operating Company) by way of loan. Other parts of some dividends were to be advanced by way of loan to one or more of the Hayes brothers and used by them to repay existing loan balances. Ultimately all BPNs were passed either by way of loan to or repayment of debt owed to the issuer of the BPNs.
Malacorp dividend payments
Table 8 sets out the dividends paid by Malacorp and the BPNs to effect payment of those dividends.
Table 8
Malacorp dividends
BPN Issuer
BPN # and
AmountFirst Recipient and Basis
Intermediate Recipient and Basis
End Recipient and Basis
Malacorp
BPN #1A
$598,543.47
BGHTT
Dividend Received
N/A
Malacorp
Loan
Malacorp
BPN #1B
$65,071.12
BGHTT
Dividend Received
M/B/P/J
Loan
Malacorp
Repayment of debt owed to Issuer[82]
Malacorp
BPN #1C
$305,542.41
BGHTT
Dividend Received
B/P/J
Loan
Malacorp
Repayment of debt owed to Issuer
Malacorp
BPN #2A
$598,543.47
PAHTT
Dividend Received
N/A
Malacorp
Loan
Malacorp
BPN #2B
$65,071.12
PAHTT
Dividend Received
M/B/P/J
Loan
Malacorp
Repayment of debt owed to Issuer
Malacorp
BPN #2C
$305,542.41
PAHTT
Dividend Received
B/P/J
Loan
Malacorp
Repayment of debt owed to Issuer
Malacorp
BPN #3A
$598,543.47
JPHTT
Dividend Received
N/A
Malacorp
Loan
Malacorp
BPN #3B
$65,071.12
JPHTT
Dividend Received
M/B/P/J
Loan
Malacorp
Repayment of debt owed to Issuer
Malacorp
BPN #3C
$305,542.41
JPHTT
Dividend Received
B/P/J
Loan
Malacorp
Repayment of debt owed to Issuer
Total
$2,907,471.00
[82]For each of BPNs 1B, 2B and 3B, $61,004.18 was for the repayment of existing loan and the remaining $4066.94 was an adjustment. See First Miller Affidavit [93]–[94].
Fuentes dividend payments
Table 9 sets out the dividends paid by Fuentes and the BPNs passed to effect payments of those dividends.
Table 9
Fuentes dividends
BPN Issuer
BPN # and
AmountFirst Recipient and Basis
Intermediate Recipient and Basis[83]
End Recipient and Basis
Fuentes
BPN #1B
$535,008.27
MJHTT
Dividend Received
N/A
Fuentes
Loan
Fuentes
BPN #1C
$72,414.03
MJHTT
Dividend Received
Hayes Partnership
Loan
Fuentes
Repayment of debt owed to Issuer
Fuentes
BPN #1D
$337,006.70
MJHTT
Dividend Received
Michael Hayes
Loan
Fuentes
Repayment of debt owed to Issuer
Fuentes
BPN #2B
$535,008.27
BGHTT
Dividend Received
N/A
Fuentes
Loan
Fuentes
BPN #2C
$72,414.03
BGHTT
Dividend Received
Hayes Partnership
Loan
Fuentes
Repayment of debt owed to Issuer
Fuentes
BPN #2D
$337,006.70
BGHTT
Dividend Received
B/P/J
Loan
Fuentes
Repayment of debt owed to Issuer
Fuentes
BPN #3B
$590,790.60
JPHTT
Dividend Received
N/A
Fuentes
Loan
Fuentes
BPN #3C
$72,414.03
JPHTT
Dividend Received
Hayes Partnership
Loan
Fuentes
Repayment of debt owed to Issuer
Fuentes
BPN #3D
$281,224.37
JPHTT
Dividend Received
B/P/J
Loan
Fuentes
Repayment of debt owed to Issuer
Total
$2,833,287.00
[83]First Miller Affidavit [77], [83], [86], [88].
BPNs 1A, 2A, 3A totalling $2,833,287 were issued by Marclef also and were passed to Fuentes. The Marclef accounts[84] reveal that between 30 June 2009 and 30 June 2010 it discharged obligations owed to the Fuentes of $2.373 million and Fuentes became indebted to Marclef to the extent of $0.460 million. BPNs 1A, 2A and 3A were passed in a circle back to Marclef and cancelled. The endorsement on the back of those BPNs suggests that they were passed on from Fuentes by way of payment of dividend. Mr Miller’s evidence was that only BPNs 1B, 2B, 3B, 1C, 2C and 3C issued by Fuentes were passed to pay dividends to the Applicants.[85] The sum of the BPN 1B, 2B, 3B, 1C, 2C and 3C face values equalled the dividend declared and reported in Fuentes’ accounts. The sum of the dividend declared and reported in Fuentes’ accounts and the other dividend amounts received by the Applicants from the other Operating Companies equals the total of the income reported as dividends from related companies in the Applicants’ accounts. While the Commissioner identified that all of the BPNs including those numbered 1A, 2A, and 3A passed by way of payment of dividend, he made no submission concerning the impact of the aggregate face values of those BPNs exceeding (by doubling) the amount of dividend otherwise shown.
[84]T-Documents T-127.
[85]First Miller Affidavit [70]–[71].
The conclusion to be reached is that the annotation on BPNs 1A, 2A and 3A was mistaken and that they formed a part of a collateral reorganisation of inter-entity loans that was effected at the same time and not part of the process of payments of dividends by Fuentes.
MJB&P dividend payments
Table 10 sets out the dividends paid by MJB&P and the BPNs to effect payment of those dividends.
Table 10
MJB&P dividends
BPN Issuer
BPN # and Amount
First Recipient and Basis
Intermediate Recipient and Basis[86]
End Recipient and Basis
MJB&P
BPN #1B
$77,250.00
MJHTT
Dividend Received
Michael Hayes
Loan
MJB&P
Repayment of debt owed to Issuer
MJB&P
BPN #2A
$51,291.32
BGHTT
Dividend Received
N/A
MJB&P
Loan
MJB&P
BPN #2B
$25,958.68
BGHTT
Dividend Received
Bryan Hayes
Loan
MJB&P
Repayment of debt owed to Issuer
MJB&P
BPN #3A
$51,291.32
PAHTT
Dividend Received
N/A
MJB&P
Loan
MJB&P
BPN #3B
$25,958.68
PAHTT
Dividend Received
Paul Hayes
Loan
MJB&P
Repayment of debt owed to Issuer
MJB&P
BPN #4A
$51,291.32
JPHTT
Dividend Received
N/A
MJB&P
Loan
MJB&P
BPN #4B
$25,958.68
JPHTT
Dividend Received
John Hayes
Loan
MJB&P
Repayment of debt owed to Issuer
Total
$309,000.00
[86]First Miller Affidavit [107].
For MJB&P the documentation also includes a BPN 1A with a value of $77,250.00. If the value of BPN 1Ais added to the value of the BPNs listed in Table 10, the aggregate value of BPNs exceeds the amount of the dividend that was declared by $77,250.00. It seems that the dividend declared in favour of the Michael Hayes Trading Trust was $77,250 and not $154,500 as would be suggested by the total on the face value of BPNs 1A and 2A. The Michael Hayes Trading Trust included only $77,250 in its dividend income and the total of all dividend income from MJB&P included in the Applicants’ income equals the $309,000 which is the same amount as the dividend declaration. Further, Mr Miller’s evidence was that like the John Hayes Trading Trust, all of the Michael Hayes Trading Trust dividend was applied against loans.[87] The proper conclusion to reach is that the second BPN in favour of the Michael Hayes Trading Trust was a mistake or not a payment of a dividend.
[87]First Miller Affidavit [106].
Hayes Investments dividend payments
Table 11 sets out the dividends paid by Hayes Investments and the BPNs passed to effect payment of those dividends. The Hayes Investments dividends were funded by BPNs issued by Grawlex (as trustee for Hayes Discretionary Trust) which repaid amounts it owed to Hayes Investments. Hayes Investments received the loan repayment by way of these BPNs which were used by Hayes Investments to pay dividends to three of the newly formed Trading Trust Applicants in respect of the Z Class shares.
The dividend statements for the dividends paid by Hayes Investments reveal an aggregate dividend of $1,958,700 was paid in respect of the Z Class shares, i.e., $489,675 per shareholder. The 2010 Year Tax Return for Hayes Investments also discloses this amount. The Hayes Investments 2010 Year financial statements disclose that dividends of $1,958,701.72 were paid. Each Applicant’s financial statements shows a dividend receipt total that reflects a 25% share of $1,958,701.72, and the BPNs passed to effect payment of the Hayes Investments dividends totalled $1,958,701.72. The difference between the tax return total and the Hayes Investments financial statements appears to be the result of rounding down (or ignoring cents) the amount of the dividend in the dividend statement.
Table 11
Hayes Investments dividends
BPN Issuer
BPN # and
AmountFirst Recipient and Basis
Intermediate Recipient and Basis[88]
End Recipient and Basis
Grawlex
BPN #1A
$489,675.43
Hayes Investments
Loan Repayment
MJHTT
Dividend Received
Grawlex
Loan
Grawlex
BPN #2A
$489,675.43
Hayes Investments
Loan Repayment
BGHTT
Dividend Received
Grawlex
Loan
Grawlex
BPN #3A
$489,675.43
Hayes Investments
Loan Repayment
PAHTT
Dividend Received
Grawlex
Loan
Grawlex
BPN #4A
$489,675.43
Hayes Investments
Loan Repayment
JPHTT
Dividend Received
Grawlex
Loan
Total
$1,958,701.72
[88]First Miller Affidavit [67].
The beginning of the flow of funds for the dividends paid by Hayes Investments was a loan repayment of $1,958,701 by Grawlex to Hayes Investments effected by the BPNs 1A, 2A, 3A and 4A. The end of the flow of dividend funds was in each case, a loan by the dividend recipient to Grawlex. The BPNs ending with their issuer were then cancelled. In effect, in addition to removing retained earnings from Hayes Investments’ balance sheet/statement of financial position, Grawlex was refinanced with new lenders, the Applicants, replacing the former lender Hayes Investments.
Post receipt use of dividends
Tables 12 and 13 are a summary of the value of BPNs that were received by the Applicants and advanced by way of loan, directly back to the BPN issuer (namely, the Operating Company or in the case of Hayes Investments, Grawlex, which issued the BPNs that funded the Hayes Investments dividend payments) and the value of the BPNs that were passed to one or more Hayes brothers before being passed back to the BPN issuer. Table 12 summarises those details from the perspective of the dividend paying Operating Company. Table 13 summarises those details from the perspective of the Applicant Trading Trusts.
Table 12 Operating Company and dividend amount BPNs passed directly from dividend recipient Applicant to issuer BPNs passed from dividend recipient Applicant to one or more Hayes brother and then to issuer BPNs # Value % of dividend Subtotal Value % of dividend Malacorp BPN #1A $598,543.47 BPN #1B $65,071.12 BPN #2A $598,543.47 BPN #1C $305,542.41 BPN #3A $598,543.47 BPN #2B $65,071.12 BPN #2C $305,542.41 BPN #3B $65,071.12 BPN #3C $305,542.41 $2,907,471.00 Subtotal $1,795,630.41 61.67% Subtotal $1,111,840.59 38.24% Fuentes BPN #1B $535,008.27 BPN #1C $72,414.03 69. BPN #2B $535,008.27 BPN #1D $337,006.70 70. BPN #3B $590,790.60 BPN #2C $72,414.03 BPN #2D $337,006.70 BPN #3C $72,414.03 BPN #3D $281,224.37 $2,833,287.00 Subtotal $1,660,807.14 58.62% Subtotal $1,172,479.86 41.38% MJB&P BPN #2A $51,291.32 BPN #1B $77,250.00 BPN #3A $51,291.32 BPN #2B $25,958.68 BPN #4A $51,291.32 BPN #3B $25,958.68 BPN #4B $25,958.68 $309,000.00 Subtotal $153,873.96 49.80% Subtotal $155,126.04 50.20% Hayes Investments BPN #1A $489,675.43 BPN #2A $489,675.43 BPN #3A $489,675.43 BPN #4A $489,675.43 $1,958,701.72 Subtotal $1,958,701.72 100% Subtotal $0 0% Aggregates $8,008,459.72 $5,569,013.23 69.54% $2,439,446.49 30.46%
Table 13
Trading Trust name
Dividends received
BPN loans to Hayes brothers
Proportion of dividends received loaned to the Hayes brothers (%)
MJH Trading Trust
$1,511,354.43
$535,474.07
35.43%
JPH Trading Trust
$2,480,511.43
$586,381.45
23.64%
BGH Trading Trust
$2,480,511.43
$658,795.48
26.56%
PAH Trading Trust
$1,536,082.43
$658,795.48
42.89%
Total
$8,008,459.72
$2,439,446.09
30.46%
In aggregate, the amounts the Hayes brothers received by way of loans from the Applicants were significantly less than the dividends paid to the Applicants.
The Commissioner notes that the reason or basis for passing BPNs from the Applicants to the Hayes brothers is not endorsed on those notes. Having said that he does not advance any proposition that the terms on which they were passed was other than as contended for, namely by way of loan. In fact, the Commissioner relies on the loans to make good his contention that the pre-existing family members received capital or non-taxable money in lieu of taxable dividends. Mr Miller’s evidence was that the BPNs passed from the Applicants to the Hayes brothers by way of loan and that he did calculations to have BPNs with face values aligned with the intended secondary uses to be advanced by way of loan and then used to discharge other debts.
Table 14 shows the current year profits, retained earnings and net assets of each Applicant for the 2010 Year and as at 30 June 2010. There were not distributions by the Applicants of any amounts (including the BPNs used to pay dividends) in the sense of there being any disbursal, bestowal, or dealing out of the Applicants’ property or assets.
Table 14 For the 2010 Year and as at 30 June 2010 (as applicable) Michael TT (at T112) John TT (at T109) Bryan TT (at T106) Paul TT (at T113) Income Dividends Related Companies ($) 1,511,354.43 2,480,511.43 2,480,511.43 1,536,082.43 Distribution Received Hayes Discretionary ($) 971,535.10 971,535.10 971,535.10 1,076,535.11 Distribution Received CWH Family Trust ($) 2,515.46 2,515.46 2,515.45 2,515.46 OilsPlus Unit Trust ($) 250,507.67 250,507.67 250,507.66 - 2,735,912.66 3,705,069.66 3,705,069.64 2,615,133.00 Expenses Bank Charges ($) 1.40 1.60 1.60 0.60 Income Tax Expense ($) 178,615.60 178,615.60 178,615.00 157,212.60 Profit from Ordinary Activities after Income Tax ($) 2,557,295.66 3,526,452.46 3,526,453.04 2,457,919.80 RETAINED PROFITS AT END OF FINANCIAL YEAR ($) 2,557,295.66 3,526,452.46 3,526,453.04 2,457,919.80 Share Capital and Reserves Retained Earnings ($) 2,557,295.66 3,526,452.46 3,526,453.04 2,457,919.80 TOTAL SHARE CAPITAL AND RESERVES ($) 2,557,295.66 3,526,452.46 3,526,453.04 2,457,919.80 Total Assets ($) 3,579,933.62 4,340,512.52 4,338,417.69 3,445,482.40 Total Liabilities ($) 1,022,637.96 814,060.06 811,964.65 987,562.60 NET ASSETS ($) 2,557,295.66 3,526,452.46 3,526,453.04 2,457,919.80
In and for its first year of operation, in reality the period between formation in February 2010 to 30 June 2010, with the period between February and May 2010 a period of no activity of any material kind, each Trading Trust Applicant had net assets equal to its Profit from Ordinary Activities after Income Tax as shown in Table 14. Retention of net assets equal to retained profits in the first year of operation for each Applicant, a year when each Applicant received BPNs in payment of dividend entitlements and passed some of those BPNs to one or more Hayes brother, is entirely consistent with Mr Miller’s evidence that the passing of those BPNs to the Hayes brothers was by way of loan, notwithstanding that there was not an endorsement of that reason on the relevant BPNs. The proper conclusions to reach in these circumstances are that those BPNs that did pass through the Trading Trusts to the Hayes brothers, passed in the manner described by Mr Miller (by way of loan) and were used to retire debt in circumstances where new debt owed by the Hayes brothers to the Trading Trust arose.
Implementing the Cleary Hoare personal asset holding plans entailed:
(a)estimating of each Hayes brother’s equity in their real property assets;
(b)each Hayes brother executing a BPN for the amount in (a);
(c)each Hayes brother gifting the BPN to his related/connected Family Trust;
(d)each Family Trust lending the funds represented by the gift back to the Hayes brother donor; and
(e)cancelling the BPN being because it was in the possession of the issuer.
The debts on account of the loans from the Family Trust to the respective Hayes brother were not secured to as not to attract duty. The effect of this sequence of events was to create a creditor for each Hayes brother who would stand equally with other unsecured creditors. The degree of asset protection created by those steps could be affected by the quantum of the amounts owed to other unsecured creditors.
Insurance
The Hayes Group had insurance that included public liability insurance.
Simplifying the structure
The Applicants led evidence that implementing the Cleary Hoare advice simplified the structure of the group.[89] Evidence was also led that in later years, loans and group arrangements were further rationalised.
[89]Transcript p 60, lines 2–4.
THE COMMISSIONER’S CONTENTIONS
Broadly the Commissioner contends that:
[There were] …four schemes [which] were the means by which the [Hayes] brothers distributed retained earnings that had been previously accumulated in four [Operating] Companies[90] that the brothers controlled in carrying on the family’s farming, livestock transport, and fuel distribution businesses.[91]
The retained earnings of the [Operating] Companies were distributed on 7 May 2010, but were not paid by way of a cash dividend to the ordinary shareholders, as one might ordinarily expect. Instead, the retained earnings were distributed in an elaborate, complicated and contrived means by which each of the [Operating] Companies paid dividends to the Trading Trusts, being newly created Z class shareholders in the [Operating] Companies, by delivery of [BPNs]. Those [BPNs] were then delivered back to each of the [Operating] Companies that had issued them, either directly or via their ordinary shareholders and associates, in a convoluted sequence of transactions that ended with all of the [BPNs] being cancelled.[92]
… the [BPNs] in the schemes travelled in one of two loops. The first loop involved the relevant [BPN] being received by one of the Trading Trusts for the payment of the dividend and then returned to the issuing [Operating] Companies (by way of loan) and then cancelled. The second loop involved the particular [BPN] being received by one of the Trading Trusts for payment of the dividend. Then this [BPN] was received by one or more of the individuals (by way of loan), and then the individuals delivered that [BPN] back to the issuing [Operating] Companies to repay existing (usually, the subject of Division 7A) loans that the individuals owed to that [Operating] Company. Upon receipt, the [Operating] Company would cancel the [BPN]. Those individual taxpayers, involved in the second loop, did not return those amounts in their individual tax returns or pay any top-up tax on such amounts, but yet used those amounts to discharge existing loans. In previous years, such loan payments had been made by dividends declared by the relevant [Operating] Company.[93]
The Trading Trusts were involved in schemes, the dominant purpose of which was to extract the accumulated, retained earnings in each of the [Operating] Companies in a manner that would cause the brothers, being the ordinary shareholders to receive the benefit of those profits but to avoid tax on that distribution.[94]
… applying an objective consideration, the reason the schemes were implemented was to avoid tax.[95]
[90]Malacorp, Fuentes, Hayes Investments, and MJB&P.
[91]Respondent’s Final Submissions [5].
[92]Respondent’s Final Submissions [7].
[93]Respondent’s Final Submissions [11].
[94]Respondent’s Final Submissions [14].
[95]Respondent’s Final Submissions [10].
Three of the Commissioner’s submissions are pivotal in the present setting:
(a)that the Operating Companies’ existing shareholders and their associates:
(i)avoided tax by receiving amounts which were not income (the amounts advanced by way of loan represented by the BPNs) that were used to discharge loans that were subject to Division 7A conditions; and
(ii)that the Operating Companies’ existing shareholders and their associates received ‘a capital sum for the shares in an amount the same as or very close to the dividends paid to the purchasers’. In this regard the Commissioner says:
the [existing shareholders and their associates] are the entities beneficially entitled to the assets of the Trading Trusts, and the transfer of capital (by the retained earnings, in the form of the fully franked dividend) from the Private Companies to the Trading Trusts could constitute a capital sum being received by the shareholders as compensation for the Private Companies profits being paid to the Z class shareholders;
in addition, the [existing shareholders and their associates] were provided, by delivery, the value of some of the bearer promissory notes by the Trading Trusts, which they used to discharge loans that the Private Companies had made to them, prior to the 2010 income year. Such amounts were received by the [existing shareholders and their associates] were not income and hence not returned;
the [existing shareholders and their associates] of the [Operating] Companies and … are the entities that are ultimately beneficially entitled to the assets of the Trading Trusts;
…
the [Operating] Companies’ [existing shareholders and their associates] were thereby able to discharge loans and the Private Companies were able to remove those loans from their balance sheets[96]
(b)‘the scheme [was] carefully planned, with all the parties acting in concert, for the predominant if not the sole purpose of the vendor shareholders, in particular, avoiding tax on a distribution of dividends by the target company.’[97] In this regard the Commissioner says that the schemes were contrived, were not required to provide asset protection for various reasons including separate business owning entities, the existence of adequate insurance, minimal if any reduction in complexity of group asset ownership arrangements and inter-entity loans.
[96]Respondent’s Final Submissions [235].
[97]Respondent’s Final Submissions [238].
Witness Affidavits
ANNEXURE A: EVIDENCE AND OTHER MATERIALS PROVIDED TO THE TRIBUNAL
LODGED AFFIDAVITS
NO.
DATE
DOCUMENT DESCRIPTION
1.
30/09/2020
Affidavit of Michael John Hayes sworn 30 September 2020
2.
15/06/2021
Affidavit of Michael John Hayes sworn 15 June 2021 and Annexure MJH-1
3.
30/09/2020
Affidavit of John Patrick Hayes sworn 30 September 2020
4.
30/09/2020
Affidavit of Paul Andrew Hayes sworn 30 September 2020
5.
29/09/2020
Affidavit of Bryan Gregory Hayes sworn 29 September 2020
6.
30/09/2020
Affidavit of Tim Hine sworn 30 September 2020
7.
30/09/2020
Affidavit of Raymond Miller sworn 30 September 2020
8.
18/06/2021
Affidavit of Raymond Miller sworn 18 June 2021 and Annexure RM-1
9.
11/08/2021
Affidavit of Raymond Miller sworn 11 August 2021 and Annexure RM-2
10.
18/06/2021
Affidavit of John Ioannou sworn 18 June 2021 and Annexure JI-1
11.
18/06/2021
Affidavit of Adrian Mason Bailey sworn 18 June 2021 and Annexure AMB-1
Applicants’ Tribunal Documents
ANNEXURE A: EVIDENCE AND OTHER MATERIALS PROVIDED TO THE TRIBUNAL
APPLICANTS’ TRIBUNAL DOCUMENTS
NO.
DATE
DOCUMENT DESCRIPTION
PART A – FINANCIAL STATEMENTS, TAX RETURNS, RESOLUTIONS AND OTHER FINANCIAL DOCUMENTS
Trading Trust documents
AT-1.
FY 2016
BGH Trading Trust financial statement for FY2016
AT-2.
FY 2016
BGH Trading Trust tax return for FY2016
AT-3.
FY 2017
BGH Trading Trust financial statement for FY2017
AT-4.
FY 2017
BGH Trading Trust tax return for FY2017
AT-5.
FY 2018
BGH Trading Trust financial statement for FY2018
AT-6.
FY 2018
BGH Trading Trust tax return for FY2018
AT-7.
FY 2019
BGH Trading Trust financial statement for FY2019
AT-8.
FY 2019
BGH Trading Trust tax return for FY2019
AT-9.
FY 2016
JPH Trading Trust financial statement for FY2016
AT-10.
FY 2016
JPH Trading Trust tax return for FY2016
AT-11.
FY 2017
JPH Trading Trust financial statement for FY2017
AT-12.
FY 2017
JPH Trading Trust tax return for FY2017
AT-13.
FY 2018
JPH Trading Trust financial statement for FY2018
AT-14.
FY 2018
JPH Trading Trust tax return for FY2018
AT-15.
FY 2019
JPH Trading Trust financial statement for FY2019
AT-16.
FY 2019
JPH Trading Trust tax return for FY2019
AT-17.
FY 2016
MJH Trading Trust financial statement for FY2016
AT-18.
FY 2016
MJH Trading Trust tax return for FY2016
AT-19.
FY 2017
MJH Trading Trust financial statement for FY2017
AT-20.
FY 2017
MJH Trading Trust tax return for FY2017
AT-21.
FY 2018
MJH Trading Trust financial statement for FY2018
AT-22.
FY 2018
MJH Trading Trust tax return for FY2018
AT-23.
FY 2019
MJH Trading Trust financial statement for FY2019
AT-24.
FY 2019
MJH Trading Trust tax return for FY2019
AT-25.
FY 2016
PAH Trading Trust financial statement for FY2016
AT-26.
FY 2016
PAH Trading Trust tax return for FY2016
AT-27.
FY 2017
PAH Trading Trust financial statement for FY2017
AT-28.
FY 2017
PAH Trading Trust tax return for FY2017
AT-29.
FY 2018
PAH Trading Trust financial statement for FY2018
AT-30.
FY 2018
PAH Trading Trust tax return for FY2018
AT-31.
FY 2019
PAH Trading Trust financial statement for FY2019
AT-32.
FY 2019
PAH Trading Trust tax return for FY2019
Fixed Trust documents
AT-33.
FY 2016
BGH Fixed Trust financial statement for FY2016
AT-34.
FY 2016
BGH Fixed Trust tax return for FY2016
AT-35.
FY 2016
JPH Fixed Trust financial statement for FY2016
AT-36.
FY 2016
JPH Fixed Trust tax return for FY2016
AT-37.
FY 2016
MJH Fixed Trust financial statement for FY2016
AT-38.
FY 2016
MJH Fixed Trust tax return for FY2016
AT-39.
FY 2016
PAH Fixed Trust financial statement for FY2016
AT-40.
FY 2016
PAH Fixed Trust tax return for FY2016
Family Trust documents
AT-41.
FY 2016
Bryan Hayes Family Trust financial statement for FY2016
AT-42.
FY 2016
Bryan Hayes Family Trust tax return for FY2016
AT-43.
FY 2019
Bryan Hayes Family Trust financial statement for FY2019
AT-44.
FY 2019
Bryan Hayes Family Trust tax return for FY2019
AT-45.
FY 2004 –
FY 2009
CWH Family Trust loan records for FY2004 – FY2009
AT-46.
FY 2009
CWH Family Trust financial report for FY2009
AT-47.
FY 2010
CWH Family Trust financial report for FY2010
AT-48.
FY 2010
CWH Family Trust Division 7A interest calculations for FY2010
AT-49.
FY 2012
CWH Family Trust trial balance sheet for FY2012
AT-50.
FY 2013
CWH Family Trust annual report for FY2013
AT-51.
FY 2014
CWH Family Trust financial report for FY2014
AT-52.
FY 2015
CWH Family Trust annual accounts for FY2015
AT-53.
FY 2016
CWH Family Trust financial statements for FY2016
AT-54.
FY 2017
CWH Family Trust financial statements for FY2017
AT-55.
FY 2018
CWH Family Trust financial statements for FY2018
AT-56.
FY 2019
CWH Family Trust financial statements for FY2019
AT-57.
FY 2016
John Hayes Family Trust financial statement for FY2016
AT-58.
FY 2016
John Hayes Family Trust tax return for FY2016
AT-59.
FY 2019
John Hayes Family Trust financial statement for FY2019
AT-60.
FY 2019
John Hayes Family Trust tax return for FY2019
AT-61.
FY 2016
Michael Hayes Family Trust amended financial statement for FY2016
AT-62.
FY 2016
Michael Hayes Family Trust tax return for FY2016
AT-63.
FY 2019
Michael Hayes Family Trust financial statement for FY2019
AT-64.
FY 2019
Michael Hayes Family Trust tax return for FY2019
AT-65.
FY 2016
Paul Hayes Family Trust financial statement for FY2016
AT-66.
FY 2016
Paul Hayes Family Trust tax return for FY2016
AT-67.
FY 2019
Paul Hayes Family Trust financial statement for FY2019
AT-68.
FY 2019
Paul Hayes Family Trust tax return for FY2019
Superannuation fund documents
AT-69.
FY 2008
Malacorp Pty Ltd Superannuation Fund financial statement for FY2008
AT-70.
FY 2016
Malacorp Pty Ltd Superannuation Fund financial statement for FY2016
AT-71.
FY 2016
Malacorp Pty Ltd Superannuation Fund tax return for FY2016
AT-72.
FY 2019
Malacorp Pty Ltd Superannuation Fund financial statement for FY2019 in draft
AT-73.
FY 2019
Malacorp Pty Ltd Superannuation Fund tax return for FY2019 in draft
AT-74.
FY 2016
MJH Superannuation Fund financial statement for FY2016
AT-75.
FY 2016
MJH Superannuation Fund tax return for FY2016
AT-76.
FY 2019
MJH Superannuation Fund financial statement for FY2019 in draft
AT-77.
FY 2019
MJH Superannuation Fund tax return for FY2019 in draft
Holding Trust and company documents
AT-78.
FY 2016
BG Hayes Holdings Pty Ltd financial statement for FY2016
AT-79.
FY 2016
BG Hayes Holdings Pty Ltd tax return for FY2016
AT-80.
FY 2019
BG Hayes Holdings Pty Ltd financial statement for FY2019
AT-81.
FY 2019
BG Hayes Holdings Pty Ltd tax return for FY2019
AT-82.
FY2019
BG Hayes Holdings Pty Ltd dividends paid transactions to Bryan Hayes for FY2019
AT-83.
FY 2019
BGH Holding Trust financial statements for FY2019
AT-84.
FY 2019
BGH Holding Trust tax return for FY2019
AT-85.
FY 2016
JP Hayes Holdings Pty Ltd financial statement for FY2016
AT-86.
FY 2016
JP Hayes Holdings Pty Ltd tax return for FY2016
AT-87.
FY 2019
JP Hayes Holdings Pty Ltd financial statement for FY2019
AT-88.
FY 2019
JP Hayes Holdings Pty Ltd tax return for FY2019
AT-89.
FY 2016
MJ Hayes Holdings Pty Ltd financial statement for FY2016
AT-90.
FY 2016
MJ Hayes Holdings Pty Ltd tax return for FY2016
AT-91.
FY 2019
MJ Hayes Holdings Pty Ltd financial statement for FY2019
AT-92.
FY 2019
MJ Hayes Holdings Pty Ltd tax return for FY2019
AT-93.
FY 2016
PA Hayes Holdings Pty Ltd financial statement for FY2016
AT-94.
FY 2016
PA Hayes Holdings Pty Ltd tax return for FY2016
AT-95.
FY 2019
PA Hayes Holdings Pty Ltd financial statement for FY2019
AT-96.
FY 2019
PA Hayes Holdings Pty Ltd tax return for FY2019
Other Trust and company documents
AT-97.
FY 2007
Fuentes Pty Ltd income tax return for FY2007
AT-98.
FY 2008
Fuentes Pty Ltd financial statements for FY2008
AT-99.
FY 2009
Fuentes Pty Ltd journal entries and Division 7A calculator for FY2009
AT-100.
FY 2009
Fuentes Pty Ltd income tax return for FY2009
AT-101.
FY 2010
Fuentes Pty Ltd financial report for FY2010
AT-102.
FY 2008/2009
Fuentes Pty Ltd Division 7A interest calculations for FY2008 and 2009
AT-103.
FY 2011
Fuentes Pty Ltd financial report for FY2011
AT-104.
FY 2012
Fuentes Pty Ltd financial report for FY2012
AT-105.
FY 2013
Fuentes Pty Ltd annual report for FY2013
AT-106.
FY 2014
Fuentes Pty Ltd financial report for FY2014
AT-107.
FY 2015
Fuentes Pty Ltd annual accounts for FY2015
AT-108.
FY 2016
Fuentes Pty Ltd amended financial statements for FY2016
AT-109.
FY 2017
Fuentes Pty Ltd financial statements for FY2017
AT-110.
FY 2017
Fuentes Pty Ltd Division 7A calculations for FY2017
AT-111.
FY 2018
Fuentes Pty Ltd Division 7A calculations for FY2018
AT-112.
FY 2018
Fuentes Pty Ltd financial statements for FY2018
AT-113.
FY 2018
Fuentes Pty Ltd Division 7A calculator for FY2018
AT-114.
FY 2019
Fuentes Pty Ltd financial statements for FY2019
AT-115.
FY 2019
Fuentes Pty Ltd summary of loan for FY2019
AT-116.
FY 2008
Hayes Discretionary Trust balance sheet page 2 for FY2008
AT-117.
FY 2009
Hayes Discretionary Trust journal entries for FY2009
AT-118.
FY 2006
Malacorp Pty Ltd financial statements for FY2006
AT-119.
FY 2006
Malacorp Pty Ltd company tax return for FY2006
AT-120.
FY 2007
Malacorp Pty Ltd company tax return for FY2007
AT-121.
FY 2008
Malacorp Pty Ltd financial report for FY2008
AT-122.
FY 2008
Malacorp Pty Ltd company tax return for FY2008
AT-123.
FY 2008
Malacorp Pty Ltd Division 7A loan calculations for FY2008
AT-124.
FY 2008
Malacorp Pty Ltd journal entries for FY2008
AT-125.
FY 2009
Malacorp Pty Ltd financial report for FY2009
AT-126.
FY 2009
Malacorp Pty Ltd company tax return for FY2009
AT-127.
FY 2009
Malacorp Pty Ltd Division 7A loan calculations for FY2009
AT-128.
FY 2009
Malacorp Pty Ltd journal entries for FY2009
AT-129.
FY 2009
Malacorp Pty Ltd Division 7A calculations to B J & P Hayes for FY2009
AT-130.
FY 2009
Malacorp Pty Ltd Division 7A calculations to C, M, J & B Hayes for FY2009
AT-131.
FY 2010
Malacorp Pty Ltd company tax return for FY2010
AT-132.
FY 2014
Malacorp Pty Ltd notes to the financial statements for FY2014
AT-133.
FY 2014
Malacorp Pty Ltd balance sheet page 2 for FY2014
AT-134.
FY 2015
Malacorp Pty Ltd interest received – private lending transactions for FY2015
AT-135.
FY 2016
Malacorp Pty Ltd loan – CA & JP Hayes transactions for FY2016
AT-136.
FY 2016
Malacorp Pty Ltd journal entries for FY2016
AT-137.
FY 2018
Malacorp Pty Ltd journal entries for FY2018
AT-138.
FY 2019
Malacorp Pty Ltd summary of loan for FY2019
AT-139.
Undated
Malacorp Pty Ltd loan calculations
AT-140.
FY 2008
MBJP Investments Pty Ltd financial report for FY2008
AT-141.
FY 2011
MBJP Hayes Investments Pty Ltd trial balance sheet for FY2011
AT-142.
FY 2020
MBJP Hayes Investments Pty Ltd balance sheet for FY2020
AT-143.
FY 2019
MBJ & P Hayes Pty Ltd summary of loan for FY2019
AT-144.
FY 2019
MBJP Investments Pty Limited summary of loan for FY2019
AT-145.
FY 2007
M J B & P Pty Ltd balance sheet for FY2007
AT-146.
FY 2008
M J B & P Pty Ltd financial report for FY2008
AT-147.
FY 2009
M J B & P Pty Ltd financial report for FY2009
AT-148.
FY 2009
M J B & P Pty Ltd Division 7A calculations for FY2009
AT-149.
FY 2016
M J B & P Pty Ltd Division 7A calculations for FY2016
Partnership documents
AT-150.
FY 2015
Hayes Rural Partnership ABN 63 034 601 326 financial statement for FY2015
AT-151.
FY 2016
Hayes Rural Partnership ABN 63 034 601 326 financial statement for FY2016
Trustee resolutions
AT-152.
16/06/2016
Memorandum of resolutions by Bryan Hayes Trading Pty Ltd as trustee of the BGH Trading Trust
AT-153.
29/06/2018
Trustee resolution by Bryan Hayes Trading Pty Ltd as trustee of the BGH Trading Trust
AT-154.
16/06/2016
Memorandum of resolutions by John Hayes Trading Pty Ltd as trustee of the JPH Trading Trust
AT-155.
30/06/2018
Trustee resolution by John Hayes Trading Pty Ltd as trustee of the JPH Trading Trust
AT-156.
30/06/2019
Trustee resolution by John Hayes Trading Pty Ltd as trustee of the JPH Trading Trust
AT-157.
29/06/2018
Trustee resolution by Michael Hayes Trading Pty Ltd as trustee of the MJH Trading Trust
AT-158.
16/06/2016
Memorandum of resolutions by Paul Hayes Trading Pty Ltd as trustee of the PAH Trading Trust
AT-159.
29/06/2018
Trustee resolution of Paul Hayes Trading Pty Ltd as trustee of the PAH Trading Trust
Dividend statements and related documents
AT-160.
24/05/2017
Notice of a meeting of a member by Bryan Hayes Trading Pty Ltd as trustee for the BGH Trading Trust regarding $39,417.94 dividend for
FY 2016AT-161.
24/05/2017
Memorandum of resolutions of Bryan Hayes Trading Pty Ltd as trustee for the BGH Trading Trust regarding approval of $39,417.94 dividend for FY 2016
AT-162.
24/05/2017
Members consent in Bryan Hayes Trading Pty Ltd as trustee for the BGH Trading Trust dispensing with 21 days’ notice for passing Members Resolution
AT-163.
24/05/2017
Dividend statement by Bryan Hayes Trading Pty Ltd as trustee of the BGH Trading Trust to Bryan Hayes Pty Ltd as trustee of the Bryan Hayes Family Trust for FY 2016
AT-164.
24/05/2017
Dividend statement by Bryan Hayes Trading Pty Ltd as trustee of the BGH Trading Trust to Bryan Hayes Pty Ltd as trustee of the BGH Fixed Trust for FY 2016
AT-165.
24/05/2017
Memorandum of resolutions of Bryan Hayes Pty Ltd as trustee for the Bryan Hayes Family Trust regarding distributions FY 2016
AT-166.
FY 2019
Dividends received by Bryan Hayes Pty Ltd as trustee for the BGH Holdings Trust to BG Hayes Holdings Pty Ltd
AT-167.
01/07/2016
Dividend statement by Fuentes Pty Ltd to Bryan Hayes for FY 2016
AT-168.
01/07/2016
Dividend statement by Fuentes Pty Ltd to John Hayes for FY 2016
AT-169.
01/07/2016
Dividend statement by Fuentes Pty Ltd to Michael Hayes for FY 2016
AT-170.
01/07/2017
Dividend statement by Fuentes Pty Ltd to Bryan Hayes for FY 2017
AT-171.
01/07/2017
Dividend statement by Fuentes Pty Ltd to John Hayes for FY 2017
AT-172.
01/07/2017
Dividend statement by Fuentes Pty Ltd to Michael Hayes for FY 2017
AT-173.
01/07/2018
Dividend statement by Fuentes Pty Ltd to Bryan Hayes for FY 2018
AT-174.
01/07/2018
Dividend statement by Fuentes Pty Ltd to John Hayes for FY 2018
AT-175.
01/07/2018
Dividend statement by Fuentes Pty Ltd to Michael Hayes for FY 2018
AT-176.
24/05/2017
Notice of a meeting of member by John Hayes Trading Pty Ltd as trustee for the JPH Trading Trust regarding $38,890.72 dividend for
FY 2016AT-177.
24/05/2017
Memorandum of resolutions of the members by John Hayes Trading Pty Ltd as trustee for the JPH Trading Trust regarding $38,890.72 dividend for FY 2016
AT-178.
24/05/2017
Members consent in John Hayes Trading Pty Ltd as trustee for the JPH Trading Trust regarding dispensing with 21 days’ notice for passing Members Resolution
AT-179.
24/05/2017
Dividend statement by John Hayes Trading Pty Ltd as trustee of the JPH Trading Trust to John Hayes Pty Ltd as trustee of the John Hayes Family Trust for FY 2016
AT-180.
24/05/2017
Dividend statement by John Hayes Trading Pty Ltd as trustee of the JPH Trading Trust to John Hayes Pty Ltd as trustee of the JPH Fixed Trust for FY 2016
AT-181.
Undated
Notice of a meeting of member by Michael Hayes Trading Pty Ltd as trustee for the MJH Trading Trust regarding $34,063.09 dividend for FY 2016
AT-182.
24/05/2017
Memorandum of resolutions of the members by Michael Hayes Trading Pty Ltd as trustee for the MJH Trading Trust regarding
$34,063.09 dividend for FY 2016
AT-183.
24/05/2017
Members consent in Michael Hayes Trading Pty Ltd as trustee for the MJH Trading Trust regarding dispensing with 21 days’ notice for passing Members Resolution
AT-184.
24/05/2017
Dividend statement by Michael Hayes Trading Pty Ltd as trustee of the MJH Trading Trust to Michael Hayes Family Pty Ltd as trustee of the Michael Hayes Family Trust for FY 2016
AT-185.
24/05/2017
Dividend statement by Michael Hayes Trading Pty Ltd as trustee of the MJH Trading Trust to Michael Hayes Family Pty Ltd as trustee of the MJH Fixed Trust for FY 2016
AT-186.
24/05/2017
Memorandum of resolutions of Paul Hayes Trading Pty Ltd as trustee for the PAH Trading Trust regarding distributions FY 2016
AT-187.
Undated
Notice of a meeting of member by Paul Hayes Trading Pty Ltd as trustee for the PAH Trading Trust regarding $33,623.56 dividend for FY 2016
AT-188.
24/05/2017
Memorandum of resolutions of the members by Paul Hayes Trading Pty Ltd as trustee for the PAH Trading Trust regarding $33,623.56 dividend for FY 2016
AT-189.
24/05/2017
Members consent in Paul Hayes Trading Pty Ltd as trustee for the PAH Trading Trust regarding dispensing with 21 days’ notice for passing Members Resolution
AT-190.
24/05/2017
Dividend statement by Paul Hayes Trading Pty Ltd as trustee of the PAH Trading Trust to Paul Hayes Pty Ltd as trustee of the Paul Hayes Family Trust for FY 2016
AT-191.
24/05/2017
Dividend statement by Paul Hayes Trading Pty Ltd as trustee of the PAH Trading Trust to Paul Hayes Pty Ltd as trustee of the PAH Fixed Trust for FY 2016
Loan agreements and related documents
AT-192.
26/03/2015
Division 7A unsecured loan agreement between Malacorp Pty Ltd and Bryan Hayes, John Hayes, Paul Hayes and Hayes Family Management Trust
AT-193.
26/03/2015
Division 7A unsecured loan agreement between Malacorp Pty Ltd
and Malacorp Pty Ltd Superannuation Fund
AT-194.
26/03/2015
Division 7A unsecured loan agreement between Malacorp Pty Ltd and Marclef Unit Trust
AT-195.
26/03/2015
Division 7A unsecured loan agreement between Malacorp Pty Ltd and Oilsplus Unit Trust
AT-196.
21/08/2015
Terms of loan advance between Malacorp Pty Ltd and Roy Hayes and Jennifer Hayes
AT-197.
21/08/2015
Mortgage over 2/717788 – mortgagors Roy Hayesand Jennifer Hayes and mortgagee Malacorp Pty Ltd
AT-198.
13/04/2016
Division 7A unsecured loan agreement between Malacorp Pty Ltd and Christopher Hayes and John Hayes
AT-199.
2016
Division 7A unsecured loan agreement between Malacorp Pty Ltd and Leewood Trust
AT-200.
2016
Division 7A unsecured loan agreement between M, J, B & P Pty Ltd and Leewood Trust
AT-201.
2016
Division 7A unsecured loan agreement between M, J, B & P Pty Ltd and BGH Rural Unit Trust, JPH Rural Unit Trust, MJH Rural Unit Trust and PAH Rural Unit Trust
AT-202.
02/05/2017
Loan agreement between Malacorp Pty Ltd, Lady Hayes Investments Pty Ltd and Ragem Pty Ltd
AT-203.
12/05/2017
Minutes of meeting of Fuentes Pty Ltd
AT-204.
12/05/2017
Loan agreement between Fuetnes Pty Ltd and Bryan Hayes Trading Pty Ltd
AT-205.
12/05/2017
Minutes of meeting of Fuentes Pty Ltd
AT-206.
12/05/2017
Loan agreement between Fuetnes Pty Ltd and John Hayes Trading Pty Ltd
AT-207.
12/05/2017
Minutes of meeting of Fuentes Pty Ltd
AT-208.
12/05/2017
Loan agreement between Fuentes Pty Ltd and Michael John Hayes Trading Pty Ltd
AT-209.
24/05/2017
Minutes of meeting of BG Hayes Holdings Pty Ltd
AT-210.
24/05/2017
Loan agreement between BG Hayes Holdings Pty Ltd and Bryan HayesTrading Pty Ltd
AT-211.
24/05/2017
Minutes of meeting of JP Hayes Holdings Pty Ltd
AT-212.
24/05/2017
Loan agreement between JP Hayes Holdings Pty Ltd and John Hayes Trading Pty Ltd
AT-213.
24/05/2017
Minutes of meeting of MJ Hayes Holdings Pty Ltd
AT-214.
24/05/2017
Loan agreement between MJ Hayes Holdings Pty Ltd and Michael John Hayes Trading Pty Ltd
AT-215.
24/05/2017
Minutes of meeting of M, J, B & P Pty Ltd
AT-216.
24/05/2017
Loan agreement between M, J, B & P Pty Ltd and Bryan Hayes Pty Ltd, John Hayes Pty Ltd, Michael Hayes Family Pty Ltd and Paul Hayes Pty Ltd
AT-217.
24/05/2017
Minutes of meeting of PA Hayes Holdings Pty Ltd
AT-218.
24/05/2017
Loan agreement between PA Hayes Holdings Pty Ltd and Paul Hayes Trading Pty Ltd
Bearer promissory notes
AT-219.
28/06/2016
Bearer promissory note 1 issued by Bryan Hayes Trading Pty Ltd as trustee of the BGH Trading Trust
AT-220.
28/06/2016
Bearer promissory note 2 issued by Bryan Hayes Trading Pty Ltd as trustee of the BGH Trading Trust
AT-221.
28/06/2016
Bearer promissory note 1 issued by
John Hayes Trading Pty Ltd as trustee of the JPH Trading Trust
AT-222.
28/06/2016
Bearer promissory note 2 issued by John Hayes Trading Pty Ltd as trustee of the JPH Trading Trust
AT-223.
28/06/2016
Bearer promissory note 1 issued by Michael Hayes Trading Pty Ltd as trustee of the MJH Trading Trust
AT-224.
28/06/2016
Bearer promissory note 2 issued by Michael Hayes Trading Pty Ltd as trustee of the MJH Trading Trust
AT-225.
28/06/2016
Bearer promissory note 1 issued by Paul Hayes Trading Pty Ltd as trustee of the PAH Trading Trust
AT-226.
28/06/2016
Bearer promissory note 2 issued by Paul Hayes Trading Pty Ltd as trustee of the PAH Trading Trust
Company resolutions
AT-227.
24/05/2017
Memorandum of resolutions of Bryan Hayes Trading Pty Ltd as trustee for the BGH Trading Trust regarding $39,417.94 dividend for FY 2016
AT-228.
28/06/2016
Resolution of Bryan Hayes Pty Ltd as trustee of the BGH Fixed Trust to distribute a dividend to the absolute beneficiaries
AT-229.
28/06/2016
Resolution of Bryan Hayes Pty Ltd as trustee of the Bryan Hayes Family Trust to distribute dividends to BG Hayes Holdings Pty Ltd
AT-230.
28/06/2016
Resolution of BG Hayes Holdings Pty Ltd to lend an amount of money to Bryan Hayes Trading Pty Ltd as trustee of the BGH Trading Trust
AT-231.
28/06/2016
Resolution of Bryan Hayes Trading Pty Ltd as trustee of the BGH Trading Trust to cancel bearer promissory notes 1 and 2
AT-232.
24/05/2017
Memorandum of resolutions of John Hayes Trading Pty Ltd as trustee for the JPH Trading Trust regarding $38,890.72 dividend for FY 2016
AT-233.
28/06/2016
Resolution of John Hayes Pty Ltd as trustee of the JPH Fixed Trust to distribute a dividend to the absolute beneficiaries
AT-234.
24/05/2017
Memorandum of resolutions of John Hayes Pty Ltd as trustee of the John Hayes Family Trust to distribute dividends to JP Hayes Holdings Pty Ltd FY 2016
AT-235.
28/06/2016
Resolution of JP Hayes Holdings Pty Ltd to lend an amount of money to John Hayes Trading Pty Ltd as trustee of the JPH Trading Trust
AT-236.
28/06/2016
Resolution of John Hayes Trading Pty Ltd as trustee of the JPH Trading Trust to cancel bearer promissory notes 1 and 2
AT-237.
24/05/2017
Memorandum of resolutions of Michael Hayes Trading Pty Ltd as trustee for the MJH Trading Trust regarding $34,063.09 dividend for
FY 2016AT-238.
28/06/2016
Resolution of Michael Hayes Family Pty Ltd as trustee of the MJH Fixed Trust to distribute a dividend to the absolute beneficiaries
AT-239.
28/06/2016
Resolution of Michael Hayes Family Pty Ltd as trustee of the Michael Hayes Family Trust to distribute dividends to MJ Hayes Holdings Pty Ltd
AT-240.
28/06/2016
Resolution of MJ Hayes Holdings Pty Ltd to lend an amount of money to Michael Hayes
Trading Pty Ltd as trustee of the MJH Trading Trust
AT-241.
28/06/2016
Resolution of Michael John Hayes Pty Ltd as trustee of the MJH Trading Trust to cancel bearer promissory notes 1 and 2
AT-242.
24/05/2017
Memorandum of resolutions of Paul Hayes Trading Pty Ltd as trustee for the PAH Trading Trust regarding $33,623.56 dividend for FY 2016
AT-243.
28/06/2016
Resolution of Paul Hayes Pty Ltd as trustee of the PAH Fixed Trust to distribute a dividend to the absolute beneficiaries
AT-244.
29/06/2018
Trustee resolution of Paul Hayes Pty Ltd as trustee for PAH Fixed Trust to distribute a dividend to absolute beneficiaries
AT-245.
24/05/2017
Memorandum of resolutions of Paul Hayes Pty Ltd as trustee of the Paul Hayes Family Trust to distribute dividends to PA Hayes Holdings Pty Ltd
AT-246.
28/06/2016
Resolution of PA Hayes Holdings Pty Ltd to lend an amount of money to Paul Hayes Trading Pty Ltd as trustee of the PAH Trading Trust
AT-247.
28/06/2016
Resolution of Paul Hayes Trading Pty Ltd as trustee of the PAH Trading Trust to cancel bearer promissory notes 1 and 2
PART B – TRUST DEEDS
AT-248.
27/06/2016
BGH Holdings Trust deed
AT-249.
27/06/2016
JPH Holdings Trust deed
AT-250.
27/06/2016
MJH Holdings Trust deed
AT-251.
27/06/2016
PAH Holdings Trust deed
PART C – PERSONAL DOCUMENTS
AT-252.
Circa 2010
Hayes property summary compiled by Pigot Miller Wilson
AT-253.
7 May 2010
Deed by Cecil Hayes, Bryan Hayes, Michael Hayes and John Hayes
Bryan Hayes
AT-254.
07/05/2010
Statutory declaration sworn by Bryan Gregory Hayes
AT-255.
07/05/2010
Resolution of the sole director of Bryan Hayes Pty Ltd as trustee for the Bryan Hayes Family Trust
AT-256.
07/05/2010
Bearer promissory note issued by Bryan Gregory Hayes to Bryan Hayes Trading Pty Ltd as trustee for the Bryan Hayes Family Trust
AT-257.
07/05/2010
Loan Agreement between Bryan Hayes Pty Ltd as trustee for the Bryan Hayes Family Trust and Bryan Gregory Hayes
AT-258.
FY 2011
Bryan Hayes individual tax return for FY2011
AT-259.
FY 2017
Bryan Hayes individual tax return for FY2017
AT-260.
FY 2018
Bryan Hayes individual tax return for FY2018
AT-261.
FY 2019
Bryan Hayes individual tax return for FY2019
John Hayes
AT-262.
21/05/2010
Statutory declaration sworn by John Patrick Hayes
AT-263.
21/05/2010
Resolution of the sole director of John Hayes Pty Ltd as trustee for the John Hayes Family Trust
AT-264.
21/05/2010
Bearer promissory note issued by John Patrick Hayes to John Hayes Trading Pty Ltd as trustee for the John Hayes Family Trust
AT-265.
21/05/2010
Loan Agreement between John Hayes Pty Ltd as trustee for the John Hayes Family Trust and John Patrick Hayes
AT-266.
FY 2011
John Hayes individual tax return for FY2011
AT-267.
FY 2017
John Hayes individual tax return for FY2017
AT-268.
FY 2018
John Hayes individual tax return for FY2018
AT-269.
FY 2019
John Hayes individual tax return for FY2019
Michael Hayes
AT-270.
07/05/2010
Statutory declaration sworn by Michael John Hayes
AT-271.
07/05/2010
Resolution of the sole director of Michael Hayes Family Pty Ltd as trustee for the Michael Hayes Family Trust
AT-272.
07/05/2010
Bearer promissory note issued by Michael John Hayes to Michael Hayes Family Pty Ltd as trustee for the Michael Hayes Family Trust
AT-273.
07/05/2010
Loan Agreement between Michael Hayes Family Pty Ltd as trustee for the Michael Hayes Family Trust and Michael John Hayes
AT-274.
FY 2011
Michael Hayes individual tax return for FY2011
AT-275.
FY 2017
Michael Hayes individual tax return for FY2017
AT-276.
FY 2018
Michael Hayes individual tax return for FY2018
AT-277.
FY 2019
Michael Hayes individual tax return for FY2019
Paul Hayes
AT-278.
21/05/2010
Statutory declaration sworn by Paul Andrew Hayes
AT-279.
21/05/2010
Resolution of the sole director of Paul Hayes Pty Ltd as trustee for the Paul Hayes Family Trust
AT-280.
21/05/2010
Bearer promissory note issued by Paul Andrew Hayes to Paul Hayes Trading Pty Ltd as trustee for the Paul Hayes Family Trust
AT-281.
21/05/2010
Loan Agreement between Paul Hayes Pty Ltd as trustee for the Paul Hayes Family Trust and Paul Andrew Hayes
AT-282.
FY 2011
Paul Hayes individual tax return for FY2011
PART D – SEARCHES
Company searches
AT-283.
31/08/2020
BG Hayes Holdings Pty Ltd
AT-284.
31/08/2020
JP Hayes Holdings Pty Ltd
AT-285.
31/08/2020
MJ Hayes Holdings Pty Ltd
AT-286.
31/08/2020
PA Hayes Holdings Pty Ltd
AT-287.
28/08/2020
Newstead Property Nominees Pty Ltd
ABN searches
AT-288.
11/09/2020
ABN Lookup for 5 Ways Developments Unit Trust
AT-289.
11/09/2020
ABN Lookup for Hayes Partnership
AT-290.
10/09/2020
ABN Lookup for Hayes Petroleum
Property searches
AT-291.
17/08/2020
Title search of Folio 24/1179721
AT-292.
11/08/2020
Title search of Folio 1/591927
AT-293.
11/08/2020
Title search of Folio 1-3/8524
AT-294.
10/08/2020
Title search of Folio 23/851657
AT-295.
28/07/2020
Title search of Folio 11/756883
AT-296.
28/07/2020
Title search of Folio 11/112228, 1/173519, 16- 18/750170, 1-4/1088600
AT-297.
28/07/2020
Title search of Folio 7/750170
AT-298.
28/07/2020
Title search of Folio 8/750170
AT-299.
28/07/2020
Title search of Folio 58/750170
AT-300.
28/07/2020
Title search of Folio 29/756883, 39/756883, 75/756883, 93/756883, 94/756883
AT-301.
28/07/2020
Title search of Folio 12/1188935
AT-302.
28/07/2020
Title search of Folio 13/1188935
AT-303.
28/07/2020
Title search of Folio 16/1188935
AT-304.
28/07/2020
Title search of Folio 17/1188935
AT-305.
24/07/2020
Title search of Folio 12/1085099
AT-306.
24/07/2020
Title search of Folio 14/1085099
AT-307.
24/07/2020
Title search of Folio 5/848818
AT-308.
24/07/2020
Title search of Folio 101/881951
AT-309.
24/07/2020
Title search of Folio 102/881951
AT-310.
24/07/2020
Title search of Folio 3-5/129079
AT-310A.
10/09/2020
Title search of Folio 3-4/255071
PART E – OTHER DOCUMENTS
AT-311.
31/12/2000–
08/04/2004
Suncorp Claims History
AT-312.
14/04/2006
Oilsplus Unit Trust Deed
AT-313.
13/06/2007
Amended statement of claim filed by John Frisby
AT-314.
27/06/2007
Tax invoice and letter from Derek Pigot & Associates to Hayes Group
AT-315.
04/12/2007
Environmental contamination investigation of K.L. Tough Fuel Supplies, Canada Street Lake Cargelligo NSW – prepared by Envirowest Consulting
AT-316.
30/09/2008
Environmental contamination investigation of West Wyalong Caltex, 220 Main Street West Wyalong NSW – prepared by Envirowest Consulting
AT-317.
Circa 2008
Hayes structure diagram prepared by Pigot Miller Wilson
AT-318.
14/01/2010
Letter by Pigot Miller Wilson to Cleary Hoare Solicitors
AT-319.
29/01/2010
Client agreement between Cleary Hoare Solicitors and Barney Hayes, John Hayes, Michael Hayes and Paul Hayes
AT-320.
06/12/2010
Free phase product from monitoring well analysis results – prepared by Envirowest Consulting
AT-321.
25/01/2012
Email chain between Cleary Hoare Solicitors and PMW Accountants regarding Hayes Trading Trusts
AT-322.
26/09/2013–
01/08/2014
National Australia Bank statements for BG Hayes regarding Malacorp Pty Ltd credits
AT-323.
26/09/2013–
01/08/2014
National Australia Bank statements for JP Hayes regarding Malacorp Pty Ltd credits
AT-324.
26/09/2013–
01/08/2014
National Australia Bank statements for PA Hayes regarding Malacorp Pty Ltd credits
AT-325.
27/09/2013
Letter from National Australia Bank to Malacorp Pty Ltd regarding term deposit
AT-326.
17/08/2020
List of Oilsplus Incidents post 2012 – prepared by Envirowest Consulting
AT-327.
14/09/2020
List of Oilsplus pre 2012 – prepared by Envirowest Consulting
AT-328.
Undated
List of company’s details by Pigot Miller Wilson
AT-329.
Undated
Hayes Group entities structure diagram by Pigot Miller Wilson
AT-330.
Undated
Individual incomes spreadsheet by Pigot Miller Wilson
AT-331.
Various
Various Correspondence and documents from Campbell Paton & Taylor Lawyers
AT-332.
04/09/2017
Letter from Campbell Paton & Taylor to Nolly Pty Ltd enclosing documents regarding the purchase of 5 and 7 Leewood Drive, Orange
AT-333.
Various
Chronology of dispute between John Frisby and Marclef Pty Ltd t/as Hayes Petroleum
AT-334.
06/11/2007
Draft letter from Campbell Paton & Taylor to Boyd House & Partners
AT-335.
05/05/2014
Information provided by Fuentes Pty Ltd tax agent Schedule A and B
APPLICANTS’ SUPPLEMENTARY TRIBUNAL DOCUMENTS
PART A – FINANCIAL STAT-EMENTS, INCOME TAX RETURNS AND OTHER FINANCIAL DOCUMENTS
Trust Documents
AT-336.
FY 2007
Hayes Discretionary Trust financial report for FY2007
AT-337.
FY 2008
Hayes Discretionary Trust financial report for FY2008
AT-338.
FY 2009
Hayes Discretionary Trust financial report for FY2009
AT-339.
FY 2009
Hayes Discretionary Trust various documents regarding purchase of units in Oilsplus Unit Trust in FY2009
AT-340.
FY 2010
Hayes Discretionary Trust trial balances for FY2010
AT-341.
2010
Hayes Discretionary Trust various working papers regarding bearer promissory note calculations
AT-342.
FY 2012
Hayes Discretionary Trust general ledger for FY2012
AT-343.
FY 2013
Hayes Discretionary Trust annual report for FY2013
AT-344.
FY 2013
Hayes Discretionary Trust transactions record for FY2013
AT-345.
FY 2014
Hayes Discretionary Trust financial report for FY2014
AT-346.
FY 2014
Hayes Discretionary Trust transactions record for FY2014
AT-347.
FY 2015
Hayes Discretionary Trust annual accounts for FY2015
AT-348.
FY 2015
Hayes Discretionary Trust transactions record for FY2015
AT-349.
FY 2016
Hayes Discretionary Trust financial statements for FY2016
AT-350.
FY 2017
Hayes Discretionary Trust financial statements for FY2017
AT-351.
FY 2018
Hayes Discretionary Trust financial statements for FY2018
AT-352.
FY 2019
Hayes Discretionary Trust financial statements for FY2019
Superannuation Fund Documents
AT-353.
FY 2007
Lady Hayes Superannuation Fund financial report for FY2007
AT-354.
FY 2008
Lady Hayes Superannuation Fund financial statements for FY2008
AT-355.
FY 2009
Lady Hayes Superannuation Fund financial statements for FY2009
AT-356.
FY 2013
Lady Hayes Superannuation Fund financial statements and income tax return for FY2013
AT-357.
FY 2014
Lady Hayes Superannuation Fund financial statements and income tax return for FY2014
AT-358.
FY 2015
Lady Hayes Superannuation Fund financial statements for FY2015
AT-359.
FY 2016
Lady Hayes Superannuation Fund financial statements for FY2016
AT-360.
FY 2017
Lady Hayes Superannuation Fund financial statements for FY2017
AT-361.
FY 2018
Lady Hayes Superannuation Fund financial statements for FY2018
AT-362.
FY 2019
Lady Hayes Superannuation Fund financial statements for FY2019
AT-363.
FY 2009
Malacorp Pty Ltd Superannuation Fund financial statements for FY2009
AT-364.
FY 2009
MJH Superannuation Fund financial statements for FY2009
Other Company Documents
AT-365.
FY 2011
Fuentes Pty Ltd general ledger for FY2011
AT-366.
FY 2014
Malacorp Pty Ltd financial report for FY2014
AT-367.
FY 2014
Malacorp Pty Ltd company tax return for FY2014
AT-368.
FY 2015
Malacorp Pty Ltd annual accounts for FY2015
AT-369.
FY 2015
Malacorp Pty Ltd company tax return for FY2015
AT-370.
FY 2016
Malacorp Pty Ltd financial statements for FY2016
AT-371.
FY 2016
Malacorp Pty Ltd company tax return for FY2016
AT-372.
FY 2017
Malacorp Pty Ltd financial statements for FY2017
AT-373.
FY 2017
Malacorp Pty Ltd company tax return for FY2017
AT-374.
FY 2018
Malacorp Pty Ltd financial statements for FY2018
AT-375.
FY 2018
Malacorp Pty Ltd company tax return for FY2018
AT-376.
FY 2019
Malacorp Pty Ltd financial statements for FY2019
AT-377.
FY 2019
Malacorp Pty Ltd company tax return for FY2019
AT-378.
2010
MBJP Hayes Investments Pty Ltd retained profit estimate calculations
AT-379.
FY 2013
M,J,B & P Pty Ltd annual report for FY2013
AT-380.
FY 2014
M,J,B & P Pty Ltd financial report for FY2014
AT-381.
FY 2015
M,J,B & P Pty Ltd annual accounts for FY2015
AT-382.
FY 2015
M,J,B & P Pty Ltd company tax return for FY2015
AT-383.
FY 2016
M,J,B & P Pty Ltd financial statements for FY2016
AT-384.
FY 2017
M,J,B & P Pty Ltd financial statements for FY2017
AT-385.
FY 2018
M,J,B & P Pty Ltd financial statements for FY2018
AT-386.
FY 2019
M,J,B & P Pty Ltd financial statements for FY2019
Partnership Documents
AT-387.
FY 2017
Manildra Partnership loan transactions for FY2017
AT-388.
FY 2017
MJBP Hayes Rural Partnership loan transactions for FY2017
Loan Agreements and Related Documents
AT-389.
02/05/2017
Loan Agreement between M,J,B & P Pty Ltd and Michael John Hayes Trading Pty Ltd
AT-390.
23/05/2017
Minutes of Meeting of M,J,B & P Pty Ltd regarding loan agreement with Michael John Hayes Trading Pty Ltd
AT-391.
31/12/2018
Loan Agreement between Malacorp Pty Ltd and Bryan Hayes
AT-392.
07/05/2019
Lenders Resolution by Malacorp Pty Ltd regarding loan agreement to Bryan Hayes
AT-393.
31/12/2018
Loan Agreement between Malacorp Pty Ltd and John Hayes
AT-394.
07/05/2019
Lenders Resolution by Malacorp Pty Ltd regarding loan agreement to John Hayes
AT-395.
31/12/2018
Loan Agreement between Malacorp Pty Ltd and Paul Hayes
AT-396.
07/05/2019
Lenders Resolution by Malacorp Pty Ltd regarding loan agreement to Paul Hayes
PART B – SEARCHES
AT-397.
07/10/2020
Company Search of Hayfin Pty Ltd
AT-398.
07/10/2020
Company Search of Butzip Pty Ltd
AT-399.
07/10/2020
Company Search of Nolly Pty Ltd
AT-400.
07/10/2020
Company Search of Phony Pty Ltd
AT-401.
07/10/2020
Historical Company Search of Riverina Fuel Supplies Pty Ltd
ANNEXURE B: LIST OF RELEVANT PARTIES AND ENTITIES
The Operating Companies
ANNEXURE B: LIST OF RELEVANT PARTIES AND ENTITIES
THE OPERATING COMPANIES
Operating Company
Directors
as at 30 June 2010Ordinary Shareholding
as at 30 June 2010Z Class Shareholding
as at 30 June 2010Business Activity
Malacorp Pty Limited
(incorporated
16 March 1988)· John
· Paul
· Bryan
· Cecil
Each appointed on 25 March 1988
· John (4 ordinary shares)
· Paul (4 shares)
· Bryan (4 ordinary shares)
· Shirley (3 ordinary shares)
· Paul Hayes Trading Pty Ltd as trustee for PAH Trading Trust
· John Hayes Trading Pty Ltd as trustee for JPH Trading Trust
· Bryan Hayes Trading Pty Ltd as trustee for BGH Trading Trust
Each holding 10 Z Class shares
‘Cec Hayes Transport’ (livestock transport business)
Fuentes Pty Ltd
(incorporated 22 September 1997)
· Michael
· John
· Bryan
Each appointed on 26 September 1997
· Michael
· John
· Bryan
Each holding 2 ordinary shares
· Michael John Hayes Trading Pty Ltd as trustee for MJH Trading Trust
· John Hayes Trading Pty Ltd as trustee for JPH Trading Trust
· Bryan Hayes Trading Pty Ltd as trustee for BGH Trading Trust
Each holding 10 Z Class shares
Primary production activities, owns rural property and owns an aircraft used in these operations
MJB&P Pty Ltd
(incorporated 8 December 2006)
· Michael
· John
· Paul
· Bryan
Each appointed on
8 December 2006· Michael
· John
· Paul
· Bryan
Each holding 1 ordinary share
· Michael John Hayes Trading Pty Ltd as trustee for MJH Trading Trust
· John Hayes Trading Pty Ltd as trustee for JPH Trading Trust
· Paul Hayes Trading Pty Ltd as trustee for PAH Trading Trust
· Bryan Hayes Trading Pty Ltd as trustee for BGH Trading Trust
Each holding 10 Z Class shares
Established for the purpose of buying a fuel depot at 34-38 Peisley St, Orange (Folio 1-3/8524)
MBJP Hayes Investments Pty Limited (incorporated 25 June 2007)
· Michael
· John
· Paul
· Bryan
Each appointed on
25 June 2007· Michael John Hayes Family Pty Ltd
· John Hayes Pty Ltd
· Paul Hayes Pty Ltd
· Bryan Hayes Pty Ltd
Each holding 2 ordinary shares
· Michael John Hayes Trading Pty Ltd as trustee for MJH Trading Trust
· John Hayes Trading Pty Ltd as trustee for JPH Trading Trust
· Paul Hayes Trading Pty Ltd as trustee for PAH Trading Trust
· Bryan Hayes Trading Pty Ltd as trustee for BGH Trading Trust
Each holding 10 Z Class shares
Investment vehicle that was never intended to trade
Derived income from distributions from the CWH Family Trust and the Hayes Discretionary Trust
The Trading Trusts
ANNEXURE B: LIST OF RELEVANT PARTIES AND ENTITIES
THE TRADING TRUSTS
Trust
Trustee
Unitholders
MJH Trading Trust
Michael John Hayes Trading Pty Ltd
· Michael Hayes Family Pty Ltd as trustee for the Michael Hayes Family Trust, as to 80 units
· Michael Hayes Family Pty Ltd as trustee of the MJH Fixed Trust, as to 20 units
JPH Trading Trust
John Hayes Trading Pty Ltd
· John Hayes Pty Ltd as trustee for the John Hayes Family Trust, as to 80 units
· John Hayes Pty Ltd as trustee of the JPH Fixed Trust, as to 20 units
BGH Trading Trust
Bryan Hayes Trading Pty Ltd
· Bryan Hayes Pty Ltd as trustee for the Bryan Hayes Family Trust, as to 80 units
· Bryan Hayes Pty Ltd as trustee of the BGH Fixed Trust, as to 20 units
PAH Trading Trust
Paul Hayes Trading Pty Ltd
· Paul Hayes Pty Ltd as trustee for the Paul Hayes Family Trust, as to 80 units
· Paul Hayes Pty Ltd as trustee of the PAH Fixed Trust, as to 20 units
CWH Family Trust
ANNEXURE B: LIST OF RELEVANT PARTIES AND ENTITIES
CWH FAMILY TRUST
Date of Deed Settlement
Trustee
Beneficiaries
Business Activity
30 June 1996 (varied in 2011)
Marclef Pty Ltd
· Cecil
· Shirley
· Family
· Family Entities
Fuel distribution and storage
Hayes Discretionary Trust
ANNEXURE B: LIST OF RELEVANT PARTIES AND ENTITIES
HAYES DISCRETIONARY TRUST
Date of Deed Settlement
Trustee
Beneficiaries
Business Activity
14 April 2006 (varied in 2011)
Grawlex Pty Ltd
· Michael, John, Bryan, Paul
· Family
· Family Entities
N/A
OilsPlus Unit Trust
ANNEXURE B: LIST OF RELEVANT PARTIES AND ENTITIES
OILSPLUS UNIT TRUST
Date of Deed Settlement
Trustee
Unitholders
Business Activity
14 April 2006
Grawlex Pty Ltd
· Grawlex Pty Ltd as trustee for the Hayes Discretionary Trust, as to 1 unit
· M Finemore Pty Ltd as trustee for the M Finemore Family Trust, as to 1 unit
· Kizrone Pty Ltd as trustee for the Timothy Hine Family Trust, as to 1 unit
· Salrema Pty Ltd as trustee for the K&D Tough Family Trust, as to 1 unit
Received dividends from OilsPlus Trust, which was a fuel wholesaler
The Family Trusts
ANNEXURE B: LIST OF RELEVANT PARTIES AND ENTITIES
THE FAMILY TRUSTS
Trust
Date of Deed Settlement
Trustee
Sole Director and Shareholder
Beneficiaries
Michael Hayes Family Trust
27 June 2007
Michael Hayes Family Pty Ltd
Michael Hayes Family Pty Ltd
· Michael
· Julie Kathleen
· Family
· Family Entities
John Hayes Family Trust
27 June 2007
John Hayes Pty Ltd
John Hayes Pty Ltd
· John
· Julie Margaret
· Family
· Family Entities
Bryan Hayes Family Trust
27 June 2007
Bryan Hayes Pty Ltd
Bryan Hayes Pty Ltd
· Bryan
· Narelle
· Family
· Family Entities
Paul Hayes Family Trust
27 June 2007
Paul Hayes Pty Ltd
Paul Hayes Pty Ltd
· Paul
· Tanya
· Family
· Family Entities
The Fixed Trusts
ANNEXURE B: LIST OF RELEVANT PARTIES AND ENTITIES
THE FIXED TRUSTS
Trust
Trustee
Unitholders/Absolute Beneficiaries
MJH Fixed Trust
Michael Hayes Family Pty Ltd
· Michael Hayes Family Pty Ltd in its capacity as trustee of the Michael Hayes Family Trust, as to a 95% share;
· Grawlex Pty Ltd in its capacity as trustee of the MJH Superannuation Fund, as to a 5% share
JPH Fixed Trust
John Hayes Pty Ltd
· John Hayes Pty Ltd in its capacity as trustee of the John Hayes Family Trust, as to a 95% share;
· Malacorp Pty Ltd in its capacity as trustee of Malacorp Pty Ltd Superannuation Fund, as to a 5% share
BGH Fixed Trust
Bryan Hayes Pty Ltd
· Bryan Hayes Pty Ltd in its capacity as trustee of the Bryan Hayes Family Trust, as to a 95% share;
· Malacorp Pty Ltd in its capacity as trustee of Malacorp Pty Ltd Superannuation Fund, as to a 5% share
PAH Fixed Trust
Paul Hayes Pty Ltd
· Paul Hayes Pty Ltd in its capacity as trustee of the Paul Hayes Family Trust, as to a 95% share;
· Malacorp Pty Ltd in its capacity as trustee of Malacorp Pty Ltd Superannuation Fund, as to a 5% share
The Rural Unit Trusts
ANNEXURE B: LIST OF RELEVANT PARTIES AND ENTITIES
THE RURAL UNIT TRUSTS
Trust
Trustee
Unitholder
MJH Rural Unit Trust
Michael Hayes Family Pty Ltd
Michael John Hayes Trading Pty Ltd in its capacity as trustee of the MJH Trading Trust
JPH Rural Unit Trust
John Hayes Pty Ltd
John Hayes Trading Pty Ltd in its capacity as trustee of the JPH Trading Trust
BGH Rural Unit Trust
Bryan Hayes Pty Ltd
Bryan Hayes Trading Pty Ltd in its capacity as trustee of the BGH Trading Trust
PAH Rural Unit Trust
Paul Hayes Pty Ltd
Paul Hayes Trading Pty Ltd in its capacity as trustee of the PAH Trading Trust
The Superannuation Funds
ANNEXURE B: LIST OF RELEVANT PARTIES AND ENTITIES
THE SUPERANNUATION FUNDS
Fund
Date of Deed Settlement
Trustee
Members
Malacorp Pty Ltd Superannuation Fund
31 March 2000 (varied 7 May 2010)
Malacorp Pty Ltd
· John
· Bryan
· Paul
· Cecil (deceased)
MJH Superannuation Fund
31 March 2000 (varied 30 June 2004)
Grawlex Pty Ltd
Michael
Hayes Partnership (or CW, BG, JP & MJ Hayes Partnership)
ANNEXURE B: LIST OF RELEVANT PARTIES AND ENTITIES
HAYES PARTNERSHIP (OR CW, BG, JP & MJ HAYES PARTNERSHIP)
Date Established
Partners
Business Activity
c. 1993
· Michael
· John
· Bryan
· Cecil (now deceased)
Purchasing of rural property, beef cattle farming and grain production
MJBP Hayes Rural Partnership
ANNEXURE B: LIST OF RELEVANT PARTIES AND ENTITIES
MJBP HAYES RURAL PARTNERSHIP
Date Established
Partners
Business Activity
24 February 2010
· Michael Hayes Family Pty Ltd
· John Hayes Pty Ltd
· Bryan Hayes Pty Ltd
· Paul Hayes Pty Ltd
Beef cattle farming and grain production
B & J & P & M Hayes Partnership
ANNEXURE B: LIST OF RELEVANT PARTIES AND ENTITIES
B & J & P & M HAYES PARTNERSHIP
Date Established
Partners
Business Activity
1 November 2002
· Michael
· John
· Bryan
· Paul
‘Property, Operators and Developers’ as listed in FY10 ITR
Haysen Partnership
ANNEXURE B: LIST OF RELEVANT PARTIES AND ENTITIES
HAYSEN PARTNERSHIP
Date Established
Partners
Business Activity
1 June 2002
· CWH Family Trust
· Haymor 17 Pty Ltd
Purchase and lease of 18-22 Peisley Street, Orange
1
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