INCOME TAX - objection to assessment - whether a dividend paid on non-redeemable, non-cumulative convertible preference shares was a "debt dividend" under s46D of the Income Tax Assessment Act 1936.
The Oxford English Dictionary, 2nd Ed (Oxford: Clarendon Press, 1989) Vol 5 The Macquarie Dictionary (NSW: Macquarie Library, 1981)
P.J. Norman, "Debt Dividends: The Test Case" (1996) 5 Taxation in Australia 10. N.J. O'Bryan, "Preference Share Financing" (1986) 1 BLB 53 C.L. Pannam, The Law of Money Lenders in Australia and New Zealand (1964) M. Pickering, The Problem of the Preference Share (1963) 26 MLR 499
COMMISSIONER OF TAXATION V RADILO ENTERPRISES PTY LTD NG229 OF 1996
LEE, SACKVILLE, LEHANE JJ SYDNEY 3 FEBRUARY, 1997
IN THE FEDERAL COURT ) OF AUSTRALIA ) NEW SOUTH WALES ) DISTRICT REGISTRY ) GENERAL DIVISION ) NO. NG229 OF 1996
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
B E T W E E N: COMMISSIONER OF TAXATION
Appellant
and
RADILO ENTERPRISES PTY LTD
Respondent
MINUTE OF ORDER
THE COURT: LEE, SACKVILLE, LEHANE JJ
DATE OF ORDER: 3 FEBRUARY, 1997
WHERE MADE: SYDNEY
THE COURT ORDERS THAT:
The appeal be dismissed with costs.
Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
IN THE FEDERAL COURT ) OF AUSTRALIA ) NEW SOUTH WALES ) DISTRICT REGISTRY ) GENERAL DIVISION ) NO. NG229 OF 1996
ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA
B E T W E E N: COMMISSIONER OF TAXATION
Appellant
and
RADILO ENTERPRISES PTY LTD
Respondent
CORAM: LEE, SACKVILLE, LEHANE JJ
DATE :3 FEBRUARY, 1997
PLACE: SYDNEY
REASONS FOR JUDGMENT
LEE J:
This is an appeal from a judgment of a Judge of this Court (Davies J) in which his Honour ordered that the decision made by the appellant ("the Commissioner") on an objection to the assessment of income tax payable by the respondent ("Radilo") be set aside and the matter remitted to the Commissioner for…
Grounds of appeal
[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.
[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.
[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.
Consideration
[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.
[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.
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AGLC
MIEA v Guo [1997] FCA 22
Case
[1997] FCA 22
Decision Date
CaseChat Overview and Summary
The appeal in MIEA v Guo was brought by the Commissioner of Taxation against the decision of Davies J to set aside an assessment of income tax payable by Radilo Enterprises Pty Ltd. The sole issue on appeal was whether the dividend paid on non-redeemable, non-cumulative convertible preference shares issued by the Australia and New Zealand Banking Group Limited was a "debt dividend" under s46D of the Income Tax Assessment Act 1936. The court found that the dividend was not a debt dividend and that the appeal should be dismissed with costs. The court held that the relationship between the bank and the shareholders was not that of debtor and creditor, and that the payment of the dividend could not be regarded as equivalent to the payment of interest on a loan. The court rejected the Commissioner's argument that the issue should be determined from the perspective of the shareholder, and held that the relevant factors to be considered included the manner in which the dividend was calculated, the conditions applicable to the payment of the dividend, and any other relevant matters. The court found that the relationship between the bank and the shareholders did not exhibit the characteristics of a debtor and creditor relationship, and that the payment of the dividend could not be regarded as equivalent to the payment of interest on a loan. The court held that the dividend was not a debt dividend within the meaning of s46D of the Act, and that Radilo was entitled to a rebate under s46 of the Act. The appeal was dismissed with costs.