Moloney and Commissioner of Taxation (Taxation)

The Administrative Appeals Tribunal considered objections by Mr and Mrs Moloney to amended income tax assessments issued by the Commissioner of Taxation. The dispute concerned the application of the small business concessions, specifically the capital gains tax (CGT) concessions, to a sale of shares in a company. The Commissioner had disallowed the Moloneys' claims for these concessions, leading to the amended assessments.

The Tribunal was required to determine whether the Moloneys satisfied the conditions for the CGT small business concessions, particularly the maximum net asset value test. A key issue was whether the parties to the transaction were dealing at arm's length, as this impacts the application of the market value substitution rule. The Tribunal also had to consider whether the market value substitution rule applied in the circumstances of the sale.

The Tribunal found that the parties to the transaction were not dealing at arm's length, which meant the market value substitution rule did not apply. It then proceeded to assess the Moloneys' eligibility for the CGT concessions based on the actual sale price. The Tribunal concluded that the Moloneys had satisfied the requirements for the concessions, including the maximum net asset value test.

Consequently, the Tribunal set aside the Commissioner's decisions and substituted decisions allowing the Moloneys' objections.