Sandini Pty Ltd v Commissioner of Taxation

In Sandini Pty Ltd v Commissioner of Taxation, the primary issue was whether the Family Court Order transferring shares to a family trust could attract rollover relief under subdiv 126-A of the Income Tax Assessment Act 1997. The applicants argued that the Family Court Order constituted a disposal of ownership by operation of law, thus triggering a CGT event A1. They further contended that the transfer was pursuant to a family court order and that there was a change in beneficial ownership, which is sufficient for a CGT event A1 to occur. The Commissioner, on the other hand, argued that the transfer to a trust rather than an individual meant that the rollover relief provisions did not apply.

The court had to determine whether the provisions of the Income Tax Assessment Act 1997 applied to transfers to companies or trusts associated with a spouse or former spouse and if the transferee must be an individual. The court also needed to decide whether the change in beneficial ownership constituted a change in ownership for the purposes of the Act and if the making of a family court order constituted a CGT event A1. Additionally, the court considered whether there was a genuine controversy between the parties that was susceptible to judicial determination and if declaratory relief was available when a tax assessment was yet to be issued.

The court found that the Family Court Order did cause a CGT event A1 to happen, as it resulted in a change of beneficial ownership of CGT assets. The court held that changes in equitable ownership alone were sufficient for a CGT event A1 to occur, and that the provisions of the Act applied to transfers made pursuant to a Family Court order. The court also held that it had jurisdiction to make a declaration as to whether Sandini was entitled to rollover relief, as there was a genuine controversy between the parties that was susceptible to judicial determination.

The court granted the declaratory relief sought by the applicants, finding that the issue of whether Sandini was entitled to rollover relief turned on the operation of the Act upon past events and was not contingent on an assessment being made. The court held that declaratory relief was available in circumstances where no assessment had been issued, and that the lack of an assessment did not render the declaratory relief sought hypothetical. The court ordered the parties to file submissions on costs to be dealt with on the papers, unless any party wished to be heard on costs.