Australian Building Systems case: plenty of common sense in the dissenting judgment by Justice Michelle Gordon

 Capital Gains Tax, Corporate Insolvency, court decisions, Insolvency Law, Priority Debts, Tax debts, Taxation Issues  Comments Off on Australian Building Systems case: plenty of common sense in the dissenting judgment by Justice Michelle Gordon
Dec 172015
 

(Judgment of December 2015)

By a majority of three to two the High Court dismissed the Australian Taxation Office’s appeal in the Australian Building Systems case: Commissioner of Taxation v Australian Building Systems Pty Ltd (In Liquidation); Commissioner of Taxation v Muller and Dunn as Liquidators of Australian Building Systems Pty Ltd (In Liquidation) [2015] HCA 48 (10 December 2015) .

This test case – run by the Australian Restructuring Insolvency & Turnaround Association (ARITA) and the Australian Taxation Office (ATO) – began in 2013 and has previously been before the Federal Court and the Federal Court of Appeal. It was supposed to settle a far-reaching, long-standing argument that ARITA and the ATO had been having since 2009.

Argument about when obligation arises

The primary argument in this case – framed here as an issue for liquidators in general – has been whether the “retention obligation” placed on liquidators by section 254(1)(d) of the Income Tax Assessment Act 1936 arises prior to the issue of a tax assessment or only after the issue of an assessment.
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Tax Office loses High Court appeal in test case regarding liquidators’ tax obligations

 Capital Gains Tax, Corporate Insolvency, Priority Debts, Returns, Tax liabilities, Taxation Issues  Comments Off on Tax Office loses High Court appeal in test case regarding liquidators’ tax obligations
Dec 102015
 

A High Court decision was been delivered today (10/12/2015)  in the long-running test case of the Commissioner of Taxation v Australian Building Systems Pty Ltd. The following is the summary of the judgment published by the High Court. (The full judgment will be found HERE.)

 

H I G H C O U R T O F A U S T R ALI A

COMMISSIONER OF TAXATION v AUSTRALIAN BUILDING SYSTEMS PTY LTD (IN LIQUIDATION); COMMISSIONER OF TAXATION v MULLER AND DUNN AS LIQUIDATORS OF AUSTRALIAN BUILDING SYSTEMS PTY LTD (IN LIQUIDATION) [2015] HCA 48

Today the High Court, by majority, dismissed appeals from the Full Court of the Federal Court of Australia. The High Court held that the retention obligation (as defined below) imposed on agents and trustees by s 254(1)(d) of the Income Tax Assessment Act 1936 (Cth) (“the 1936 Act”) only arises after the making of an assessment or deemed assessment in respect of the income, profits or gains. Continue reading »

Contempt for corporations law a growing culture in construction industry

 ASIC, Australian Senate 2013-14, Corporate Insolvency, Insolvency Statistics, Phoenix company activity, White collar crime  Comments Off on Contempt for corporations law a growing culture in construction industry
Dec 042015
 

The Senate Economics References Committee has criticised the contempt that some directors show for company laws, the “mild” consequences of non-compliance and the low likelihood that unlawful conduct will be detected.

In its report “Insolvency in the Australian construction industry: I just want to be paid” – published 3 December 2015 – the Senate Committee states:

The committee considers that the estimates of the incidence of illegal phoenix activity detailed in this report suggest that construction industry is being beset by a growing culture among some company directors of disregard for the corporations law. This view is reinforced by the anecdotal evidence received by the committee which indicates that phoenixing is considered by some in the industry as merely the way business is done in order to make a profit.

The committee is particularly concerned at evidence that a culture has developed in sections of the industry in which some company directors consider compliance with the corporations law to be optional, because the consequences of non-compliance are so mild and the likelihood that unlawful conduct will be detected is so low.

This culture is reflected in the number of external administrator reports indicating possible breaches of civil and criminal misconduct by company directors in the construction industry. Over three thousand possible cases of civil misconduct and nearly 250 possible criminal offences under the Corporations Act 2001 were reported in a single year in the construction industry. This is a matter for serious concern. It suggests an industry in which company directors’ contempt for the rule of law is becoming all too common.

[from Executive summary, Phoenixing (page xix) and paragraph 5.100 (page 87)]
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