Australian Building Systems case: nuanced ATO view of decision

On 6 January 2016 the ATO issued a Decision Impact Statement concerning the High Court judgment in the Australian Building Systems case.

[See my previous post for a discussion of the High Court’s majority decision: Australian Building Systems case: plenty of common sense in the dissenting judgment by Justice Michelle Gordon]

It seems that although the ATO accepts the High Court’s majority decision (as, of course, it must), it’s interpretation of the decision is nuanced, and suggests that it has no intention of giving up on the retention obligation.

Under the heading “ATO View of Decision” the Statement says:

The Commissioner accepts that a trustee or agent has no obligation to retain under paragraph 254(1)(d) of the ITAA 1936 until an assessment has first issued in respect of the income, profits or gains.

The Commissioner will consider where it is now necessary to finalise draft taxation determinations TD 2012/D6 and TD 2012/D7. He will also consider the content of any revised Determinations.

The decision reflects the Commissioner’s view that section 254 of the ITAA 1936 does not require the trustee to be assessable to tax under Part III, Division 6 of the ITAA 1936 in order for the retention obligation to be imposed.

The decision also reflects the Commissioner’s view that section 254 of the ITAA 1936 is both an assessing and a collection provision.

The Commissioner agrees with the obiter comments made by Gordon J at [207] concerning the operation of section 556 of the Corporations Law, and will act accordingly.(Highlighting added)