The Declaration under Division 165
154 Division 165 "operates" if the integers of s 165-5(1) are satisfied.
155 The first consideration is whether an entity, characterised as an avoider, gets or got a GST benefit from a scheme: s 165-5(1)(a). The Tribunal notes at [89] that Unit Trend accepted that the arrangements identified by the Commissioner constituted a scheme within the GST Act. The taxpayer adopted the same position before the Full Court. The scheme comprises the steps as described at [110] and [111] of these reasons and as so found by the Tribunal based upon the taxpayer's acceptance of that characterisation (see [115] of these reasons). The steps in the scheme involved a GST-free transfer of Towers II and III to Blesford and Mooreville (as a going concern or transfers within a GST group); a GST-free supply by Simnat at a supply price that reduced the margin of supply to end purchasers that would have prevailed had Simnat supplied end purchasers; and Unit Trend's choosing to apply the margin scheme to supplies by Blesford and Mooreville to end purchasers.
156 The Tribunal regarded Simnat, Blesford and Mooreville as the closest analogues of "the avoider" rather than Unit Trend. The Tribunal found that the avoider "got a GST benefit" from the scheme because, apart from the scheme, Simnat would have continued to be the vendor; it would have conveyed (settled) the units to end purchasers; and it would have paid GST, at least, on the basis of a valuation of the Towers at 1 July 2000: see [119], [122] and [123] of these reasons.
157 It followed for the Tribunal that for settlements up to 17 March 2005, the margin would have been "much greater" than under the scheme and the GST payable under the Act would have been "much greater" than the GST payable under the Act having regard to the scheme.
158 These findings of fact are not said by Unit Trend to reflect any error of law or raise a question of law. Clearly enough, on the factual question, the Tribunal was persuaded that Simnat's conduct in relation to Tower I provided a clear analogue for the postulate of what would have occurred in relation to Towers II and III had the scheme not been entered into or carried out.
159 The question of whether the approach adopted by the Tribunal to s 165-10(1) of applying the jurisprudence deriving from a consideration by the Courts of s 177C of the 1936 Act is not a live issue in the appeal. It may however, in the absence of authority on the question, be helpful to make these brief observations. Section 165-10(1) contemplates, in determining whether an entity has obtained a GST benefit from a scheme, an analysis of what could reasonably be expected to be the position, apart from the scheme as found on the facts. That formulation of the approach to determining a GST benefit involves a hypothetical postulate, as does s 177C of the 1936 Act. In the context of s 177C of the 1936 Act, an inquiry is required, as the Tribunal noted, into what the taxpayer would or might reasonably be expected to have done had the collection of arrangements constituting the scheme not been entered into or carried out. Having regard to the similarity in the language of the two provisions, and the history of the evolution of Division 165 and its modelling as an anti-avoidance device on the content and structure of Part IVA, there seems to be no good reason not to apply to s 165-10(1), an analysis that involves an inquiry into what the taxpayer would or might reasonably be expected to have done had the scheme as defined in s 165-10(2), and, as found on the facts, not been entered into or carried out.
160 The second consideration is whether Division 165 fails to operate because the GST benefit, so found on the facts, from the scheme as found, is not attributable to the making by any entity (not just the avoider) of a choice, election, application or agreement expressly provided for by the GST law.
161 The GST benefit from the scheme was found to be the amount of the difference between GST payable on end sales to purchasers by Blesford and Mooreville, settled up to and including 16 March 2005, and GST that would have been payable by Simnat on end sales (settlements) to that date, had the scheme not been entered into or carried out by Simnat, Blesford or Mooreville. The GST benefit therefore was found, for the purposes of s 165-10(1)(a), to be an amount calculated by reference to the GST payable on particular transactions, namely, sales to end purchasers with or without the scheme. Although the measure of the amount of the GST benefit is calculated on those transactions, the elements of the scheme that gave rise to or by which the avoider "got a GST benefit from [the] scheme", necessarily involved antecedent transactions, as found, involving an election to engage in a GST-free going concern transfer under s 38-325 by Simnat to Blesford and Mooreville (and GST-free inter-GST group transfers) at a market valuation reflecting improvements to the land (thus reducing the end sales margin), and the exercise of a choice in applying the margin scheme to sales of the units to buyers.
162 In other words, although the amount of the GST benefit is calculated on the basis of the GST payable on end purchaser transactions, with or without the scheme, it may well be artificial in construing whether the GST benefit is attributable to a choice etc, to disregard the choices or elections inherent in the antecedent transactions (expressly provided for by the GST law) that necessarily formed a part of and led to the transactions on which the GST benefit arises and is calculated.
163 Can it be said that the GST benefit as found by the Tribunal is not attributable to the making by any entity of a choice, election, application or agreement expressly provided for by the GST law?
164 The Tribunal construed s 165-5(1)(b) in a way reminiscent of the observations of Pagone J, Tax Avoidance in Australia, G.T. Pagone, Federation Press, 2010 at p 149 where the author said this of the statutory purpose in excluding, by s 165-5(1)(b), the operation of Division 165:
The purpose of the exclusion from the operation of Div 165 is to preserve the entitlement and effect of specific legislative provisions expressly providing for benefits that might otherwise be defeated by the operation of Div 165. This purpose may exclude some connections between tax benefits and choices etc where the connection may not be causative in the sense of supplying the explanation for the GST benefit.
The language of the section suggests that being partly causative of a GST benefit may not be sufficient for the exclusion to apply if it not be the cause responsible for the GST benefit.
[emphasis added]
165 At [110], the Tribunal accepted that the statutory purpose of s 165-5(1)(b) is to preserve entitlements to benefits expressly conferred that otherwise might be defeated by the operation of Division 165. For the Tribunal, giving effect to the statutory purpose meant that demonstrating "some connection" between the GST benefit and the choices etc made and provided for, is not a sufficient connection unless the GST benefit is "explained" by the choice, rather than "something else". The Tribunal considered that the GST benefit, as found, consisting of the benefit arising on end purchaser transactions, is not explained by the choice of applying the margin scheme to those transactions, but is explained by, and is thus attributable to, the "use" of the higher intermediate amount (so as to narrow the final margin) and reduce the amount of GST payable under the margin scheme. The Tribunal considered that the emergence and use of the "higher amount" is not a function of any election or choice in applying the margin scheme to end purchaser transactions but is a result of earlier transfers coupled with the higher transfer price selected for those upstream transactions.
166 Moreover, the Tribunal considered that because no input tax credits were available to the developer, the margin scheme would have been applied in any event with the result that the choice of or election to apply the margin scheme was not causative of the GST benefit. Therefore, the application of the margin scheme did not explain, for the Tribunal, the GST benefit, as found. The GST benefit could only be explained by the antecedent transactions and the intermediate higher supply price to Blesford and Mooreville from Simnat.
167 Unit Trend contends that this approach by the Tribunal adds an impermissible gloss to the terms of s 165-5(1)(b) by importing into the subsection notions of "solely attributable", inherent in the approach of seeking to determine whether the GST benefit is "explained" by the relevant choice etc rather than by "something else".
168 Identifying the object of Division 165 is not a matter left to the Explanatory Memorandum ("EM") in support of A New Tax System (Goods and Services Tax) Bill 1998 (the "GST Bill 1998"). The Parliament has recorded in the Act itself at s 165-1 a statement of "[w]hat this Division is about". As mentioned earlier, the object of Division 165 is to deter schemes to give entities benefits by reducing GST (and other manipulations of the burden that might fall upon a taxpayer under the GST Act). The fulfilment of the object is described in this way: "If the dominant purpose or principal effect of a scheme is to give an entity such a benefit, the Commissioner may negate the benefit an entity gets from the scheme by declaring how much GST or refund would have been payable, and when it would have been payable, apart from the scheme" [emphasis added]. The focus of the Division is described as being "aimed at artificial or contrived schemes" [emphasis added].
169 The references to "dominant purpose" and "principal effect" focus upon s 165-5(1)(c) which is concerned with whether it is reasonable to conclude that particular entities entered into or carried out the scheme (or part of it) with the relevant sole or dominant purpose or whether the principal effect of the scheme (or part of it) is to confer a GST benefit from the scheme directly or indirectly on the avoider.
170 In describing the object, focus or aim of the Division, s 165-1 does not suggest that the nature of the attribution contemplated by s 165-5(1)(b) is that the choice, election, application or agreement is to be the sole or dominant cause of the GST benefit. Section 165-1 does not recite any characteristic of what might be comprised in the notion of a GST benefit being attributable (or not) to a relevant choice etc expressly provided for by the Act. The feature given emphasis in s 165-1 that renders a scheme artificial or contrived so as to enable the Commissioner to negate a GST benefit is whether the dominant purpose of entry into (or carrying out) the scheme, or the principal effect of the scheme is, put simply, to give a relevant entity a GST benefit.
171 The description of the object of the Division at s 165-1 is consistent with the explanation of the Division contained in the EM for the GST Bill 1998. For example, the EM contains these observations:
6.303 Division 165 operates to deter avoidance schemes that are designed to obtain GST benefits by taking advantage of the GST law in circumstances other than that intended by the GST law.
…
6.305 The Division allows the Commissioner to make any such scheme ineffective where it is concluded that the scheme was entered into, or carried out, for the dominant purpose of an entity obtaining a GST benefit, or the scheme had the principal effect of an entity obtaining a GST benefit.
…
6.307 The general anti-avoidance provision ('GAP') is a key component in maintaining the integrity of the GST base.
…
6.313 Division 165 reflects the policy underlying the income general anti-avoidance provisions found in Part IVA of the [1936 Act]. However, Division 165 has been designed to meet the needs of a transaction based tax, such as, a GST, and accordingly it has its own peculiar features.
…
6.315 Division 165 applies where an entity (referred to in this Chapter as the 'avoider') has obtained a GST benefit from a scheme, and it has concluded that the dominant purpose of the scheme (or part of a scheme) is to give any entity a GST benefit, or a principal effect of a scheme (or part of a scheme) is to give the avoider the GST benefit - subsection 165-5(1).
6.316 By considering the dominant purposes or principal effect of a scheme, Division 165 will cover what is commonly considered to be tax avoidance. Bona fide supplies, acquisitions and importations do not come within the ambit of the test.
…
6.319 Three requirements must be satisfied before Division 165 applies:
• there must be a scheme;
• an entity must obtain a GST benefit from the scheme;
- the concept of a GST benefit will cover reducing GST payable, increasing a refund, delaying payment of GST and bringing forward a refund of GST; and
• it is reasonable to conclude, taking into account a list of relevant factors, that:
- the sole or dominant purpose of an entity that entered into or carried out the scheme (or part of the scheme) was to obtain a GST benefit for any entity; or
- a principal effect of the scheme (or part of the scheme) was to obtain a GST benefit for the avoider.
172 The EM elaborates on the three requirements of: a scheme, a GST benefit from a scheme, and the dominant purpose or principal effect test. There is no discussion in the EM of the notion of a GST benefit not being attributable to a choice, election etc expressly provided for by the Act. The emphasis in the statements of the object and purpose of the Division seems to be those matters recited at 6.305, 6.315, 6.316 and the three particular features at 6.319. The discussion of the three requirements gives no explanation of the scope of the relationship between the GST benefit and a relevant choice or election etc.
173 That may be explained by the Supplementary Explanatory Memorandum (the "SEM") tabled in the Senate in support of amendments to the GST Bill 1998. Section 165-5(1) was in the following terms in the GST Bill 1998:
General rule
(1) This Division operates if:
(a) an entity (the avoider) gets or got a *GST benefit from a *scheme; and
(b) taking account of the matters described in section 165-15, it is reasonable to conclude that either:
(i) an entity that (whether alone or with others) entered into or carried out the scheme, or part of the scheme, did so with the sole or dominant purpose of that entity or another entity getting a *GST benefit from the scheme; or
(ii) a principal effect of the scheme, or of part of the scheme, is that the avoider gets the GST benefit from the scheme directly or indirectly.
174 That form of s 165-5(1) did not contain a subsection in terms of s 165-5(1)(b) as ultimately enacted. The absence of such a provision from the GST Bill 1998 provoked requests for amendments to the Bill. The relevant parts of the SEM are these:
General anti-avoidance provision (Division 165)
1.117 Division 165 operates to deter avoidance schemes that are designed to obtain GST benefits by taking advantage of a GST law or the wine tax, or luxury car tax laws.
1.118 Queries have been made about the scope of the current Division 165. It has been suggested that the Division may have unintended effects and may apply to transactions not intended to defeat the GST law. In particular, it has been suggested that the exercise of an explicit option under the GST law may trigger the anti-avoidance provisions. …
1.119 Requests 79 to 82 seek amendments to Division 165 to clarify the intended operation of the Division.
[emphasis added]
1.120 Request 79 substitutes a new section 165-1 to explain what the Division is about, pointing out that it is aimed at artificial and contrived schemes. Examples are given of activities the Division is not intended to cover.
1.121 … Request 80 inserts new paragraph 165-5(1)(aa) so that the exercise of an option expressly provided for under the GST law will not fall within the scope of the anti-avoidance provisions. …
175 The concerns reflected in the requests for amendment were that the exercise of an explicit option (an expressly conferred choice etc) might trigger the unintended operation of Division 165 (1.118) and thus a new s 165-5(1)(aa) ought to be adopted so that the exercise of an option expressly provided for under the GST law would not engage Division 165 (1.121).
176 Section 165-5(1)(b) was inserted into the GST Act by reason of these amendments.
177 Because s 165-5(1) contemplates the getting of a benefit from a "scheme" which term engages "an arrangement" (s 165-10(2)) which, in turn, may contemplate a number of steps (each potentially involving choices or elections expressly provided for by the GST law), the statutory intention to be derived from the language of s 165-5(1) and s 165-10(2) in the context of Div 165 as a whole is that s 165-1 does not only engage a single choice, election, application or agreement expressly provided for by the GST law (or the wine tax law or the luxury car tax law) but engages one or more such expressly provided for choices comprising the scheme (or arrangement). The notion that expressly provided for choices "comprise" the scheme may be thought to be an argumentative construction in the sense that a scheme may be comprised of some steps chosen because of (or dictated by) the particular commercial circumstances and also some choices or elections expressly provided for by the relevant law. In those circumstances of mixed choices determined in part by the commercial arrangements and in part by choices expressly provided for by the GST law, the question to be decided is whether, as a matter of proper construction of s 165-5(1) in context, the GST benefit is attributable to the choices or elections implemented within the scheme expressly provided for by the GST law, or whether, because the scheme is comprised of those choices and other steps or choices not expressly provided for by that law, the GST benefit is attributable to the aggregated arrangement, that is, the scheme rather than the choices forming part of the scheme, expressly provided for by the GST law itself.
178 The taxpayer contends that had Blesford and Mooreville not made choices or elections expressly provided for by the GST law to join the GST group of companies (of which Unit Trend is the representative) under s 48-5 of the GST Act; seek and obtain the approval of the Commissioner for that purpose; and enter into intra-group arrangements between Simnat and Blesford and Mooreville respectively for sales of Towers II and III as going concerns in conformity with the requirements of the GST Act under s 38-325(1)(c), a GST liability would have arisen on those sales.
179 The taxpayer also contends that but for those choices and the further choice or election to apply the margin scheme on end sales by Blesford and Mooreville under s 75-5 of the GST Act, the taxpayer "would have paid full GST on both the transfers from Simnat and on end sales".
180 It follows for the taxpayer that it is only because of these choices expressly provided for by the GST law of which the steps in the scheme are the expression, that the taxpayer is liable for less GST than if Blesford and Mooreville had not made the identified choices and entered into the transactions embodying those choices, thus giving rise to the GST benefit.
181 On the face of the description of the object of the Division in s 165-1, there is nothing to suggest that the ordinary understanding of the English words "attributable to" ought to bear anything other than their ordinary meaning: "attributable" as an adjective (describing the proper noun "GST benefit" in s 165-5(1)(b)) means: "Capable of being attributed or ascribed, esp. as owing to, produced by": Oxford English Dictionary (OED), 2nd Ed, 1989, online version December 2011. It is a derivative of the verb "to attribute". As a verb, "attribute" has a number of meanings including: "To ascribe to as belonging or proper; to consider or view as belonging or appropriate to"; "To ascribe, impute, or refer, as an effect to the cause; to reckon as a consequence of"; "To ascribe to an author as his work": OED, 2nd Ed, 1989, online version December 2011.
182 In Federal Commissioner of Taxation v Sun Alliance Investments Pty Limited (in liq) (2005) 225 CLR 488 ("FCT v Sun Alliance"), the High Court considered the approach to construction of a provision of the 1936 Act (and analogues in the 1997 Act) that sought to address the vice of company A generating a capital loss on disposal of shares in company B where no equivalent "economic loss" had been suffered by company A because pre-acquisition profits of company B (that is, retained profits in company B at the date of acquisition of the shares by company A) were subsequently distributed to company A as rebatable dividends. The capital loss on disposal of the shares in such circumstances was thought to not reflect the actual economic loss as company A had enjoyed the economic benefit of a distribution of retained profits before disposal of the shares.
183 The 1936 Act provides for the inclusion of net capital gains calculated by taking into account net capital losses, in the assessable income of the taxpayer. Capital losses can be carried forward. They are to be calculated by reference to the consideration received on disposal of the asset and the "reduced cost base" of the asset. The reduced cost base is to be calculated by reference to particular "amounts" contemplated by the 1936 Act. If the disposal asset is a share, the amount worked out in calculating the reduced cost base of the asset is to be further reduced by any rebatable dividend adjustment in relation to the share (called, for this purpose, an "RDA share"). For example, a share might be sold for $5.00 which has a reduced cost base of $10.00 (calculated according to the relevant amounts referred to by the 1936 Act) giving rise to a capital loss of $5.00. If, however, a dividend of pre-acquisition retained profits has been received of $5.00, the cost base might be adjusted by a reduction of $5.00 to reflect the economic benefit of the dividend, resulting in no capital loss.
184 A rebatable dividend adjustment might arise if four criteria are satisfied. Criterion (b) is the subject of the Court's particular consideration in FCT v Sun Alliance. Criteria (a) and (b) were in these terms:
(a) under an arrangement, a company makes a distribution to the holder of the RDA share; and
(b) an amount (the "attributable amount"), being the whole or a part of the distribution, could reasonably be taken to be attributable to profits that were derived by the company before the holder acquired the RDA share
…
[the emphasis is that reflected in the provision quoted by the Court at [9]]
185 One aspect of criterion (b) concerned whether the entity had "derived profits before the holder acquired the RDA share". The High Court concluded that a profit had relevantly accrued. That matter is not presently relevant. The High Court then considered whether the distribution "could reasonably be taken to be attributable to profits" etc.
186 At [77], the Court (Gleeson CJ, Gummow, Kirby, Callinan and Heydon JJ) observed that criterion (b) presents "a question of characterisation" requiring "an inquiry as to the existence of a sufficient link between that whole or part of the distribution and profits derived by the company before a specified event" [emphasis added]. The Court at [77] said this:
… that link may be described in terms of necessary causation but, as with all questions of causality, the starting point is the identification of the purpose (here the legislative purpose) to which the question is directed.
[emphasis added]
187 The Court determined that the legislative purpose of the particular provision was directed to ensuring that a capital loss not be claimed where the result of the course of action described in the subsection was that the taxpayer had suffered no economic loss. The Court also observed at [77] that the "criterion of linkage", an attribution described by the subsection as "reasonable", was to be "read and applied accordingly". At [80], the Court observed that criterion (b) was concerned with "the concept of causation, rather than source …". In considering the concept of causation embodied in the notion of "attributable to" for the purposes of the subsection, the Court said this at [80]:
In determining whether the plaintiff's loss of employment was "attributable to" the provisions of the Local Government Act 1972 (UK), Donaldson J in Walsh v Rother District Council said:
'[T]hese are plain English words involving some causal connection between the loss of employment and that to which the loss is said to be attributable. However, this connection need not be that of a sole, dominant, direct or proximate cause and effect. A contributory causal connection is quite sufficient.'
Nothing, in either the text of [the subsection] or in its objects as expressed in the Explanatory Memorandum on the Bill for the Amending Act, indicates that a narrower meaning should be presently ascribed to that phrase.
188 The Court also observed that the phrase "could reasonably be taken to be" suggested that for the subsection to be enlivened the pre-acquisition profits need not actually be a contributory cause. It would be sufficient if the profits "may reasonably be capable of being seen as such". The Court said this at [82]:
… given the breadth of the nexus contemplated by the words "attributable to", where a pre-acquisition unrealised gain is a contributory cause to a post-acquisition realised profit, then that unrealised gain would, failing some break in the proverbial chain of causation, reasonably be capable of being taken to be a contributory cause to any distribution sourced in the subsequent realised profit.
[emphasis added]
189 There are many authorities to the same effect as the view expressed by Donaldson J in Walsh v Rother District Council [1978] 1 All ER 510 approved by the High Court in FCT v Sun Alliance and almost all of them concern the meaning to be ascribed to "attributable to" in the context of beneficial legislation conferring rights and entitlements to compensation for matters such as loss of employment, workers' compensation benefits, pensions or other entitlements concerning war service and legislation directed to beneficial social security measures in a civil society, more generally.
190 In Repatriation Commission v Law (1980) 47 FLR 57, Bowen CJ and Brennan and Lockhart JJ said at p 68 in the context of the Repatriation Act 1920 (Cth) that it seemed clear that the expression "attributable to" involved an element of causation and the "cause need not be the sole or dominant cause: it is sufficient to show 'attributability' if the cause is one of a number of causes providing it is a contributing cause". In Roncevich v Repatriation Commission (2005) 222 CLR 115, McHugh, Gummow, Callinan and Heydon JJ in the context of a claim to an entitlement to a pension under the Veterans' Entitlements Act 1986 (Cth) due to incapacity from a defence-caused injury, said this at [27]:
The use disjunctively in s 70(5) of the expressions "arose out of" and "attributable" manifest a legislative intention to give "defence-caused" a broad meaning, and certainly one not necessarily to be circumscribed by considerations such as whether the relevant act of the appellant was one that he was obliged to do as a soldier. A causal link alone or a causal connection is capable of satisfying a test of attributability without any qualifications conveyed by such terms as sole, dominant, direct or proximate.
[emphasis added]
191 In the tortious context, Mason CJ said this in March v Stramare (E. & M.H.) Pty Ltd (1991) 171 CLR 506 at p 509 about the law's approach to the notion of causation and its relationship with scientific approaches to causation as an "explanation" of things:
It has often been said that the legal concept of causation differs from philosophical and scientific notions of causation. That is because "questions of cause and consequence are not the same for law as for philosophy and science", as Windeyer J. pointed out in National Insurance Co of New Zealand Ltd v Espagne. In philosophy and science, the concept of causation has been developed in the context of explaining phenomena by reference to the relationship between conditions and occurrences. In law, on the other hand, problems of causation arise in the context of ascertaining or apportioning legal responsibility for a given occurrence. The law does not accept John Stuart Mill's definition of cause as the sum of the conditions which are jointly sufficient to produce it. Thus, at law, a person may be responsible for damage when his or her wrongful conduct is one of a number of conditions sufficient to produce the damage …
192 Section 165-5(1)(b) is not a broadly based enabling provision of the kind found in legislation directed to the matters such as those described in [189] of these reasons. However, the statutory purpose of the provision in excluding the operation of the anti-avoidance Division is to preserve the entitlement to and effect of the specific legislative options, choices, elections etc expressly provided for under a GST law giving rise to benefits that might otherwise be defeated by an unintended operation of Division 165. The provision excluding Division 165 ought to be construed in a way that gives effect to that purpose.
193 Section 165-5(1)(b) crafts a rule that gives operation to the Division to secure the Parliament's objectives recited in s 165-1 of preventing the Division (and the Commissioner's power of negation) from operating if the GST benefit has the relevant degree of connection with the making of expressly conferred choices etc.
194 Having regard to the matters discussed at [168] to [176] of these reasons, the language of s 165-5(1) in the context of the Division as a whole, preventing the Division from operating, seems to more properly contemplate causation in an allocative sense asking whether the nexus between the GST benefit and the exercise of the statutory choice is sufficiently close to provide an answer to the question, is the choice etc made by the taxpayer as expressly provided by a GST law, the predominant cause or the direct cause of the GST benefit? In that sense, the subsection does not import by its terms in the context of the Division and the Act a concept of causation in which the relevant choice etc is simply one of a number of contributory causes, as a sufficient connection. Otherwise, the Division would seem to have little field of operation. In approaching the question of construction we have had regard to the principles set out in Project Blue Sky Inc. v Australian Broadcasting Authority (1998) 194 CLR 355 at [69] - [71] and [78] (McHugh, Gummow, Kirby and Hayne JJ); Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 218 CLR 273 at 280-281 (McHugh ACJ and Gummow and Hayne JJ); Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27 at [47] (Hayne, Heydon, Crennan and Kiefel JJ); CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408 (Brennan CJ, Dawson, Toohey and Gummow JJ); Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 99 (Toohey, Gaudron and Gummow JJ) and at 112-113 (McHugh J).
195 However, if, having regard to the legislative purpose, a view is formed that "attributable to" imports the notion of causation in the sense of "some connection" or a "causal link alone" or a test of attributability that does not involve any qualification or limitation conveyed by such terms as "sole, dominant, direct or proximate" or the notion that "a contributory causal connection is quite sufficient", then, clearly enough, Unit Trend has satisfied that test of causation and the GST benefit is attributable to a causal link alone consisting of the exercise of one or more choices expressly provided for by the Act.
196 The GST benefit in this case is sourced in the scheme having regard to all of the elements of that scheme as found on the facts. Section 165-5(1)(b) asks whether the GST benefit obtained from the scheme is caused in an allocative sense by the choices made by the taxpayer in the sense of belonging to the choices, elections or agreements expressly provided for by the GST law.
197 There were a number of choices.
198 Simnat, Blesford and Mooreville chose to enter into a GST-free supply (and acquisition) of a going concern that satisfied the requirements of the GST Act, at a supply price to Blesford and Mooreville that transferred the land at the relevant date for a consideration that reflected the market value of the improved land. The transfers as part of the going concern transaction also effected an intra-GST group transfer which apart from the going concern transaction, gave rise to a GST-free transfer. Having effected a complying transfer of a going concern in conformity with the GST law, Blesford and Mooreville sold and settled units in each Tower having chosen to apply the margin scheme to those sales, and having agreed with purchasers that the margin scheme was to apply to those sales. Unit Trend chose to apply the margin scheme to all sales. The going concern transaction resulted in a supply price to Blesford and Mooreville on which the margin of supply to end purchasers would be calculated for settlements up to and including 16 March 2005.
199 Had not these choices been made to apply the margin scheme to end purchaser transactions, together with the choices made in the antecedent arrangements or transactions all forming part of the scheme from which the GST benefit arose, as found, the GST benefit calculated on the end purchaser transactions would not have arisen. The GST benefit is thus attributable to the choices, elections and agreements made by the taxpayer in the sense that the GST benefit is explained by those choices etc as expressly provided for by the GST Act.
200 The Commissioner correctly observes that the taxpayer's election or choice to enter into agreements to transfer Towers II and III from Simnat to Blesford and Mooreville was not itself an election or choice expressly provided for by the GST law. It was a commercial election or choice that brought about, in effect, an uplift in the intermediate cost base in the hands of Blesford and Mooreville which would diminish the margin on end sales. However, entry into those intra-group transactions on terms consistent with a sale of a "going concern" in a manner which conformed with s 38-325(1)(c) of the GST Act (as the Commissioner accepts), did involve an election or choice to transfer on terms expressly in conformity with s 38-325 and thus in a manner expressly consistent with the GST Act. The taxpayer was entitled to make a choice or election to enter into a going concern transaction in conformity with s 38-325 which had the effect that GST would not become payable on settlement of the transfers from Simnat to those entities.
201 If what lies at the heart of the GST benefit obtained from the scheme is the intermediate transaction resulting in an uplift in the transactional cost base (coupled with the application of the margin scheme to end sales) the intermediate transaction within the scheme involved the taxpayer making a choice or election to enter into a going concern transaction in conformity with s 38-325(1)(c). But for the making of the choice or election to transfer Towers II and III as a going concern in conformity with s 38-325(1)(c), a GST liability would have arisen by reason of the settlement of each transfer.
202 However, the choice or election to engage in a going concern transaction in conformity with s 38-325(1)(c) was not the only choice. Put simply, Unit Trend entered into a scheme comprising a number of sequential steps that ultimately gave rise to a GST benefit attributable to (or owing to or produced by) a number of choices, elections or agreements made as expressly provided for by the GST law (as it then stood) given expression in the arrangements comprising the scheme giving rise to that benefit with the result that Division 165 does not apply as s 165-5(1)(b) of Subdivision 165-A is not satisfied. Section 165-5(1) is conditioned on the GST benefit being attributable to the making of a choice, election, application or agreement expressly provided for by the GST law. The fact that it could be said that the benefit is attributable to a "scheme" resulting from a series of such choices etc does not prevent the GST benefit also being attributable to the making of those choices. This arises from the express use of "attributable to" rather than a narrower or more restrictive test.
203 The Tribunal concluded that the application of the margin scheme to end purchaser transactions did not involve the exercise of a choice etc on the part of Unit Trend because the margin scheme, in the circumstances of the particular development, would necessarily have been applied in any event. However, even though the particular commercial circumstances may have inevitably led to the exercise of a prudent choice to apply the margin scheme, the election to do so nevertheless involved a choice. The supplier of each unit to an end purchaser could have chosen (for no apparently good commercial reason) to pay GST on the basis of the supply price. Alternatively (for apparently good commercial reason), it could have chosen to (and did) apply the margin scheme to those transactions with the result that GST would be calculated on the margin of supply only, appropriately determined.
204 As to ground (a) of the appeal, the Tribunal did not fall into error in determining that for the purposes of s 165-5(1)(b) the notion of "attributable to" means that the GST benefit must be explained by a choice, election, application or agreement in the sense of an allocative concept in which the GST benefit belongs to or is directly explained by that choice or election etc. The Tribunal, however, fell into error in concluding that for settlements up to and including 16 March 2005 the GST benefit was not explained by the choices, elections etc made by Unit Trend, as the GST benefit deriving from the scheme was properly explained by each choice, election and agreement made by Unit Trend in the transactions central to the scheme (and therefore the "getting" of the GST benefit), and also to the end purchaser transactions on which the amount of the GST benefit was ultimately calculated.
205 If the statutory purpose of s 165-5(1)(b) is to be served of preserving for the taxpayer the choices, elections etc expressly conferred by the GST law, the GST benefit must be answerable to, explained by or belong to those choices.
206 It follows that for all settlements up to and including 16 March 2005, Division 165 did not operate because it was excluded as the GST benefit on the end purchaser transactions was attributable to the choices etc made by Unit Trend as described. It also follows that the Tribunal's decision affirming the Commissioner's objection decision in relation to settlements by Simnat of Simnat contracts up to and including 16 March 2005 must be set aside.