Westrac Equipment Pty Ltd v Commissioner of Taxation

REASONS FOR JUDGMENT 1 This appeal under s 14ZZ of the Taxation Administration Act 1953 (Cth) raises identical issues to those raised by the applicant in Rataplan Pty Ltd v Commissioner of Taxation of the Commonwealth of Australia [2004] FCA 920 in which matter judgment and reasons for judgment were delivered today. The two appeals were heard simultaneously. 2 The only relevant factual differences between the two matters are reflected in the following short narration. 3 In respect of the year ended 30 June 1991 Australian Capital Equity Pty Ltd ("ACE") and the applicant gave the respondent written notice, dated 7 May 1992, under s 80G(6) of the Income Tax Assessment Act 1936 (Cth) ("the Act") to transfer a loss from ACE to the applicant in the amount of $7,009,772, the year of the loss being stated to be 1991. 4 The applicant lodged its tax return for the year ended 30 June 1991 on 15 May 1992, showing nil taxable income after the deduction of losses transferred to it from ACE and other group companies. 5 On 2 October 1998 the respondent issued an assessment to the applicant, assessing a taxable income of $4,066,647 being wholly attributable to the disallowance of that amount, claimed by ACE as a deduction under s 70B of the Act and sought to be transferred to the applicant. 6 The applicant objected to that assessment. The respondent partially allowed that objection by an amended assessment dated 20 June 2000. The effect of the partial allowance was to reduce the applicant's taxable income for the year ended 30 June 1991, the reduction being attributable to other deductions available to the applicant apart from the disputed s 70B deduction, leaving a taxable income of $2,354,716, all attributable to the disputed s 70B deduction. 7 This is an appeal against the respondent's decision on the applicant's objection, whereby the applicant claims that the respondent was wrong to disallow a deduction of $2,354,716 to which the applicant would be entitled if ACE were allowed a deduction in the financial year ended 30 June 1991 of that amount, or a greater amount, under s 70B of the Act. 8 There were orders which had the effect that the evidence in Rataplan was evidence in this matter. The submissions made in Rataplan were common to both appeals. 9 On the basis of the findings of fact which I have made and for the reasons which I have given in Rataplan, I have decided that the respondent's assessment, referred to above, was excessive and his objection decision of 14 June 2000 should have been made differently. The appeal will be allowed. The respondent's objection decision, made on 14 June 2000, will be varied by allowing the applicant's objection in full, excluding the sum of $2,354,716 from its taxable income for the year ended 30 June 1991 and reducing the tax payable accordingly. The respondent must pay the applicant's costs of the appeal. I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of Justice Carr.