Dua v FCT  AATA 1520 – Medical practitioner refused debt relief following flashy purchases
The AAT has refused to grant a medical practitioner release from their tax debt after finding they would not suffer serious hardship if required to satisfy it.
The taxpayer’s tax liability consisted mainly of unpaid PAYG instalments. On 24 June 2020 the taxpayer applied for a release of his tax liabilities due to serious financial hardship pursuant to section 340-5 of Schedule 1 to the Taxation Administration Act 1953 (Cth). The taxpayer purchased a 2019 Porsche Macan for five days later and acquired another property in December 2020. The Commissioner declined to release the taxpayer but granted a full remission of GIC. The Commissioner also disallowed the taxpayer’s objection. The taxpayer applied to the AAT for review, providing updated financial information.
The AAT ultimately affirmed the objection decision under review. Regarding a preliminary issue raised by the taxpayer that a determination of serious hardship should be confined to his known circumstances at the time he made the release application, the AAT held it could consider circumstances arising after lodgment. The AAT found discrepancies in the information provided which evidenced the taxpayer’s failure to make a full and frank disclosure of his income and outgoings.
The AAT also held that the income/outgoings test was not satisfied on the evidence and the taxpayer had not met his onus of establishing that being required to meet his tax liabilities would result in serious hardship within the meaning of section 340-5. Even if the discretionary power to release had been enlivened, it would not be appropriate to exercise it in the taxpayer’s circumstances.
Edge Developments (SA) Pty Ltd v Treasurer of the State of South Australia  SASC 55 – Redemption and cancellation of units in a unit trust subject to stamp duty
The Supreme Court of South Australia has held that a redemption and cancellation of units in a unit trust (which was held to be a landholding entity) constituted a dutiable transaction.
The units in the unit trust carried an entitlement to share in the profits of a commercial development pursuant to a Performance Charge over land owned by Adabco and Tabco. Abadco and Tadbco jointly held 70.59% of the units. In 2014, the remaining units (which were held by another party) were redeemed for $2,350,000 resulting in Abadco and Tabco holding 100% of the units. Stamp duty was imposed on an underlying land value of $23 million pursuant to section 100(2)(b) of the Stamp Duties Act 1923 (SA) (the Act), on the basis that the unit trust was a land holding entity and Adabco and Tabco had increased their prescribed interest in it as a result of the transaction.
The contention that the unit trust was a land holding entity stemmed from its entitlement to the profits of the commercial development pursuant to the Performance Charge, which the respondents submitted meant it had an equitable interest in the land itself. The appellants contended that the right to receive proceeds from the sale of land did not create an interest in that land at common law, and even if it did, such an interest would not be dutiable due to section 92(1) of the Act. Alternatively, the appellants also submitted that the redemption was exempt from duty under section 102F(1) of the Act.
The Supreme Court ultimately dismissed the appeal, finding that the Performance Charge gave rise to a beneficial interest in the development sale proceeds and therefore a deemed beneficial interest in the land pursuant to section 2(2). As such, the interest was a local land asset and, as the value of the interest was greater than $1 million, the trust was a land holding entity. Regarding the section 92(1) contention, the Court accepted that had the unit trust’s interest in the land been solely pursuant to a mortgage, lien or charge then it would not have been taken to hold a local land asset and would therefore not have been a local land holding entity. However, the unit trust also had a deemed beneficial interest in the land due to section 2(2). As such, the unit trust was a land holding entity, notwithstanding that it also had another interest in the land as chargee. The Court also rejected the appellants’ contention that the exemption in section 102F(1) applied.