MacMahon and Commissioner of Taxation [2011] AATA 809 (15 November 2011)

Last Updated: 16 November 2011

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2011] AATA 809

ADMINISTRATIVE APPEALS TRIBUNAL )

) No 2008/2925-2927;

TAXATION APPEALS DIVISION		) 2009/6129-6131; 2010/3423-3425
	Re		GREGORY MACMAHON

Applicant

And

COMMISSIONER OF TAXATION

Respondent

DECISION

Tribunal

Deputy President P E Hack SC

Date 15 November 2011

Place Sydney

Decision

In each application the objection decision is affirmed.

......................[sgd]........................
Deputy President

CATCHWORDS

TAXATION – income tax – sale of shares – whether capital gains tax (CGT) event – disposal of a CGT asset – anti-avoidance provisions - purpose of a scheme - decision under review affirmed

Income Tax Assessment Act 1936 (Cth) s 177

Income Tax Assessment Act 1997 (Cth) ss 104-10, 104-55, 104-60

Taxation Administration Act 1953 (Cth) s 14ZZK(b)(i), Sch 1 ss 284-15, 284-160, 298-20

Federal Commissioner of Taxation v Dalco [1990] HCA 3; (1990) 168 CLR 614

Federal Commissioner of Taxation v Mochkin [2003] FCAFC 15; (2003) 127 FCR 185

Halloran v Minister Administering National Parks and Wildlife Act 1974 [2006] HCA 3; (2006) 229 CLR 545

Walstern Pty Ltd v Federal Commissioner of Taxation [2003] FCA 1428; (2003) 138 FCR 1

Ma v Federal Commissioner of Taxation [1992] FCA 359; 37 FCR 225

REASONS FOR DECISION

15 November 2011

Deputy President P E Hack SC

INTRODUCTION

1. Prior to 30 October 2000 the applicant, Mr Gregory John MacMahon, was the holder of one half of the issued share capital in a company called Mactek Pty Ltd (Mactek). By an agreement in writing dated 30 October 2000 the applicant and his brother, Mr Peter James MacMahon (who held the other half), agreed to sell their shares in Mactek to Radiodetection Australia Pty Ltd (Radiodetection Australia) for a price in excess of $6m.
2. In these proceedings the applicant contends that, despite disposing of his shareholding in Mactek in this way, there was no CGT event which was capable of triggering the capital gains tax provisions of the Income Tax Assessment Act 1997 (Cth) (the ITAA 1997) and requiring him to bring into account a capital gain on the sale of the shares. This, according to the applicant, is the result of a complex series of acts, transactions and events that took place on 26 October 2000. The respondent, the Commissioner of Taxation, contends that those acts, transactions and events were not efficacious to achieve the result contended for. In any event, says the Commissioner, if it had the result contended for, then the antiavoidance provisions in Part IVA of the Income Tax Assessment Act 1936 (Cth) (the ITAA 1936) operate to overcome that result.
3. There was at an earlier time a question whether other amounts paid at the direction of the applicant and described in the material as “sign-on fees” formed part of his assessable income in the 2001, 2002 and 2003 income years. That is no longer an issue; Mr Young, counsel for the applicant, conceded in his final submissions that those payments formed part of the applicant’s assessable income for the relevant years. There remains an issue whether other payments made for the applicant’s benefit, called the credit card payments in the material, constitute part of his assessable income. The applicant says that the payments came from the fund into which the sign-on fees were paid; to treat them as also being part of his assessable income would be to tax him twice on the same income. The Commissioner contends that the applicant has not discharged his onus of showing that the assessments were excessive to this extent.
4. Finally there is an issue regarding the imposition of shortfall penalties and, as well, whether the penalties imposed ought be remitted under the general power to remit in s 298-20 of Schedule 1 to the Taxation Administration Act 1953 (Cth).

THE UNCONTROVERSIAL BACKGROUND

5. While I have very considerable doubts about the reliability of the applicant’s evidence I do not understand what follows to be in issue.
6. At all material times there were 1000 issued shares in Mactek; the applicant held 500, his brother Mr Peter MacMahon also held 500. In March 2000 the brothers commenced negotiations with representatives of Radiodetection Limited^[1], a United Kingdom corporation, for the sale of the shares in Mactek. Agreement in principle was reached by about May 2000 and thereafter the process of documenting the agreement was undertaken. Mr Brian Killalea, solicitor, acted for the MacMahon brothers; Freehill, Hollingdale & Page acted for Radiodetection Limited.
7. The applicant says that he first received a draft of the agreement in early October 2000. He says that he sought advice from Mr Killalea. In addition he sought advice from Mr Wayne Morton, his accountant, with the firm Morton O’Leary. At some stage Mr Morton referred him to a solicitor, Mr David Bonnell, and another accountant, Ms Michelle Dodd. It is not clear what relationship, if any, existed between Mr Bonnell and Ms Dodd; as the applicant recounts the events they appeared to work together. In any event either or both of Mr Bonnell and Ms Dodd promoted to the applicant the benefits of the arrangements that took place on 26 October 2000 which are examined in greater detail in paragraphs [12] and [13] below.
8. I infer that the applicant had consulted Mr Bonnell and Ms Dodd by 6 October 2000 at least. On that day, according to a file note^[2] of the conversation recorded by a solicitor from Freehill, Hollingdale & Page, Mr Killalea rang that firm to advise that there was a plan to restructure the deal to reflect tax advice received by Mactek from tax advisers who were also lawyers. Also included in the material is a letter^[3] from Mr Bonnell’s firm to the applicant and dated 24 October 2000. It refers to the retainer as “the documentation of the vesting of shares in Mactek Pty Limited in the Hill End Unit Trust and the provision of tax advice in respect of that transaction” and agreed costs of $750,000.
9. The share sale agreement was executed on 30 October 2000. It was an agreement for the sale by the MacMahon brothers to Radiodetection Australia of 100% of the issued share capital of Mactek. On completion, Radiodetection Australia was obliged to pay $6m to the MacMahon brothers comprising an “Initial Amount” of $3m and a further $3m as prepayment of an “Earn-Out Amount”, in effect, a percentage of future sales for a period of years. Between the completion date and September 2005 the MacMahon brothers were paid amounts totalling in excess of $8.3m.
10. On 31 October 2000 the applicant and Mactek entered into an employment contract whereby the applicant would be employed as an “Executive Director” of Mactek for an initial term of three years upon the terms and conditions set out in a letter of that date from Mactek to the applicant. One of the terms of the employment agreement, found in clause 6.2, was that Mactek would pay the applicant,

“...a contract sign-on fee of $300,024.00 to be paid by 36 equal monthly instalments of $8,334.00 each...”

The clause permitted the applicant to nominate the bank account into which those payments were to be made. In December 2000 the MacMahon brothers caused a “Stichting” to be set up, the Port Douglas Stichting (the Stichting), and directed that instalments of the sign-on fee be paid into the Stichting. Given that there is no longer an issue concerning the inclusion of these amounts in the applicant’s assessable income it is sufficient to note that a Stichting is apparently an entity recognised by Dutch civil law. The Stichting, despite the Australian flavour of its name, was established in the Netherlands through the offices of Morton O’Leary.

11. On 2 February 2001 the applicant, as “borrower”, executed a document which, on its face, purports to be a loan agreement with the Stichting under which the Stichting would make an initial advance to the applicant of up to $200,000. Funds under the loan agreement could be accessed only by way of a credit card. The applicant was provided with a credit card from the Bank of Butterfield International (Cayman) Limited, located in the Cayman Islands.

THE ACTS, TRANSACTIONS AND EVENTS OF 26 OCTOBER 2000

12. With that explanation of the background I turn to the events of 26 October 2000. The applicant was somewhat vague on the detail of what transpired on that day and I do not, in any event, regard him as a reliable source of evidence about those events. The various meetings said to have taken place took place at Mactek’s premises at Mona Vale. Ms Dodd was present with the two MacMahon brothers. It is common ground that each of the steps taken by the applicant was replicated by Mr Peter MacMahon. The applicant was unsure whether any other person was present. I infer that Ms Dodd brought to the meeting all of the documents that were subsequently executed or otherwise required for the purposes of the meeting. Adopting the order of events used by Mr Young in the course of his opening to describe the acts, transactions and events (although there is, in reality no evidence about the order of events) what appears to have taken place is as follows.

Step 1 – the applicant signed a letter^[4], dated 26 October 2000, and addressed to himself and Mr Peter MacMahon which noted that he (the applicant) was the owner of 500 shares in Mactek. The letter continued,

“I hereby offer to vest the equitable estate in the Shares on a unit trust to be known as the Hill End Unit Trust with you as trustees of that Trust.

You may accept the offer contained in this letter to be the Trustees of the Hill End Unit Trust by accepting delivery of the title documents to the Shares and recording an allotment to me of Three Million Seven Hundred and Fifty Thousand A Class [sic] Units in the Hill End Unit Trust.

Once this offer has been accepted, you shall be bound to hold the Shares on trust on the terms and conditions of the draft Deed of Unit Trust annexed hereto and marked with the letter ‘A’. Further I will be recorded as holding all the B Class units in the Hill End Unit Trust.

Further upon acceptance of the title documents and the creation of the Hill End Unit Trust I shall continue to hold legal title to the Shares as your nominee. I will transfer the Shares to you or as you direct.”

Attached and marked “Appendix A” was an unexecuted document^[5] described as operating “to provide evidence of the basis on which the Trustee [the applicant and Mr Peter MacMahon] shall hold certain property on trust for Registered Holders who will take and hold Units in the Trust Fund on the terms and conditions of this document.”

Step 2 – the next document in the apparent sequence is a set of minutes of a meeting at which the applicant and Mr Peter MacMahon are said to have been present. The minutes record,

“Produced at the meeting were letters of offer made by Peter James MacMahon and Gregory John MacMahon to Peter James MacMahon and Gregory John MacMahon. The letters stated that Peter James MacMahon and Gregory John MacMahon wished to vest the equitable estate in all the shares owned by each of them in Mactek Pty Limited (the ‘Shares’) in a unit trust to be created on vesting. Vesting was to occur on acceptance by Peter James MacMahon and Gregory John MacMahon of the title documents.

It was noted that upon acceptance Peter James MacMahon and Gregory John MacMahon would be the Trustees of the Hill End Unit Trust holding the equitable interest in all the Shares, of which Peter James MacMahon and Gregory John MacMahon are registered proprietors on terms of the draft Unit Trust annexed to the Offer and that Peter James MacMahon and Gregory John MacMahon would remain legal owners of the Shares as nominees for the Trust and subject to the terms of the Hill End Unit Trust.

RESOLVED that Peter James MacMahon and Gregory John MacMahon should accept the Offer contained in the tabled letter. Accordingly they resolved to accept delivery of the title documents of the Shares and to assume the role of Trustees of the Unit Trust. It was noted that the names of Peter James MacMahon and Gregory John MacMahon in a register of Unit Holders in accordance with the Schedule of the Letter of Offer.”

Some things may immediately be said about these minutes. First, there appear to be some words missing from the last sentence in the extract above. Next, there were two letters of offer, not a single letter. And the letter of offer by the applicant makes no reference to a Schedule. The result of all of that is that the last sentence is incomprehensible. But what is of more concern relates to the question of “delivery of title documents” i.e. the share certificates. The minutes speak in terms of a resolution to accept delivery but do not record that fact that delivery was made or accepted in fact. Nor are copies attached to any of the relevant documents in a manner that might lead to an inference of delivery having occurred in fact. The applicant did not suggest that there had been other documents in evidence at the meeting that had not been reproduced in the material. I will return later^[6] to the significance of this omission.

The applicant executed a document^[7] accepting the issue of 3,750,000 B Class units in the Hill End Unit Trust and other documents^[8] were executed evidencing the allotment of the 3,750,000 B Class units in the Hill End Unit Trust.

Step 3 – at some point during the day, and at least by this stage in the proceedings, the G MacMahon Family Trust was created by a deed^[9] between Ms Dodd as settlor and the applicant as trustee. It was a discretionary trust on apparently conventional terms. The applicant and persons and entities related to him were the beneficiaries. The only notable feature of the trust deed is that Ms Dodd did not execute it despite the fact that Mr Peter MacMahon purported to witness her signature.

Step 4 – the next step was for the G MacMahon Family Trust to resolve to make application for the allotment to it of 3,750,000 ordinary class units in the Hill End Unit Trust and to make that application^[10]. That application was supported by a promissory note drawn by the applicant as trustee for the G MacMahon Family Trust by which he promised to pay the sum of $3,750,000 on demand to himself and his brother as trustees of the Hill End Unit Trust or to order. Whilst it is not immediately apparent on the documents the promissory note, according to Mr Young, was the consideration for the allotment of 3,750,000 ordinary class units in the Hill End Unit Trust^[11].

Step 5 – the next step involved a meeting of the trustees of the Hill End Unit Trust at which, on the production of applications by the P MacMahon Family Trust and the G MacMahon Family Trust for the allotment to each of them of 3,750,000 ordinary class units, resolved to allot those units as requested and to issue unit certificates evidencing those allotments^[12]. The unit certificate for the G MacMahon Family trust was issued^[13].

Step 6 – next the applicant gave notice to the Hill End Unit Trust of a desire on his part to redeem his 3,750,000 B Class units in the Hill End Unit Trust^[14]. The MacMahon brothers, in their capacities as trustees of the Hill End Unit Trust then met to consider the requests to redeem the A Class units (held by Mr Peter MacMahon) and the B Class units held by the applicant. They resolved^[15] that,

“...the Trustees of The Hill End Unit [sic] should redeem all the A and B Class units held by Peter James MacMahon and Gregory John MacMahon in the Hill End Unit Trust at a price of One Dollar each by the endorsement of promissory notes received from the P MacMahon Family Trust and the G MacMahon Family Trust and that the Unit Certificates issued to them evidencing those Units should be cancelled.”

Step 7 – the MacMahon brothers, as trustees of the Hill End Unit Trust then apparently endorsed in favour of the applicant the promissory note earlier delivered by the applicant in his capacity as trustee of the G MacMahon Family Trust^[16].

Step 8 – the applicant then apparently further endorsed the promissory note as a gift in favour of himself in his capacity as the trustee of the G MacMahon Family Trust^[17] and, in that capacity, held a meeting at which it was resolved that the applicant, as trustee of the G MacMahon Family Trust should accept delivery of the promissory note as a settlement on the G MacMahon Family Trust.

THE ASSESSING PROCESSES

13. The applicant lodged his income tax return for 2001 in June 2002. The 2002 return was assessed as lodged on 4 February 2003 and the 2003 return was assessed as lodged on 4 August 2004. The returns did not disclose the receipt of any capital gain from the sale of Mactek shares nor payments to or from the Stichting.
14. The Commissioner appears to have commenced an investigation into the applicant’s affairs in late 2003. As a result of those investigations amended assessments were made for each of the 2001, 2002 and 2003 years, evidenced by notices of amended assessment dated 12 May 2006.
15. In the 2001 income year the applicant’s taxable income was increased by $2,435,171 comprising,
    • a net capital gain of $2,075,739 arising from the sale of the 500 Mactek shares;
    • an amount of $135,988 comprising half of the total payments made to the Stichting for that year;
    • an amount of $142,072 being an estimate by the Commissioner of the total of payments made by the Stichting to the applicant’s credit card for the year; and
    • an amount of $81,372 comprising a dividend from Mactek.
16. For the 2002 income year the applicant’s taxable income was increased by $236,440 comprising,
    • $108,342, payments from Radiodetection Australia Pty Ltd to the Stichting;
    • $146,005 for credit card payments; and
    • a net reduction of $17,907 to exclude income and expenses of a rental property that ought to have been returned by another entity.
17. In 2003 the applicant’s taxable income was increased by $264,339 comprising,
    • $100,087 payments from Radiodetection Australia to the Stichting;
    • $130,909 for credit card payments;
    • $40,282 for income from trusts not previously returned; and
    • a net loss of $6,939 from a rental property owned by another entity.
18. Penalties were assessed on the various shortfalls by notices of assessment also dated 12 May 2006. The penalties were assessed on the footing that the shortfalls resulting from the omission of the capital gain from the sale of shares, the payments by Radiodetection Australia to the Stichting and the credit card payments were attributable to recklessness thus warranting a penalty of 50% and that the other omissions, of the Mactek dividend and the trust dividends, were the result of a failure to take reasonable care warranting a penalty of 25%.
19. The applicant lodged notices of objection on 28 June 2006. That relating to the 2001 year put in issue the inclusion of the net capital gain, and asserted, in the alternative, that in any event the cost base ought to have been increased by $750,000 to take into account Mr Bonnell’s fees, and the inclusion of $142,072 in credit card payments. In the 2002 and 2003 years the objections were limited to the inclusion of the $146,005 (2002) and $130,909 (2003) in credit card payments.
20. On 19 March 2008 the Commissioner determined to wholly disallow the objections. The applicant’s application to review those objection decisions is the subject matter of applications 2008/2925, 2008/2926 and 2008/2927 lodged in the Tribunal on 28 July 2008.
21. Then on 17 June 2009 the applicant lodged what are described as supplementary notices of objection to the 2001, 2002 and 2003 amended assessments, on this occasion putting in issue the inclusion of the payments from Radiodetection Australia to the Stichting of $135,988 (2001), $108,342 (2002) and $100,807 (2003). Those objections were disallowed on 13 October 2009 and the applications to review those decisions (2009/6129, 2009/6130 and 2009/6131) were lodged in the Tribunal on 24 December 2009.
22. Finally, on 5 August 2010, the applicant lodged an objection to the penalty assessments of 12 May 2006. The Commissioner disallowed the objection, and refused to remit any of the penalty by letter dated 9 August 2010. Those decisions are the subject matter of applications 2010/3423, 2010/2424 and 2010/3425.

THE APPLICANT’S CGT CASE

23. Division 104 of the ITAA 1997 sets out the CGT events from which a capital gain or a capital loss may arise. Those which are said to be relevant are Event A1, Disposal of a CGT asset, Event E1, Creating a trust over a CGT asset or Event E2, Transferring a CGT asset to a trust.
24. Section 104-10 of the ITAA 1997 provides,

“(1) CGT event A1 happens if you dispose of a CGT asset.

(2) You dispose of a CGT asset if a change of ownership occurs from you to another entity, whether because of some act or event or by operation of law. However, a change of ownership does not occur:

(a) if you stop being the legal owner of the asset but continue to be its beneficial owner; or

(b) merely because of a change of trustee.”

Section 104-55 of the ITAA 1997 provides,

“(1) CGT event E1 happens if you create a trust over a CGT asset by declaration or settlement.”

Section 104-60 of the ITAA 1997 provides,

“(1) CGT event E2 happens if you transfer a CGT asset to an existing trust.”

25. The result of the acts, transactions and events of 26 October 2000, if I understood Mr Young’s explanation correctly, was said to be that on 30 October 2000, when the share sale agreement with Radiodetection Australia Pty Ltd was executed, the applicant and Mr Peter MacMahon, by operation of law, were taken to have held the equitable interest in the 1,000 Mactek shares on a constructive trust for the benefit of the P MacMahon Family Trust and the G MacMahon Family Trust (in equal shares).
26. The applicant accepts that his 500 shares in Mactek were a CGT asset, as that expression is used in the ITAA 1997. His case is that the transactions of 26 October 2000 were effective in equity to vest the equitable ownership of his shares in him and his brother as trustees of the Hill End Unit Trust. As trustees of the Hill End Unit Trust the brothers held the equitable interest in the 500 shares on trust for the applicant as the sole unit holder in respect of the parcel of shares. The transactions by which the equitable ownership of the shares was vested in the trustees did not trigger a CGT event – there was no “change of ownership” for the purpose of CGT Event A1, no trust was created by declaration or settlement, thereby excluding the operation of CGT Event E1 and, given that the transfer and the creation of the Hill End Unit Trust happened at the same time, there can be no asset transferred to an existing trust in terms of CGT Event E2.
    27. When, on 31 October 2000, the 1000 shares in Mactek were transferred to Radiodetection Australia CGT Event A1 was triggered but the “you” in s 104-10(2) of the ITAA 1997 was the applicant and Mr Peter MacMahon as trustees of the Hill End Unit Trust. The Commissioner, so Mr Young said, “has the wrong taxpayer”^[18].
    28. I do not find it necessary to spend any time undertaking an analysis of the quite sophisticated argument presented by Mr Young in support of these propositions. The case fails at the outset on the facts. And, as I will explain, even if that is not the case, it is defeated by the anti-avoidance provisions of Part IVA of the ITAA 1936.
    29. The case fails because I am not satisfied by the evidence that the transactions were effective to achieve the result contended for even if all else in the applicant’s argument were to be accepted. The difficulty I have concerns the “title documents” and the question of their delivery. It is assumed that the title documents were the share certificates; certainly the documents themselves did not make clear what was intended to be conveyed by the expression. It is fundamental to the applicant’s argument that delivery of the share certificates took place in fact. No witness was called to say that they were delivered or accepted. The letter of offer does not suggest that the title documents were attached to it so that delivery might be inferred from the fact of receipt of the letter. The documents, on their face, do not suggest that the trustees in fact accepted delivery only that they resolved to accept delivery. There is, in the material, a statutory declaration^[19] from Ms Dodd in which she says, materially,

“I also witnessed those present at the meeting accept delivery of the title documents to the Shares referred to in the Letter of Offer annexed to this Statutory Declaration.”

But there is, though, nothing annexed to the copy of the statutory declaration contained in the material. Ms Dodd was not called^[20] and her absence was not explained. Nor was Mr Peter MacMahon called.

30. In that regard it is relevant to note that this is a rehearing as a consequence of an appeal to the Federal Court of Australia. At a directions hearing on 22 June 2011 counsel for the applicant (who appeared for the applicant throughout the proceedings) said this:

“...on the previous occasion you will observe that the Commissioner was quite critical of the state of the evidence filed on the part of the applicants ^[[21]] and was quite pointed to a number of specific, in the Commissioner’s submissions, gaps in the applicants’ evidence, including, for example, no particular evidence from certain advisors who were supposedly parties who were present at the time of the transactions. In those circumstances, and given that if I was to concede that the evidence for the applicants was Spartan on the first occasion, I would appreciate the opportunity – sorry, I would seek the opportunity to put on further evidence in the applicants’ case to meet the deficiencies identified by the Commissioner first time around.”

Despite that, no evidence was led from any of the advisors and no additional evidence in chief was elicited from the applicant beyond putting in proper form some of his evidence that was rejected at the hearing.

31. In circumstances where no witness was called to give evidence of the fact of delivery, where the documents do not, on their face, suggest that delivery took place, where copies of the title documents are not attached to the scheme documents and where the omission of Ms Dodd’s signature on a deed and other patent errors in the documents demonstrate an absence of care in the undertaking of the steps necessary to give effect to the scheme, I am not satisfied that the title deeds were in fact delivered. In those circumstances the carefully constructed edifice fails. I am satisfied that the applicant disposed of his 500 shares in Mactek to Radiodetection Australia on 31 October 2000 and that CGT Event A1 happened as a consequence of him doing so.
32. Although the applicant’s statement suggests that the amount received from Radiodetection Australia was less than the amount brought into account by the Commissioner I do not understand that contention to be pressed. But if it were, there is simply no evidence, beyond mere assertion, of the amount that the applicant says was in fact received. Similarly the earlier argument that the cost base ought be reduced by $750,000 to take into account Mr Bonnell’s fees has also been abandoned.

THE APPLICANT’S CREDIBILITY

33. Given the conclusion I have reached about the efficacy of the scheme it is, strictly speaking, unnecessary to consider the application of Part IVA of the ITAA 1936. Nonetheless I propose to consider its application against the possibility of a finding of legal error in my earlier conclusion. Before doing so I need to make some observations about the reliability of the applicant’s evidence.
34. I must say that I have very considerable doubts about his reliability. The account given by him in his statement dated 28 July 2010 is inherently implausible. He professes to have a recollection of the words (or words to the effect of) of conversations that took place almost 10 years before the statement was signed. Yet in his oral evidence he displayed an almost complete lack of recall of the details of the events and conversations of October 2000. The latter is readily explicable by reference to the frailty of human memory; the former is far more likely to represent reconstruction, and a favourable reconstruction at that.
35. Moreover, the account of what the applicant says he was told by each of Mr Killalea, Mr Morton and one or other of Mr Bonnell or Ms Dodd – that clause 4.4 of the share sale agreement allowed Radiodetection Australia to recover from him monies already paid – is nonsensical. Clause 4.4 provided,

“The Buyer may set off against any payment required under clause 4.3(a) any claim it has against the Seller under this agreement, including but not limited to a claim under clauses 9.4, 9.5 or 9.7.”

Clause 4.4 was in perfectly orthodox terms. It said nothing of the capacity of the purchaser to recover monies already paid; it merely allowed the purchaser to set off against future payments any claim that it might have against the applicant under the agreement. It obviated the need for any argument about equitable set off if the buyer had claims in the future. I find it difficult to accept that any moderately competent lawyer or accountant could conclude that it had the effect that the applicant says that he was told that it has; I find it impossible to conclude that all three told him that. And my disbelief is only compounded by the applicant’s evidence that the notion of avoiding some millions of dollars of capital gains tax was almost an afterthought to advice about “asset protection”^[22].

36. I reject the applicant’s evidence of the conversations in October 2000 and the notion that the structure created by the 26 October 2000 scheme was concerned with asset protection.

PART IVA

37. By virtue of s 177D of the ITAA 1936 Part IVA of that Act operates where there is a scheme (as defined in the Act), where there has been a tax benefit obtained in connection with the scheme (the element in s 177D(a), and where,
    

“(b) having regard to:

(i) the manner in which the scheme was entered into or carried out;

(ii) the form and substance of the scheme;

(iii) the time at which the scheme was entered into and the length of the period during which the scheme was carried out;

(iv) the result in relation to the operation of this Act that, but for this Part, would be achieved by the scheme;

(v) any change in the financial position of the relevant taxpayer that has resulted, will result, or may reasonably be expected to result, from the scheme;

(vi) any change in the financial position of any person who has, or has had, any connection (whether of a business, family or other nature) with the relevant taxpayer, being a change that has resulted, will result or may reasonably be expected to result, from the scheme;

(vii) any other consequence for the relevant taxpayer, or for any person referred to in subparagraph (vi), of the scheme having been entered into or carried out; and

(viii) the nature of any connection (whether of a business, family or other nature) between the relevant taxpayer and any person referred to in subparagraph (vi);

it would be concluded that the person, or one of the persons, who entered into or carried out the scheme or any part of the scheme did so for the purpose of enabling the relevant taxpayer to obtain a tax benefit in connection with the scheme or of enabling the relevant taxpayer and another taxpayer or other taxpayers each to obtain a tax benefit in connection with the scheme (whether or not that person who entered into or carried out the scheme or any part of the scheme is the relevant taxpayer or is the other taxpayer or one of the other taxpayers).”

Section 177A(5) is also relevant. It provides,

“A reference in this Part to a scheme or a part of a scheme being entered into or carried out by a person for a particular purpose shall be read as including a reference to the scheme or the part of the scheme being entered into or carried out by the person for 2 or more purposes of which that particular purpose is the dominant purpose.”

38. The applicant accepts that there is a scheme and that a tax benefit has been obtained in connection with the scheme. At an earlier time the applicant had raised an issue regarding the form of the Commissioner’s determination cancelling the tax benefit however that argument is no longer pressed^[23]. The contest now solely relates to the question of objective purpose; the applicant submits that an examination of the relevant matters would not lead to the conclusion that the dominant purpose was one of securing a tax advantage^[24]. He submits that,

“...viewed from the standpoint of an impartial reasonable minded observer, objectively viewed, the arrangements to vest the equitable interest in the Mactek shares in the Hill End Unit Trust as a constructive trust had the following commercial purposes:

(a) It secured asset protection by removing ownership of the purchase moneys from the applicant personally and having those purchase moneys as an asset ultimately held through a family discretionary trust;

(b) It had the consequence that any attempt by Radiodetection to enforce their [sic] indemnities under clause 9.4 of the sale agreement against the applicant personally would not succeed;

(c) It avoided, as the arrangements in Halloran^[[25]] would demonstrate, the imposition of stamp duty on a written declaration of trust in the Mactek shares.”^[26]

As will appear, I reject the submission; it finds no support whatsoever in the evidence. In my view it is plain that the objectively ascertained purpose in entering into the arrangement was to obtain a tax benefit, namely, the avoidance of the incidence of capital gains tax on the sale of the Mactek shares. That is the inescapable conclusion to be drawn by reference to the eight factors in s 177D of the ITAA 1936. In considering those factors some repetition will be unavoidable.

The manner in which the scheme was entered into or carried out

39. It is evident that the scheme was the product of advice and very expensive advice at that. The fee of $750,000 charged to the applicant by David Bonnell (and presumably a similar charge to Mr Gregory MacMahon) is extraordinary. It cannot conceivably bear any relationship to the work undertaken by Mr Bonnell. The advice was sought and provided after an agreement in principle had been reached between the MacMahon brothers and Radiodetection. The solicitor acting for the applicant described the advice as “tax advice”. That is consistent with the applicant’s first statement^[27] but not the second^[28].
40. The steps taken to give effect to the scheme were convoluted and not capable of explanation by reference to ordinary commercial considerations. They involved the applicant acting in a variety of capacities, making offers to, and otherwise communicating with, himself in differing capacities, both present and future. In varying capacities the applicant gave, then endorsed, then endorsed again, a promissory note for $3,750,000. No money changed hands and ultimately most of the proceeds of sale “gifted” to the G MacMahon Family Trust were lent back to the applicant.
41. There was no evidence that Radiodetection was made aware of the detail of the transactions which, prima facie, affected the property that it contracted to purchase.

The form and substance of the scheme

42. Sufficient has been said about the form of the scheme. The substance of it was that it purported to be a mechanism by which the proceeds of sale of the applicant’s shares in Mactek ended up as a loan to the applicant, undocumented and apparently interest free, from the G MacMahon Family Trust without, so it has hoped, the applicant incurring any liability to pay capital gains tax on those proceeds.

The result achieved by the scheme

43. Had the scheme otherwise been effective, its effect, but for the operation of Part IVA, would have been that no capital gains tax was payable by the applicant on his disposal of shares in Mactek. Whilst Mr Young suggested in his opening^[29] that the Hill End Unit Trust was liable to account for capital gains tax on the sale of shares the applicant did not make that concession and there is no evidence that the Trust considered itself liable in that way or lodged tax returns on that basis. On the most favourable view, had the scheme been efficacious, liability would have fallen on an entity with no assets to satisfy it.

Change in the applicant’s financial position

44. The applicant’s financial position has changed considerably. He was the holder of 500 shares. He disposed of them in a way that, on his view, avoided the incidence of capital gains tax and enjoyed the benefit of the proceeds of sale in the form of loans.

Changes in the financial position of others

45. The only relevant change appears to be to the position of Mr Bonnell’s firm – it has been considerably enriched by promoting this scheme to the applicant and his brother.

Any other consequences

46. The Commissioner submits, under this head, that it is open to conclude that the associated trusts, the Hill End Unit Trust and the G MacMahon Family Trust, were not treated particularly seriously. It is certainly the case that the Hill End Unit Trust appeared to be somewhat casual in lodging its tax returns – as at June 2004 the 2001 return had not been lodged. And it seems curious, at least, that the agreement between the applicant and Mr Bonnell allowed the latter to retain “all documentation, including letters of advice, trust deeds and other documents evidencing the transactions” for a period of two years.

The nature of any connection

47. In reality there were two human participants who formed differing entities with the result that they had differing capacities. There were no arm’s length transactions involved in the events of 26 October 2000.

Asset protection?

48. I have already explained why I reject the applicant’s evidence regarding “asset protection”. His assertions are not, of course, relevant where the test is objective. But there must, at least, be an evidentiary foundation from which, either directly or by inference, an objective conclusion may be drawn. In the present case there is not even evidence from which one might infer a need to protect assets. Beyond the risible suggestion that his advisers were concerned that clause 4.4 would permit Radiodetection Australia to recover monies already paid, the applicant does not suggest why there was a need to protect his assets and, if such a need existed, why it apparently did not extend to other assets. There was no evidence, for example, of a concern about potential liability from any particular source, no evidence of the recognition of a risk from a particular source, or even a concern that a particular warranty might have been breached. The notion of asset protection is raised in an evidentiary vacuum.
49. The applicant submits that I should conclude that the commercial purpose of the arrangement was to secure asset protection. Yet no explanation was proffered as to how that was achieved by the mechanism adopted beyond a suggestion that the mechanism was “not obvious and not readily apparent” to Radiodetection Australia. Also left unexplained was the claim that any attempt by Radiodetection Australia to enforce its contractual indemnities “would not succeed”.
50. Finally I note that there was no evidence from the applicant that I regard as acceptable that put forward the avoidance of stamp duty as a consideration. The applicant made no reference to stamp duty in either of his witness statements. The only reference to stamp duty is in the notice of objection which is signed by the applicant but obviously prepared by others. The applicant did not seek to adopt the truth of the matters of fact contained in the notice and I see no reason why I should infer that the avoidance of stamp duty was a consideration for the applicant. And beyond that, as the Commissioner’s submissions point out, there is no explanation why adopting this mechanism avoided stamp duty. There is then absent any evidentiary basis for me to conclude, objectively, that the avoidance of stamp duty was a purpose for adopting the scheme.
51. I am then satisfied that even if, contrary to my earlier conclusion, the applicant’s scheme had been effective, Part IVA operates to cancel the resulting tax benefit.
52. The result is that the objection decision, insofar as it concerns the inclusion of the capital gain, must be affirmed.

THE PAYMENTS TO THE STICHTING

53. In his closing submissions Mr Young conceded that the payments made to the Stichting were correctly included in the applicant’s assessable income. He had earlier accepted^[30] that the shortfall arising from the omission of these amounts was correctly assessed as reckless and thus warranting a penalty of 50%.
54. The objection decision, insofar as it related to the payments to the Stichting in the three years in question, ought to be affirmed.

THE CREDIT CARD PAYMENTS

55. Some further reference to the facts is necessary. The Commissioner has only ever had access to one monthly statement of the credit card account, that for February/March 2003. In September 2005 the Commissioner sought information about the credit card payments and statements of the account from 1 July 1999 to 30 June 2003. The answers provided to the requests for information were quite vague and, as to the credit card statements, it was asserted that those documents had already been provided to the Commissioner. No documents were then provided.
56. In January 2006 the Commissioner produced a position paper setting out his views on various aspects of the investigation, including his tentative conclusions about the credit card payments. It noted^[31] that the applicant had earlier advised that,

“...the loan from the Stichting is drawn down by way of the Stichting paying the amounts to your credit cards on a monthly basis, and payments to the Stichting were made by Mactek.”

The applicant was asked to provide records of the actual amounts paid by Mactek to the Stichting or, alternatively, to provide copies of the credit card statements from 1 July 2000 to 30 June 2004 except for the single month already in the possession of the Commissioner. Reference was then made to the fact that that statement showed a payment of US$6,373.11 and to cases that permitted the Commissioner to make an estimate. On the basis that that amount was received in that way for each month, and applying the average exchange rates for the three years, it was said that estimates of $142,071 for the 2001 year, $146,006 for the 2002 year and $130,909 for the 2003 year might be made.

57. The response from Mr Bonnell’s firm was as follows,

“As our client has conceded that the source of these loans (payments from Mactek) are [sic] assessable to our client the loans from the Stichting are simply payments to our client of their [sic] own money and are therefore not assessable.”^[32]

By letter of 16 March 2006^[33] the Commissioner sought a “reconciliation between the sign on fee paid by Mactek to the Stichting and loans receipt from the Stichting.” In response^[34], Mr Bonnell professed confusion as to what was meant by a reconciliation given the concession about the assessability of the payments. Mr Bonnell did not understand why “this should still be an issue” and referred to his instructions “that the only funds that were received by the Stichting were the proceeds from the sign on fee with Mactek.”

58. The amended assessments in May 2006 were made on the basis of the estimates foreshadowed in the Commissioner’s position paper. Following the applicant’s objection further information and documentary evidence was sought by the Commissioner’s letter of 7 September 2006^[35]. The response from Mr Bonnell^[36] was to the effect that it was not possible to provide documentary evidence from Mactek and that clarification was sought of the nature of the documents sought. In any event no further information was ever provided to the Commissioner.
59. The Commissioner’s case throughout the proceedings in the Tribunal is that no reliable evidence had been produced in support of the applicant’s assertions about the credit card payments. The Commissioner accepts that it would be wrong to include the same income twice – once as a payment of a sign on fee and again as a payment made in discharge of a credit card debt – but he submits that it would be impermissible to assume, in the absence of reliable and apparently available evidence addressing the issue, that there had been double counting. He points to the repeated failure of the applicant to produce documents available to him, especially the credit card statements which the applicant accepted that he received on a monthly basis^[37]. The only inference that could be drawn, it was submitted was that the documents would demonstrate that the actual position was worse for the applicant than the estimates made by the Commissioner when the amended assessments were made.
60. Mr Young relied on the applicant’s evidence that no payments had been made to the Stichting beyond the sign-on fees. He submitted that the Commissioner had not pointed to any other possible sources of income into the Stichting and reminded me of the observations of Burchett J in Ma v Federal Commissioner of Taxation^[38] where his Honour said:

“But if a taxpayer denies any undisclosed source of income, provides acceptable evidence of how he spends his time, and demonstrates a reasonable explanation for any appearance of the possession of assets, he will generally discharge his burden of proof unless some positive reason is shown why he is to be disbelieved.”

61. Ultimately an applicant has the burden of proving that an assessment is excessive^[39]. And it is the task of an applicant, on a review of an objection decision, to show that the amount of money for which tax is levied by a notice of assessment exceeds the actual substantive liability^[40]. The applicant seeks to do so here by inviting acceptance of his evidence that all of the income into the Stichting has been brought into account. In my view he does not succeed.
62. It is true, as the applicant submits, that the Commissioner cannot point to any particular source of income, beyond the sign-on fees, that might have gone into the Stichting. But that Stichting was created by, or on behalf of, the applicant and it was set up in the Netherlands. The applicant does not seek to demonstrate why he could not have obtained records from the Stichting demonstrating all the payments made into it. And he does not seek to demonstrate why he could not produce the credit card statements which he admits having received. There is an inference available, which I draw, that the documents that he has refused to produce would not support his case. I have already explained that I have considerable doubts about the reliability of the applicant’s evidence. The position is no different here where the evidence i.e. that there were no payments into the Stichting beyond the sign-on fees, is capable of ready corroboration from documentary evidence and the applicant, having been informed of the basis on which the Commissioner will proceed, refuses to produce the documents and gives no explanation for that failure. That refusal gives me additional reason to disbelieve the applicant on this aspect of his evidence.
63. It follows that I am not satisfied that the assessments are excessive as a consequence of the inclusion of the “credit card” amounts. That part of the objection decision ought to be affirmed.

PENALTIES

64. It is unnecessary to examine the legislative scheme for the imposition of administrative penalties. The scheme requires consideration of the conduct of the taxpayer in adopting the position evidenced, generally, by the income tax return. Thus, so far as the omission of the capital gain from the sale of shares is concerned, it is necessary to consider whether, as the applicant submits, it was “reasonably arguable” that the transactions did not trigger a capital gains tax event. The alternative, and the basis of the Commissioner’s assessment of penalty, is that the applicant, by failing to disclose the capital gain, made a statement to the Commissioner that was false or misleading and that the shortfall amount that resulted from that omission resulted from recklessness on the part of the applicant. If the applicant is correct, no penalty may be imposed; if the Commissioner is correct, penalty was properly imposed at 50%.
65. By virtue of s 284-15(1) of Schedule 1 to the Taxation Administration Act a matter is reasonably arguable,

“...if it would be concluded in the circumstances, having regard to relevant authorities, that what is argued for is about as likely to be correct as incorrect, or is more likely to be correct than incorrect.”

The approach to the analogous provision in s 226K of the ITAA 1936 was considered by Hill J in Walstern Pty Ltd v Federal Commissioner of Taxation^[41]. In a passage endorsed by frequent Full Court decisions since^[42] his Honour said^[43]:

“The following conclusions can be drawn as to the correct approach to penalty under s 226K:

1. The test to be applied is objective, not subjective. This is clear from the use of the words `it would be concluded' in para (1)(b) of the section;
2. The decision-maker considering the penalty must first determine what the argument is which supports the taxpayer's claim;
3. That person will already have formed the view that the claim is wrong, otherwise the issue of penalty could not have arisen. Hence the decision-maker at this point will need to compare the taxpayer's argument with the argument which is considered to be the correct argument;
4. The decision-maker must then determine whether the taxpayer's argument, although considered wrong, is about as likely as not correct, when regard is had to `the authorities';
5. It is not necessary that the decision-maker form the view that the taxpayer's argument in an objective sense is more likely to be right than wrong. That this is so follows from the fact that tax has already been short paid, that is to say the premise against which the question is raised for decision is that the taxpayer's argument has already been found to be wrong. Nor can it be necessary that the decision-maker form the view that it is just as likely that the taxpayer's argument is correct as the argument which the decision-maker considers to be the correct argument for the decision-maker has already formed the view that the taxpayer's argument is wrong. The standard is not as high as that. The word `about' indicates the need for balancing the two arguments, with the consequence that there must be room for it to be argued which of the two positions is correct so that on balance the taxpayer's argument can objectively be said to be one that while wrong could be argued on rational grounds to be right;
6. An argument could not be as likely as not correct if there is a failure on the part of the taxpayer to take reasonable care. Hence the argument must clearly be one where, in making it, the taxpayer has exercised reasonable care. However, mere reasonable care will not be enough for the argument of the taxpayer must be such as, objectively, to be `about as likely as not correct' when regard is to be had to the material constituting `the authorities'; and
7. Subject to what has been said the view advanced by the taxpayer must be one where objectively it would be concluded that having regard to the material included within the definition of `authority' a reasoned argument can be made which argument when contrasted with the argument which is accepted as correct is about as likely as not correct. That is to say the two arguments, namely, that which is advanced by the taxpayer and that which reflects the correct view will be finely balanced. The case must thus be one where reasonable minds could differ as to which view, that of the taxpayer or that ultimately adopted by the Commissioner was correct. There must, in other words, be room for a real and rational difference of opinion between the two views such that while the taxpayer's view is ultimately seen to be wrong it is nevertheless `about' as likely to be correct as the correct view. A question of judgment is involved.”
66. I do not regard the matter as reasonably arguable because there was a clear failure on the part of the applicant to take reasonable care. In his notice of objection^[44] the applicant asserted that he had acted on the basis that no capital gains tax trigger event had occurred because of “advice given to me by my solicitor and confirmed in a written advice to my solicitor from a barrister.” Some matters need be noted about that assertion.
67. First, there was no evidence given by the applicant to that effect in the course of the hearing. On the contrary the applicant sought to demonstrate that the question of the tax effect of the transactions was in the nature of an afterthought to asset protection advice. There was no evidence that he sought or obtained advice from a competent practitioner about the tax consequences of the scheme. Next, the solicitor who supposedly gave that advice was not called and no written advice from him was produced. The advice of counsel referred to post-dated the implementation of the scheme by some months and could not possibly have informed the applicant’s decision to implement the scheme. The applicant, I am satisfied, did not adopt a position that was reasonably arguable since he did not take reasonable care to determine the tax consequences of what he proposed. The position he adopted was, in my view, reckless and imposition of penalty at 50% on the shortfall was warranted.
68. But, in any event, the same result comes about if the matter is determined by reference to Part IVA of the ITAA 1936. Section 284-160 of Schedule 1 to the Taxation Administration Act sets a base penalty amount of 50% of the “scheme shortfall amount” or 25% where, in effect, the scheme was reasonably arguable. The scheme in issue here was not even remotely arguable let alone reasonably arguable.
69. The applicant accepted that penalty at 50% was correctly imposed in relation to the shortfall arising from the omission of the sign-on fees. He did submit that “the contention re double taxation is reasonably arguable”. But, with respect, that misses the point. Had I been satisfied that the applicant was being taxed twice on the same income he would have succeeded on this aspect of the case and the penalty imposed would have fallen away. And the focus is not on whether the argument presented at hearing was reasonable, it is on whether the position adopted by the applicant in compiling and lodging his returns was reasonable. Here the applicant did not disclose the credit card payments as income. In the absence of credible evidence at the hearing that the same income was being taxed twice I conclude that it was not reasonably arguable that the applicant could lodge his returns on the basis that the credit card payments were not income in his hands.
70. On my view of the facts the applicant was reckless in not disclosing amounts of income he received by way of credit card payments. The penalty was correctly assessed.
71. It remains only to consider the applicant’s argument that the discretion in s 298-20 of Schedule 1 to remit, either in whole or in part, the penalties imposed ought to be exercised in his favour. He advances two reasons why that should be done.
72. First, he submits that “the effect of the decisions in Halloran and Mochkin are relevant considerations to be taken into account”^[45] in the exercise of that discretion. And then he submits that “the existence of double taxation ... is a highly relevant consideration”^[46] in the exercise of the discretion. No further explanation of either submission was provided.
73. Halloran^[47] was the case relied upon by the applicant to establish that the scheme was capable of achieving a disposal of the shares without triggering a capital gains tax event. As best as I can comprehend the argument is appears to be a reprise of the “reasonably arguable” point. A conclusion that the scheme was reasonably arguable leads to the conclusion that no penalty is warranted. That seems to me to be the end of the matter, there is no halfway house of “almost reasonably arguable” such as would warrant remission.
74. Mochkin^[48] was an appellate affirmation that the conclusion of the primary judge in that case that the dominant purpose of a scheme was asset protection was established by the evidence. I cannot comprehend how the fact that that applicant could establish that which this applicant could not, can possibly be relevant to the remission of penalty.
75. And, had I been satisfied that the applicant was being taxed twice on the same income I would have given effect to that conclusion. I was not so satisfied.
76. I reject the basis on which the applicant submits that a remission of penalty is warranted. On the view I take of the matter the applicant engaged in a blatant and contrived artifice to avoid capital gains tax on a very considerable sum. He set up an overseas structure to receive hundreds of thousands of dollars in payments in connection with his employment under the guise that it was a pension fund and failed to account for those payments in his income tax returns. No exercise of the discretion to remit is warranted.

CONCLUSION

77. It follows that I consider that the decisions in issue were the correct or preferable decisions. I would, in each application, affirm the decision under review.

I certify that the preceding 77 paragraphs are a true copy of the reasons for the decision herein of Deputy President P E Hack SC

Signed: .....................................[sgd]........................................

Associate

Dates of Hearing 24, 25 & 26 October 2011.

Date of Decision 15 November 2011

Counsel for the applicant Mr IS Young

Solicitors for the applicant Bonnell Rowntree LP

Counsel for the respondent Mr T Thawley & Mr G O’Mahoney

Solicitors for the respondent ATO Legal Services Branch

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^[1] Radiodetection Australia was ultimately set up as a subsidiary of Radiodetection Limited to hold the shares acquired in Mactek.

^[2] Exhibit 7.

^[3] Exhibit 1, page 421.

^[4] Exhibit 1, page 187.

^[5] Exhibit 1, pages 188-206.

^[6] See paragraphs [29] and [30].

^[7] Exhibit 1, page 210.

^[8] Exhibit 1, pages 209 & 211.

^[9] Exhibit 1, pages 224-252.

^[10] Exhibit 1, pages 215-216.

^[11] Transcript, page 22, line 45.

^[12] Exhibit 1, page 213.

^[13] Exhibit 1, page 217.

^[14] Exhibit 1, page 219.
^[15] Exhibit 1, page 218.

^[16] Exhibit 1, page 221 (top).

^[17] Exhibit 1, page 221 (bottom).

^[18] Transcript page 33, line 20.

^[19] Exhibit 1, page 223.

^[20] It was made plain at the outset of the hearing that the statutory declaration would be regarded only as a document that was before the decision-maker and not as evidence of the truth of its contents: see transcript page 48, lines 6-14.

^[21] There was, by this stage, only one applicant accordingly I assume that the transcript references to applicants are transcription errors or merely evidence some confusion on the part of counsel.

^[22] Transcript pages 124-125.

^[23] Applicant’s closing submissions at paragraph [69].

^[24] The applicant uses the word “advantage” in his submissions at paragraph 68; it is assumed to be synonymous with the word “benefit” used in the legislation.

^[25] Halloran v Minister Administering National Parks and Wildlife Act 1974 [2006] HCA 3; (2006) 229 CLR 545.

^[26] Applicant’s closing submissions at [64].

^[27] Exhibit 4 at paragraph [5].

^[28] Exhibit 5.

^[29] Transcript page 33, line 8.

^[30] Transcript page 45, line 25.
^[31] Exhibit 1, page 398.

^[32] Exhibit 1, page 407.

^[33] Exhibit 1, page 409.

^[34] Exhibit 1, page 412.

^[35] Exhibit 1, page 516.

^[36] Exhibit 1, page 523.

^[37] Transcript page 121, lines 42-44.

^[38] [1992] FCA 359; 37 FCR 225, 230

^[39] Taxation Administration Act 1953 (Cth), s 14ZZK(b)(i)

^[40] Federal Commissioner of Taxation v Dalco [1990] HCA 3; (1990) 168 CLR 614

^[41] [2003] FCA 1428; (2003) 138 FCR 1.

^[42] See most recently Allen (Trustee), in the matter of Allen’s Asphalt Staff Superannuation Fund v Federal Commissioner of Taxation [2011] FCAFC 118.

^[43] At [108].

^[44] Exhibit 1, page 485.

^[45] Final submissions, paragraph 71.

^[46] Final submissions, paragraph 77.

^[47] Halloran v Minister Administering National Parks and Wildlife Act 1974 [2006] HCA 3; (2006) 229 CLR 545.

^[48] Federal Commissioner of Taxation v Mochkin [2003] FCAFC 15; (2003) 127 FCR 185.