Case Study Of Hacon And Sons Pty Ltd
Hacon & Sons Pty Ltd is a family grazing business and a trustee for the Hacon Family Trust. After Mr Walter Hacon and his wife passed away, the remaining shareholders of the Hacon & Sons Pty Ltd are their three sons. The properties that trustee’s grazing business were conducted on are owned by corporate subsidiaries of the trustee, and three sons.
The allocation of the operation profit of the company is not conducted by dividend but invest to the distributed fund by the trustee in “off-farm assets”. This makes it possible for the company to assist with funding the business especially in hard time.
The grazing business was restricted by three sons. They were trying to control their own part of the property more …show more content…
A week later, the applicants further provided more information in respect of the scheme and declared they can supply further details if needed. However, the application was declined by the Commissioner for lack of further information on other matters for making the ruling.
(b) Key tax issues to be decided by the Court
The key tax issue is that whether the Commissioner realised the provided information is not sufficient; whether he requested for the information; and can the Commissioner decide to decline the private ruling request before requesting further information.
(c) Arguments put forward by the ATO Commissioner and the taxpayer
In order to request the accurate private ruling, the taxpayer put forward the following arguments. Firstly, the applicants argued that before the Commissioner declining to make the private ruling, he must explicitly request additional information that he considered was necessary to issue the private ruling. Secondly, apart from the nominated exceptions, it is the unavoidable responsibility for the Commissioner to comply with the request of the private ruling and conduct it. Thirdly, to conduct the private ruling, abundant information should be provided to the Commissioner in a reasonable …show more content…
I agree with this decision. Referring to the summarized content above, Logan J quashed the decision of the Commissioner of Taxation of declining to make the private ruling under Part 5-5 of Schedule 1 of the TAA 1953 for which the Hacon applied . This judgment was based on the facts that the Commissioner’s administration did not make request of further information from the applicant when he considered necessary. It was regarded as an error of law and a jurisdictional error . The significance of this case is that it clarified the “request of further information” from section 357-105 TAA Sched 1 is an imperative obligation to comply with an application for a private ruling and make the ruling . Further, the clarification is consistent with the objective of Part 5-5 of TAA of beneficial intend for taxpayers to reduce their risks from uncertainty of tax obligations and entitlements