It is conspicuous to discover that the parent company (Buildco Ltd) was established in 1950, and become the one of the world’s leading international building companies via its own skills. 6. Was the parent in effectual and constant control?
Yes. The case shows that the CEO of the parent company (Buildco Ltd) has been helm the company for nearly 20 years. In addition, the parent company (Buildco Ltd) made a large profit and strict policy.
In summary, there is an agency relationship between the parent company (Buildco Ltd) and the subsidiaries company (Asset Pty Ltd). That is to say, they can be treated as a single legal entity, so the subsidiary company (Asset Pty Ltd) would not write-off the loan to the parent company (Buildco Ltd) as a debt and could not claim a tax deduction for that debt. Instead, there is a similar case which is called Commissioner of Taxation v BHP Billiton Finance Ltd (2010), the court held that the bad debt can be deducted due to the fact that the Commissioner’s submissions denying the separate legal existence of Finance Ltd. However, there are two differences between the two cases. Firstly, in the Commissioner of Taxation case, the reason of building the subsidiary company is not only solves the problem of sourcing debt finance, but also deals with the third parties. In contrast, the subsidiary company (Asset Pty Ltd) has no deal with other companies, except the parent company (Buildco Ltd). In addition, in the case of Commission, the BHP …show more content…
Professor Sharon Christensen and Professor Bill. (2012). lifting the joint venture veil: liability of related entities for misleading conduct of agents engaged by joint venture partners. DuncanAustralian Property Law Bulletin (newsletter), 2012: Volume 26 No 8.
5. Ramsay I and Noakes D. (2001). Piercing the Corporation Veil in Australia. company and securities law journal, 2001: Volume 19 No 250.
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[ 6 ]. Australia Corporation Law, s46.
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[ 9 ]. Smith stone &Knight Ltd v Briminghan Corp (1939) 4 All ER 116
[ 10 ]. Commissioner of Taxation v BHP Billiton Finance Ltd (2010) 182FCR
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