Tax appeals updates (AU)
List of recent Appeals updates that have been reported in CA ANZ Tax News AU
Items released week ended 10 April 2026
Kilgour v Commissioner of Taxation [2025] FCAFC 183, Isterling v Commissioner of Taxation [2025] FCAFC 183 – Sale of shares occurred at arm’s length
The High Court has refused the taxpayer special leave to appeal the decision in Kilgour v Commissioner of Taxation [2025] FCAFC 183. In that decision, the Full Federal Court dismissed the taxpayers’ appeal, holding that the sale of their shares occurred at arm’s length and therefore the market value substitution rules did not apply to reduce the sale proceeds.
The taxpayers were beneficiaries of separate trusts which each held 20% of the shares in Punters Paradise Pty Ltd (Punters), along with a third shareholder which held 60% of the Punters shares. The three vendors sold Punters to News Corp Investments Pty Ltd (News Corp) under a Share Sale Agreement for a total of $31 million. The taxpayers’ trusts each received $6.2 million, reflecting their 20% shareholding. The taxpayers contended that for the purposes of calculating capital gains tax, the focus was on the market value of the 20% parcels considered as discrete transactions, without regard to the simultaneous acquisition by News Corp of 100% of Punters’ shares from the three shareholders collectively. They argued that the value of the assets sold by them did not include advantages to News Corp’s overall enterprise arising from the ownership and control of Punters (synergies).
The Court held that the prescription that the CGT event occurs “just before” the execution of an agreement for the transfer of the CGT asset does not in terms carry with it a requirement that an actual transaction must be ignored for all purposes when ascertaining the market value of the CGT asset at the immediately preceding moment in time. Nothing in the authorities compels the valuer to imagine the sale of the CGT asset in a public auction devoid of the commercial considerations in fact influencing the price.
Ziegler v Commissioner of Taxation [2025] FCAFC 168, Wellton Holdings Pty Ltd ACN 101 069 827 v Commissioner of Taxation [2025] FCAFC 168 – GIC credited to Income Tax Account an assessable recoupment
The High Court has refused the taxpayers special leave to appeal the decision in Ziegler v Commissioner of Taxation [2025] FCAFC 168. In that decision, the taxpayer and various entities he controlled entered into a number of transactions, including a settlement with the ATO, that ultimately resulted in the taxpayer receiving a dividend with an imputation benefit of approximately $2.9 million in 2009. The taxpayer received a refundable tax offset of $2.9 million in 2009 after taking into account deductions which included a GIC deduction of approximately $13.7 million, calculated by reference to the taxpayer’s Income Tax Account (ITA). After the settlement, the ATO recalculated the taxpayer’s GIC and credited it to the taxpayer’s ITA. The taxpayer took the position that the GIC credited was not an assessable recoupment under s 2020(3) of the ITAA 1997.
The Court held that GIC liabilities and the Commissioner’s credit in the ITA reflected actual transactions. The Commissioner’s credit was “received as recoupment of a loss or outgoing” within the meaning of s 2020(3) of the ITAA 1997, namely as a recoupment of the GIC which the taxpayer had deducted.
Commissioner of Taxation v Hicks [2025] FCAC 171, Commissioner of Taxation v Hicks Beneficiary Pty Ltd ACN 157 868 507 [2025] FCAC 171, Commissioner of Taxation v Ierna [2025] FCAC 171 - No tax benefit received from a selective capital reduction
The High Court has refused the Commissioner special leave to appeal the decision in Commissioner of Taxation v Hicks [2025] FCAC 171. In that decision, the taxpayers received a distribution of capital through the selective buy-back of pre-CGT shares in a company, following the restructure by a private group of entities. The restructure essentially involved the taxpayers transferring units in City Beach Trust (CBT) to the company, Methuselah, in exchange for new shares in Methuselah. The ATO made determinations under s 45B(3) of the ITAA 1936, to treat the capital benefits received by the taxpayers as unfranked dividends.
The Full Federal Court found the context and purpose of the capital return by Methuselah was to fund the repayment of Division 7A loans, holding that a capital distribution by Methuselah could not in any sense be taken to be in substitution for a dividend that would otherwise have been paid by CBT out of the profits of the CBT. No distribution by CBT would have been assessable as a dividend to the taxpayers. Considering Part IVA, the Court held the fact that a transaction is entered into following the receipt of tax advice or the fact that the advice refers to “no adverse tax consequences” does not of itself support a conclusion that the dominant purpose of a person was to enable the taxpayers to obtain a tax benefit in the form identified and sought to be cancelled by the Commissioner. The bare fact that a taxpayer pays less tax, if one form of transaction rather than another is made, does not demonstrate that Part IVA applies.
Charles Apartments Pty Limited v Commissioner of Taxation [2025] FCAFC 180 – Intragroup interest paid as guarantor not as borrower
The High Court has refused the taxpayers special leave to appeal the decision in Charles Apartments Pty Limited v Commissioner of Taxation [2025] FCAFC 180. In that decision, the Full Federal Court dismissed the taxpayer’s appeal holding that capitalised interest paid on an intragroup loan was not deductible under s 8-1.
The taxpayer (a special purpose vehicle in a large property development group) incurred capitalised interest under refinancing arrangements which consolidated loans within the taxpayer’s corporate group. The taxpayer only paid the capitalised interest when it sold certain properties and was only liable for such interest to the extent that there were sufficient sale proceeds from the sale of the properties. The taxpayer argued that it should have been allowed a deduction for interest under an intragroup loan agreement under s 8-1.
The Full Federal Court held that even if the taxpayer incurred capitalised interest, any interest liability discharged was that of West Apartments (a related entity) to Suncorp. The character of the advantage obtained by the taxpayer remained that of reducing the extent of its overall liability as a guarantor of the Suncorp facility and of forestalling a sale of its properties by Suncorp as mortgagee in possession.
Appeals update for 2026
Commissioner of Taxation v ACN 154 520 199 Pty Ltd (in liquidation) [2025] FCAFC 146
The High Court has refused the taxpayer special leave to appeal the decision in Commissioner of Taxation v ACN 154 520 199 Pty Ltd (in liquidation) [2025] FCAFC 146. In that decision, the taxpayer claimed input tax credits (ITCs) for purchasing refining material that did not meet the definition of “precious metal” in s 195-1 of the A New Tax System - Goods and Services - Tax Act 1999 (GST Act). The taxpayer’s suppliers fraudulently did not remit GST payable on its supplies made to the taxpayer. The Full Federal Court allowed the Commissioner’s appeal holding that the AAT misconstrued and misapplied the s 165-5(c)(ii) ‘principal effect’ inquiry by failing to focus on the fiscal effect of a scheme. Further, the AAT misconstrued and misapplied s 165-5(1)(c) by disregarding that a purpose or object of Division 165 (GST anti-avoidance division) is to deter artificial or contrived schemes.
Commissioner of Taxation v CPG Group Pty Ltd [2025] FCAFC 147
The High Court has refused the taxpayer special leave to appeal the decision in Commissioner of Taxation v CPG Group Pty Ltd [2025] FCAFC 147. In that decision, the taxpayer was involved in a round robin transfer of gold. Effectively, the taxpayer sold gold bullion as GST-free “precious metal” under s 195-1 of the GST Act to a related party. The supplies made to the taxpayer were subject to GST allowing the taxpayer to ITCs. The Full Federal Court allowed the Commissioner’s appeal holding that the AAT misconstrued and misapplied the s 165-5(c)(ii) ‘principal effect’ inquiry by failing to focus on the fiscal effect of the scheme. Further, the AAT misconstrued and misapplied s 165-5(1)(c) and s 165-15(1)(c) by disregarding that a purpose or object of Div 165 is to deter artificial or contrived schemes.
Geocon Land Holdings No. 5 Pty Ltd v Commissioner of Taxation [2025] FCAFC 172
The High Court has refused the Commissioner special leave to appeal the decision in Geocon Land Holdings No. 5 Pty Ltd v Commissioner of Taxation [2025] FCAFC 172. In that decision, the Full Federal Court allowed Geocon’s appeal and set aside the Tribunal’s decision, holding that the ATO was not entitled to deny a refund of overpaid GST under Division 142 of the GST Act. At issue was whether GST overpaid under the margin scheme in a residential property development had been “passed on” to purchasers for the purposes of Division 142. The Court found that the Tribunal had applied the wrong legal approach by presuming “passing on” the GST had occurred based on profitability, and clarified that “passed on” requires a factual inquiry consistent with its ordinary meaning, not a general assumption that GST is embedded in prices.
YTL Power Investments Limited v Commissioner of Taxation of the Commonwealth of Australia [2025] FCA 1317
The Commissioner has filed a notice of appeal against the Federal Court’s decision in YTL Power Investments Limited v Commissioner of Taxation of the Commonwealth of Australia [2025] FCA 1317 [link: ]. In that decision, the Court held that shares in an Australian resident company, which held electricity transmission licences and a lease of electricity infrastructure, were not taxable Australian real property and thus the disposal of the shares by the non-resident taxpayer was not subject to CGT.
Appeals updates for 2025
Rusanov v Commissioner of Taxation (No 3) [2025] FCAFC 117
The High Court has refused the taxpayer special leave to appeal the decision in Rusanov v Commissioner of Taxation (No 3) [2025] FCAFC 117. In this case, the Commissioner issued the taxpayers with default assessments using a bank account analysis methodology to attribute taxable income to the taxpayers based on unexplained deposits and expenses in their bank statements. At first instance, the Administrative Appeals Tribunal (AAT) held the taxpayers had not discharged their burden of proving what their actual taxable income was in the relevant years so as to demonstrate that the assessments were excessive. On appeal, the Federal Court held that the AAT did not err and that there were no contemporaneous records of any sort to substantiate the nature of the payments.
Read case
AusNet Services Ltd v Commissioner of Taxation [2025] FCAFC 21
The High Court has refused the taxpayer special leave to appeal the decision of AusNet Services Ltd v Commissioner of Taxation [2025] FCAFC 21. In that decision, the Full Federal Court had dismissed the taxpayer’s appeal, holding the Division 615 rollover relief was available for the restructure and therefore the taxpayer was not entitled to an uplift in cost base.
The Court found that the scheme involving the acquisition of shares in AusNet Services (Distribution) Limited met the statutory requirement of a “scheme for reorganising the affairs” of the entity, even though it also affected the affairs of the interposed company.
Their Honours rejected AusNet’s argument that shareholders received “something else” beyond shares in the interposed company, clarifying that incidental increases in share value did not breach the “and nothing else” condition.
Finally, the Court interpreted the market value ratio test in section 615-20(2) as applying only to shares issued under the scheme, not pre-existing shares, thereby confirming the scheme satisfied the statutory requirements
Commissioner of Taxation v Bendel [2025] FCAFC 15
The High Court has granted the Commissioner special leave to appeal the Full Federal Court decision of the Commissioner of Taxation v Bendel [2025] FCAFC 15. In this case the Full Federal Court concluded that an unpaid present entitlement to a corporate beneficiary was not a loan under Division 7A of ITAA 1936.
The Commissioner’s position, as expressed in Interim Decision Impact Statement, is that “Pending the outcome of the appeal process, we are administering the law in accordance with the published views relating to private company entitlements and trust income in TD 2022/11.”
Commissioner of Taxation v Liang [2025] FCAFC 4
The High Court has refused special leave to the taxpayer in Commissioner of Taxation v Liang [2025] FCAFC 4. The Full Federal Court held that the taxpayers failed to establish the source of their unexplained deposits that the Commissioner subsequently assessed as ordinary income. Therefore the taxpayers had not discharged their burden of proving the amended assessments were excessive.
Toowoomba Regional Council v Commissioner of Taxation [2025] FCA 161
The Commissioner has lodged an appeal to the Full Federal Court against the decision in Toowoomba Regional Council v Commissioner of Taxation [2025] FCA 161. In this case, the Court held that a particular shopping centre car park was not a “commercial parking station”.
Youssef v Commissioner of Taxation (Appeal) [2024] FCA 1154
The taxpayers have appealed to the Full Court after their case was dismissed in Youssef v Commissioner of Taxation (Appeal) [2024] FCA 1154. The Federal Court decision upheld the Tribunal’s earlier decision that the taxpayer failed to prove that unexplained deposits were not assessable income.
Singapore Telecom Australia Investments Pty Ltd v Commissioner of Taxation [2024] FCAFC 29
The High Court has refused the taxpayer’s application for special leave to appeal the decision of the Full Federal Court in Singapore Telecom Australia Investments Pty Ltd v Commissioner of Taxation [2024] FCAFC 29. In that decision, the Full Federal Court dismissed the taxpayer’s appeal, disallowing interest deductions pursuant to the transfer pricing rules.
Automotive Invest Pty Limited v Commissioner of Taxation [2023] FCAFC 129
The High Court has granted the taxpayer special leave to appeal the Full Federal Court decision of Automotive Invest Pty Limited v Commissioner of Taxation [2023] FCAFC 129. In this decision, the Court upheld the primary judge’s decision that the cars on display in a car museum that were for sale were held as exhibits as well as trading stock. Therefore, the taxpayer was liable to pay luxury car tax and its input tax credits were limited to 1/11th of the car limit.
If the taxpayer was considered using the car only for the purpose of holding it as trading stock then it would not have an increasing luxury car tax adjustment under the sections 15-30 and 15-35 of the A New Tax System - Luxury Car Tax Act 1999. Similarly, if the taxpayer was considered using the car only for the purpose of holding it as trading stock then the input tax credits wouldn’t be limited to 1/11th of the “car limit” under section 69-10 of the A New Tax System - Goods and Services Tax Act 1999.
Hedges v Commissioner of Taxation [2023] FCAFC 105
The High Court has dismissed the taxpayer’s application for leave to appeal the decision in Hedges v Commissioner of Taxation [2023] FCAFC 105. In this decision, the Full Federal Court held that the taxpayer was entitled to receive the capital proceeds for the disposal of interest in the goodwill of a partnership pursuant to the Partnership Deed and thus was assessable on the discount capital gain without set-off for the taxpayer’s debt due on the capital account.
Hedges v Commissioner of Taxation [2022] FCA 1389
The taxpayer has filed a notice of appeal to the Federal Court against the decision of Hedges v Commissioner of Taxation [2022] FCA 1389. In this decision, the Federal Court upheld the Tribunal’s decision that a capital gain arising from the disposal of goodwill by the partner in a law firm partnership, could not be offset by amounts owed to the partnership. The decision is reported under ‘Tax cases’.
T.D.S BIZ PTY LTD and Commissioner of Taxation
The taxpayer has filed a notice of appeal to the Federal Court against the decision of the Tribunal in T.D.S BIZ PTY LTD and Commissioner of Taxation [2022] AATA 3543. In that case, the Tribunal rejected the taxpayer’s R&D tax incentive claim as a "finding" covering activities conducted overseas was not in force.
Appears in Tax News AU: Edition 44
Peter Greensill Family Co Pty Ltd (Trustee) v Commissioner of Taxation
The High Court has refused the applicants, Peter Greensill Family Co Pty Ltd as Trustee for the Peter Greensill Family Trust, Martin and N & M Martin Holdings Pty Ltd ATF Martin Family Trust, special leave to appeal the Full Federal Court’s decision in Peter Greensill Family Co Pty Ltd (Trustee) v Commissioner of Taxation [2021] FCAFC 99. In that decision, the Full Federal Court reaffirmed that a non-resident beneficiary of an Australian resident discretionary trust is taxable in Australia on the capital gain attributable to assets that are not taxable Australian property.
Appears in Tax News AU: Edition 10
Commissioner of Taxation v Burswood Nominees Limited as trustee for the Burswood Property Trust [2021] FCAFC 151
The High Court has refused the taxpayer’s special leave application to appeal the decision in Commissioner of Taxation v Burswood Nominees Limited as trustee for the Burswood Property Trust [2021] FCAFC 151.
In relation to the total amount payable at the end of a junket (which is a net amount taking into account winnings, losses, commissions and rebates) by the junket tour operator to the casino or by the casino to the junket tour operator, the Court found it was inconsistent with the scheme of Division 126, and with the terms of the relevant expressions, to treat this amount as constituting or forming part of the “total amount wagered” (if payable by the junket tour operator to the casino) or the “total monetary prizes” (if payable by the casino to the junket tour operator).
Read Commissioner of Taxation v Burswood Nominees Limited
Appears in Tax News AU: Edition 17
