Commissioner of taxation wins appeal upholding s.255 notices
The Full Court of the Federal Court has allowed the commissioner of taxation’s appeal in FCT v Resource Capital Fund IV LP  FCAFC 118. The appeal concerned the operation of section 255 of the Income Tax Assessment Act 1936 (ITAA), which empowers the commissioner to collect tax owing by a non-resident from any person who has the control, receipt or disposal of money belonging to the non-resident. In allowing the appeal, the Full Court held that the word ‘money’ in s.255 is not limited to Australian currency but includes foreign currency.
The taxpayer, a limited partnership formed in the Cayman Islands, owned shares in an Australian company, Talison. Under a scheme of arrangement, the taxpayer transferred its shares in Talison to a third party. The amount payable to the taxpayer was denominated in Canadian currency and was payable out of a Canadian bank account maintained by Talison. The commissioner issued assessments to the taxpayer seeking to tax it on a profit made on the transfer.
In attempting to collect the tax, the commissioner issued a notice to Talison under s.255 of the ITAA 1936. A person issued with a notice under s.255 is required to pay any tax that is or will become due by a non-resident if the person has the receipt, control or disposal of money belonging to the non-resident. The person is personally liable to the extent of any amount that he has retained or should have retained, but is not otherwise personally liable…
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