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05 Jun 07 High Court grants special leave in Bluebottle

On 25 May 2007, the High Court granted the taxpayer leave to appeal from the decision of the New South Wales Court of Appeal in Bluebottle UK Limited & Ors v FCT.

The case concerned the issue of whether an Australian company (Virgin Blue) had an obligation to retain and pay to the Commissioner tax on account of 2 non-resident shareholders of Virgin Blue to whom a dividend (declared in the preceding month) was payable. Prior to payment of the dividend, but after service on Virgin Blue of a notice under s 255 ITAA 1936 requiring payment of the tax, the 2 non-resident shareholders had assigned, for value, their rights to the future dividend to another non-resident company, Bluebottle UK Limited.

The Court of Appeal held that Virgin Blue was obliged to comply with the s 255 notice  - see 2006 TAXVINE No 49 (11) (20 December 2006) - upholding the Commissioner's appeal from the decision of Gzell J - see 2006 TAXVINE No 27 (6) (21 July 2006) - who had held that it did not have any such obligation.

For a copy of the transcript of the special leave proceedings in the High Court, go here

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