The Federal Court (Lindgren J) has held that a non-resident company (ABB Zurich), which was a shareholder in a resident company (ABB Australia), was liable to withholding tax in respect of a dividend which it, ABB Zurich, assigned for valuable consideration between the date of declaration of the dividend and the date of payment of the dividend. The dividend was ultimately paid, by direction, to a resident of Australia. ABB Zurich argued that it never derived the dividend, either at date of declaration or at date of payment, with the result that s 128B(1) ITAA 1936 had no application. Lindgren J disagreed, holding that ABB Zurich derived the dividend at date of declaration or, if he was wrong in that regard, at date of payment. Further, Lindgren J held that the fact that ABB Zurich may not have derived the dividend beneficially at date of payment but as a trustee was not relevant to the liability to withholding tax: ABB Australia Pty Limited v FCT  FCA 1063 (Federal Court, Lindgren J, 20 July 2007).
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