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02 Apr 12 Commissioner has mixed success on dividend deduction appeal - Noza

The Full Court of the Federal Court (Edmonds, Jessup and Robertson JJ) has partially upheld the appeal of the Commissioner from the decision of Gordon J in Noza Holdings Pty Ltd v FCT [2011] FCA 46 (4 February 2011), denying the taxpayers a deduction for $83,001,628, representing unpaid dividend obligations on certain redeemable preference shares which were treated as debt interests for tax purposes.

However, the Full Court dismissed the Commissioner’s appeal against that part of Gordon J’s decision allowing the taxpayer Noza Holdings Pty Limited (Noza) a deduction under s 25-90 ITAA 1997 for $170,983,354 for dividends that were actually paid by Noza in the 2003 income year.

In relation to the unpaid dividends, the Full Federal Court held that under the terms of the redeemable preference shares, there was no presently existing liability, such that there was no loss or outgoing for the purposes of s 25-90 ITAA 1997.

An appeal by the Commissioner against the decision of Gordon J in relation to the non-application of Part IVA to the transactions was abandoned by the Commissioner during the hearing of the appeal.

FCT v Noza Holdings Pty Ltd [2012] FCAFC 43 (Full Court of the Federal Court, Edmonds, Jessup and Robertson JJ, 28 March 2012).

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