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08 Feb 11 Decision Impact Statement - Bruton Holdings Pty Ltd (in liquidation)

The Commissioner has issued a Decision Impact Statement in relation to the High Court decision in Bruton Holdings Pty Ltd (in liquidation) v FCT [2009] HCA 32; 2009 ATC 20-125; 72 ATR 856.

The case concerned notices under s 260-5 of Taxation Administration Act 1953 (Cth) ("the Act") issued to a third party which held, on trust, assets of a trust. The notices required payment to the Commissioner of those assets. The former trustee of the trust was a company (Bruton) that had been put into voluntary liquidation. The liquidators of Bruton sought a declaration that the s 260-5 notices were invalid. The Full Federal Court held that the notices were valid.

On appeal, the High Court found for the liquidators, holding that "the remedy available to the Commissioner...was that under the regime for liquidations (s 260-45 [of the Act]), not the garnishee regime provided by s 260-5".

The Decision Impact Statement states:

"It had been the longstanding view of the Commissioner that a notice under s 260-5 should not be issued to third party debtors in respect of tax related liabilities of a company in liquidation, other than tax related liabilities incurred by a company in the capacity of a trustee of a trust.

Following the High Court's decision in this matter, the Commissioner will cease to issue notices under s 260-5 in respect of tax related liabilities of companies in liquidation that have incurred their tax related liabilities in the capacity of a trustee of a trust."


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