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29 Jan 14 Decision Impact Statement - Crown Insurance Services

The ATO has published a Decision Impact Statement in relation to the decision of the Full Court of the Federal Court in FCT v Crown Insurance Services Ltd [2012] FCAFC 153; 2012 ATC 20-359.

The Decision Impact Statement outlines the ATO's response to this case which concerns questions dealing with source of income derived from business activity and whether income of the taxpayer was derived directly or indirectly from Australian sources.

The taxpayer was an insurer incorporated in Vanuatu. Before the AAT, it was held that the source of the taxpayer's income was the insurance contracts it entered into with other group companies. As the contracts were made and performed in Vanuatu, the AAT was satisfied that the taxpayer's income was not derived from sources in Australia.The taxpayer's objection was upheld.

On appeal, the issues before the Full Federal Court were whether the AAT's finding raised a question of law and, if so, whether the facts found by the AAT fell within the terms of s 6-5(3) of the ITAA 1997. A majority of the Full Court (Lander & Foster JJ) dismissed the appeal on the basis that the appeal was incompetent. They considered that there was no question of law on the construction of s6-5(3).

The Commissioner's application for special leave to appeal to the High Court was refused on 6 June 2013 - see the transcript here

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