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The Full Court of the Federal Court has dismissed the taxpayer’s appeal against that part of the decision of Besanko J in Kelly v FCT [2012] FCA 423 in which it was held that one purported assignment of a partial interest in a legal partnership to a trust was ineffective for income tax purposes. In contrast, Besanko J held that two other assignments to that trust and another trust in 2005 and 2006 respectively were effective for income tax purposes. The Full Court dismissed the Commissioner's cross appeal against that latter aspect of Besanko J's decision.

The Full Court also confirmed that superannuation contributions made on behalf of the taxpayer and his wife by the corporate trustee of a family trust were not proper deductions as they were not employees of the family trust and they were not "entitled to payment" for the performance of their duties as directors within the meaning of those words in s 12(2) of the Superannuation Guarantee (Administration) Act 1992 for the purposes of s 290-70 ITAA 1997. The taxpayer's appeal in this regard was also dismissed.

Kelly v FCT [2013] FCAFC 88 (Full Federal Court; Lander, Siopis, Gilmour JJ; 8 August 2013).


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