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19 Feb 14 High Court refuses taxpayer special leave in CGT roll-over case - Dickinson

The High Court (Kiefel and Gageler JJ) has refused the taxpayer special leave to appeal from the decision of the Full Court of the Federal Court in FCT v Fabig [2013] FCAFC 99 (28 August 2013).

The case concerned the application of the scrip for scrip roll-over relief under Div 124-M ITAA 1997. The taxpayer was one of a number of shareholders who sold shares in one company (iMega) for cash and shares in the acquiring company (Photon). As a result of an agreement made between themselves (to which the acquiring company was not a party) the proportion of cash and shares that each of the taxpayers received from or in Photon was different to the value of shares that they held in iMega.

For roll-over relief to be available, each exchange must be in consequence of a single arrangement, where that arrangement is one in which participation was available on substantially the same terms for all of the owners of interests of a particular type in the original entity. The shareholders (including the taxpayer) had entered into a Shareholders Agreement which provided that the consideration for any sale would be split between them in proportions different to their respective shareholdings. The Commissioner argued that this meant that the shareholders' participation was not on substantially the same terms. The Full Court agreed.

In dismissing the taxpayer's application for special leave, Kiefel J said that there was insufficient reason to doubt the correctness of the decision of the Full Court.

For a copy of the transcript of the special leave application, go here


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