12 Oct 11 Maximum net asset value case remitted to AAT - Byrne Hotels
The Full Federal Court (Dowsett, Bennett and Greenwood JJ) has allowed, in part, the Commissioner's appeal from the decision of the AAT in The Taxpayer and FCT  AATA 455 (18 June 2010), and remitted the matter to the AAT for further determination. The case concerned whether the taxpayer satisfied the maximum net asset value test in Div 152 ITAA 1997, thus entitling it to the benefit of the small business CGT concessions, in relation to the sale by it of its hotel business.
However, whilst allowing the Commissioner's appeal, the Full Federal Court, by majority (Dowsett and Greenwood JJ), upheld the taxpayer's arguments that the commission paid by the taxpayer to its real estate agents, Jones Lang LaSalle Hotels (Qld) Pty Ltd, in providing services and introducing the buyer to the taxpayer as vendor of the hotel business, was a "liability" that existed "just before" the CGT event, namely, the sale of the hotel business. This had the result of reducing the value of the taxpayer's net assets, albeit not below the $5m limit as calculated by the Commissioner.
The matter was therefore remitted to the AAT for further determination as to whether other assets of the husband and wife directors of the taxpayer and certain legal fees could be disregarded for the purposes of satisfying the maximum net asset value test.
FCT v Byrne Hotels Qld Pty Ltd  FCAFC 127 (11 October 2011).