The AAT has set aside the Commissioner's decision in relation to the taxpayer's 2007 income year and remitted the matter to the Commissioner for adjustment but has confirmed the Commissioner's decision in relation to the taxpayer's 2008 income year.
The taxpayer was a company incorporated in Vanuatu. During the years in question, it traded in the shares of a company called EnviroGold Limited. It bought and sold shares in both "on market" and "off market" transactions.
In relation to the 2007 income year, the taxpayer was able to demonstrate that the Commissioner had overstated the assessable profits from the share trading activities by understating the cost of the shares sold in "off market" transactions. In relation to the 2008 income year, although the same understatement of cost occurred, this was more than offset by other errors which resulted in the taxpayer being assessed on additional assessable income.
The taxpayer's argument that none of the profits from the share trading activities had an Australian source was rejected.
Picton Finance Limited and FCT  AATA 116 (AAT, Taylor SC SM, 5 March 2013).