23 Jun 09 Taxpayers' appeals dismissed - 3D ScaffoldingThe Full Federal Court (Emmett, Kenny and McKerracher JJ) has dismissed the appeals of two taxpayers from the decision of Edmonds J, who upheld the findings of the AAT.
The case concerned the Commissioner's denial of deductions claimed by the taxpayer company, a scaffolding company, in respect of lease payments purportedly made by it to the lessor of scaffolding. The AAT found and the taxpayers conceded on appeal that the lessor was fictitious. Further, the AAT upheld assessments by the Commissioner issued to one of the shareholders of the taxpayer company, treating the payments as deemed dividends under Division 7A, on the basis that the fictitious entity to whom the payments were made and the shareholder were one and the same.
In relation to the claim for a deduction by the taxpayer company, the Full Federal Court found no procedural unfairness in the way in which the AAT dealt with the taxpayer company's witnesses. In relation to the Div 7A assessments, the Full Federal Court agreed with Edmonds J that the AAT committed no error of law merely because it mistakenly found that the shareholder was the sole director of the taxpayer company when he was not: 3D Scaffolding Pty Limited v FCT  FCAFC 75 (Full Federal Court; Emmett, Kenny and McKerracher JJ; 22 June 2009).
For a copy of the decision, go here