Decision impact statement
Commissioner of Taxation v McNeil
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Court citation:
[2007] HCA 5
2007 ATC 4223
64 ATR 431
(2007) 233 ALR 1
(2007) 229 CLR 656
Venue: High Court
Venue Reference No: S56/2006
Judge Name: Gummow ACJ, Hayne, Callinan, Heydon and Crennan JJ
Judgment date: 22 February 2007
Appeals on foot:
No
Impacted Advice
Relevant Rulings/Determinations:
Subject References:
Income tax
Derivation of income
Respondent acquired shares which were later the subject of a buy-back arrangement that gave the respondent "sell-back rights"
 This document is not a public ruling, but provides a statement of the Commissioner's position in relation to the decision and how the law will be administered as a consequence of the decision. Any proposals for changes in the law are matters for government and it is not appropriate for the Commissioner to comment. |
Précis
Outlines the Tax Office's interim response to this case which concerned the assessability of the value of sell back rights provided to a shareholder of St George Bank Limited
Brief summary of facts
In February 2001, St George Bank granted rights to its shareholders which permitted them to sell back some of their shares at a price slightly above their market value.
The Tax Office issued a class ruling stating that those shareholders who received sell back rights would be liable to pay income tax.
St George funded litigation on behalf of shareholders to challenge the class ruling. The costs of the appeals to the High Court were borne by the Commissioner.
Issues decided by the court or tribunal
The High Court on 22 February 2007 allowed the Commissioner's appeal from the Full Federal Court that share sell back rights granted to St. George Bank shareholders in 2001 are considered income and therefore assessable.
Tax Office view of Decision
The High Court's decision provides certainty on the tax treatment of sell back rights for the affected taxpayers.
The Class Ruling CR 2001/75 regarding 2001 sell back rights for St George Bank Limited shareholders is available from the legal database at www.ato.gov.au
Administrative Treatment
The Tax Office will work with St George Bank to contact affected shareholders and provide advice on the decision and what it means for them.
There are a small number of people who objected to inclusion of this amount in their return. Their objections have been on hold pending the Court's decision. They will now be finalised. These taxpayers do not need to take any action; we will write to them.
The Tax Office will now do all we can to assist affected taxpayers finalise their tax affairs.
Implications on current Public Rulings & Determinations
Under consideration.
Implications on Law Administration Practice Statements
Under consideration
Legislative References:
Corporations Law
Ch 2J
257A
257B
257C
257D
257E
257F
257G
257H
257J
Income Tax Assessment Act 1936 (Cth)
Pt III, Div 2, subdiv D
Income Tax Assessment Act 1997 (Cth)
6-5
Case References:
Commissioner of Taxation (NSW) v Stevenson
(1937) 59 CLR 80
Thornett v Federal Commissioner of Taxation
(1938) 59 CLR 787
Federal Commissioner of Taxation v Blakely
(1951) 82 CLR 388
Federal Commissioner of Taxation v Uther
(1965) 112 CLR 630
Federal Commissioner of Taxation v Slater Holdings Ltd
(1984) 156 CLR 447
84 ATC 4883
15 ATR 1299
Ord Forrest Pty Ltd v Federal Commissioner of Taxation
(1974) 130 CLR 124
74 ATC 4034
4 ATR 230
Federal Commissioner of Taxation v Miranda
(1976) 11 ALR 85
(1976) 76 ATC 4180
(1976) 6 ATR 367
Inland Revenue Commissioners v Blott
[1921] 2 AC 171
Federal Commissioner of Taxation v Dixon
(1952) 86 CLR 540
Reseck v Federal Commissioner of Taxation
(1975) 133 CLR 45
75 ATC 4213
5 ATR 538
| Date: | Version: | |
| You are here | 22 February 2007 | Identified |
| 4 December 2008 | Response | |
| 10 January 2011 | Resolved |