Nexus: Brown v C of T (2002) 49 ATR 301; 2002 ATC 4283

Caselaw in taxation: Brown v C of T (2002)

  • The case:
    • Monacorp wanted to sale its land
    • The taxpayer introduced the principal (“R”) of Monacorp to the principal of NN, a potential buyer of the land
      • Other assistances provided by the taxpayer:
        1. to Monacorp: assisted R to overcome NN’s dissatisfaction towards the land
        2. to NN: lent his name to NN’s application to Foreign Investment Review Board (FIRB) as one of the requirements to acquire the land
    • Monacorp gave the taxpayer $1 million in form of a townhouse built by RDC, an associate of Monacorp
    • The taxpayer failed to refer to the benefit in his tax return
      • The Commission issued an amended assessment to the taxpayer which included the value of the benefits as income and a penalty component
      • The taxpayer objected to the amended assessment, but the objection was disallowed.
  • The decisions:
    1. The taxpayer appealed to the Federal Court, but the appeal was dismissed.
    2. The taxpayer appealed to the Full Federal Court, but the appeal was dismissed:
      1. The taxpayer was rewarded for services he rendered to R and the company which he represented.
      2. The provision of the benefits was related directly to the introduction of NN to Monacorp and as a reward for so doing.
      3. The benefits were dependent on the transaction with NN proceeding. Therefore, the inference could be made that the taxpayer’s intervention in the FIRB application to assist in the completion of the contract also played a part in the provision of the benefits to him.

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