Court Decisions
Managed investment schemes
19.12.2008
The Full Federal Court (Finn, Dowsett and Edmonds JJ) has unanimously allowed appeals against a private ruling issued by the Commissioner in which he ruled that a taxpayer who participated in a managed investment scheme, which was being set up to produce almonds, would not be carrying on a business and would not be entitled to claim certain deductions as general deductions (Hance v FCT [2008] FCAFC 196).
This case is the managed investment scheme test case which the ATO has funded. On the same day as the Full Federal Court’s judgment was handed down, the Commissioner issued a media release in which he made the following points:
· the arrangements considered did not involve features like non-recourse or round robin funding that were present in mass marketed schemes that were disallowed by the courts in several cases;
· in light of the Full Federal Court’s decision, the ATO will withdraw its current income tax ruling (TR 2007/8) and draft GST ruling (GSTR 2008/D1) on managed investment schemes;
· a new income tax ruling is to be released in 2009 and a decision impact statement is expected to issue shortly; and
· the ATO will not be seeking special leave to appeal to the High Court from the Full Federal Court’s decision.
