Russell v Commissioner of Taxation (includes Corrigendum dated 7 February 2011)

(2011) 190 FCR 449; [2011] FCAFC 10

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Interrogate

Catchwords

1. Taxation
2. › Income tax
3. › International tax agreements
4. › Double taxation
5. › NZ Agreement Article 7(1)
6. › Meaning of 'profits of an enterprise'
7. › Whether personal services income regime taxes profits of a New Zealand enterprise
8. › International Tax Agreements Act 1953 (Cth), s 3(2), s 4, s 6B(1A)
9. › Income Tax Assessment Act 1997 (Cth), Pt 2-42, s 86-30
1. Taxation
2. › Income tax
3. › International tax agreements
4. › Interpretation of international conventions incorporated into Australian law
5. › Whether OECD commentaries may override statutory text
6. › Primacy of Australian statutory interpretation principles
7. › International Tax Agreements Act 1953 (Cth)
1. Taxation
2. › Goods and services tax
3. › Creditable acquisitions
4. › Meaning of 'creditable purpose'
5. › Carrying on an enterprise
6. › Whether works done in course of commencement of enterprise
7. › Whether construction of swimming pool for naturist retreat was precursor to or part of commencement of enterprise
8. › A New Tax System (Goods and Services Tax) Act 1999 (Cth), ss 11-5, 11-15, 9-20, 195-1
1. Taxation
2. › Goods and services tax
3. › Creditable acquisitions
4. › Private or domestic nature
5. › Essential character test
6. › Whether acquisitions for naturist retreat were of private or domestic nature
7. › A New Tax System (Goods and Services Tax) Act 1999 (Cth), s 11-15(2)(b)

Quick Take

Personal services income attributed to an Australian resident under Pt 2-42 of the Income Tax Assessment Act 1997 is not part of the 'profits' of a New Zealand company's enterprise for the purposes of Article 7(1) of the NZ Agreement, because s 3(2) of the Tax Agreements Act requires 'profits' to be read as 'taxable income' and s 86-30 excludes personal services income from the company's assessable income. For GST purposes, works done pursuant to a genuine business plan with the intention of commencing an enterprise may constitute acts done 'in the course of the commencement' of the enterprise, entitling the taxpayer to input tax credits, even where the works are also consistent with private use. The taxpayer's purpose and intention at the time of acquisition is the determinative question.