Ipsofactoj.com: International Cases [2002] Part 7 Case 6 (NZCA)


COURT OF APPEAL, NEW ZEALAND

Coram

Mainzeal Holdings Ltd

- vs -

Commissioner of Inland Revenue

ELIAS CJ

KEITH J

BLANCHARD J

22 NOVEMBER 2001


Judgment

Blanchard J

(delivered the judgment of the court)

INTRODUCTION

  1. This appeal involves the deductibility for income tax purposes of certain payments made by a New Zealand parent company, the taxpayer Mainzeal Holdings Limited (Mainzeal NZ), to its Australian subsidiary, Mainzeal Corporation Pty Ltd (Mainzeal Aust), in connection with two property development projects in Brisbane. The contested assessments relate to the taxpayer’s June 1986 and June 1987 income years. The focal point is an agreement entered into between the two Mainzeal companies on 11 July 1986.

    FACTS

  2. Mainzeal NZ carried on the business of construction and property development in New Zealand. Its subsidiary was similarly engaged in Queensland.

  3. At the relevant time Mainzeal Aust owned two pieces of land. In September 1984 it had purchased a site at Strathpine, near Brisbane, on which it began construction in January 1985 of a "homemakers centre" and commercial offices. For the purpose of obtaining finance it commissioned a market valuation of the completed property from Jones Lang Wootton. On the basis of estimated net annual rentals of $555,070 per annum capitalised at 10%, the valuation of the completed building was estimated at $5,500,000. (Unless stated, all financial figures in this judgment are in Australian dollars.) The valuer noted that the developer contemplated providing a rental guarantee to a purchaser for a 12 month period after practical completion.

  4. Practical completion of Strathpine was achieved in August 1985 but it was not fully tenanted and had not been sold. The accounts of Mainzeal Aust for the year to June 1987 (we do not have those for the 1986 year) show that the cost of the project, including land acquisition, had been $4,039,558.

  5. The position as at July 1986 was that approximately 40% of the space in the building was vacant. There had been difficulty in leasing the upstairs commercial area in particular. The judgment below records that the property market had begun to decline about the beginning of 1986. There was evidence from the taxpayer’s witness, its finance manager and company secretary, Mr Lobb, that by April 1986 the market valuation of Strathpine had dropped considerably. He commented that "the property market was collapsing at this time".

  6. Mr Shaw, the general manager and a director of Mainzeal Aust, said in his evidence:

    The fundamental fact is that on completion of Strathpine while we had certain tenants in place which were sound tenants the market started to turn and I could see that a recession was around the corner which subsequently occurred and the market conditions changed very rapidly just after completion.

    He also commented that there was "no market for sale unless the property was totally leased taking into account the state of the market at the time". Leasing efforts had been going on for 15 months by April 1986.

  7. Mr Shaw confirmed that the highest offer received by the end of 1986 was $3.6m. In February 1987 an offer from Jacaranda Ltd was received. It was prepared to pay $4.2m but only on condition of a vendor guarantee of $567,000 annual rental income for two years. Part of the price was to be paid by way of a share issue in the purchaser company. It is to be noted that the offered price reflected a rental capitalisation rate considerably in excess of 10%, reflecting lesser demand and/or greater perception of risk. Eventually in June 1987 Strathpine was sold for $3.1m.

  8. The second property held by Mainzeal Aust in July 1986 was bare land at Gregory Terrace, Fortitude Valley, Central Brisbane. It is not clear from the materials before the Court when this property had been acquired but it seems that it was not long before April 1986. The acquisition price was recorded in a document prepared by Mr Shaw and dated 17 April 1986 as $1m. It seems however that the actual price may have been less than this. The accounts show a figure of $936,464. The document of 17 April contains projections for a development (including holding costs on $1m at 17% over eight months) and predicts a net profit on the development of just over $1.1m.

  9. In May 1986 Mainzeal Aust turned down a proposal from an English company, Brixton, for a 50/50 joint venture. Mr Shaw described joint venture (of Gregory Terrace) in a memorandum to Mainzeal NZ as "the last resort".

  10. No development ever occurred. Gregory Terrace was sold for $1.2m in September 1987, by which time it must have been held for at least 17 months.

  11. Mainzeal Aust had a credit facility with Lloyds International Ltd of $4.5m secured over the properties and guaranteed by Mainzeal NZ. Mainzeal Aust had drawn down $4,190,000 on which it was paying interest only. In a memorandum to Mr Menzies, the chief executive officer of Mainzeal NZ, in April 1986 Mr Shaw mentioned that the interest bill was very high and that, unless Strathpine was sold or Gregory Terrace pre-sold, Mainzeal Aust had "no alternative but to look to Head Office to meet our interest commitments on current borrowings" as it did not wish to resort to additional borrowing at the moment "assuming Lloyds agreed to allow us to go to the approved commitment of $M4.5 ($310,000)".

  12. Mr Shaw added that by Head Office meeting the interest bill a taxation advantage could be achieved "at your end".

  13. Early in June 1986 Mr Shaw resigned as a full-time employee of Mainzeal Aust. He transferred his 10% shareholding in that company, which had arisen as part of his employment remuneration package, to Mainzeal NZ without consideration. That appears to indicate a nil value for the Australian company.

  14. On 11 July 1986 the two companies executed a deed of agreement in the following form:

    WHEREAS:

    A.

    [Mainzeal Aust] carries on business in the State of Queensland as a property developer.

    B.

    [Mainzeal Aust] owns the properties described in the First Schedule hereto, and has incurred expenditure on developing or in respect of proposed development of the properties. The properties in the First Schedule are hereinafter referred to as ‘the properties’.

    C.

    [Mainzeal Aust] is experiencing liquidity problems and is having difficulty in leasing and/or selling one of the properties, known as the Strathpine Homemakers Centre, and accordingly in proceeding with any other property development.

    D.

    [Mainzeal NZ] is a Guarantor of loans from Lloyds Bank NZA Ltd amounting to the sum of Four Million One Hundred and Ninety Thousand Dollars ($4,190,000.00) approximately, as at the date hereof.

    E.

    [Mainzeal Aust] has requested [Mainzeal NZ] provide assistance in funding interest and other continuing commitments in respect of the existing loans and the operations of [Mainzeal Aust].

    F.

    [Mainzeal NZ] is concerned with its position as Guarantor and the parties have agreed to enter into a joint venture arrangement to ensure security of the assets of [Mainzeal Aust] and security of the position of [Mainzeal NZ].

    NOW THIS AGREEMENT WITNESSES as follows:

    1.

    In consideration of the premises and of [Mainzeal NZ] paying to [Mainzeal Aust] the amounts mentioned herein and of [Mainzeal Aust] agreeing to enter into this Agreement, the parties agree as follows:

    (a)

    [Mainzeal Aust] shall pay and continue to pay all expenses of any kind in respect of its business operations and all holding financing and other costs (including but not limited to interest and financiers’ charges) in respect of all the properties, and the premises from which it conducts its business. Such expenses shall also include investigations and research for all proposed acquisitions purchases or projects whether completed commenced or proposed including but without limitation the properties.

    (b)

    [Mainzeal Aust] shall collect all rents in respect of the properties and in particular arising out of its ownership of the Strathpine Homemakers Centre.

    (c)

    [Mainzeal NZ] shall from time to time (but no less frequently than annually) pay to [Mainzeal Aust] a fee in partial reimbursement to [Mainzeal Aust] for its continuation in business, such fee to be calculated as follows:

    (i)

    the total amount of all overhead expenses incurred by [Mainzeal Aust] in respect of its business operations as aforesaid, from the First day of July, 1985 until the operations of [Mainzeal Aust] cease, plus financing, holding and other non-capital costs in respect of the properties, or all other properties or projects being investigated or considered, less any interest received on monies invested by [Mainzeal Aust], and less one half of any rental received by [Mainzeal Aust] from any of the properties. In the event of any dispute as to the sum or sums to be taken into account, or the fee to be paid, then such dispute may be referred by either party to the Accountants for [Mainzeal Aust], Messrs. Graham Edmonds & Co., of 380 Upper Roma Street, Brisbane whose opinion in that respect shall be binding upon the parties.

    (ii)

    [Mainzeal NZ] shall on the date hereof pay to [Mainzeal Aust] in part payment of the fee referred to in the preceding paragraph an initial fee that shall be equal to all overhead expenditure, financing, holding and other non capital costs actually incurred or paid by [Mainzeal Aust] from the First day of July, 1985, to the date hereof less any interest received on monies invested, and less one half of rent received from any of the properties. Such initial fee shall be in part payment of the fee payable by [Mainzeal NZ] to [Mainzeal Aust]. Should the parties not agree as to the initial fee then such dispute shall be referred to the Accountants for [Mainzeal Aust], Messrs Graham Edmonds & Co., of 380 Upper Roma Street, Brisbane aforesaid whose opinion in respect thereon shall be binding upon the parties.

    (d)

    ....

    (e)

    In consideration of [Mainzeal NZ] paying the initial fee and its agreement to pay the fee herein, the nett profit derived from the sale of the properties shall be apportioned, and paid, in the order of and upon the following bases:

    (i)

    Firstly, to [Mainzeal NZ], the initial fee and any further fee (whether in part or full payment of the fee payable by [Mainzeal NZ] to [Mainzeal Aust], in accordance with subclauses 1(c)(i) and 1(c)(ii) hereof, up to and including the date of sale of the last of the properties.

    (ii)

    Secondly, as to any amount remaining of the said nett profit, one half to [Mainzeal NZ], and one half to [Mainzeal Aust].

    The parties agree that the nett profit shall be determined in accordance with the usual accounting arrangements recommended by [Mainzeal NZ] and used by [Mainzeal Aust], and in the event of any dispute as to the amount of nett profit, the dispute may be referred by either party to Messrs. Graham Edmonds & Co. of 380 Upper Roma Street, Brisbane, whose opinion shall be binding upon the parties.

    (f)

    The parties agree that the law of New Zealand shall govern the interpretation of the terms of this Agreement and the parties hereby submit themselves to the jurisdiction of the Courts and/or laws of New Zealand accordingly.

  15. Pursuant to that agreement Mainzeal NZ made payments to Mainzeal Aust of $820,604 for the 1986 income year and $1,562,000 for the 1987 year, a total of $2,382,604. The total in NZ dollars is agreed as being $2,947,608 and the tax in dispute concerning the deductibility of those payments in New Zealand is NZ$1,384,149. The question for the High Court on a Case Stated by the Commissioner was whether the Commissioner had acted incorrectly in disallowing Mainzeal NZ’s objection relating to the Strathpine/Gregory "Expenses"

    STATUTORY PROVISIONS

  16. The relevant provisions of the Income Tax Act 1976 are:

    104

    Expenditure or loss incurred in production of assessable income- 

    In calculating the assessable income of any taxpayer, any expenditure or loss to the extent to which it—

    (a)

    Is incurred in gaining or producing the assessable income for any income year; or

    (b)

    Is necessarily incurred in carrying on a business for the purpose of gaining or producing the assessable income for any income year—

    may, except as otherwise provided in this Act, be deducted from the total income derived by the taxpayer in the income year in which the expenditure or loss is incurred.

    106

    Certain deductions not permitted

    (1)

    Notwithstanding anything in section 104 of this Act, in calculating the assessable income derived by any person from any source, no deduction shall, except as expressly provided in this Act, be made in respect of any of the following sums or matters:

    (a)

    Investment, expenditure, loss, or withdrawal of capital; money used or intended to be used as capital; money used in the improvement of premises occupied; interest which might have been made on any such capital or money if laid out at interest.

    THE JUDGMENTS OF THE HIGH COURT

  17. In the High Court, counsel for the taxpayer submitted that the payments were deductible as expenditure incurred in carrying on a business of property development. The Commissioner’s case was that the payments were capital investments or loans to rescue a subsidiary in its hour of need and were therefore not deductible.

  18. Nicholson J considered that the answer to the question of deductibility of the payments was to be ascertained "from the true nature of the payments transaction and that the business and legal relationship between the parties is not decisive of this". He said that the basic question was whether the payments were fees, as described in the agreement dated 11 July 1986, or were investment of capital or loans. He inferred from the facts that the reason for the payments was to sustain Mainzeal Aust’s liquidity. He found the evidence of Mr Lobb and Mr Menzies about the reasons for and the nature of the payments – contributions under a joint venture aimed at obtaining profits from the two properties – "unclear and unconvincing". They were not supported by contemporary documents and were inconsistent with Mr Shaw’s report to Head Office and the preamble to the agreement.

  19. The Judge referred to the opinion evidence of Mr A N Frankham, an accounting expert called by the Commissioner, that the payments were not fees for a service and did not have the characteristics of an expense. Mr Frankham had also said that they had the characteristics of an investment of capital or of a non-recourse loan, except that there were no interest provisions.

  20. Nicholson J concluded that the true nature of the transaction was an injection of capital by a holding company into a subsidiary to enable it to pay its debts and thereby maintain liquidity. The Judge preferred the view that it was an investment of capital, rather than a loan (because of uncertainty about the intention regarding repayment). Whichever of the two it was, he said, it was not payment of a fee and was not expenditure qualifying for deduction from income under s104. He answered the question in the Case Stated in the negative.

    SUBMISSIONS

  21. For the appellant taxpayer, Mrs Howe submitted that the operative provisions of the agreement clearly recorded the terms of an arrangement whereby the two companies would develop Strathpine jointly and share the profits in agreed proportions. This was said to be consistent with the evidence of witnesses for the taxpayer. The existence of a relationship of parent and subsidiary did not give rise to any presumption that contractual arrangements could be disregarded. The Commissioner had not claimed that the document was a sham nor invoked s99. The taxpayer was a property developer. Its property transactions were on revenue account. There was a nexus between that business and the payments in question. What was crucial therefore was the ascertainment of the legal rights and duties which the agreement created. Nomenclature ("fees") was not decisive. The fees were for participation in a profit making venture.

  22. Counsel said that there were various ways in which funds could have been provided to the subsidiary. The parties had been entitled to structure their arrangement by means of a joint venture. There was the necessary intention, at the point when the agreement had been entered into, to derive profit. Mr Shaw had referred in his evidence to ongoing efforts to lease Strathpine which, if achieved, would have enabled it to be sold. Gregory Terrace could then have been developed at a profit. The agreement also contemplated other projects. The payments were not made, therefore, in an attempt to bail out Mainzeal Aust. Its cash position was admittedly tight but it had capacity to draw on the Lloyds facility. The parent company was not concerned about the guarantee. No call had been made on it. The joint venture arrangements were also said to bear no resemblance to a loan.

  23. Counsel for the Commissioner, Mr Eichelbaum, said that the evidence clearly demonstrated that in July 1986 when the agreement was signed Mainzeal NZ could not have believed that it could possibly make a profit out of the venture. It had not shown that it had any intention other than propping up its subsidiary. He drew attention to admissions from the appellant’s witnesses, Mr Shaw and Mr Lobb, about the deteriorating state of the property market, the difficulty in obtaining tenants, without which Strathpine could not be sold to any advantage, and the statements in the preamble to the agreement about liquidity problems and concerns about the parent’s guarantee. The burden, it was submitted, was on Mainzeal NZ to show that it had a profit making intention and it had not done so. While the Judge had addressed this question only "by implication", it was clear from his conclusions that he was of this view. He had disbelieved the appellant’s witnesses when they claimed otherwise. On matters of credibility this Court ought not, counsel said, to take a different view.

    DISCUSSION

  24. In BP Australia Ltd v Commissioner of Taxation of the Commonwealth of Australia [1966] AC 224, 264, Lord Pearce adopted Dixon J’s statement in Hallstroms Pty Ltd v Federal Commissioner of Taxation (1946) 72 CLR 634, 648 that the determination whether expenditure is capital or income in nature "depends upon what the expenditure is calculated to effect from a practical and business point of view". The legal arrangements actually entered into and carried out are central to the inquiry. As Richardson J said in Marac Life Assurance Ltd v Commissioner of Inland Revenue [1986] 1 NZLR 694, 706, "what is crucial is the ascertainment of the legal rights and duties which are actually created by the transaction into which the parties entered". The appellant’s case is, however, that, in terms of s104(b), the payments it made to its subsidiaries were necessarily incurred in carrying on a business – i.e. for pecuniary profit (s2) – for the purpose of gaining or producing its accessible income for any income year. It is therefore not enough for the appellant to point to its existing business as a property developer and to statements in the document about the proposed division of profits if the surrounding circumstances at the time of signature of the agreement are not consistent with any expectation of profit from the venture. It can be accepted that the taxpayer had under the agreement a legal entitlement to any profits which might be earned. But it must show that it actually had an intention or purpose of profit making from the joint venture when it entered into the agreement. Unless that was the position, the payments cannot be regarded as necessarily incurred as part of its business as a property developer.

  25. A taxpayer claiming a deduction under s104 (b) does not have to show that, realistically, there was a reasonable prospect of profit. The existence of a genuine intention, however ill-founded, to carry on business for profit is enough. But a claimed intention may be viewed with some scepticism if, on an objective examination of the realities at the time it appears that, even in the longer term, a profitable outcome was impossible or highly unlikely. Lack of a reasonable prospect of profit may indicate that, no matter what legal entitlement to a profit may have existed, the taxpayer did not make the expenditure with that intention (Grieve v Commissioner of Inland Revenue [1984] 1 NZLR 101).

  26. In this case the Judge did not directly deal with whether the taxpayer had a profit making intention when entering into the agreement with its subsidiary and making the payments pursuant to it, but we are inclined to agree with Mr Eichelbaum that a reading of the whole of his judgment leads to the view that he did not think so. He referred to certain evidence of Mr Lobb which included a statement that it had been suggested by Mr Menzies that, as Strathpine looked like a good project, it would be better to joint venture with the parent company rather than with an outsider; and that they had not viewed Mainzeal NZ’s payments as propping up Mainzeal Aust. He also referred to the evidence of Mr Menzies that payments made under the joint venture agreement were a business arrangement aimed at obtaining a profit from the sale of Strathpine and seeking further profits from Mainzeal Aust’s proposed investment in Gregory Terrace. The Judge then stated that he found the evidence of these witnesses "about the reasons for and the nature of the relevant payments" unclear and unconvincing.

  27. Nevertheless, because the Judge dealt with what we regard as the crucial point only obliquely, we have thought it preferable to consider all of the evidence de novo (but taking into account the Judge’s view of the witnesses just mentioned, particularly Mr Lobb who was cross-examined at some length) in order to determine this question.

  28. It is of course for the appellant taxpayer to establish its entitlement to deduct the payments made to its subsidiary pursuant to the joint venture agreement relying on s104(b). The scheme of the joint venture was that as from 1 July 1985 (just prior to practical completion of Strathpine and about a year prior to the making of the agreement) the parent company would reimburse all overhead expenses of the subsidiary and all financing, holding and non-capital costs in respect of the two properties (and all other properties or projects). Reimbursement was not therefore required in respect of moneys expended by Mainzeal Aust on acquisition costs of properties or on building works at Strathpine. Reimbursement was not required to the extent of interest received by the subsidiary or of half the rents received. The payments were to be made annually, with an immediate payment for the period from 1 July 1985 to the date of the agreement. The sum paid and claimed for the period to 30 June 1985 was $820,604. Subsequent payments, as claimed, amounted to $1,562,000.

  29. Although the agreement mentioned other properties or projects, it was Mr Lobb’s evidence that in fact Mainzeal Aust’s business was being wound down:

    The climate was changing dramatically and we were getting out of the business. We start [Mainzeal Aust] opportunities and naturally they wound down. Unless you put new projects into this sort of company they die and that is when Trevor [Shaw] left us. We were winding it back.

    Mr Shaw resigned on 1 June 1986 and transferred his shares to a nominee of Mainzeal NZ at nil value on 16 June, just under a month before the joint venture agreement was signed. He plainly was not envisaging that the two projects for which he had had responsibility would be profitable for Mainzeal Aust.

  30. It is to be remembered also that Mr Lobb, the financial manager and company secretary of Mainzeal NZ, told the Court that "the property market was collapsing" and that Mainzeal in New Zealand had made a decision to get out of property investment and were winding back the Australian investments for the same reason. That is an unpromising platform for a new joint venture supposedly bent on profit.

  31. Although the taxpayer bore the burden of proof, it did not put before the Court evidence about how a profit would be properly calculated under the joint venture agreement, nor did it produce positive evidence concerning the values and prospects for the two properties as at July 1986. There had originally been an expectation that Strathpine would command a sale price, fully let, of $5,500,000, but that was when work was only just about to commence and the property market was apparently quite buoyant. Mr Shaw’s evidence was that Strathpine really could not be sold unless it was fully tenanted. It was only 60% let and Mainzeal Aust had been trying to find tenants, by July 1986, for about 18 months without success. The best offer received during 1986 was $3.6m. Early in 1987 an interested party was prepared to offer $4.2m but only on the basis that for two years the vendor would guarantee rentals at the same level as had been projected in the 1985 valuation. Eventually Strathpine was sold in June 1987 for $3.1m.

  32. The prospects for Strathpine in July 1986, it must be concluded, were not bright. There were very real difficulties finding tenants and existing tenants were complaining, as is shown by the graphic account given of the position one tenant had found himself in when he wrote to Mainzeal Aust less than a month after the joint venture agreement was signed. He spoke of the centre as a "white elephant" with the carpark "continually empty" except for cars belonging to staff. He said they would be "lucky to see six people in the entire centre in any one day". Even allowing for possible exaggeration by a tenant seeking a rent moratorium, the picture is an unhappy one for a developer looking to lease and sell.

  33. What Mainzeal Aust faced in July 1986 at Strathpine, it would appear, was a lengthy wait while tenants were found, presumably at discounted rents, or a buyer was found at a price much lower than had originally been anticipated. The fact that no offer was received during 1986 at a figure above $3.6m rather speaks for itself.

  34. So far as the Gregory Terrace property is concerned, there had as recently as April 1986 been a projection by Mr Shaw of a development profit of about $1.1m but that was dependant upon finding tenants before proceeding with the development. The April 1986 projection had allowed for a construction period of eight months, but if tenants had to be found beforehand so that the project could be pre-sold, it is reasonable to suppose that the prospects in July 1986 must have been that realisation would not occur for a rather longer period than that. It was not suggested in any of the material before the Court that settlement of a sale of the property as developed was likely to occur before practical completion. Predictions of profit for a future development of this kind in a market said to be collapsing would surely have been treated warily by the parent company. Eventually the land at Gregory Terrace was sold undeveloped for $1.2m in September 1987.

  35. Mainzeal NZ’s chance of getting back the moneys which it paid to its subsidiary pursuant to the joint venture agreement, let alone with a profit on top, depended upon the subsidiary’s ability to realise the two properties and repay the $4,190,000 mortgage debt to Lloyds. Only after that was paid, would any moneys be available to the parent. It must have seemed that, at the very best, realisations would not occur until the middle of 1987. And if Gregory Terrace were actually to be developed, that cost had to be funded by the subsidiary or the joint venture. It would seem that the least that Mainzeal NZ must have anticipated in July 1986 having to put in pursuant to the joint venture agreement was approximately the amount which was actually paid to the subsidiary, namely $2,382,000. The comparison with prospective recoveries (using round figures) is stark:

    Realisation of Strathpine

    $4.2m

    Projected profit on Gregory Terrace

    $1.1m

    $5.3m

    Less Mortgage to Lloyds

    $4.2m

    Balance

    $1.1m

    Thus only $1.1m would be recovered out of the $2.4m which would have to be contributed by the parent. It can be seen that, even if $5.5m could have been obtained for Strathpine, as originally projected – and no one has suggested that that remained a possibility – only a break-even point could have been achieved.

  36. It will be observed that these calculations have been done on the basis of cash flow rather than actual profitability of the joint venture and of the subsidiary (since calculations were not provided by the appellant). But, since the properties were really the only assets of Mainzeal Aust, anyone advising on the viability of the joint venture would surely have looked first to the cash which might eventually be extracted.

  37. We have concluded that plainly there was no prospect of profit for the joint venture in July 1986 or at any time thereafter and that Mainzeal NZ has not established that it genuinely had a profit making intention or purpose when the venture was entered into. This is not to deny that the arrangement was genuine, in the sense of creating for the taxpayer a legal right to share in any profit. What we are saying, rather, is that the intent actually to derive such profit was lacking. The expenditures were thus not deductible under s104(b).

  38. It was not put to the Court that there was any entitlement to a deduction under s104(a) but we should record our view that, even if the payments could have been shown to fall within that paragraph, they would have to be regarded as non-deductible in terms of s106 as an expenditure of a capital nature. As this Court said in Levin and Co Ltd v Commissioner of Inland Revenue [1963] NZLR 801, the questions whether a payment was incurred in gaining or producing assessable income for any income year and whether that payment is of a capital nature tend to be determined by the character of the payment. We agree with Nicholson J that what was occurring was the maintenance of the liquidity of a subsidiary, not the gaining of income.

    RESULT

  39. The appeal is accordingly dismissed with costs to the Commissioner of $5,000 together with his reasonable disbursements which are to be fixed if necessary by the Registrar.


Cases

BP Australia Ltd v Commissioner of Taxation of the Commonwealth of Australia [1966] AC 224; Hallstroms Pty Ltd v Federal Commissioner of Taxation (1946) 72 CLR 634; Marac Life Assurance Ltd v Commissioner of Inland Revenue [1986] 1 NZLR 694; Grieve v Commissioner of Inland Revenue [1984] 1 NZLR 101; Levin and Co Ltd v Commissioner of Inland Revenue [1963] NZLR 801

Legislations

Income Tax Act 1976: s.104, s.106

Representations

B A Howe and A N Ryan for Appellant (instructed by Chapman Tripp Sheffield Young, Wellington)
J R Eichelbaum and Z Wisniewski for Respondent (instructed by Crown Law Office, Wellington)


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