Court rules settlement | Two men jailed | IGTO report

Court rules settlement payment an ETPThe Federal Court has affirmed a decision of the AAT that a settlement payment of $505,000 received by taxpayer in “settlement of claims for breach of employment agreement and misleading or deceptive conduct” was an ETP in his hands. The taxpayer argued that the payment was of a non-assessable capital amount as it was “compensation for the destruction of his earning capacity and for loss of earnings” and that it fell within the exception from ETP in s 82-135(i) of the ITAA 1997 as a “capital payment for, or in respect of, personal injury”. However, the Court found that the taxpayer had not shown that the payment was “for, or in respect, of personal injury”. Rather, it determined that the payment was made for release of claims for economic loss in relation to a breach of an employment agreement and that it was, therefore, made “in consequence of” the termination of his employment. (Stark v FCT [2023] FCA 1523, 19 December 2023)
Two men jailed for gold bullion and GST fraudThe ATO has advised that the Supreme Court of NSW has convicted and sentenced 2 men to jail for conspiring to cause a loss of approximately $40m to the Commonwealth in relation to a gold bullion fraud over a 2-year period. The fraud involved claiming GST input tax credits in business activity statements by falsely stating that the GST-free gold bullion was purchased inclusive of GST under the GST second-hand dealers’ rules. The men were convicted of 2 offences of conspiring to dishonestly cause a loss to the Commonwealth contrary to s135.4(3) of the Criminal Code Act 1995 (Cth) and each sentenced to 8 years imprisonment with a non-parole period of 4 years and 6 months for their role.

IGTO report identifies ways to improve administration of remedial powersThe Inspector-General of Taxation and Taxation Ombudsman has released her report and recommendations following her office’s investigation into The Administration of the Commissioner’s Remedial Power. The report examines this power and discretion (which gives the Commissioner the ability to temporarily modify tax laws where it produces results which are unintended or unforeseen until a more permanent, legislative resolution can be implemented). The report identifies 9 ways to improve administration of this power.

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