Radiology Partners Pty Ltd ACN 165 655 883 as Trustee for the Radiology Partners Unit Trust v Commissioner of State Revenue (Qld)

In this case, Wilson J was asked to adjudicate on the proper construction of s 30 of the Duties Act 2001 as it applied to the restructuring of the unitholders of the appellant’s unit trust. Essentially, the question was whether the fifteen dutiable transactions undertaken should be aggregated under s 30. In adjudicating on this point, her Honour engaged with an interesting and important discussion first on the nature of statutory appeals under the Tax Administration Act 2001 to the Supreme Court, and secondly on the proper construction of s 30 of the Duties Act 2001.

Wilson J

9 August 2019

The Trust, of which the (statutory) appellant is trustee, holds dutiable property valued at over $2 million. [4]. It is a unit trust. Prior to 15 May 2015, the Trust had six unit holders, each of whom was either a company or a natural person which held 1,000 units in the Trust as trustee for six family trusts. [4]. On 15 May 2015, the appellant and the six then-unitholders attended a meeting, where it was unanimously voted that all their units be redeemed, effective from 15 May 2015 (“the redemptions”). [5], [7]. It was then resolved that 1,000 units be distributed to each of nine new entities, each of which was trustee for a self-managed superannuation fund (“the acquisitions”). [7]. The ultimate beneficiaries of each of the six original unitholders were the ultimate beneficiaries of six of the nine new unitholders. [8].

On 9 June 2016, the Commissioner issued the appellant with an assessment on the basis that, pursuant to s 30 of the Duties Act 2001, the redemptions were aggregated and treated as a single dutiable transaction [10]. A separate assessment was made, applying s 30 to the acquisitions. [10]. The appellant objected to these assessments, but the Commissioner did not amend her assessments. [11], [15]. The appellant appealed from this decision under s 69 of the Taxation Administration Act 2001 (“TAA”). [1]. The following issues arose before Wilson J: [17]

1. What is the nature of an appeal under s 69?
2. What is the proper construction of s 30, and on what basis should any aggregation occur?

The Nature of the Appeal

On this question, Wilson J – and the parties – ultimately relied on the judgment of Bowskill J in Wakefield v Commissioner of State Revenue [2019] QSC 85. [18]. Several points of note arise: [19]

• the Court “exercises its original jurisdiction to make such judgment as it considers ought to have been given, on the facts and the law, at the time of the hearing”;
• the Court must give the Commissioner the opportunity to reconsider the objection if it is to admit new evidence;
• the scope of the Court’s powers on appeal differs, depending on whether the decision being appealed related to a state of satisfaction being formed by the Commissioner, or cases where the law is applied to objective conclusions of fact. In the latter cases – such as the instant one – the exercise of the Court’s powers is not dependent upon the demonstration of an error by the decision-maker; and
• where the question involves the Commissioner forming a state of satisfaction, the appellant will need to show an error of principle was made by the Commissioner; it is not for the Court to “re-exercise any discretionary power conferred upon the Commissioner”. This differs from review by QCAT, which does involve the Tribunal standing in the shoes of the Commissioner and re-exercising the discretion.

The Proper Construction of Section 30

Wilson J identified a number of guiding principles which shape the Court’s approach to the aggregation of transactions pursuant to s 30: [32]

1. it is a question of law as to whether the transactions satisfy s 30;
2. the factors considered by the respondent will involve a consideration of the conduct of the parties. The transferee(s)’ conduct will, therefore, be of primary significance;
3. in deciding whether the circumstances amount substantially to one arrangement, the respondent is required to “have regard to all relevant factors” and there will be “questions of degree involved”;
4. one must look at the whole facts of the situation, and the enquiry is not limited to the circumstances of the transactions themselves;
5. the substance of the transactions must be examined in order to determine whether they are “in substance” one transaction. Which is to say that the subject transactions need not be one arrangement, they only need to be substantially so; and
6. there must be an “integral and not [merely] fortuitous” relationship between the transactions before they will be viewed as being substantially the same. Looked at in the negative, to avoid aggregation, the transactions must be “separate and independent [and] unconnected with the others”.

On top of these principles, her Honour noted that there must be some unifying feature bringing the dutiable transactions within the section. [36]. In this context, “arrangement” “is a word of wide, but not unlimited meaning”, and refers not merely to contracts but to understandings or plans which may not be enforceable. [38]–[39]. Further, the court must look to the substance, not the form, of the arrangement. [41]. Ultimately, the determination under s 30(1) is a question of fact which takes into account “all relevant circumstances”, including the “objectives, actions or conduct” of the transferees. [42]–[44].

Having regard to these points, and the parties’ submissions, Wilson J noted that although, as “a matter of form, the acquisitions and redemptions may appear as separate transactions”, “the substance of the arrangement … shows there was some essential unity” between the transactions. [107]–[108]. Crucial to this finding were the Minutes of the meeting of 15 May 2015, which “evidence an arrangement between the parties”, with certain desired outcomes. [110]. This arrangement was “to restructure the unit trust” by transferring the units into self-managed superannuation funds for the existing unit holders, and to introduce three new unitholders. [115]. The restructure was effected by a single resolution with a “unity of purpose in the subject transactions”. [116]–[117]. It followed that the redemptions and the acquisitions should each be treated as substantially one arrangement under s 30. [118].

In the event, the statutory appeal was dismissed. [119].

M Paterson