Bluebottle UK Limited v Deputy Commissioner of Taxation

Taxes and duties – Income tax and related legislation – Collection and recovery of tax – Collection of tax due and payable by a non-resident from a third party – Two non-resident shareholders in Virgin Blue Holdings Limited ("Virgin Blue") allegedly derived income or profits or gains of a capital nature from a source in Australia – Directors of Virgin Blue declared a dividend due for payment on 15 December 2005 to those who were shareholders on a specified record date of 28 November 2005 – After the record date but before the date for payment of the dividend, the Deputy Commissioner of Taxation ("the Commissioner") issued notices to Virgin Blue pursuant to s 255 of the Income Tax Assessment Act 1936 (Cth) ("the Act") purporting to require Virgin Blue to retain an amount from the dividend owed to each shareholder to meet the shareholder's tax liability – The following day, which was before the date for payment of the dividend, the shareholders agreed to assign their rights to the dividend to a third party and informed Virgin Blue of that agreement – The following day, which was still before the date for payment of the dividend, the Commissioner issued tax assessment notices to the shareholders and further notices to Virgin Blue pursuant to s 255 of the Act – Whether Virgin Blue was required to retain the dividend to pay the shareholders' tax liability.

Taxes and duties – Income tax and related legislation – Whether s 255 of the Act required the Commissioner to assess a non-resident's tax liability before the Commissioner could require a third party to pay the tax due and payable by that non-resident – Relevance of relationship between s 218 and s 255 of the Act.

Corporations – Share capital – Shares – Dividends – Assignment of rights to receive a dividend – Whether a shareholder could assign its rights to receive a dividend to a third party – Whether a corporation was bound to recognise a shareholder's assignment of its rights to receive a dividend to a third party – Relevance of statutory contract under s 140(1) of the Corporations Act 2001 (Cth) – Time at which Virgin Blue incurred a "debt" to its shareholders in respect of the dividend – Relevance of distinction between declaring a dividend and determining that a dividend is payable – Relevance of "record date".

Equity – Assignments in equity – Whether the shareholders' agreement to assign the rights to the dividend purported to effect an equitable assignment or a statutory assignment pursuant to s 199 of the Property Law Act 1974 (Q).

Words and phrases – "declare", "debt", "determine", "due", "due and payable", "final dividend", "interim dividend", "record date".

Corporations Act 2001 (Cth) – ss 140(1), 254T, 254U, 254V.

Company Law Review Act 1998 (Cth).

Income Tax Assessment Act 1936 (Cth) – ss 218, 255, 256, 257.

Property Law Act 1974 (Q) – s 199.