Fraud, corruption, and coldies at the Lord Stanley

The last week has seen a flurry of interesting court decisions from State and Federal courts. Six decisions are of particular note, and each is worthy of a separate, detailed update.

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Taxpayer guillotined – ATO still not happy

Yesterday the Federal Court made unprecedented use of an obscure provision of the Corporations Act to give a distressed company a final chance to sort itself out.

Instead of winding the company up immediately, the court made a conditional winding up order, which now remains suspended over the company like a guillotine, “encouraging” it to pay its outstanding tax and lodge its outstanding BAS by particular dates – failing which a liquidator will be appointed automatically.

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The ATO trumps a mortgagee – or does it..?

Many of you will be familiar with the decision in Tang & Anor v. Bassili & Ors [2011] FMCA 544, in which the Federal Magistrate’s Court said that the ATO could not use a garnishee notice to hijack the proceeds of sale of a mortgaged property.

Last Friday, that decision was overturned on appeal, and the proceeds of sale of the property concerned were ordered to be paid to the ATO, instead of the mortgagee. However, for the reasons set out below, this development is not as alarming as it might initially seem. Continue reading