In Crown Insurance Services Ltd v Commissioner of Taxation (Crown), the issues raised are pertinent to the residence and source of the company under s6(1) of the Income Tax Assessment Act 1936. As cases are determined on the basis of all relevant facts and circumstances of each case, this analysis will focus on how the court’s decision process determined whether Crown had carried on business in the years 2004-2007 inclusive and the existence of central management and control (CM&C) in Australia. The purpose of this is to assess the valuation of Crown’s taxable income, which ultimately resulted in the objective decision to be set aside in favour of the applicant. Evaluation will be made in regards to how the case compares with previous cases and tax rulings and the likely impacts of the case on future commercial practices. Further, what the case infers about the current state of law in this area will also be discussed, as well as the potential degree of changes in modern judgements of residence and source issues within businesses not incorporated in Australia.
Past judgements and tax rulings
The facts of the case are similar to that of Malayan Shipping Co Ltd v FCT (1946), where the court held that “the mere trading in Australia by a company not incorporated in Australia will not of itself be sufficient to cause the company to become a resident”. This is true and consistent with the statutory definition of resident of Australia, and with the decision made in Crown. This is highlighted in paragraphs 57-58 as it indicates that the case does not result in new law. Moreover, in Tariff Reinsurances Ltd v Commissioner of Taxes (Vic) (1938), the contract was formed in London and the company’s profits were not “earned in or derived in or from Victoria” under s42 of the Victorian Income Tax Act 1928. This judgement is exemplified in the decision of Crown, where payments of claims to member companies were not made in Australia,
Bibliography: Malayan Shipping Co Ltd v FCT (1946) 71 CLR 156; 3 AITR 258 Tariff Reinsurances Ltd v Commissioner of Taxes (Vic)  HCA 21 Dirkis, M. ‘Still a Problem Child: Central Management and Control after RITA’ (2005) Revenue Law Journal, Vol. 15(1), pp. 126-139 Other sources Coleman et al., Australian Tax Analysis – Cases, Commentary, Commercial Applications and Questions, 8th ed, Thomas Reuters, Lawbook Co. 2011