Linda Smith and Rob Kirman are inching towards paying a divvie to beneficiaries of asset management services provider Brite Advisors, but their potential personal liability for a stonking great tax bill has emerged as a sticking point between the McGrathNicol partners and the Australian Tax Office (ATO).
“A particularly frustrating aspect of this procedural dispute is that despite the Receivers wanting reassurance that they will not be held personally liable for what potentially is a very significant amount of tax, no application for a PBR has been made in circumstances where the ATO’s solicitors have indicated that is what is required.” Justice Patrick O’Sullivan.
The impasse was laid bare this week after Federal Court judge Pat O’Sullivan delivered his reasons in Australian Securities and Investments Commission v Brite Advisors Pty Ltd (Receivers and Managers Appointed) (in liq) [2025] FCA 1242.
Smith and Kirman, who are court appointed receivers of the property, assets and undertakings held by Brite Advisors on trust as well as liquidators of Brite Advisors Pty Ltd, had applied to the court to have the ATO joined to the proceedings as an interested party.
The ATO resisted the application on the basis that as the CGT issue had not been resolved, joining the tax office would have no utility.
At the heart of the dispute is the uncertainty around the amount Smith and Kirman will need to set aside out of the proceeds of liquidation of assets to cover capital gains tax (CGT).
If they don’t set aside enough, the ATO will hold them personally liable for the difference. And they can’t expect the Brite beneficiaries to have a whip around.
According to Justice O’Sullivan’s judgment, the ATO was prepared to give the receivers some certainty as to amounts if only Smith and Kirman would make application to the ATO for a Private binding Ruling (PBR).
For reasons not revealed in the judgment Smith and Kirman have up until last week declined to make a PBR application, no doubt on the basis of legal advice.
iNO asked the pair this morning to provide some clarity around the reasons for not pursuing a PBR but given the time difference between Sydney and Perth weren’t able to rouse a response from either by deadline.
Of course given the judge’s determination in the joinder application, the advice in respect of the PBR may be redundant.
In dismissing the receivers application he said: “A particularly frustrating aspect of this procedural dispute is that despite the Receivers wanting reassurance that they will not be held personally liable for what potentially is a very significant amount of tax, no application for a PBR has been made in circumstances where the ATO’s solicitors have indicated that is what is required.
“Accordingly, in order to cut through this completely unsatisfactory state of affairs, there will be an order that if so advised the Receivers make an application for a PBR to the ATO by on or before close of business on Friday, 10 October 2025.”
Impediment eliminated, presumably.
Threre has been a lot of commentary in Accounting Newsletter of recent times as to the delays in obtaining any guidance from the ATO – perhaps this was the reason.
Clearly the Commissioner was an appropriate party to the application by the Court appointed Receivers.