His business folded. He sold shares to stay afloat. The ATO assessed $117,000 on the proceeds.
Lewis and Commissioner of Taxation [2026] ARTA 256 is one of the saddest cases I have read in a while. Not because the law was wrong. Because it was applied exactly as intended.
The facts
Mr Lewis was a personal trainer running a fitness franchise through a family trust. COVID-19 lockdowns shut down group fitness activities overnight. Cash flow dropped to zero. The company found itself insolvent [19].
The trust sold shares acquired from August 2019, held less than 12 months, so no CGT discount. Mr Lewis knew that. He sold anyway because he had no choice [4], [14], [19].
The trust distributed $201,976 in capital gains to Mr Lewis. Every dollar went to rent, staff wages and legal costs. The business folded anyway. His total tax liability: $117,045. Plus interest [6].
The decision
Mr Lewis argued the shares were sold under duress, not as an investment strategy. He said there was no real “gain” because proceeds were consumed by business liabilities. He cited s 102-5, Montgomery, Roche and asked the Tribunal to consider a “humanitarian side” to taxation assessments [18], [21]-[25].
The Tribunal affirmed the assessment. General Member Stratos accepted Mr Lewis felt compelled to sell [36]. But CGT does not look to whether a “profit” was made. It asks whether proceeds exceeded cost base. They did [38].
Section 102-5 does not require an inquiry into intent. Section 118-195 relates to deceased estates, not hardship. Montgomery concerned income versus capital. Roche concerned transfer pricing. No discretionary provisions exist to disregard a gain based on hardship, forced sales or what proceeds were used for [40]-[44].
Where the system falls short
Mr Lewis did not engineer a scheme. He was a small business owner whose business collapsed in a pandemic. The Tribunal accepted that [36]. The facts were not in dispute [3].
The CGT regime has no equivalent of the GIC remission power in s 8AAG. Compare Division 7A, where s 109RB gives the Commissioner discretion to disregard a deemed dividend from an honest mistake. The CGT provisions offer no comparable safety valve.
A discretion does not have to mean a free pass. It could be limited to cases where disposal was demonstrably involuntary, proceeds were applied to existing liabilities and the taxpayer can substantiate those facts.
But that is not the law. Until it changes, cases like Lewis will keep producing outcomes that are technically correct and deeply unfair. Mr Lewis did not lose because his case was weak on the facts. He lost because the law has no room for his story.
General information only. This note was accurate when written. The law may have changed since and the note is not updated. It is not legal or tax advice, does not take account of your circumstances and must not be relied upon as a substitute for advice on your own matter. If the issue is live for you or your client, email arda@nortonquaytaxlaw.com.au for advice on the current position.