BHP Billiton Petroleum (Bass Strait) Pty Ltd v Commissioner of Taxation [2002] FCAFC 433

FEDERAL COURT OF AUSTRALIA

BHP Billiton Petroleum (Bass Strait) Pty Ltd v Commissioner of Taxation [2002] FCAFC 433 TAXATION – assessable income- trading stock (being commodities) sold by taxpayers where part of the consideration subject to a bona fide dispute and not paid on invoice – disputed income derived when dispute settled and not when commodity supplied or invoiced– significance of evidence of business and accounting practice in determining when "income derived" – whether arbitration pursuant to contract was a condition precedent to recoverability– consideration of overseas case law discussing when income accrues in case of a bona fide dispute.

WORDS & PHRASES – "income derived, "consideration receivable", "claim of right" Income Tax Assessment Act 1936 (Cth), s 25(1) Petroleum Resource Rent Tax Assessment Act 1987 (Cth), s 24 Petroleum Resource Rent Legislation Amendment Act 1991 (Cth) s 21 Commercial Arbitration Act 1984 (Vic) Anderson v GH Michell & Sons Ltd (1941) 65 CLR 543 distinguished PMT Partners Pty Ltd (1995) 184 CLR followed ABB Power Plants Ltd v Electricity Commission (NSW) (1995) 35 NSWLR 596 cited Arthur Murray (NSW) Pty Ltd v Federal Commissioner of Income Tax (1965) 114 CLR 314 followed Barratt v Commissioner of Taxation (1992) 36 FCR 222 discussed Henderson v Federal Commissioner of Taxation (1969-70) 119 CLR 612 considered Gasparin v Commissioner of Taxation (1993) 50 FCR 73 considered Commissioner of Taxation (Cth) v Australian Gas Light Co (1983) 74 FLR 13 distinguished J Rowe & Son Pty Ltd v Federal Commissioner of Taxation (1970) 124 CLR 421 considered Farnsworth v Federal Commissioner of Taxation (1949) 78 CLR 504 distinguished All States Frozen Foods Pty Ltd v Commissioner of Taxation (1990) 21 FCR 457 cited Federal Commissioner of Taxation v Squatting Investment Co Ltd (1953-4) 88 CLR 413 distinguished Ritchie v Trustees Executors and Agency Co Ltd (1951) 84 CLR 553 considered Federal Commissioner of Taxation v James Flood Pty Ltd (1953) 88 CLR 492 referred to Nilsen Development Laboratories Pty Ltd v Federal Commissioner of Taxation (1981) 144 CLR 616 referred to Coles Myer Finance Ltd v Federal Commissioner of Taxation (1992-3) 176 CLR 640 cited GE Crane Sales Pty Ltd v Federal Commissioner of Taxation (1971) 126 CLR 177 cited Point v Federal Commissioner of Taxation (1970) 119 CLR 453 cited Franklin's Selfserve Pty Ltd v Federal Commissioner of Taxation (1970) 125 CLR 52 cited North American Oil Consolidated v Burnett (1932) 286 US 417 considered Cold Metal Process Co v CIR 17 TC 916, 932 (1951) cited Minister of National Revenue v Benaby Realties (1967) 67 DTC 5275 discussed Commonwealth Construction Company Ltd v The Queen (1984) 84 DTC 6420 discussed MNR v Colford Contracting Co Ltd (1960) 60 DTC 1130 cited Commonwealth-New Guinea Timbers Ltd v The Chief Collector of Taxes (1973) PNGLR 358 discussed Ballarat Brewing Co Ltd v Commissioner of Taxation (Cth) (1951) 82 CLR 364 applied London-Butte Gold Mines Co v Commissioner of Internal Revenue (Ct of Appeals, 10th circuit) (1940) 116 F (2d) 478 cited BHP BILLITON PETROLEUM (BASS STRAIT) PTY LTD (ACN 004 228 004) v THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA V 423 of 2002 ESSO AUSTRALIA RESOURCES PTY LTD (ACN 091 829 819) v THE COMMISSION OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA V 424 of 2002 HILL, HEEREY & GYLES JJ 20 DECEMBER 2002 MELBOURNE