Commissioner of Taxation v Visy Industries USA Pty Ltd [2012] FCAFC 106

FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation v Visy Industries USA Pty Ltd [2012] FCAFC 106 Citation: Commissioner of Taxation v Visy Industries USA Pty Ltd [2012] FCAFC 106

Appeal from: Visy Industries USA Pty Ltd v Commissioner of Taxation [2011] FCA 1065

Parties: THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA v VISY INDUSTRIES USA PTY LTD (ACN 005 449 445)

File numbers: VID 1124 of 2011 VID 1125 of 2011

Judges: EDMONDS, GREENWOOD & ROBERTSON JJ

Date of judgment: 10 August 2012

Catchwords: INCOME TAX – whether payment to related company for indemnifying taxpayer company against loss under anterior forward exchange contract with another related company an allowable deduction under s 8-1 of the Income Tax Assessment Act 1997 (Cth) – anterior forward exchange contract found to have been entered into for the purpose of profit-making and in the course of taxpayer's business albeit not in the ordinary course of that business – held that finding open on the primary facts as found – any loss, being in consequence, on revenue account, the indemnity payment was of the same character and deductible in the year in which it was incurred – deductibility was not to be denied on the basis that it was to be taken into account in some later year as part of the cost of a wider profit-making transaction

Legislation: Income Tax Assessment Act 1936 (Cth) s 51(1) Income Tax Assessment Act 1997 (Cth) s 8-1

Cases cited: Australian National Hotels Ltd v Federal Commissioner of Taxation (1988) 19 FCR 234 referred to Babka v Commissioner of Taxation (1989) 89 ALR 373 cited BP Australia Ltd v Federal Commissioner of Taxation (1965) 112 CLR 386 cited Brajkovich v Commissioner of Taxation (1989) 89 ALR 408 cited Commercial and General Acceptance Limited v Federal Commissioner of Taxation (1977) 137 CLR 37 cited Commissioner of Taxation v Myer Emporium Ltd (1986–1987) 163 CLR 199 followed Commissioner of Taxation v Raymor (NSW) Pty Ltd (1990) 24 FCR 90 cited Commissioner of Taxation v Smith (1981) 147 CLR 578 applied Federal Coke Co Pty Ltd v Federal Commissioner of Taxation (1977) 34 FLR 375 cited Federal Commissioner of Taxation v Ashwick (Qld) No 127 Pty Ltd (2011) 192 FCR 325 cited Federal Commissioner of Taxation v BHP Billiton Finance Limited (2010) 182 FCR 526 cited Federal Commissioner of Taxation v Citylink Melbourne Limited (2006) 228 CLR 1 cited Federal Commissioner of Taxation v Midland Railway Co of Western Australia Ltd (1952) 85 CLR 306 cited Federal Commissioner of Taxation v Montgomery (1999) 198 CLR 639 discussed Federal Commissioner of Taxation v Orica Ltd (1998) 194 CLR 500 referred to Federal Commissioner of Taxation v South Australian Battery Makers (1978) 140 CLR 645 cited Federal Commissioner of Taxation v Spotless Services Ltd (1996) 186 CLR 404 referred to GP International Pipecoaters Pty Ltd v Federal Commissioner of Taxation (1990) 170 CLR 124 cited GRE Insurance Ltd v Federal Commissioner of Taxation (1992) 34 FCR 160 cited Hallstroms Pty Ltd v Federal Commissioner of Taxation (1946) 72 CLR 634 followed Investment and Merchant Finance Corporation Ltd v Commissioner of Taxation (1971) 125 CLR 249 cited National Australian Bank Ltd v Commissioner of Taxation (1997) 80 FCR 352 cited Ransburg Australia Pty Ltd v Federal Commissioner of Taxation (1980) 47 FLR 177 referred to Sun Newspapers Ltd and Associated Newspapers Ltd v Federal Commissioner of Taxation (1938) 61 CLR 337 followed W Nevill & Co Ltd v Federal Commissioner of Taxation (1937) 56 CLR 290 cited WD & HO Wills (Aust) Pty Ltd v Federal Commissioner of Taxation (1996) 65 FCR 298 referred to Western Gold Mines NL v Commissioner of Taxation (WA) (1938) 59 CLR 729 cited Parsons RW, Income Taxation in Australia: Principles of Income, Deductibility and Tax Accounting (Law Book Company, 1985)