Clough Limited v Commissioner of Taxation [2021] FCAFC 197

Federal Court of Australia

Clough Limited v Commissioner of Taxation [2021] FCAFC 197 Appeal from: Clough Limited v Commissioner of Taxation [2021] FCA 108

File number: WAD 60 of 2021

Judgment of: KENNY, DAVIES AND THAWLEY JJ

Date of judgment: 12 November 2021

Catchwords: INCOME TAXATION – payments made to bring to an end options and rights held by employees – payments made in the context of a scheme of arrangement pursuant to which the majority shareholder bought all shares in company – whether payments made deductible under either positive limb of s 8-1(1) of the Income Tax Assessment Act 1997 (Cth) – held not deductible – whether payments on capital account within the meaning of s 8-1(2)(a) of the Income Tax Assessment Act 1997 (Cth) – held payments on capital account – payments conceded to be deductible under and in accordance with s 40-880 of the Income Tax Assessment Act 1997 (Cth)

Legislation: Income Tax Assessment Act 1922 (Cth) ss 23(1), 25(e) Income Tax Assessment Act 1936 (Cth) s 51(1) Income Tax Assessment Act 1997 (Cth) ss 8-1, 40-880 Taxation Administration Act 1953 (Cth) Pt IVC, s 14ZZ(1)

Cases cited: AusNet Transmission Group Pty Ltd v Federal Commissioner of Taxation (2015) 255 CLR 439 BP Australia Ltd v Commissioner of Taxation (1965) 112 CLR 386 Charles Moore & Co (WA) Pty Ltd v Federal Commissioner of Taxation (1956) 95 CLR 344 Clough Limited v Commissioner of Taxation [2021] FCA 108 Colonial Mutual Life Assurance Society Ltd v Federal Commissioner of Taxation (1953) 89 CLR 428 Esso Australia Resources Ltd v Commissioner of Taxation (Cth) (1998) 84 FCR 541 Federal Commissioner of Taxation v Day (2008) 236 CLR 163 Federal Commissioner of Taxation v Foxwood (Tolga) Pty Ltd (1981) 147 CLR 278 Federal Commissioner of Taxation v Payne (2001) 202 CLR 93 Federal Commissioner of Taxation v Rowe (1997) 187 CLR 266 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2019) 269 CLR 370 Federal Commissioner of Taxation v Snowden & Willson Pty Ltd (1958) 99 CLR 431 Federal Commissioner of Taxation v South Australian Battery Makers Pty Ltd (1978) 140 CLR 645 Fletcher v Federal Commissioner of Taxation (1991) 173 CLR 1 GP International Pipecoaters Pty Ltd v Federal Commissioner of Taxation (1990) 170 CLR 124 Hallstroms Pty Ltd v Federal Commissioner of Taxation (1946) 72 CLR 634 Her Majesty the Queen v Kaiser Petroleum Ltd [1990] 2 CTC 439 Imperial Tobacco Canada Ltd v The Queen [2012] DTC 5003 John Fairfax & Sons Pty Ltd v Federal Commissioner of Taxation (1959) 101 CLR 30 Macquarie Finance Limited v Commissioner of Taxation (2005) 146 FCR 77 Magna Alloys & Research Pty Ltd v Federal Commissioner of Taxation (1980) 49 FLR 183 Paciocco v ANZ Banking Group Limited (2016) 258 CLR 525 Ronpibon Tin NL and Tongkah Compound NL v Federal Commissioner of Taxation (1949) 78 CLR 47 Royal Insurance Co v Watson [1897] AC 1 Spriggs v Commissioner of Taxation (2009) 239 CLR 1 St George Bank Limited v Commissioner of Taxation [2008] FCA 453; (2008) 69 ATR 634 Sun Newspapers Limited and Associated Newspapers Limited v Federal Commissioner of Taxation (1938) 61 CLR 337 Trustees of the Estate Mortgage Fighting Fund Trust v Commissioner of Taxation (2000) 102 FCR 15 W Nevill & Co Ltd v Federal Commissioner of Taxation (1937) 56 CLR 290 Watson as trustee for the Murrindindi Bushfire Class Action Settlement Fund v Commissioner of Taxation [2020] FCAFC 92; (2020) 277 FCR 253 Western Gold Mines (NL) v Commissioner of Taxation (WA) (1938) 59 CLR 729