Consolidated Press Holdings Ltd & Anor v Commissioner of Taxation [1998] FCA 1277

FEDERAL COURT OF AUSTRALIA

INCOME TAX – thin capitalisation - attributable income of controlled foreign corporation ("CFC") – Part X and Division 16F of Part III Income Tax Assessment Act 1936 ("the Act") –whether attributable income of a CFC should be calculated without regard to interest payable because of the operation of Division 16F of Part III of the Act concerned with thin capitalisation – relationship between Part X and Division 16F of Part III of the Act considered

INCOME TAX – debt defeasance – whether in calculating attributable income in respect of CFC a defeasance profit is to be treated as adjusted tainted income or passive income – nature of the business of CFC considered – whether CFC carried on business as a finance company – characterisation of defeasance profit

INTERPRETATION – principles applicable in interpretation of taxation Act – relevance of subsequent legislation in ascertaining legislative purpose. Income Tax Assessment Act 1936 (Cth) – ss 159GZA, 159GZC, 159GZE, 159GZF, 159GZS, 316, 381, 382, 383, 384, 386, 446(1)(d), 446(1)(j), 446(1)(k), 456 Part X, Division 16F Part III

WORDS AND PHRASES "attributable income"; "thin capitalisation"; "debt defeasance"; "adjusted income"; "adjusted tainted income"; "passive income"; "factoring"; "in the nature of interest" CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR – cited Federal Commissioner of Taxation v Australia and New Zealand Savings Bank Ltd (1998) 156 ALR 570 – cited Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 – referred to Grain Elevators Board (Victoria) v President, Councillors and Ratepayers of the Shire of Dunmunkle Corporation (1946) 73 CLR 70 – cited Cape Brandy Syndicate v Inland Revenue Commissioners [1921] 2 KB 403 – cited Hepples v Federal Commissioner of Taxation (1991) 102 ALR 497 – cited Avco Financial Services Limited v Federal Commissioner of Taxation (1981-2) 150 CLR 510 – considered Coles Myer Finance Limited v Federal Commissioner of Taxation (1993) 176 CLR 640 – considered Federal Commissioner of Taxation v Unilever Australia Securities Ltd (1996) 56FCR 152 – considered Federal Commissioner of Taxation v Orica Ltd (1998) 154 ALR 1 – considered London Australia Investment Co Ltd v Federal Commissioner of Taxation (1977) 138 CLR 106 – cited National Bank of Australasia Ltd v Federal Commissioner of Taxation (1969) 118 CLR 529 – cited Litchfield v Dreyfus [1906] 1 KB 584 – referred to Edgelow v MacElwee [1918] 1 KB 205 – cited Federal Commissioner of Taxation v Bivona Pty Ltd (1990) 21 FCR 562 – referred to Californian Copper Syndicate Ltd v Harris (Surveyor of Taxes) (1904) 5 TC 159 – referred to Modern Permanent Building and Investment Society v Federal Commissioner of Taxation (1958) 98 CLR 187 – referred to Re: Farm Security Act 1944 of the Province of Saskatchewan [1947] SCR 394 – cited Century Yuasa Batteries Pty Ltd v Federal Commissioner of Taxation (1997) 97 ATC 4299 – cited Century Yuasa Batteries Pty Ltd v Federal Commissioner of Taxation (1998) 98 ATC 4380 – cited