Commissioner of Taxation v Consolidated Press Holdings Pty Ltd [1999] FCA 1229

FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation v Consolidated Press Holdings Ltd [1999] FCA 1229

TAXATION AND REVENUE – income tax – controlled foreign corporations – attributable income – notional assessable income – adjusted tainted income – passive income – business of trading in tainted assets – disposal of tainted assets – issue of bonds for fund raising by overseas corporation controlled by Australian corporations – obligation assumption agreement with third party in respect of bonds – debt defeasance transaction – whether gain from debt defeasance transaction constitutes passive income – whether gain in business of trading in bonds or bills of exchange

Thin capitalisation – interest payments by controlled foreign corporation – application of assumption of residency under Part X to controlled foreign corporation – whether assumption attracts thin capitalisation rules under Division 16F – interest payments not deductible for purpose of calculating notional assessable income of Australian controllers. Income Tax Assessment Act 1936 (Cth) ss 159GZF, 316(1), 381, 382, 383, 384, 446, 456(1) Commissioner of Taxation v Unilever Australia Securities Ltd (1995) 56 FCR 152, discussed Grain Elevators Board (Victoria) v Dunmunkle Corporation (1946) 73 CLR 70, applied Cape Brandy Syndicate v Inland Revenue Commissioners [1921] 2 KB 403, applied Hunter Resources Ltd v Melville (1988) 164 CLR 234, cited Federal Commissioner of Taxation v Orica Ltd (1998) 72 ALJR 969, distinguished Avco Financial Services Ltd v Federal Commissioner of Taxation (1982) 150 CLR 510, applied Coles Myer Finance Ltd v Federal Commissioner of Taxation (1993) 176 CLR 640, applied Bank of New South Wales v The Commonwealth (1948) 76 CLR 1, cited W & A McArthur Ltd v State of Queensland (1920) 28 CLR 530, cited R v The Judges of the Federal Court of Australia; Ex parte Western Australian National Football League (Inc) (1979) 143 CLR 190, cited Lend Lease Corporation Ltd v Federal Commissioner of Taxation (1990) 95 ALR 427, discussed London Australia Investment Co Ltd v Federal Commissioner of Taxation (1977) 138 CLR 106, cited COMMISSIONER OF TAXATION v CONSOLIDATED PRESS HOLDINGS LIMITED (ACN 008 394 509), MURRAY LEISURE GROUP PTY LIMITED (ACN 000 090 273) NG 1176, 1177, 1178, 1179, 1180, 1181, 1182 and 1183 of 1998 FRENCH, SACKVILLE and SUNDBERG JJ 7 SEPTEMBER 1999 SYDNEY