CSR Ltd v Commissioner of Taxation [2000] FCA 403

FEDERAL COURT OF AUSTRALIA

CSR Ltd v Commissioner of Taxation

[2000] FCA 403

TAXATION AND REVENUE – income tax – whether money received pursuant to a deed of settlement constituted assessable income pursuant to s 25 or s 26(j) of the Income Tax Assessment Act 1936 (Cth) – where payment is an undissected lump sum and where the only cause of action to which parties had regard in negotiations was on revenue account but other causes of action existed

Income Tax Assessment Act 1936 (Cth) s 25, s 26(j)

Taxation Administration Act 1953 (Cth) s 14ZZP

Allsop v Commissioner of Taxation (1965) 113 CLR 341 applied

Lehmann and Coleman, Taxation in Australia, 4th Ed

Parsons, Income Taxation in Australia, 1985

CSR LIMITED (ACN 000 001 276) v COMMISSIONER OF TAXATION

NG 1427 OF 1998

GYLES J

SYDNEY

31 MARCH 2000

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 1427 OF 1998

BETWEEN: CSR LIMITED (ACN 000 001 276)

APPLICANT

AND: COMMISSIONER OF TAXATION

RESPONDENT

JUDGE: GYLES J

DATE OF ORDER: 31 MARCH 2000

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: The proceedings stand over to 9.30am on Friday, 7 April 2000. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 1427 OF 1998

BETWEEN: CSR LIMITED (ACN 000 001 276)

APPLICANT

AND: COMMISSIONER OF TAXATION

RESPONDENT

JUDGE: GYLES J

DATE: 31 MARCH 2000

PLACE: SYDNEY

REASONS FOR JUDGMENT 1 The proceedings are an appeal against the disallowance of an objection against the assessment of CSR Limited ("the Applicant") to income tax for the year of income ended 31 March 1995 ("the year of income"). The relevant assessment was a deemed assessment pursuant to s 166A of the Income Tax Assessment Act 1936 (Cth) ("the Act") which arose upon lodgement, on 15 December 1995, by the Applicant of its income tax return for the year of income. 2 Following the expression by the Commissioner of Taxation ("the Respondent") of his view that an amount of $100 million received by the Applicant from the New Zealand Insurance Group ("NZI") pursuant to a deed of settlement dated 3 March 1995 ("the deed of settlement') constituted assessable income, the Applicant returned that amount as assessable income in its income tax return. The Applicant lodged a notice of objection against the deemed assessment on 20 May 1998. The Respondent advised the Applicant on or about 9 November 1998 that its objection against the assessment had been disallowed. 3 On 24 December 1998 an application was filed by the Applicant in this Court seeking to have the Respondent's objection decision set aside pursuant to s 14ZZP Taxation Administration Act 1953 (Cth). 4 The Applicant has been, for many years, a publicly listed company, carrying on business in Australia and overseas. At all relevant times Midalco Pty Limited ("Midalco") was a wholly owned subsidiary of the Applicant. Midalco was formerly known as Australian Blue Asbestos Pty Limited, and from 1943 to 1966 operated a blue asbestos mine and primary processing facility at Wittenoom, Western Australia. Asbestos produced from Midalco's Wittenoom facility was sold to an American company, Johns-Manville Corporation, in the period from 1948 to 1966. Asbestos from the Wittenoom facility was also sold within Australia. CSR America is an indirect, wholly owned subsidiary of the Applicant.