Commissioner of Taxation v Dulux Holdings Pty Ltd & Orica Ltd [2001] FCA 1344

FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation v Dulux Holdings Pty Ltd &

Orica Ltd [2001] FCA 1344

CAPITAL GAINS TAX – time of deemed disposal – "Assumption Agreement" under which company already liable to make stream of future payments under debentures pays another entity to assume that liability – consideration payable by company to the entity calculated as discounted present day value of the stream of future payments – parties at arm's length – previously held by High Court in Federal Commissioner of Taxation v Orica Ltd (1998) 194 CLR 500 that payments made by the entity which assumed the liability to the trustee for debenture-holders effected pro tanto discharges of the company's chose in action against the entity, with result that upon making of each payment there was a deemed change in ownership of the chose in action and a deemed disposal of an asset by that company for purposes of Pt IIIA of the Income Tax Assessment Act 1936 (Cth) ("the Act") by reason of s 160M of that Act – the payments were made under the "Assumption Agreement", but question whether the deemed change in ownership and deemed disposal were "under" that contract for purposes of subs 160U(3) of the Act – whether deemed disposal taken to have been made at time of making of contract or at later times of making of payments by the entity to trustee for debenture-holders – relevance of indexation of cost base – scope, purpose and object of subs 160U(3) WORDS AND PHRASES – "disposal" – "change in ownership" Income Tax Assessment Act 1936 (Cth) Pt IIIA, ss 160M, 160U

Federal Commissioner of Taxation v Orica Ltd (1998) 194 CLR 500 discussed Federal Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd (2000) 201 CLR 520 distinguished Caffoor v Commissioner of Income Tax Colombo [1961] AC 584 cited Chamberlain v Deputy Commissioner of Taxation (1988) 164 CLR 502 cited Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589 cited Kiwi Brands Pty Ltd v Commissioner of Taxation (1998) 90 FCR 64 cited