Orica Ltd v Commissioner of Taxation [2010] FCA 197

FEDERAL COURT OF AUSTRALIA

Orica Ltd v Commissioner of Taxation [2010] FCA 197 Citation: Orica Ltd v Commissioner of Taxation [2010] FCA 197

Parties: ORICA LIMITED (ACN 004 145 868) v COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

File number: VID 232 of 2005

Judge: SUNDBERG J

Date of judgment: 10 March 2010

Catchwords: INCOME TAX – capital gains – whether assessment excessive – parent company assessed – whether subsidiary should have been assessed instead – asset disposed of – rights under distribution agreement – whether parent or subsidiary owned asset on disposal – identification of disposal giving rise to capital gain – right to payment of amount to be ascertained by valuation process – whether debitum in praesenti solvendum in futuro – release of prospective but not accrued liabilities – whether novation – market value of asset on disposal – valuation evidence – penalties – whether taxpayer's position reasonably arguable when return lodged.

Legislation: Corporations Act 1974 (Cth) Part 2M.3 Income Tax Assessment Act 1936 (Cth) ss 160Z(1)(a), 160ZD, 160ZH, 160ZO, 160M, 226K, 222C(a) Taxation Administration Act 1953 (Cth) s 14ZZO

Cases cited: Byrne v Australian Airlines Ltd (1995) 185 CLR 410 considered Federal Commissioner of Taxation v ANZ Savings Bank Ltd (1994) 181 CLR 467 cited Federal Commissioner of Taxation v Dalco (1990) 168 CLR 614 cited Linden Gardens Trust Ltd v Lenesta Sludge Disposals Ltd [1994] 1 AC 85 cited O'Keefe v Williams (1910) 11 CLR 171 cited Olsson v Dyson (1969) 120 CLR 365 cited Re Ahearn; Ex parte Palmer (1906) 6 SR (NSW) 576 cited Walker v Corboy (1990) 19 NSWLR 382 applied Walsh Bay Developments Pty Ltd v Federal Commissioner of Taxation (1995) 130 ALR 415 cited Walstern Pty Ltd v Commissioner of Taxation (2003) 138 FCR 1 followed Webb v Stenton (1883) 11 QBD 518 cited Weldwood‑Westply Ltd v Cundy (1965) 50 DLR (2d) 744 cited