Origin Energy Limited v Commissioner of Taxation (No 2) [2020] FCA 409

FEDERAL COURT OF AUSTRALIA

Origin Energy Limited v Commissioner of Taxation (No 2) [2020] FCA 409 File numbers: NSD 198 of 2018 NSD 199 of 2018 NSD 200 of 2018

Judge: THAWLEY J

Date of judgment: 31 March 2020

Catchwords: TAXATION – appeals under s 14ZZ of the Taxation Administration Act 1953 (Cth) – whether "capacity charges" payable under an agreement were outgoings of capital or of a capital nature within the meaning of s 8-1(2) of the Income Tax Assessment Act 1997 (Cth) – where "capacity charges" were paid for the exclusive supply of electricity – where outgoings were a substantial extension the profit-making structure of the applicant – where applicant had substantial control of when and how electricity was generated – where "capacity charges" were, in substance, paid up-front in a lump sum – appeal dismissed TAXATION – appeals under s 14ZZ of the Taxation Administration Act 1953 (Cth) – whether expenditure was in relation to a lease or other legal or equitable right within the meaning of s 40-880(5)(d) of the Income Tax Assessment Act 1997 (Cth) – where expenditure gave applicant a bundle of rights amounting to a right to use the power stations to generate and trade electricity – appeal dismissed TAXATION – appeals under s 14ZZ of the Taxation Administration Act 1953 (Cth) – whether expenditure could be taken into account in working out the amount of a capital gain or a capital loss from a Capital Gains Tax (CGT) event within the meaning of s 40-880(5)(f) of the Income Tax Assessment Act 1997 (Cth) – where expenditure gave applicant a number of contractual rights, including the right to trade the electricity generated from the relevant power stations – appeal dismissed