Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd [2000] HCA 35

HIGH COURT OF AUSTRALIA

GLEESON CJ,

GAUDRON, McHUGH, HAYNE AND CALLINAN JJ

COMMISSIONER OF TAXATION OF

THE COMMONWEALTH OF AUSTRALIA APPELLANT

AND

SARA LEE HOUSEHOLD & BODY CARE

(AUSTRALIA) PTY LTD RESPONDENT

Commissioner of Taxation v Sara Lee Household & Body Care

(Australia) Pty Ltd [2000] HCA 35

15 June 2000

M57/1999

ORDER

1. Appeal allowed with costs.

2. Set aside the orders made by the Full Court of the Federal Court of Australia on 11 December 1998, and in place thereof, order that the appeal to that Court be dismissed with costs.

On appeal from the Federal Court of Australia

Representation:

R A Brett QC with S J Sharpley for the appellant (instructed by Australian Government Solicitor)

B J Shaw QC with J W De Wijn QC for the respondent (instructed by Arthur Robinson & Hedderwicks)

Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Commissioner of Taxation v Sara Lee Household & Body Care (Australia) Pty Ltd

Taxation – Capital gains tax – Time of disposal of assets – Original agreement providing for disposal subsequently amended – Whether disposal made under original agreement or amended agreement.

Words and phrases – "under a contract".

Income Tax Assessment Act 1936 (Cth), s 160U

1. GLEESON CJ, GAUDRON, McHUGH AND HAYNE JJ. The issue in this appeal concerns the identification of the year of income in which a capital gain made by the respondent taxpayer was brought to tax by reason of the provisions of Pt IIIA of the Income Tax Assessment Act 1936 (Cth) ("the Act"). The capital gain resulted from a disposal of assets by the respondent. The change in ownership of the assets occurred during the year ended 30 June 1992. The appellant contends that the assets were disposed of under a contract which was made during the year ended 30 June 1991. The question, which arises out of disallowances of objections against an assessment, and an amended assessment, to income tax, is whether the capital gain was made during the 1991 income year or the 1992 income year. The practical significance of the question for the respondent results from the availability of offsetting losses or deductions in the 1992 income year. 2. The respondent has changed its name a number of times. It appealed to the Federal Court of Australia at a time when it was named Kiwi Brands Pty Ltd. Its appeal failed before North J at first instance[1]. A further appeal to the Full Court of the Federal Court (Hill, Finn and Sundberg JJ) was successful[2]. The Commissioner of Taxation now appeals to this Court from the decision of the Full Court.