Commissioner of Taxation v Citylink Melbourne Limited [2006] HCA 35

HIGH COURT OF AUSTRALIA

GLEESON CJ

GUMMOW, KIRBY, CALLINAN, HEYDON AND CRENNAN JJ

THE COMMISSIONER OF TAXATION OF THE

COMMONWEALTH OF AUSTRALIA APPELLANT

AND

CITYLINK MELBOURNE LIMITED (FORMERLY

KNOWN AS TRANSURBAN CITY LINK LIMITED) RESPONDENT

Commissioner of Taxation v Citylink Melbourne Limited [2006] HCA 35

20 July 2006

M49/2005

ORDER

Appeal dismissed with costs.

On appeal from the Federal Court of Australia

Representation

B J Shaw QC with I B Stewart for the appellant (instructed by Australian Government Solicitor)

A C Archibald QC with M M Gordon SC, M N Connock and S H Steward for the respondent (instructed by Freehills)

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 Citylink Melbourne Limited

Income tax – Allowable deductions – Respondent entered into contracts with the State of Victoria to design, construct, operate and maintain a major system of roads – The State conceded to the respondent rights to do all that was necessary to complete those tasks, with a view to transferring the infrastructure and all associated rights back to the State at the expiry of the concession period – Respondent paid concession fees as consideration for those rights – Whether concession fees were allowable deductions – Whether concession fees which accrued semi-annually were outgoings incurred in, and referable to, the relevant years of income, where the fees were "owing" but "not due for payment" – Whether payment was contingent or theoretical – Whether concession fees were on revenue or capital account – Whether concession fees were an outgoing in gaining or producing the taxpayer's assessable income – Whether the concession fees conferred a benefit on the taxpayer of an enduring nature – Whether acquisition of the benefit essential to the taxpayer's business – Whether concession fees were the purchase price paid for the road system as a capital asset – Whether concession fees were akin to a share of profits with the State or a dividend payable to a joint venturer – Whether payment of concession fees analogous to the payment of rent.