29 Jan 1414 Decision Impact Statement - Resource Capital Fund IV LP
The ATO has published a Decision Impact Statement in relation to the decision of the Full Court of the Federal Court in FCT v Resource Capital Fund IV LP  FCAFC 118.
The Decision Impact Statement outlines the ATO's response to this case, in which the primary issue was whether the reference to "money" in the context of s 255(1) of the ITAA 1936 is confined to Australian currency or whether it extends to foreign currency. Their Honours unanimously concluded (contrary to the finding at first instance) that s 255(1) does extend to money denominated in foreign currency.
The ATO view of the decision is stated as follows:
"The decision is significant in that it confirms the ATO view that the reference to "money" in s 255(1) (b) is not confined to Australian currency, but extends to foreign currency.
Importantly, the decision confirms that while the amount of tax due and payable by the non-resident entity is to be paid in Australian dollars, s 255 does not require the payment of this amount to come directly from the money which was the subject of the retention by the person having the receipt, control or disposal of money belonging to a non-resident taxpayer.
All that is required by s 255 is for the controller to retain sufficient money to address the tax liability. Accordingly, if the money retained by the controller is denominated in foreign currency, a sufficient amount of such foreign currency must be retained to pay the liability. The quantum of amount to be retained is capped to the liability set out in the notice.
There are no negative implications arising from this decision."