03 Sep 12 High Court grants special leave in share buyback case - Consolidated Media
On 17 August 2012, the High Court (French CJ and Heydon J) granted the Commissioner special leave to appeal against the decision of the Full Federal Court in Consolidated Media Holdings Ltd v FCT  FCAFC 36 (20 March 2012).
The issue in the case is whether a payment of $1,000,000,000 made by Crown Melbourne Limited ("Crown") to the taxpayer for the buy-back of shares in Crown held by the taxpayer was a dividend for the purposes of s 159GZZZP ITAA 1936. If so, it was fully rebatable under the former s 46 ITAA 1936. If not, it gave rise to an assessable capital gain of $402,461,564.
The payment was debited to a new account in Crown's books entitled "Share Buy-Back Reserve Account" and it was the only entry in that account. If this account comprised part of Crown's "share capital account", the payment could not be a dividend. At first instance, Emmett J held that the "Share Buy-Back Reserve Account" was part of the account kept by Crown of its share capital within the meaning of the former s 6D ITAA 1936. The taxpayer successfully argued before the Full Federal Court that the account was not part of Crown's share capital account as ordinarily understood nor was it an account to which the former s 6D applied.
The appeal is likely to be heard in October 2012.
FCT v Consolidated Media Holdings Ltd  HCATrans 186 (17 August 2012)