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19 Aug 13 No obligation to pay Canadian currency under s 255 notices - Resource Capital Fund IV LP

The Federal Court (Edmonds J) has held that Talison Lithium Limited ("Talison"), an Australian incorporated company, had no obligation to pay moneys to the Commissioner under notices issued pursuant to s 255 ITAA 1936.

The s 255 notices were issued in respect of moneys that Talison owed to two limited partnerships ("LPs") formed in the Cayman Islands. The amounts were owed under a scheme of arrangment. The Commissioner had issued assessments against the two LPs, denominated in Australian dollars, with a due date for payment of 2 December 2013. The s 255 notices required payment, in Australian dollars, of the amounts assessed to each of the LPs.

Under the scheme of arrangement, the amounts payable by Talison to the two LPs were denominated in Canadian currency and were payable out of a Canadian bank account maintained by Talison.

The issue before Edmonds J was articulated in para [2] of his judgment as follows:

"The issue between the parties is whether, as the applicants contend, the expression 'money' in s 255(1) of the 1936 Act is confined to Australian currency or whether it includes, as the Commissioner contends, foreign currency although, on the view I take of the terms of the notices, as to which see [9] to [12] below, the applicants are entitled to the relief sought irrespective of how the issue is resolved."

Edmonds J said, at para [11], as follows:

"However, as a matter of fact, Talison does not have the receipt, control or disposal of any Australian currency belonging to [the two LPs] from which to retain sufficient Australian currency to pay the tax payable by [the two LPs]; nor does s 255, or any other provision of the Income Tax Assessment Acts, authorise the conversion of the whole or part of the Talison Canadian currency into Australian currency by way of sale or otherwise. It follows, in my view, that irrespective of the outcome of the issue as articulated in [2] above, the terms of the notices themselves, as distinct from the provisions of s 255(1), do not impose obligations on Talison of the kind referred to in [1(3) and (4)] above, and the applicants are therefore entitled to the declarations sought."

Edmonds J went on to decide that, in any event, the word "money" in s 255(1) ITAA 1936 is confined to Australian currency and does not include foreign currency.

Resource Capital Fund IV L.P. v FCT [2013] FCA 801 (Federal Court, Edmonds J, 15 August 2013).


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