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12 Apr 2019 Resource Capital Fund case

MEMBER 73 writes: 

Dear TaxVine, 

I refer to comments in TaxVine to the effect that the Federal Court had initially determined that profits from the sale of shares were not assessable to Australian tax as capital gains by the operation of Division 855. 

In fact, the Federal Court determined that the profits were made on revenue account and assessable under s 6-5 of the ITAA 1997 as ordinary income from an Australian source (see paragraphs 50 to 53 on pages 32 to 36 of that decision). The Federal Court did then go on to consider Division 855, but this would appear to be merely obiter. On appeal the Full Federal Court did not consider whether the profits were income according to ordinary concepts as the respondents did not dispute that (see paragraph 52 on page 15 of the FFC decision). 

The FFC also confirmed the source was Australia (paragraph 66, at page 21).

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