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17 Dec 14 Special leave granted in SPI PowerNet

The High Court (Crennan, Kiefel and Bell JJ) has granted Ausnet Transmission Group Proprietary Limited (formerly called SPI PowerNet Pty Ltd) special leave to appeal to the High Court from the decision of the Full Court of the Federal Court in SPI PowerNet Pty Ltd v FCT [2014] FCAFC 36 (Edmonds, McKerracher and Davies JJ; 7 April 2014).

At first instance, Gordon J held that payments made by the taxpayer, the licensee of an electricity transmission business in Victoria, to the Victorian Treasurer totalling $177.5 million during the financial years 1998 to 2000 were not deductible under s 8-1(1) ITAA 1997. Gordon J did so on two alternative bases:

(1) The payments were not a cost of the taxpayer deriving its income. The payments were payments out of the taxpayer’s profits after the calculation of the taxpayer’s taxable income. The payments did not satisfy either limb of s 8-1(1).

(2) While it was strictly unnecessary to consider, the payments were outgoings of capital or of a capital nature.

On appeal, Edmonds and McKerracher JJ disagreed with Gordon J's findings on the first basis, but agreed with her Honour's findings on the second basis, thus dismissing the taxpayer's appeal. In dissent, Davies J disagreed with both bases and would have allowed the taxpayer's appeal.

For a copy of the transcript of the special leave application in the High Court, go here

 


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