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On 17 October 2014, the High Court (Crennan and Keane JJ) refused the taxpayer's application for special leave to appeal from the decision of the Full Court of the Federal Court in FCT  v Resource Capital Fund III LP [2014] FCAFC 37 (3 April 2014).

The issue in the case was whether the taxpayer, a non-resident limited partnership formed in the Cayman Islands, was taxable in Australia on a capital gain it made on the sale of shares that it held in an Australian mining company, pursuant to the provisions of Div 5A of ITAA 1936 ("the Act") or whether the provisions of the Double Tax Agreement between Australia and the United States ("the DTA") precluded taxation of the taxpayer.

The judge at first instance (Edmonds J) had held that the taxpayer was not so taxable because the DTA treated the gain as derived not by the taxpayer but by the limited partners of the partnership and, therefore, an inconsistency existed between the Act and the DTA which was required by s 4(2) of the International Tax Agreements Act 1953 to be resolved in favour of the DTA.

The Full Court upheld the Commissioner's appeal from the decision of Edmonds J, holding that there was no inconsistency between the provisions of the Act and the DTA because the DTA did not apply to the taxpayer because it was not a resident of the United States. Accordingly, the DTA did not preclude the taxpayer's liability to Australian tax.

In the view of the High Court, the decision of the Full Court was not attended by sufficient doubt to warrant a grant of special leave and special leave to appeal was refused with costs.

For a copy of the transcript to the special leave application, go here

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