05 Aug 13 Transferred tax losses on exploration tenements not deductible
The Full Court of the Federal Court (Dowsett, Edmonds and Griffiths JJ) has dismissed the taxpayer's appeal from the decision of Gordon J in Pratt Holdings Proprietary Limited v FCT (No 2)  FCA 1118, in which it was held that the taxpayer was not entitled to a deduction in the sum of $2,573,948 in the year of income pursuant to s 170-20 of ITAA 1997 for a loss transferred to it by another member of the same wholly owned group of companies (“LME 1”).
The issue was whether LME 1 was entitled to a balancing adjustment deduction under s 330-485(3) of ITAA 1997because the "termination value" of four exploration tenements it disposed of in the year of income. Both at first instance and on appeal, it was held that LME 1 was not entitled to the balancing adjustment because it was not carrying on eligible mining operations on those tenements or on any other mining property, as required by the relevant provisions conferring the right to a deduction. It therefore had no tax loss that could be transferred to the taxpayer.
Pratt Holdings Proprietary Limited v FCT  FCAFC 82 (Full Federal Court; Dowsett, Edmonds and Griffiths JJ; 2 August 2013).