Commissioner of Taxation v Resource Capital Fund IV LP

• Jurisdiction: Australia Federal only
• Court: Full Federal Court (Australia)
• Judgment Date: 02 April 2019
• Neutral Citation: [2019] FCAFC 51
• Date: 02 April 2019

FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation v Resource Capital Fund IV LP [2019] FCAFC 51

Appeal from:	Resource Capital Fund IV LP v Commissioner of Taxation [2018] FCA 41
File numbers:	NSD 283 of 2018NSD 285 of 2018
Judges:	BESANKO, MIDDLETON, DAVIES, STEWARD AND THAWLEY JJ
Date of judgment:	2 April 2019
Catchwords:	TAXATION – where provisions of the income tax law which refer to a company are read as also referring to a corporate limited partnership – where partners of a corporate limited partnership are jointly and severally liable to pay any amount that would be payable by the partnership – whether a corporate limited partnership is an entity which is liable to pay income tax – whether assessments issued to corporate limited partnerships should be treated as being assessments issued to all partners of each partnership ; CONSTITUTIONAL LAW – competency to object – where a corporate limited partnership is treated as a separate “taxable” entity – whether a corporate limited partnership is competent to object to an assessment – where liability is imposed on the individual partners without separate assessment – whether the imposition of joint and several liability on the individual partners would be an incontestable tax and unconstitutional ; TAXATION – ordinary income – source of income – where corporate limited partnerships made a gain from the sale of shares in a company – where value of the shares depended upon the value of a mine located in Australia – where disposal of shares was pursuant to a scheme of arrangement approved by the Federal Court of Australia – whether profits had an Australian source ; TAXATION – Double taxation agreement – residence of limited partnership – Division 855 of the Income Tax Assessment Act 1997 (Cth) – taxable Australian real property – mining, quarrying or prospecting right – whether limited partnerships could be residents of the United States – whether limited partnerships could rely on Taxation Determination TD 2011/25 for protection from Australian income tax – whether general purpose leases and a miscellaneous licence issued pursuant to the Mining Act 1978 (WA) were taxable Australian real property because they each constituted a “mining, quarrying or prospecting right” – whether general purpose leases were a lease of land
Legislation:	Corporations Act 2001 (Cth) s 411 Federal Court Rules 1979 (Cth) O 52B (repealed) Federal Court Rules 2011 (Cth) r 9.41 Income Tax Assessment Act (No 2) 1968 (Cth) s 122 (repealed), 122B (repealed) Income Tax Assessment Act 1936 (Cth) Part III, Divs 5, 5A, 10 (repealed), Subdiv C, ss 44, 78 (repealed), 91, 92, 94A, 94B, 94D, 94H, 94J, 94K, 94L, 94M, 94P, 94Q, 94V, 161, 166A(3), 170, 175A, 254, 255 Income Tax Assessment Act 1997 (Cth) Divs 9, 40, 300 (repealed), 721, 855, ss 4-1, 4-5, 5-5, 6-1, 6-5(3), 9-1, 9-1A, 40-30, 202-5, 202-20(b), 202-30, 205-15, 205-25(1)(a), 330-235 (repealed), 330-240 (repealed), 855-15, 855-20, 855-30, 950-150, 960-100(1), 960-115(b), 960‑120(1) Item 2, 995-1 International Tax Agreements Act 1953 (Cth) s 3A Judiciary Act 1903 (Cth) s 78B Sales Tax (Exemptions and Classifications) Act 1935 (Cth) (repealed) Taxation Administration Act 1953 (Cth) Pt IVC, Sch 1, Subdiv 255-A, ss 3A, 14ZL(1), 175A(1), 353-10, 357-60 Tax laws Amendment (2009 Measures No 4) Act 2009 (Cth) Explanatory Memorandum, Income Tax Assessment Bill (No. 2) 1968 (Cth) Explanatory Memorandum, Taxation Laws Amendment Bill (No. 6) 1992 (Cth) Mining Act 1928 (Vic) Mining Act 1978 (WA) Pt IV Divs 3, 4, ss 8, 85, 86, 87, 88, 91, 103C, 103F, 155, 162A Mining Act 1904 (WA) s 273 (repealed) Stamp Act 1921 (WA) Convention between the Government of Australia and the Government of the United States of America for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, signed on 6 August 1982, [1983] ATS 16 (entered into force on 31 October 1983) Arts 3(1)(a), 4(1)(b), 6(2), 7, 13, 16
Cases cited:	Barry R Liggins Pty Ltd v Comptroller-General of Customs (1991) 32 FCR 112 Bob-Jane T-Marts v Federal Commissioner of Taxation (1999) 42 ATR 43 City Mutual Life Assurance Society Ltd v Smith (1932) 48 CLR 532 Commissioner of Taxation v Brambles Holdings Limited (1991) 28 FCR 451 Commissioner of Taxation v Northwest Iron Co Ltd (1986) 9 FCR 463 Commissioner of Taxation (Cth) v Reynolds Australia Alumina Ltd (1987) 18 FCR 29 Commissioner of State Revenue v TEC Desert Pty Ltd (2009) 40 WAR 344 Deputy Federal Commissioner of Taxation v Brown (1958) 100 CLR 32 Dismin Investments Pty Ltd v Federal Commissioner of Taxation (2001) 183 ALR 565 Esquire Nominees Ltd v Federal Commissioner of Taxation (1973) 129 CLR 177 Esso Australia Resources Ltd v Federal Commissioner of Taxation (1997) 36 ATR 65 Federal Commissioner of Taxation v Broken Hill Pty Co Ltd (1969) 120 CLR 240 Federal Commissioner of Taxation v Casuarina Pty Ltd (1970) 127 CLR 62 Federal Commissioner of Taxation v Henderson (1943) 68 CLR 29 Federal Commissioner of Taxation v Linter Textiles Australia Ltd (In liq) (2005) 220 CLR 592 Federal Commissioner of Taxation v Prestige Motors Pty Ltd (1994) 181 CLR 1 Federal Commissioner of Taxation v Resource Capital Fund III LP (2014) 225 FCR 290 Giris Pty Ltd v Federal Commissioner of Taxation (1969) 119 CLR 365 Lewis v Bell (1985) 1 NSWLR 731 Living and Leisure Australia Ltd v Commissioner of State Revenue (2017) 106 ATR 910 Living and Leisure Australia Ltd v Commissioner of State Revenue [2018] VSCA 237 MacCormick v Federal Commissioner of Taxation (1984) 158 CLR 622 Mineralogy Pty Ltd v Sino Iron Pty Ltd (No 16) [2017] WASC 340 Mitsui & Co (Australia) Ltd v Federal Commissioner of Taxation (2012) 205 FCR 523 Muc v Deputy Commissioner of Taxation (2008) 73 NSWLR 378 NSW Associated Blue-Metal Quarries Ltd v Federal Commissioner of Taxation (1956) 94 CLR 509 Oil Basins Ltd v BHP Petroleum Pty Ltd (unreported, Supreme Court of Victoria, Kaye, Fullagar and Hampel JJ, 27 May 1988) Orica Ltd v Federal Commissioner of Taxation (2010) 78 ATR 710 Oxnard Financing S.A. v Rahn [1998] 1 WLR 1465 Parker v Federal Commissioner of Taxation (1953) 90 CLR 489 Pratt Holdings Pty Ltd v Federal Commissioner of Taxation (2012) 216 FCR 258 Premier Automatic Ticket Issuers Ltd v Federal Commissioner of Taxation (1933) 50 CLR 268 Radaich v Smith (1959) 101 CLR 209 Re CSR Ltd (2010) 183 FCR 358 Re Talison Lithium Ltd [2013] FCA 194 Regional Director of Customs (WA) v Dampier Salt (Operations) Pty Ltd (1996) 67 FCR 108 Resource Capital Fund III LP v Commissioner of Taxation (2013) 95 ATR 504 Rio Tinto Ltd v Commissioner of Taxation (2004) 55 ATR 321 Robe River Mining Co Pty Ltd v Federal Commissioner of Taxation (1990) 21 ATR 1068 Rose v Commissioner of Taxation (1951) 84 CLR 118 Spencer v Commonwealth (1907) 5 CLR 418 Spotless Services Ltd v Federal Commissioner of Taxation (1993) 25 ATR 344 Tariff Reinsurances v Commissioner of Taxes (Vic) (1938) 59 CLR 194 TEC Desert Pty Ltd v Commissioner of State Revenue (WA) (2010) 241 CLR 576 Waterhouse v Deputy Federal Commissioner of Land Tax, South Australia (1914) 17 CLR 665 Western Australia v Brown (2014) 253 CLR 507 Western Australia v Ward (2002) 213 CLR 1 Wik Peoples v State of Queensland (1996) 187 CLR 1
Date of hearing:	9 and 10 August...