On 10 November, Justice Colvin of the Federal Court of Australia delivered judgment in Newmont v Commissioner of Taxation. The proceedings have been on foot since 2017.
The 3-week case heard in August 2024 concerned Newmont’s liability to tax on aggregate capital gains of approximately $320 million resulting from a restructure of the holding of its Australian gold mining assets including the Boddington Mine in WA in 2011.
The principal issue was whether Division 855 (TARP or “taxable Australian real property”) applied to “disregard” the gains for Australian tax purposes.
Primary tax in excess of $96 million is in dispute.
The Court has not made final orders. It will do so after several issues are reported on by a referee.
The decision addresses a number of issues of potentially wide import in the context of the Div 855 “TARP” regime, including:
- The meaning of “real property” in the context of Div 855 (see also the recent YTL decision)
- The approach to valuing particular assets (or allocating value to assets) in the context of the TARP regime
- When it is appropriate to apply a discount for lack of control and marketability in valuing shares in a company
Chris Peadon led a 3-counsel team for the Commissioner including New Chamber’s Michael Cosgrove, and Nathan Li of 7 Wentworth Selborne.
The decision will be of interest to foreign residents considering their liability to tax upon disposal of interests in entities owning real property and other land-related interests in Australia. It follows on from the decision of the 5-member bench of the Full Federal Court in “RCF IV” in which Chris Peadon also appeared.
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