Case: Federal Commissioner of Taxation v Myer Emporium Ltd [1987] HCA 18 ; (1987) 163 CLR 199
Outcome: cited
In the foregoing context, Lend Lease cited dicta of a Full Federal Court in Burrill v Commissioner of Taxation (1996) 67 FCR 519 at 523 (Jenkinson, Olney and Sundberg JJ) that '[i] t is a fundamental principle of Australian income tax law that rights to receive money and obligations to pay money are taken into account in calculating income and outgoings, gains and losses, at their nominal value' . Reliance was placed by the Full Federal Court in Burrill incidentally upon the following dicta of the High Court in Federal Commissioner of Taxation v Myer Emporium Ltd [1987] HCA 18 ; (1987) 163 CLR 199 at 216-217 (Mason ACJ, Wilson, Brennan, Deane and Dawson JJ): 'The accounting basis which has been employed in calculating profits and losses for the purposes of the Act is historical cost... not economic equivalence... And so a taxpayer who lends money for a stipulated period at interest is treated as exchanging the money lent for a debt of the same amount, unless the loan is made at a discount or premium, in which case there may be a gain or loss on capital account... . In the ordinary case, the debt is brought to account in the same amount as the money lent. The amount of the debt is not reduced because the lender is kept out of the use and enjoyment of the money lent for the period of the loan.' It was contended by the Commissioner that the foregoing dicta 'does not address the statutory requirements in s 160ZD(1)(c)'. The difficulty for the Commissioner remains however in seeking to establish that the par (c) expression 'an amount or amounts of money or property' accommodated the controversial notion of '[a] dditional non-cash consideration on disposal' appearing in [16] above. 52 The further response of Lend Lease to what was propounded by the Commissioner concerning the value of the 'right to share in Westpac dividends' was that the Commissioner thereby unjustifiably and impermissibly elevated 'a supposed economic equivalence to the status of a contractual right capable of comprising consideration'. Lend Lease cited in that regard Commissioner of Taxation v Citylink Melbourne Ltd [2006] HCA 35 ; (2006) 228 ALR 301, where at [95], Crennan J (with whose reasons Gleeson CJ and Gummow J agreed), observed as follows: '... it was contended that the net present value of the liability to pay the concession fees should be used to calculate allowable deductions. The Commissioner applied for leave to amend the grounds of appeal to raise this point... Leave to amend was refused. Present value discounting of outgoings, payable in the future, is currently under consideration, together with other methods for assessment and deduction, spread over the life of certain financial arrangements (her Honour thereby referring to the Tax Laws Amendment (Taxation of Financial Arrangements) Bill 2006, exposure draft, December 2005) . However, the accounting basis used to date in Australian tax law for the purposes of assessment and deductions has been historical cost accounting, rather than economic equivalents.' Citation was made by her Honour from both Burrill and Myer Emporium.