The High Court has granted the taxpayer special leave to appeal against the decision in Blank v FCT [2015] FCAFC 154.

In a majority decision, the Full Federal Court dismissed the taxpayer’s appeal and confirmed that payments of US$160m he received in instalments following his termination from a company were assessable to him as ordinary income in the income year in which the right to the payments arose.

[LTN 94, 18/5/16]

Extract from the Full Federal Court majority decision


  1. This appeal and the cross-appeal are from a judgment of a single judge of the Court delivered on 26 May 2014.
  2. The proceedings below resulted in two sets of reasons for judgment, delivered on 21 February 2014 and on 22 May 2014 respectively: see Blank v Commissioner of Taxation  [2014] FCA 87 and Blank v Commissioner of Taxation (No 2) [2014] FCA 517. On 21 February 2014, the primary judge delivered reasons in which he held that payments amounting to USD160,033,328.25 (the Amount), which were made by Glencore International AG (GI) to, or at the direction of, the appellant, were assessable as ordinary income; and ordered that the parties provide short minutes of order to give effect to those reasons. On 27 February 2014, however, the appellant applied to re-open his case in order to argue that s 23AG of the Income Tax Assessment Act 1936 (Cth) (ITAA 1936) applied, with the result that some part of the payments was exempt from tax. The primary judge dismissed this application, with reasons, on 22 May 2014 and made final orders on 26 May 2014.
  3. The proceedings principally concern the correct characterisation, for tax purposes, of payments made by GI to the appellant in the 2007 to 2010 income years, following the termination of the appellant’s employment by his resignation from Glencore Australia Pty Limited (Glencore Australia), a wholly owned subsidiary of GI, on 31 December 2006. The Amount was calculated by reference to the appellant’s entitlement under profit participation arrangements made during the course of his employment by companies in the Glencore group of companies (Glencore Group). The principal issue is whether the payments are assessable as ordinary income under s6-5 of the Income Tax Assessment Act 1997 (Cth) (ITAA 1997) or, alternatively, s 26(e) of the ITAA 1936; or as a capital gain as a consequence of the ending of a CGT asset under s104-25 of the ITAA 1997, on the execution of a Declaration of Assignment and General Release by the appellant on 15 March 2007 (the Declaration).
  4. For the reasons stated below, we would dismiss the appeal and the cross-appeal, essentially because in our view the primary judge correctly held that the payments in question were assessable as ordinary income and we discern no error in his Honour’s determination of two other related issues, including his refusal of leave to re-open.