Australian Financial Review article, by Michael Belly, Legal Editor, 5 Dec 2108 (Paper, p2 of the 6.12.18 edition)

See also: Tax Technical articles: Case Note; Seminar Slides


The West Australian tax commissioner hit Barrick Gold with “land rich” stamp duty on its $15 billion takeover of Placer Dome in 2006, and if the miner had won its challenge it would have paid minimal or no tax.

At issue was the tax office’s “top-down” approach to valuing the land, which doesn’t allow for goodwill or other intangibles. Barrick argued the value of the goodwill in Placer brought it under the tax threshold.

The Fimiston Open Pit mine, jointly owned by Barrick Gold Corp. and Newmont Mining Corp, and is Australia’s largest open-pit mine.  Carla Gottgens


The High Court said in a statement issued with the decision on Tuesday that Barrick had “failed to establish that the value of all of Placer’s land, as a percentage of the value of all of Placer’s property, did not meet or exceed the 60 per cent threshold”.

“Placer was a land rich company which had no material property comprising legal goodwill,” the court said.

“Goodwill for legal purposes, as distinct from accounting purposes, was held to comprise those sources which generated or added value (or earnings) to a business by attracting custom.

“Custom remained central to the concept of legal goodwill.

“Barrick’s contention that goodwill for legal purposes was or should be treated as synonymous with what it described as the “added value” concept of goodwill, or ‘going concern’ value, was rejected.”

Land value

Gilbert + Tobin stamp duty special counsel Adam Musgrave said the court had clarified the issue of whether a mining company has any recognisable legal goodwill which can be separately valued from its landholdings.

​”This has been a contentious one in the stamp duty space for a considerable number of years.”

“The approach and decision making of the state and territory courts and tribunals on this issue has been different in a number of stamp duty cases over the years and this is reflected in the differing decisions in this case.”

The case came to the High Court via the Western Australian Court of Appeal, which said the commissioner had failed to distinguish the value of the land from the value of Placer’s business as a going concern.

At the special leave hearing, High Court judge Michelle Gordon told the commissioner: “Your argument is, ‘If I can identify there’s no goodwill, I don’t need to go to the expense of valuing the land.”

Noel Hutley SC for the commissioner replied: “Their case was that everything that is not property – land, is goodwill.”

The takeover of Placer Dome in 2006 was the largest transaction of its kind in the gold industry and created the world’s largest gold mining business. The Commissioner assessed stamp duty payable on the acquisition at about $55 million.

For the assessment, Placer’s property was valued at $12.8 billion. To attract duty, the value of its land had to equal or exceed 60 per cent (in this case $7.68 billion) or more of the value of all property to which it was entitled..

However, after it nominated “fair value” amounts to Placer’s tangible assets in its company accounts, Barrick allocated the residual balance of the purchase price ($6.5 billion) to “goodwill”. This brought it well under the threshold.

The lead judgment of Chief Justice Susan Kiefel and Justices Virginia Bell, Geoffrey Nettle and Michelle Gordon said there were “no sources of goodwill that could explain the $6 billion gap which was attributed by Barrick to goodwill”.

“It is important to recognise that goodwill has no existence independently of the conduct of that business; goodwill cannot be severed from the business which created it.”

Mr Musgrave said the decision “has direct application now to how mining tenements and other land interests held by a mining company – whether one with a longstanding and profitable business or a start-up company – are to be properly valued for stamp duty purposes on an Australia-wide basis”.




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