In a decision handed down on Fri 2.8.2013, the Full Federal Court dismissed an appeal by a taxpayer against an earlier decision which had held that the taxpayer was not entitled to deduct a loss transferred to it from a related joint venture company in respect of a project to explore certain mining exploration tenements. The loss included part of a balancing adjustment deduction for “allowable capital expenditure” (ACE) claimed by the joint venture company pursuant to the relevant provisions in Div 330 of the ITAA 1997 that arose following the failure of the venture and the sale of the parties’ respective interests. In dismissing the appeal, the Full Court held there was no balancing adjustment deduction for the joint venture company, in consequence of its disposal of the 4 exploration tenements, giving rise to a tax loss in the year of income transferrable to the taxpayer pursuant to s 170-20 of the ITAA 1997.
(Pratt Holdings Proprietary Limited v FCT [2013] FCAFC 82, Full Federal Court, Dowsett, Edmonds and Griffiths JJ, 2 August 2013.)
[FJM Note: The taxpayer had a binding private ruling that the deduction was available, based on final documentation, and was in the end the victim of retrospective legislation, which although it said it was intended to restore Div 330 to the way everyone expected it to work, was in drafted differently, and those extra statutory statements about how it was intended to work, counted for nothing.]
[LTN 148, 2/8/13]