The AAT has confirmed that a taxpayer who carried on a business of trading in coal and mineral exploration permits was assessable on $2.5m and the value of 40,000,000 shares as ordinary income under s 6-5 of the ITAA 1997 from the sale of mining tenements in the 2010 year.
The taxpayer argued among other things, that he was not assessable on the value of the shares until the Department administering the Mineral Resources Act 1989 (Qld) provided written confirmation that the purchaser’s application for an exploration permit had been successfully lodged and the tenements were granted to the purchaser (which the taxpayer claimed did not occur until the 2012 year, in respect of some tenements sold). He also claimed that the sale was dependent on various covenants relating to the transfer of the tenements, affecting both the taxpayer and the purchaser, being fulfilled.
In dismissing the taxpayer’s application, the AAT found his argument that the Commissioner could not assess him on the receipts until the tenements were granted to the purchaser did not assist him. Instead, the AAT found, in effect, that the taxpayer had done everything under the contract that the parties had contemplated was necessary to “achieve the end of having the tenements in the name of” the purchaser – and that this occurred in the 2010 income year. Moreover, the AAT found that the various amounts the taxpayer received were receipts in the ordinary course of the business he was conducting and, therefore, income according to ordinary concepts.
(AAT Case [2014] AATA 867, Re Byrt and FCT, AAT, Ref No 2013/6230, Hack DP, 21 November 2014.)
[LTN 228, 25/11/14]