Power Point slides: prepared by Eugene Wheelahan SC, for a presentation to the Tax Bar Association, on 18 December 2018 – on this important High Court case:  HCA 59 – reproduced with Eugene’s approval.
KEY POINTS – found in these slides, include:
- a breakdown of the analysis, of the Court, with paragraph numbers, to help navigate the judgement.
- The WA ‘land rich’ test, which focussed on the ratio of land to total property values (‘goodwill’ not being the only ‘non-land’ asset).
- The restrictive view, the majority took, of ‘goodwill’, for legal purposes (only things that attract custom).
- The importance of gold miners being ‘price takers’ selling product into a market for generic goods, where the taxpayer’s product can’t be identified (so that there can be nothing that ‘attracts custom’).
- Gageler J’s view that the right to carry on a business, as a ‘going concern’, is ‘property’ that includes, but is not limited to, things that attract custom. He would have found in favour of the taxpayer, if there was appropriate evidence that the value of this property got the taxpayer over the 40% line, but there was the risk that some of this might actually be part of the value of the land, so he allowed the appeal, because the taxpayer did not satisfy its onus.
- The various income tax provisions, that could be relevant, using this Court’s approach to ‘legal’ goodwill, particularly: the ‘consolidation’ provisions, where the amount paid, for the target, must be ‘pushed down’ onto its identifiable assets. If the law continues to take a restricted view of what ‘goodwill’ is, then more value could be pushed down onto other assets, with potentially more advantageous tax results.