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RCF IV: Special Leave refused by High Court

RCF IV: Special Leave refused by High Court

The High Court dismissed the application for special leave of Resource Capital Fund IV LP and Resource Capital Fund V LP (RCF) on Friday, 13 September.

Alex Patrick

Partner, Dispute Resolution & Controversy

KPMG Australia


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Gavel and paper

The case concerned the Australian tax treatment of profits made by RCF following a sale of shares in Talison Lithium Limited (Talison), an Australian resident company. It considered a number of tax issues commonly impacting foreign investment in Australia.

On 5 February 2018, the Federal Court handed down its decision at first instance. 

The Commissioner appealed to the Full Federal Court (FFC, Besanko, Middleton, Davies, Steward and Thawley JJ), which handed down its decision on 2 April 2019. The FFC allowed the Commissioner’s appeal, and RCF sought special leave to appeal this decision to the High Court.

Special leave application

Keane and Gordon JJ dismissed RCF’s application with costs, and without seeking oral submissions from the Commissioner, deciding that the case was not a suitable vehicle to test the application of Division 855 and that there was no reason to doubt the decision of the FFC.

The submissions made by counsel for RCF, John de Wijn AM QC, related to the FFC’s decision regarding the:

  • statutory construction of a “mining, quarrying or prospecting right” – specifically that the general purpose leases and the miscellaneous licence were taxable Australian real property (TARP) because they each constituted a “mining, quarrying or prospecting right” within the meaning of section 855-20.

Keane and Gordon JJ have upheld the FFC’s interpretation in this context.

Taxpayers will need to bear this relatively broad interpretation in mind when considering what constitutes a “mining, quarrying or prospecting right” in their existing and future contractual arrangements.

  • “value beyond mining lease” intangible – namely the FFC’s finding this “was not properly attributable to “Downstream Operations” and was clearly attributable to a right to mine and thus TARP”

Again, Keane and Gordon JJ have upheld the FFC’s decision. 

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