Commissioner of Taxation of the Commonwealth of Australia v Allina Pty Limited

The Commissioner of Taxation of the Commonwealth of Australia (the Commissioner) sought special leave to appeal to the High Court of Australia against a decision concerning capital gains tax. The dispute involved Allina Pty Limited (the taxpayer) and the Commissioner, with the core issue revolving around the cost base of certain rights acquired by shareholders.

The legal question before the High Court was whether, for the purposes of calculating a capital gain under section 160ZH(9)(a) of the relevant tax legislation, shareholders in BHP should be treated as having acquired rights issued by BHP Gold. Specifically, the court had to determine if these rights, issued for no consideration, should be deemed to have a cost base equal to their market value at the time of acquisition, as provided for in section 160ZH(9)(a) where an asset is acquired without consideration.

The Commissioner argued that the issue of rights by BHP Gold to its shareholders, for which no consideration was paid, fell within the scope of section 160ZH(9)(a). This provision deems a taxpayer to have paid consideration equal to the market value of the asset at the time of acquisition if the asset was acquired from another person without paying or giving any consideration. The taxpayer contended that the issue of these rights did not constitute a disposal by BHP Gold to the shareholders, and therefore the deeming provision of section 160ZH(9)(a) was not applicable. The court was required to interpret the meaning of "acquired the asset from" within the context of section 160ZH(9)(a) and consider whether the issuance of rights by a company to its shareholders constituted such an acquisition for the purposes of the capital gains tax provisions.