Commissioner of Taxation of the Commonwealth of Australia v Mount Isa Mines Limited

In the High Court of Australia, Mount Isa Mines Limited (the taxpayer) sought special leave to appeal against a decision of the Full Federal Court concerning the deductibility of an investment allowance. The Commissioner of Taxation of the Commonwealth of Australia was the respondent. The dispute centred on whether transportable housing units installed by the taxpayer at remote mining townships qualified for an investment allowance under section 82AA of the relevant legislation.

The primary legal issue before the High Court was the interpretation of section 82AA(2)(b)(ii), which allowed an investment allowance for a unit of eligible property used by a taxpayer wholly and exclusively for the purpose of producing assessable income, other than by granting rights to use the property to other persons. The taxpayer argued that the accommodation units, while occupied by employees who paid a small rent, were primarily used by the taxpayer to facilitate its mining operations, thereby producing assessable income from mining. The Commissioner contended that the granting of rights to occupy the units to employees constituted the derivation of assessable income through rent, thus falling outside the scope of the allowance.

The taxpayer submitted that the Full Federal Court had misunderstood the decision in *Tourapark*, a previous High Court case. In *Tourapark*, the taxpayer's business was deriving income from caravan occupation, and the caravans were the means by which that income was generated. In contrast, the taxpayer in this case argued that its sole purpose in constructing the units was to enable its mining activities, with the rent received from employees being incidental and substantially irrelevant to the primary purpose of producing mining income. The taxpayer contended that the units constituted plant essential for its mining operations, and their use was wholly and exclusively for that purpose, notwithstanding the minor rental income.