National Mutual Life Association of Australia Ltd v Commissioner of Taxation

(2009) 177 FCR 539; [2009] FCAFC 96

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Interrogate

Catchwords

1. Income Tax
2. › Capital gains
3. › Reduced cost base
4. › Expenditure of a capital nature
5. › Capital contribution to subsidiary company
6. › Whether expenditure reflected in state or nature of shares at time of disposal
7. › Whether value of shares forms part of state or nature of shares
8. › Income Tax Assessment Act 1936 (Cth), s 160ZH(3)(c)

Quick Take

The 'state or nature' of an asset in s 160ZH(3)(c) of the Income Tax Assessment Act 1936 (Cth) includes the value of the asset. A capital contribution to a subsidiary's shareholders' funds that enhances the value of shares and remains reflected in that value at the time of disposal satisfies the second limb of s 160ZH(3)(c). The UK approach in Aberdeen Construction and [name withheld], which required a change distinct from enhancement of value, does not represent the law in Australia.