GHP 104 160 689 Pty Ltd v. Commissioner of Taxation

March 7th, 2015

Summary of 104 160 689 matter

Taxation Ruling – TR2013/3 Click Here
 Taxation Ruling: TR 2013/3A1 – Addendum Click Here
Decision Impact Statement – GHP 104 160 689 Pty Ltd  Click Here

The case concerned whether certain expenditure was to be disallowed deductibility at the rate of 125% because it was ‘feedstock expenditure’ within the meaning of the former section 73B(1) of ITAA 1936. GHP 104 160 689 Pty Ltd (‘the applicant’) carried on the business of mining operations which included certain research and development (‘R&D’) activities.


  • Over several tax years (2003-2007) the applicant undertook R&D activities during plant trials, to test various possible improvements to its copper and lead concentrators and its copper smelter. The expression “plant trial” refers to R&D undertaken by way of testing one or more altered integers of a plant under ordinary operational conditions to assess the changed integers’ impacts on the operation of a plant as a whole. Some plant trials can run over a considerable period of time before results can be assessed. The evidence establishes that many of the plant trials conducted by the applicant ran over several months. However, it is not in dispute that the applicant’s R&D as relevant to these proceedings was appropriately conducted as plant trials.
  • The applicant seeks to deduct a considerable part of its expenditure incurred during those plant trials at the premium rate of 125%.
  • The Commissioner disallowed certain claims for deductions at the rate of 125% in the relevant years, contending that they related to ‘feedstock expenditure’ for the purposes of subsection 73B(1) of the ITAA 1936.
  • There was some overlap between the activities in the applicant’s copper concentrator and its smelter in Mount Isa, in that some of the copper concentrate was subsequently fed into plant trials being conducted in the smelter. The Commissioner contended that all expenditure incurred in producing copper concentrate which was fed into the smelter comprised ‘feedstock expenditure’.


  • Whether various items of expenditure used in the concentrate process and included in the R&D claim and deducted at 125% should have been categorised as feedstock (and deducted at 100%); and
  • Given the inter-related nature of the concentrating and smelting processes, where the timing of the processes and materials used ‘overlap’ (i.e. where concentrate produced in the concentrate process was subsequently fed into the smelting process), the issue is whether this expenditure became feedstock expenditure

Click here to view the GHP 104 160 689 Pty Ltd and Commissioner of Taxation case.