Home » News » GHP 104 160 689 Pty Ltd v. Commissioner of Taxation

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.

Background

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’.

Issues

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.

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 Trustindex verifies that the original source of the review is Google.  I have been using Swanson Reed for my clients for more than a decade.  Having a specialist firm that can provide practical and commercial advice that produces real outcomes is very important and we have received great feedback from our clients. Highly recommended.
  
 
 
      Posted on Google  
   
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 Trustindex verifies that the original source of the review is Google.  Damian and the rest of the team at Swanson Reed have been supporting us for several years.  We always appreciate their insights, expertise, and efforts.
  
 
 
      Posted on Google  
   
   Rueben Rajasingam  
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 Trustindex verifies that the original source of the review is Google.  Experienced responsive Team. They have been a great help to me and my company navigate the R&D tax claim process and have provided invaluable advice.
  
 
 
      Posted on Google  
   
   Enrique Esquivel  
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 Trustindex verifies that the original source of the review is Google.  Damian and the team at Swanson Reed have been extremely helpfully and professional during all of our consultations. Highly recommended.
  
 
 
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 Trustindex verifies that the original source of the review is Google.  
  
 
 
      Posted on Google  
   
   Anatole Kononewsky  
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 Trustindex verifies that the original source of the review is Google.  The Swanson Reed team have provided our company with exceptional professional advice and assistance for all of our R&D claims for many years - have always achieved great results with excellent value for their services.
  
 
 
      Posted on Google  
   
   Payam Toloo  
 2. June, 2022
 
 
 Trustindex verifies that the original source of the review is Google.  Damian Smyth and his team are very helpful, supportive and experts in their field of R&D Tax claims. I'm always happy with the work they do and been a customer of their for over 5 years.
  
 
 
      Posted on Google  
   
   Melissa Doddy  
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 Trustindex verifies that the original source of the review is Google.  The Team at Swanson Reed are very experienced R&D Tax Advisors and gave us ongoing support with all of our R&D Claims, the consultants ensured we were always working with current legislative guidelines, gave us assistance with compiling technical and government documentation and went out their way to ensure they were with us for the entire process from beginning to end.  Highly recommended to anyone who needs assistance with working through what can at times be a daunting process.
  
 
 
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   Gary Watson  
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 Trustindex verifies that the original source of the review is Google.  We can highly recommend Swanson and Reed as an R & D accountant. We have worked with them for several years now as they make our R & D claim so easy and communicate quickly with both us and our accountant.
  
 
 
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