Court Decisions
Pre-CGT double tax agreements
04.02.2009
A single Judge of the Federal Court (Lindgren J) has held that the so-called capital gains tax, which was enacted as Part IIIA ITAA 1936, was within the taxes covered by the Netherlands and the former UK double tax agreements, both of which were entered into before the enactment of Part IIIA ITAA 1936 (Undershaft (No 1) Ltd v FCT [2009] FCA 41).
This meant that net capital gains made by residents of the UK and the Netherlands from the disposal of shares which had the necessary connection with Australia were not taxable in Australia because the taxpayers did not carry on a business through a permanent establishment in Australia. The decision in this case mirrors the decision of Edmonds J in Virgin Holdings SA v FCT ([2008] FCA 1503) from which the Commissioner is appealing to the Full Federal Court.
