PepsiCo, Inc v FCT  FCA 1490 – Federal Court issues first decision concerning DPT
In the first reported decision considering the diverted profits tax (DPT), the Federal Court has ruled that:
- a component of the payments made by Schweppes Australia Pty Ltd under its exclusive bottling agreements (EBAs) with two US beverage companies (PepsiCo, Inc and Stokely-Van Camp, Inc) were royalties in respect of which the US companies were liable for Australian royalty withholding tax; and
- in the alternative (i.e. only if the Court’s conclusion as to the royalty withholding tax issue was incorrect), one of the principal purposes of PepsiCo and Stokley-Van Camp in entering into or carrying out the scheme constituted by the EBAs was to obtain a tax benefit (namely not being liable to pay Australian royalty withholding tax) and to reduce foreign tax (namely US tax on their income), such that the Court would have concluded that the DPT provisions applied.
Nerang Subdivision Pty Ltd v Hutson  QSC 268 – Administrator of deceased estate required to be registered for GST
The Queensland Supreme Court has held that the administrator of a deceased estate who entered into an agreement with third parties for the development of 312 hectares of land that formed part of that estate was required to be registered for GST.
Shell Energy Operations case
The NSW Chief Commissioner of State Revenue has been unsuccessful in its application for special leave to appeal to the High Court from the NSW Court of Appeal’s decision in Chief Commissioner of State Revenue (NSW) v Shell Energy Operations No 2 Pty Ltd  NSWCA 113 (covered in the Birchstone Brief for the week ended 2 June 2023). As such, the Court of Appeal’s decision now stands.
In that case, the Court held that interests in power stations which were severed from the land on which they stood pursuant to two statutory vesting orders were ‘goods’ for the purposes of the landholder duty provisions in Chapter 4 of the Duties Act 1997 (NSW).
Edge Developments Pty Ltd case
The High Court has refused the taxpayer’s application for special leave to appeal against the South Australian Court of Appeal’s decision in Edge Developments Pty Ltd v Commissioner of State Taxation (SA)  SASCA 88 (covered in the Birchstone Brief for the week ended 25 August 2023). In that case, the Court held that:
- a unit trust’s equitable interest in land pursuant to a performance charge was a relevant interest in land sufficient to render it a land holding entity; and
- as such, a redemption of units in the unit trust that led to an increase in the relevant taxpayers’ interests in the unit trust was a dutiable transaction.
Gosford Classic Car Museum case
The High Court has granted the taxpayer special leave to appeal against the Full Federal Court’s decision in Automotive Invest Pty Limited v FCT  FCAFC 129 (the ‘Gosford Classic Car Museum’ case, covered in the Birchstone Brief for the week ended 18 August 2023). In that case, the Full Court had upheld a decision that that cars displayed in a car museum that were also held for sale were not held solely as trading stock. As a result, the Full Court ruled that:
- the taxpayer was liable to increasing luxury car tax adjustments; and
- the input tax credits the taxpayer could claim in respect of the cars were mostly limited to 1/11th of the car limit.