25/05/2010 - 15:05

CBH beats taxman in legal case

25/05/2010 - 15:05

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Grain storage, handling and marketing giant CBH Group has won a Federal Court appeal over its tax-exempt status that could have cost it millions of dollars a year.

CBH beats taxman in legal case

Grain storage, handling and marketing giant CBH Group has won a Federal Court appeal over its tax-exempt status that could have cost it millions of dollars a year.

CBH has previously estimated that had it not been tax-exempt the average tax bill for the past decade would have been $13 million per year.

Federal Court Justice John Gilmour today released his conclusion that the Commissioner for Taxation was wrong when he decided that CBH was liable for tax because the business it carried on was for the profit or gain of its members.

“The fact that growers who are also members benefit from the activities of CBH, not because they are members but because they are growers, does not make CBH an association carried on for their individual profit or gain,” Justice Gilmour said in his reasons.

Justice Gilmour also dismissed the commissioner’s legal argument that because CBH’s activities fell outside the farm gate it did not fit into a legislated tax exemption category.

“I am satisfied for the following reasons that the principal, dominant or main purpose of CBH was and remains to promote the development of Australian agricultural resources by promoting the development of the grain industry of Western Australia,” he wrote.

“I have already concluded, contrary to the commissioner’s submissions that both the grain harvested from the land and the means by which it is transported, stored and loaded in bulk for consumption and export for part of Australia’s agricultural resources.”

The battle with the tax man took place after CBH sought a private ruling from the Commissioner of Taxation about its tax status as the board and management considered the future structure of the organisation.

As the appellant, CBH had to prove the tax commissioner wrong.

The 77-year-old agricultural cooperative has held tax-exempt status since 1972.

Its 2007-08 income tax expense was $17.1 million.

Although CBH has subsidiaries which are taxable entities in their own right, the decision is likely to influence the debate within the organisation about its future structure.

 

 

 

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