Commissioner of Taxation v BHP Billiton Limited

Income tax – Allowable deductions - Funds advanced for construction of plant and facilities - Div 243 of Income Tax Assessment Act 1997 (Cth) ("Act") required taxpayer to include additional amount in assessable income at termination of limited recourse debt arrangement if limited recourse debt used to finance or refinance expenditure and certain other criteria met - "Limited recourse debt" relevantly defined in s 243-20(2) of Act as debt where creditor's rights against debtor in event of default capable of being limited to rights in relation to financed property or property provided as security for debt, having regard to various factors - Wholly-owned subsidiary ("BHPDRI") of parent company ("BHPB") partly financed capital expenditure for processing plant with monies borrowed from other wholly-owned subsidiary ("Finance") - Finance wrote off balance of loan as irrecoverable - BHPDRI and BHPB claimed capital allowance deductions for project expenditure - Appellant applied Div 243 of Act to reduce deductions - Whether loan from Finance to BHPDRI "limited recourse debt" under s 243-20(2) of Act - Whether BHPDRI and Finance dealing at arm's length - Meaning of "capable of being limited" in s 243-20(2) of Act.

Words and phrases – "capable of being limited", "capital allowance deductions", "limited recourse debt".

Income Tax Assessment Act 1997 (Cth) – ss 243-15(1), 243-20(1), 243-20(2).