AusNet Services, Victoria’s biggest energy distributor, claimed deductions totalling $177.5 million in respect of payments made to the Victorian Government following privatisation of the Victorian electricity transmission system. Confirming the decisions of the courts below, the High Court (Nettle J dissenting) decided that the payments were of a capital nature and not deductible, agreeing with the Commissioner, as represented by Helen Symon QC with Eugene Wheelahan.
The plurality’s (French CJ, Kiefel and Bell JJ) conclusion was based on the Asset Sale Agreement which effected the privatisation. By its terms, AusNet assumed liability to make the payments. From a practical and business point of view, AusNet did so in order to effect the capital acquisition of the Transmission Licence and other transmission assets.
Gageler J’s conclusion did not depend on the Asset Sale Agreement. His Honour’s conclusion followed from an analysis of the structure and commercial context in which statutory liability to make the payments came to be imposed. From a practical and business perspective, AusNet had to subject itself to that statutory liability in order to secure acquisition of the transmission assets.