Federal Court clarifies meaning of ‘taxable Australian real property’ in Newmont case

On 10 November 2025, the Federal Court handed down its decision in Newmont Canada FN Holdings ULC v Commissioner of Taxation (No 2) [2025] FCA 1356.

The case provides important guidance on the interpretation of ‘taxable Australian real property’ (TARP) under Division 855 of the Income Tax Assessment Act 1997 (Div 855), particularly in the context of mining operations and foreign investors. This provision dictates the taxing rights Australia has over foreign residents in respect to their Australian based assets.

Background

The dispute arose from a 2011 restructure within the Newmont group. Two foreign-resident entities (the Newmont Vendors) sold their shares in Newmont Australia Pty Ltd (NAPL), which operated four major gold mines in Australia. 

The vendors sought to disregard approximately AUD $96 million in capital gains under Div 855 – a provision that allows foreign residents to disregard gains on the disposal of assets where those assets are not ‘Taxable Australian Property’ (TAP). 

The definition of TAP includes, among other things, indirect Australian real property interests – in other words, shares in an entity whose value is principally (i.e. greater than 50 per cent) derived from TARP. Relevantly, s855-20 defines TARP as “real property situated in Australia (including the lease of land if the land is situated in Australia)”. 

The Commissioner disagreed with the taxpayer and assessed that the shares were indirect Australian real property interests, primarily based on the argument that:

1. plant and equipment (P&E) at the Boddington Gold Mine was TARP; and
2. the value of the P&E was so significant that the majority of value of the sale shares came from TARP assets, as opposed to non-TARP assets, meaning that the capital gain on the shares could not be disregarded. 

This resulted in two key questions for Colvin J to consider:

1. Whether the P&E was TARP; and
2. The valuation of the P&E. 

The arguments 

Broadly, the Commissioner argued for a broad interpretation of ‘real property’, contending that P&E affixed to land that is the freehold or leasehold land of the owner of the P&E will become part of the land under general law and should, therefore, be treated as TARP. Accordingly, the value of the TARP in this instance would likely exceed the value of the non-TARP assets of NAPL, meaning that the Newmont Vendors (i.e. foreign-resident shareholders) could not disregard the capital gain on the disposal of the shares in NAPL.

The Newmont Vendors argued the existing general law concept of ‘real property’ should be applied, consistent with the Federal Court decision in YTL Power Investments Ltd v Commissioner of Taxation [2025] FCA 1317) (the YTL case). The argument put forward was that the P&E was installed on the land under the ‘authority’ of mining tenement rights, and it was not the freehold (or leasehold) that conferred the right to install and use the mining P&E. Mining tenements confer only statutory rights (personal property) and, therefore, are not an interest in land. Consequently, the Newmont Vendors argued that P&E affixed to the land should not automatically be treated as real property, and thatAccordingly, the value of the TARP would not exceed the value of the non-TARP assets of NAPL, allowing the Newmont Vendors to disregard the capital gain on the disposal of the shares in NAPL. 

The decision 

Ultimately, Colvin J rejected the Commissioner’s broad interpretation and reaffirmed that:

• ‘Real property’ does not take an expansive, policy-driven interpretation put forward by the Commissioner.  
• Drawing on TEC Desert Pty Ltd v Commissioner of State Revenue (WA) [2010] HCA 49, whether an item forms part of the land depends on the source of the authority for its installation. 
• In this instance, the authority from which P&E was installed on the land came from mining tenements (personal property), not land ownership. 
• Therefore, P&E installed under the mining tenement rights does not constitute real property for Division 855 purposes. 

The Court did state, in obiter, that in slightly different circumstances, the P&E could have been considered TARP for Division 855 purposes. Therefore, it is important to understand the statutory rights being exercised in each case. 

Why it matters 

This decision, alongside the YTL case, signals a consistent judicial approach to Div 855. It provides confirmation that ‘real property’ in this context takes its legal meaning, and provides clarity on when capital gains on Australian shares can be disregarded. 

It also demonstrates that P&E will not automatically be TARP even when affixed to land, depending on the nature of the underlying rights. 

However, taxpayers should note that Treasury has flagged possible legislative amendments to Division 855, and appeals may follow. Foreign investors should review asset characterisation carefully when planning restructures or exits.

Learn more about how our Tax services can help you

Visit our Tax page