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By: Mark Trewhella, Jessica Brass
09 Dec 20256 min read
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.
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:
This resulted in two key questions for Colvin J to consider:
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.
Ultimately, Colvin J rejected the Commissioner’s broad interpretation and reaffirmed that:
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.
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.
The NSW Budget 2026 focuses on health and education spending, with slower growth forecasts, rising debt and targeted foreign investor duty relief measures.
On Tuesday 23 June 2026, Treasurer David Janetzki handed down his second state budget alongside Premier David Crisafulli. Deficits are forecast throughout the forward estimates, with a surplus of $619m projected for 2029-30.
The Government has announced revisions to several tax measures in the Budget, affecting capital gains tax treatment for small businesses, a special carve-out for start-ups, and a conditional exclusion for discretionary testamentary trusts from the 30 per cent tax on trusts.
