In this case, the High Court of Australia unanimously dismissed an appeal from BHP Billiton Limited (now named BHP Group Limited) (BHP) from a 2:1 decision of the Full Federal Court, which concerned the attribution of income to BHP under Part X of the Income Tax Assessment Act 1936 (Cth) (1936 Act). The case turned on the concept of “associate” in s 318 of the 1936 Act and, in particular, on the meaning of the definition of “sufficiently influenced” in s 318(6)(b).

The High Court held that BHP “sufficiently influenced” (and was “sufficiently influenced” by) BHP Billiton Plc, with which it has a dual-listed company arrangement, and, further, that the BHP group’s Swiss marketing entity was “sufficiently influenced” by BHP Billiton Plc and BHP for the purposes of s 318(2) of the 1936 Act. In so finding, the High Court concluded that in order for a company to be “sufficiently influenced” by another entity within the meaning of s 318(6)(b), it was not necessary to show “effective control”, or a causal link between the entity’s “directions, instructions or wishes” and the company’s actions (as BHP had contended). The definition could be satisfied if the facts provided a basis upon which to conclude a “requisite degree of contribution” between such directions and actions.