In the Second Reading Speech to the Electricity Industry (Amendment) Bill (11 May 1995), which amended s 163A of the Act to its present form, the Minister for Energy and Minerals said:
"Another important feature of part 2 is the provision setting out the basis on which the government will set franchise fees to be paid by those distribution companies which are licensed to sell electricity to franchise customers. The franchise fee is designed to capture for the government the 'monopoly rent' that would otherwise be available to the distribution companies. Beyond the franchise period, the distribution companies will no longer have monopoly power over their customers and the monopoly rent will be eradicated by competition and regulated open access rules."
In the State government's August 1995 Victorian Electricity Distribution Businesses Information Memorandum (Volume 2) the franchise fees were explained as follows:
"3.3.8 Franchise Fees
The government has established franchise fees which are collectable by the State from all parties licensed to retail electricity to franchise customers. The fees are designed to capture the excess profits that would otherwise accrue to retailers as a result of MUTs exceeding the forecast cost of supplying electricity to franchise customers.
The fees are being set in advance in real terms for each DB. The fees will be a fixed real amount, indexed to CPWe and will be payable quarterly in arrears. The fees for the year ended 30 June 1995 have been set in Franchise Fee Orders in Council for each DB. Franchise fees for the period from 1 July 1995 to 31 December 2000 will be contained in Franchise Fee Orders in Council pursuant to Section 163A of the Electricity Industry Act to be effective from July 1995 and which must be finalised by 30 June 1996. Once made, the Franchise Fee Order in Council cannot be varied other than by further legislation.
The fees will phase out as franchise customers become contestable and will cease once the market is fully contestable." (at 44)
THE ELECTRICITY INDUSTRY ACT 1993
Part 12 of the Act, which was inserted by the Electricity Industry (Amendment) Act 1994, provides for the regulation of the restructured electricity industry in Victoria. Section 159 prohibits a person from engaging in, inter alia, the supply or sale of electricity without a licence. An application for a licence may be made pursuant to s 161. Section 162 provides for the determination of licence applications. A licence, inter alia, confers the right to sell electricity in the licence area. Licence fees, payable under s 163(3)(a) and (4), are based on a proportion of the costs of the Office of the Regulator‑General and are payable to the Office. The functions of the Office are set out in s157.
Under s 162(2B) the licence is exclusive in respect of franchise customers. The sub-section provides:
If the Office has issued a licence authorising a distribution company to sell electricity to franchise customers, the Office must not issue a licence to another applicant authorising the sale of electricity to those franchise customers unless the Minister and the licensed distribution company have consented to the issue of the licence.
Franchise and non‑franchise customers are defined in s 154:
"'franchise customer' means a customer other than a non‑franchise customer;
........
'non-franchise customer' means a customer who purchases a load or amount of electricity that exceeds prescribed limits determined in accordance with the regulations".
The franchise fee for an "exclusive licence" granted under Part 12 is provided for in s 163A:
"(1) A distribution company that holds, or has held, an exclusive licence under this Part authorising it to sell electricity to franchise customers must pay to the Treasurer, in respect of each financial year during which it holds, or held, such a licence the impost determined in respect of that year by Order of the Governor in Council, on the recommendation of the Treasurer, applying to that company and published in the Government Gazette-
(a) if the licence issued before 30 June 1996-
(i) before 30 June 1995, in the case of the impost in respect of the financial year ending on that date; and
(ii) before 30 June 1996, in the case of the impost in respect of each year ending on 30 June in the period beginning on 30 June 1996 and ending on 30 June 2001; and
(b) if the licence is issued on or after 30 June 1996, before the end of the first year of the term of the licence.
(2) The Treasurer, in recommending the amount of an impost for each financial year payable by a distribution company, must be satisfied that the amount reasonably represents the amount by which the income of the company derived from the sale of electricity to franchise customers in that year is likely to exceed the sum of-
(a) the costs of deriving the income; and
(b) taxes payable in deriving that income; and
(c) an amount determined by the Treasurer to be a reasonable return on the capital of the company used in deriving that income-
having regard to-
(d) any relevant Order in force under section 158A; and
(e) the value of property and rights vested in the company under Parts 10 and 11; and
(f) the amount of liabilities that became liabilities of the company under Parts 10 and 11; and
(g) the likely number of franchise customers of the company in that financial year; and
(h) such other matters as the Treasurer determines after consultation with the company.
(3) The impost in respect of a financial year is payable at such times and in such manner as are determined in the Order.
(4) For the purposes of this section, a distribution company has an exclusive licence authorising the sale of electricity to franchise customers if that licence is the only licence in force under this Part authorising the sale of electricity to those customers."
To give effect to the intention to phase in full competition for the retail supply of electricity by 2001, ss 2, 39(d) and 39(e) of the Electricity Industry (Amendment) Act 1995 repeal ss 162(2B) and 163A as from 1 January 2001. The repeal of ss 162(2B) and 163A will bring to an end the statutory provisions which confer exclusivity in respect of franchise customers.
THE RETAIL LICENCES
The taxpayer and each of the other distribution companies were granted Distribution and Retail licences under Part 12 of the Act as from 3 October 1994 for their respective distribution areas. Each of the licences contains substantially the same terms and conditions. The taxpayer's licences authorise it to distribute and sell electricity in the licensed geographical area, which is the eastern fringe of Port Phillip Bay in Victoria ("the licence area"). Upon the grant of the licences the taxpayer commenced to distribute and sell electricity in accordance with the terms of the licences.
Clause 2 of the Retail licence empowered the taxpayer to sell electricity to franchise customers in the licence area and to non-franchise customers anywhere in Victoria. The definitions of franchise and non-franchise customers are the same as in s 154 of the Act. Accordingly, under the licences each licensee is free to compete for non-franchise customers anywhere in Victoria, but not for franchise customers in the distribution area of another licensee, as the sale of electricity to such customers is not authorised under cl 2, and accordingly, is prohibited by s 159 of the Act. In that way the exclusivity contemplated by s 162(2B) was achieved.
The Retail licence expressly provides for payment of the licence fee but not the franchise fee. Under cl 15 the licensee is required to pay, as directed by the Office of the Regulator-General, the licence fee, determined in accordance with s 163(4) of the Act, by four equal instalments on the last day of January, April, June and October in each year. The licence fee is payable for the rights, conferred under the licence, to sell electricity to franchise and non-franchise customers in Victoria. On the other hand, the franchise fee is payable under s 163A and not by reason of any express provision of the licence. The franchise fee is not referred to in the licence. A failure to pay the fee would, however, constitute a breach of the terms of the licence by reason of cl 17 which requires that the licensee "must comply with all applicable laws ...".
THE ORDERS MADE PURSUANT TO S 163A
On 20 June 1995, pursuant to s 163A, an Order was made by the Governor in Council on the recommendation of the Treasurer in respect of the year ended 30 June 1995. The franchise fee payable by the taxpayer under the Order is $85,900,000.
On 7 August 1995, by an agreement entered into between SECV, the State of Victoria and Power Partnership Pty Ltd, Power Partnership Pty Ltd agreed to acquire all of the shares in the taxpayer. The agreement provided that $85 million, being part of the purchase price for the shares, was to be repaid to Power Partnership Pty Ltd if the franchise fees payable under s 163A were not deductible outgoings under s 51(1) or any other section of the Income Tax Assessment Act 1936.
On 15 August 1995 a second Order under s 163A, as amended, was made in respect of the franchise fee payable by the taxpayer for each financial year ending 30 June 1996 until 30 June 2001. The operative part of the Order is as follows:
"1. Amounts payable
The amount payable by the licensee under section 163A of the Act:
(a) in respect of the year ending 30 June 1996 is $59,900,000 (escalated in accordance with clause 2), payable in four equal instalments on 15 October 1995, 15 January 1996, 15 April 1996 and 15 July 1996;
(b) in respect of the year ending 30 June 1997 is $63,900,000 (escalated in accordance with clause 2), payable in four equal instalments on 15 October 1996, 15 January 1997, 15 April 1997 and 15 July 1997;
(c) in respect of the year ending 30 June 1998 is $72,400,000 (escalated in accordance with clause 2), payable in four equal instalments on 15 October 1997, 15 January 1998, 15 April 1998 and 15 July 1998;
(d) in respect of the year ending 30 June 1999 is $62,300,000 (escalated in accordance with clause 2), payable in four equal instalments on 15 October 1998, 15 January 1999, 15 April 1999 and 15 July 1999;
(e) in respect of the year ending 30 June 2000 is $64,100,000 (escalated in accordance with clause 2), payable in four equal instalments on 15 October 1999, 15 January 2000, 15 April 2000 and 15 July 2000;
(f) in respect of the year ending 30 June 2001 is $19,400,000 (escalated in accordance with clause 2), payable in four equal instalments on 15 October 2000, 15 January 2001, 15 April 2001 and 15 July 2001.
2. Escalation
Where an amount is expressed in this Order to be escalated in accordance with clause 2 the escalated amount is the amount derived by applying the following formula:
EA = A x B
C
where
EA is the escalated amount;
A is the amount expressed in the Order as being escalated in accordance with this clause;
B is the consumer price index number in respect of the relevant quarter; and
C is the consumer price index number in respect of the quarter ending on 31 March 1994.
In this clause:
consumer price index number means the all groups consumer price index number for Melbourne published by the Commonwealth Statistician in respect of the quarter ending on 31 March in each year; and
relevant quarter means the quarter ending on 31 March immediately preceding the year in respect of which the amount expressed in the Order as being escalated in accordance with this clause is to be paid."
It is to be observed that the franchise fees payable for the whole of the period the subject of the Orders are predetermined under the Orders, subject only to consumer price index adjustment to maintain the value, in real terms, of the amounts payable. Accordingly, it is apt to refer to the franchise fees as amounts payable in accordance with the terms of the Orders in respect of each of the years in which the taxpayer will enjoy the exclusive right to sell electricity to franchise customers in its licence area. The fact that the fee is separately calculated for each year and is payable by instalments does not necessarily make it an annual or a recurring fee.
CAPITAL AND INCOME
The classic formulation of the matters to be taken into account in determining whether an outgoing is of a capital nature is that of Dixon J in Sun Newspapers Ltd and Associated Newspapers Ltd v Federal Commissioner of Taxation (1938) 61 CLR 337 at 363:
"There are, I think, three matters to be considered, (a) the character of the advantage sought, and in this its lasting qualities may play a part, (b) the manner in which it is to be used, relied upon or enjoyed, and in this and under the former head recurrence may play its part, and (c) the means adopted to obtain it; that is, by providing a periodical reward or outlay to cover its use or enjoyment for periods commensurate with the payment or by making a final provision or payment so as to secure future use or enjoyment."
More recently the High Court in GP International Pipe Coaters Pty Ltd v Federal Commissioner of Taxation (1990) 170 CLR 120 at 137 said:
"The character of expenditure is ordinarily determined by reference to the nature of the asset acquired or liability discharged by the making of the expenditure, for the character of the advantage sought by the making of the expenditure is the chief, if not the critical, factor in determining the character of what is paid.
In Mount Isa Mines Ltd v Federal Commissioner of Taxation (1992) 176 CLR 141 at 149 the High Court, after citing this passage from GP International Pipe Coaters, emphasised the importance of characterising the expenditure by reference to the advantage sought by the making of the outgoing rather than the purpose served by the outcome achieved as a result of the outgoing having been made.
In Hallstroms Pty Ltd v Federal Commissioner of Taxation (1946) 72 CLR 634 at 648 Dixon J said:
"... What is an outgoing of capital and what is an outgoing on account of revenue depends on what the expenditure is calculated to effect from a practical and business point of view, rather than upon the juristic classification of the legal rights, if any, secured, employed or exhausted in the process."
Lord Pearce, delivering the judgment of the Privy Council in BP Australia Ltd v Federal Commissioner of Taxation (1965) 112 CLR 386 at 394-395, accepted as a "valuable guide to the traveller in these regions" the judgment of Dixon J in Sun Newspapers Ltd, but recognised that the line of demarcation between revenue and capital is
"... sometimes difficult indeed to draw and leads to distinctions of some subtlety between profit that is made 'out of' assets and profit that is made 'upon' assets or 'with' assets."
His Lordship said that the observation of Viscount Radcliffe in Commissioner of Taxes v Nehanga Consolidated Copper Mines Ltd [1964] AC 948 at 960 that the demarcation between
"the cost of creating, acquiring or enlarging the permanent (which does not mean perpetual) structure of which the income is to be the produce or fruit and the cost of earning that income itself or performing the income‑earning operations"
was "as illuminating a line of distinction as the law by itself is likely to achieve". At 397 his Lordship observed:
.... Although the categories of capital and income expenditure are distinct and easily ascertainable in obvious cases that lie far from the boundary, the line of distinction is often hard to draw in border line cases; and conflicting considerations may produce a situation where the answer turns on questions of emphasis and degree. That answer 'depends on what the expenditure is calculated to effect from a practical and business point of view, rather than upon the juristic classification of the legal rights, if any, secured, employed or exhausted in the process' (per Dixon J in Hallstrom's Case). As each new case comes to be argued felicitous phrases from earlier judgments are used in argument by one side and the other. But those phrases are not the deciding factor, nor are they of unlimited application. They merely crystallize particular factors which may incline the scale in a particular case after a balance of all the considerations has been taken. (Footnotes omitted)
THE NATURE OF THE FRANCHISE FEE
Part 12 of the Act implements the franchise customer system in Victoria in accordance with the proposals to which we have referred. In particular, the combined operation of ss 159, 162(2B) and 163A is that the fee is payable by a distribution company as a "monopoly rent" for the right to be free of competition from the other distribution companies for the retail custom of franchise customers within the licence area. Unlike the licence fee, which is payable to the Office of the Regulator-General, the franchise fee is payable to the Treasurer.
In the Explanatory Memorandum set out under the heading The Franchise Fees, the fee is said to be "appropriately viewed ... as a fee payable by the DBs for the benefit ... of their franchise customer bases". That is in our view an accurate description of the fee. The "benefit" referred to is that a franchise customer, being one who has "not yet become contestable" under the reforms, must buy electricity from the distribution company for its area for so long as that customer is not "contestable". The franchise fee is not payable for the right to sell electricity to customers in the distributor's licence area. That right is conferred by a licence to sell electricity granted under ss162 and 163 for which a different fee is payable. Rather the franchise fee is payable for the advantage enjoyed by the distribution company of being free from the competition of the other four distribution companies for the custom of franchise customers in the distributor's licence area. The fee was aptly described by the Minister as a "monopoly rent" for the exclusive right to sell to franchise customers in the distributor's licence area during the transitional period.
The licence is consistent with the Act. The exclusivity granted to a licensee in respect of franchise customers does not arise by reason of any term of a Retail licence. Rather, it arises because each Retail licence authorises sales of electricity only to franchise customers within the licence area. That limited authorisation and the prohibition against unauthorised sales under s 159(1) ensure the exclusivity required by s 162(2B).
Accordingly, the franchise fee is payable by the taxpayer for and by reason of the exclusivity provided for under ss 162(2B) and 163A(4) and conferred by a combination of s 159(1) and the terms of the Retail licences granted to the five distribution companies. This conclusion is significant as it is not strictly correct to contend, as did counsel for the taxpayer, that the franchise fee is payable in "consequence" of the licence or the monopoly the licence entitled the taxpayer to exercise in relation to part of its market.
IS THE FRANCHISE FEE A CAPITAL OUTGOING?
The franchise fee is a non-voluntary statutory impost. But it was not imposed as an afterthought or to appropriate unexpected windfall profits. The fee was imposed as an integral aspect of the phasing in of full competition for retail custom between the five distribution companies, as part of the scheme for the restructuring of the electricity supply industry in Victoria. Part of that restructuring was the sale to private interests, on behalf of the State of Victoria, of the five distribution companies on the basis of the State's grant of the statutory right of exclusivity for franchise customers until 2001 in return for payment to the State of the franchise fee payable under s 163A. When the restructuring scheme is examined in its totality, it is an oversimplification to say, as counsel for the taxpayer did, that the fee is not a payment for the right of exclusivity but "simply a payment in consequence of the right annually."
In determining the advantage sought by payment of the franchise fee, from a practical and business point of view, an examination of its role under and as part of the restructuring scheme is required. In these circumstances it is unrealistic to regard the involuntary nature of the franchise fee as being determinative of its proper characterization under s 51(1). The essential character of the advantage calculated to be gained and in fact gained by the franchise fee is freedom, until the year 2001, from competition from other distribution companies for franchise customers in the licence area. Its character is the same if determined upon a juristic classification of the rights conferred. This is not surprising as the proposed advantage for which the fee is payable is crystallised in legislative form in ss 162(2B) and 163A of the Act.
In arriving at our conclusion as to the essential character of the franchise fee we do not disagree with Lockhart J that the fee is a compulsory exaction imposed by the Victorian government to extract a share of the taxpayer's profits. Our approach accepts that characterization, but identifies the profits extracted as a monopoly rent, the monopoly being the immunity from competition granted by the government in respect of the taxpayer's franchise customers.
The advantage gained as a result of the franchise fee is akin to that derived by the taxpayer in Broken Hill Theatres Pty Ltd v Federal Commissioner of Taxation (1952) 85 CLR 423. In that case the appellant and other proprietors of motion picture theatres operating in Broken Hill successfully opposed an application for a theatre licence in respect of other premises in Broken Hill and thus for a period of twelve months procured immunity from further competition. Over a period of ten years a number of similar applications were successfully opposed by the appellant, although one was granted. The issue was whether the legal expenses incurred by the appellant in opposing the licence applications were an outgoing of capital under s 51(1). In holding that the outgoings were on capital account Williams J, at first instance, said at 430‑431:
"The expenditure now in dispute was, I think, an expenditure made once and for all and with a view to bringing into existence an advantage for the lasting benefit of the appellant's motion picture business. This business is of a kind which can only be carried on by persons who are licensed to exhibit motion pictures in particular theatres or halls. The less the number of licences the less the competition, and the better the opportunity for those privileged to possess licences to carry on a profitable business. The defeat of any particular application for a new licence frees the existing exhibitors forever from the threat of new competition resulting from the success of that particular application. The application might be granted or it might be refused. Expenditure in opposing the application would be of the same nature whether the opposition succeeded or failed (Southwell v Savill Bros Ltd). The essential purpose of the opposition is to restrict the number of persons licensed to carry on the business to a minimum. The success of the opposition to the grant of a new licence would benefit what Dixon J described in the passage cited as 'the business entity, structure, or organization set up or established for the earning of profit' or what Lord Greene in the Associated Portland Cement Manufacturer's Case described as the goodwill of the business." (Footnotes omitted)
On appeal the decision of Williams J was affirmed. Dixon CJ, McTiernan, Fullagar and Kitto JJ said at 433:
"In our opinion the decision of Williams J in this case was right. We do not see how his Honour could have reached any other conclusion consistently with the principles laid down in the cases and particularly in British Insulated and Helsby Cables Ltd v Atherton and Sun Newspapers Ltd v Federal Commissioner of Taxation: see especially the judgment of Dixon J in the latter case." (Footnotes omitted)
In rejecting the argument that the outgoing was not of capital, as no new asset was brought into existence, their Honours said at 434:
"The advantage of being free from Boulus's competition and of all other competition for twelve months is just the very kind of thing which has been held in many cases to give to moneys expended in obtaining it the character of capital outlay".
Similarly, in Smithkline Beecham Laboratories (Australia) Ltd v Federal Commissioner of Taxation (1993) 44 FCR 129 Hill J held that legal expenses to prevent or delay competitors from obtaining marketing approval for competing products were outgoings on capital account to preserve the taxpayer's commercial monopoly for its product. In National Australia Bank Ltd v Federal Commissioner of Taxation (Federal Court of Australia, 12 June 1997, unreported), now under appeal, Heerey J held that a lump sum payment by the National Australia Bank to the Commonwealth, in exchange for the exclusive right to make subsidised loans to Australian Defence Force personnel, was capital expenditure.
Using the words of Dixon J in Sun Newspapers at 359, the franchise fee benefits "the business entity, structure, or organization set up or established for the earning of profit." Or, using the words of the joint judgment on appeal in Broken Hill Theatres at 434, "the advantage of being free from ... competition" in the sale of electricity for the period for which the franchise fee is payable is "just the very kind of thing which has been held in many cases to give to moneys expended in obtaining [that advantage] the character of capital outlay".
Counsel for the taxpayer contended that the franchise fee is a compulsory exaction to redress the excess profits obtained from the statutory monopoly, and that therefore no enduring benefit enured to the taxpayer. Counsel also submitted that the present case is the reverse of the competition cases, as the fee is an impost for the very reason that the licence entitles the taxpayer to exercise a monopoly in relation to part of its market, rather than a payment to fend off competition or gain that monopoly. Accordingly the effect of the fee, so it was said, does not enlarge the taxpayer's goodwill or business undertaking.
In our view the submission takes too narrow a view of the franchise fee. Immunity from competition in respect of franchise customers in the licence area is secured by the exclusivity conferred under ss 162(2B) and 163A. The franchise fee is payable under s 163A for that exclusivity. The immunity, so obtained, is of enduring benefit to the "business entity, structure or organisation" of the taxpayer.
The taxpayer also relied on the annual nature of the impost, the recurrence of the payments, and their relationship to the income earned in the relevant financial year, to contend that the fee had the hallmarks of payments on revenue account. As was said by Stephen J in Cliffs International Inc v Federal Commissioner of Taxation (1979) 142 CLR 141 at 165, the relevance of recurrence is the light it casts upon the advantage obtained. In the present case, since the advantage is immunity from competition, the recurrence of the payments is of little assistance to the taxpayer. Further, the franchise fee is a predetermined amount for each year to 2001. The fee is based on the value of the estimated advantage gained each year from the immunity from competition granted for that year. The amount so calculated is payable by instalments. There is no provision for adjustment if the actual advantage differs from that estimated. In these circumstances it is not appropriate to describe the fee as an annually recurring impost payable for the right to earn income in the relevant year.
Superficially, the franchise fees bear some resemblance to the payments made by the taxpayer in BP Australia Ltd (supra). BP made payments to service station owners in order to obtain exclusive outlets for the sale of its products at those service stations. Agreements were entered into with the owners whereby BP, in consideration of the owners selling during a certain period only brands of petrol approved by it, promised to pay to the owners lump sums to defray some of their expenses, or as assistance to them. BP claimed the amount of the lump sums as allowable deductions under s 51(1) but was assessed on the basis that the sums were capital rather than revenue expenses. The assessment was confirmed in the High Court by Taylor J, and on appeal by McTiernan, Windeyer and Owen JJ, Dixon CJ and Kitto J dissenting. On appeal the Privy Council held that the lump sums paid were on revenue account and were therefore allowable as deductions under s 51(1).
The Privy Council accepted that a payment to buy out a rival in order to secure its goodwill or to suppress it, and so provide or maintain a clear field for an enterprise over a substantial period, was a "definite prima facie pointer towards a capital payment" (at 395). However, that "monopoly" situation was distinguished from BP's payments which were to secure the trade of particular retailers, leaving other retailers free to buy and sell products of their choice. That circumstance was sufficient to distinguish BP's payments from "...the cases where competition had been stifled for a substantial period or a monopoly has been acquired ....." (at 396).
Although their Lordships accepted that the case was not easy to decide, a factor that appeared, "on a balance of all the relevant considerations", to weigh strongly in favour of the payments being on revenue account was that they were made to particular customers to secure their particular custom and were therefore more akin to sums expended as part of the money earning process than to sums expended on the structure by which the profits were to be earned. As Kitto J, whose dissenting view in the High Court in BP Australia (1964) 110 CLR 387 at 412-413 was upheld on appeal, said:
"the effect of a binding promise not to compete is to create for the promisee a more favourable situation in which to carry on his business for the future; it makes an improvement in the conditions in which he may proceed to carry on his profit-making activities. In other words, the elimination of the competitor is anterior to, and not part of, the trading in which the benefit of it will be felt; and accordingly, in the ordinary case at least, the cost of it is a cost of adding a protective element to the structure of the promisee's business. Forming no part of his trading expenses, but being, in effect, the purchase price of a capital asset, it is a capital charge. But a promise by a service station operator not to deal with oil companies other than the appellant or its allies was only the negative side of the substantial positive advantage which it was the purpose and practical effect of the agreement to produce, namely the advantage of a practical certainty that the whole of the custom of the service station, for motor spirit, would be given to the appellant or its allies for the agreed period; and what the appellant really paid its money for was that positive advantage... [A] payment made by a trader to a customer for the purpose of securing orders for a quantity of goods is prima facie part of the cost of selling the goods."
The payments in that case are analogous to the licence fees paid by the taxpayer in the present case for the advantage of supplying and selling electricity in the licence area. They are part of the process by which the taxpayer earns profit from its licence to sell electricity in Victoria.
Payments of fees to the Treasurer of the State of Victoria, as a monopoly rent for freedom from competition in respect of a substantial body of retail customers in the taxpayer's licence area, are qualitatively different from payments by a supplier to particular customers to buy only its products, and payments of the licence fees payable under the licence to sell electricity in Victoria from year to year.
In our view the franchise fees are clearly distinguishable from the payments considered in BP Australia.