Victorian Flight Academy: Strategic Business Transactions & Key Client Essay.

Victorian Flight Academy (‘VFA’) is a flying school that provides aircraft pilot training and specialist instruction services to individuals (‘clients’) which was incorporated in the State of Victoria in 1984.  Ross Mc Kinnon and Dale Wise are the Directors of VFA, in addition to being the Chief Flying Instructors accredited by the Civil Aviation Authority (‘CAA’).

VFA is located at Lysterfield Airport, a private airport on the outskirts of Melbourne.  Each year Lysterfield Airport is the location of the annual air-show and VFA is a key participant in the air-show’s program.  Ross and Dale view the expense as a marketing exercise aimed to attract new prospective students.

The flying academy employs three Grade 1 Instructors and five Grade 2 Instructors, in addition to four administrative staff who manage the accounts receivables and payable functions, and student licensing confirmations with the CAA.  The instructors receive company benefits of “free” independent (non-instruction) flying time of 150 hours per year to any location in Australia; however this flying time is the minimum required by the CAA to maintain the Instructor rating licence.

VFA is generally a highly profitable business, however in the 2016/17 financial year student enrolments were at an all-time low and a tax loss of $190,000 was reported.

The Directors have provided the following statement of the strategic business transactions and key client matters which have occurred over the 2017/18 financial year.

To improve VFA’s profitability, VFA decided to diversify the scope of services offered to their clients and to widen their client base.  After discussions with various international airlines, on 1 September 2017, Ross and Dale signed a pilot training contract with TCA Airways Inc. in London, United Kingdom.  The contract provided for the exclusive training contract for all new Australian based and recruited flight crew.  This cost TCA Airways AUD $1,200,000 per annum, payable to VFA in a lump sum on 1 October of each year for five years.  It was agreed between the parties that the annual lump sum will be paid into a VFA’s Australian bank account.

Owing to the potential expansion of VFA, on 1 October 2017 VFA purchased the adjoining three blocks of land from Lysterfield Airport at a total cost of $6 million (each block had equal value).  VFA borrowed 90% of the total cost from the Victorian State Bank at an interest rate of 6.8% per annual repayable over 25 years.  Due to the risky nature of the loan, the bank secured the title to Ross Mc Kinnon and Dale Wise personal homes, both located in the exclusive Melbourne suburb of Toorak.

VFA’s intention was to consolidate the land titles and build a large training facility, to train students to fly commercial aircraft using flight simulators.  However, when the planning application to consolidate the land titles was lodged, VFA met heavy opposition from Lysterfield Airport together with the CAA.  Both organisations’ argued that the airport facility was only suitable for training of pilots for light aircraft.  

As a result, VFA incurred $380,000 in solicitor and court fees to assist with the application approval; however the Land Tribunal on the advice of the CAA, ruled VFA unsuccessful and the Tribunal instructed the Council to reject the planning application.  In light of this, VFA sold both recently purchased blocks of land back to Lysterfield Airport for a total sum of $6.85 million on 31 January 2018, with settlement on 1 March 2018.  A deposit of 15% was paid on contract date.

VFA was approached by the Chandler Airports Corporation (CAC) with the offer to lease a commercially zoned flight-training centre, located on the outskirts of Melbourne’s international airport.  CAC also offered a $60,000 cash incentive and twelve months rent-free valued at $100,000 if VFA relocated their entire business to the new facility.  VFA accepted and moved premises on 10 April 2018.

For the effective training of commercial pilots for in-the-air “emergency” scenarios, VFA leased a special flight simulator from Flight Services Ltd.  The lease agreement contracted VFA for the period of five years for a cost of $150,000 per annum.  

Dale Wise travelled to London for six months to attend the TCA Airways training program for English and European based flight crew.  Whilst overseas, Dale decided that his passion was to fly light aircraft for private purposes.  He realised that the direction VFA was heading no longer left a place for him in the company.  As a result, Dale tendered his resignation to Ross effective 15 June 2018.  Ross worried about the intellectual property Dale gained whilst training with TCA Airways, entered into a restrictive covenant agreement with Dale which prohibited Dale from training commercial pilots in Australia for the period of 4 years at a cost of $350,000.

After heavy marketing, Ross managed to secure a training contract with an Australian based commercial airline, Flyhigh Ltd.  The contract provided for VFA to train their first officers for a period of five years, commencing 1 May 2018 at a cost of $500,000 per annum.  However, on 15 June 2018, Flyhigh decided to terminate their contract, effective immediately due to undisclosed reasons.  Flyhigh refused to compensate VFA and VFA engaged their solicitors to recover the loss in revenue.  On 30 June 2018, Flyhigh agreed to pay compensation of $750,000 after lengthy legal discussions.

Please note that the list above only contains information of VFA’s strategic transactions which have occurred in the 2017/18 financial year.  Other transactions are detailed below in the Statement of Cash Receipts and Payments and the notes.

Cash Receipts	Note	$ AUD
TCA Airways Contract	No Note	1,200,000
Other Client Fees	1	1,380,750
Sale of Land – Receipt of Deposit	No Note	1,027,500

Cash Payments	Note	$ AUD
Australian Taxation Office	2	1,015,000
Bank Charges	3	177,400
Car Expenses	4	217,600
Education Expenses	5	103,000
Employee Remuneration	6	1,855,000
Entertainment	7	7,431
Flight Simulator Lease	No Note	150,000
Furniture	8	30 544
Fuel, Aircraft Maintenance & Other Aircraft Costs	9	428,000
Land Purchase – Payment of Deposit	No Note	450,000
Marketing Costs	10	24,125
Solicitors Fees	11	388,190
Telephone	12	40,641
Travel Expenses	13	74,250

Note	Description / Further Information	$ AUD
1	Flyhigh Ltd settlement Outstanding debtors at 30 June 2018 Debts written off after 6 months (client refused to pay) Debts written off > 12 months old	750,000 129,800 6,705 10,130
	It is the policy of VFA Pty Ltd to have provision for doubtful debts equal to 1.5% of outstanding debtors at the end of the financial year.
2	PAYG instalments (quarterly equal payments) GST	600,000 415,000
3	Bank interest charges on property purchase Card transaction fees (charged at 2.5% on credit card sales)	151,000 26,400
4	Vehicle purchases: · Jaguar for Ross Mc Kinnon  Acquired 20 November 2017; Business use: 77% Running costs: · Jaguar (acquired 20 November 2017)	210,000 7,600
5	Instructor’s professional training costs as required by CSA Professional development courses for administrative staff	88,000 15,000
6	Directors / Chief Flying Instructors salaries Dale Wise’s Restrictive Covenant Payment Instructor: Grade 1 Salaries Instructor: Grade 2 Salaries Administrative Staff Salaries Note: the mandatory minimum superannuation contribution is included in the salaries noted above. Annual CSA Flight Instructors Rating Licences for Instructors Value of Instructor “free flying” time (refer Business Overview)	550,000 350,000 400,000 425,000 130,000 12,000 110,000
7	Staff lunches and staff Christmas party	7,431
8	Opening written down value Acquisition of Furniture & Office Equipment – 2017/18 · Desks and Chairs (acquired 1 July 2017) · Computers (acquired 9 July 2017) · Partitions (acquired 10 July 2017)	305,000 7,850 13,444 9,250
9	Fuel – Aircraft Aircraft Maintenance Costs	133,000 295,000
10	Marketing costs for the annual air-show Advertising costs in magazines	15,425 8,700
11	Solicitors fees incurred in relation to: · Application approval for land at Lysterfield Airport · Resignation of Dale Wise from VFA Pty Ltd · Lease agreement review for flight simulator	380,000 1,890 6,300
12	Office telephone lines and fax line Mobile phones for Instructors	11,518 29,123
13	Business class airfare for Dale Wise to London Six month lease of apartment for Dale Wise in London Meals and incidentals for Dale Wise’s trip	15,150 46,600 12,500

Note: All amounts include Australian GST where applicable.

Required

You have been approached by Ross Mc Kinnon and Dale Wise in your capacity as their tax agent.  They have asked you to prepare the necessary documentation to meet the tax compliance obligations for VFA for the income year ending 30 June 2018.

Prepare a letter of advice which identifies all relevant tax issues, critically analyses and applies the taxation treatment to the issues, i.e., you will need to argue and support your view and consider differing views (if applicable), and finally, indicate your recommended action based on your better view, i.e., your conclusion (IRAC principle).

You must ensure that your analysis used to determine your recommended action is fully supported with relevant authority, for example, tax legislation and case law.

The information provided related to the company has been thoroughly reviewed. The underlying case laws, tax rulings and legislation have been referred to for providing correct advice in relation to the taxation treatment of the various cash receipts and cash outflows. In order to reach the recommendation, various steps have been considered relating to identifying the issue, discussing the underlying law, applying the same on the basis of the facts provided leading to advice generation. The detailed discussion and recommendation can be found in the attachment.

In case of any issues that may be unaddressed or any queries related to the reply provided, please feel free to contact me.

The main objective in the context of the company is to provide advice related to tax for the year terminating on June 30, 2018. The various issues that are to be considered for further discussion are indicated as follows.

1) The appropriate revenue recognition basis for the company with regards to the two methods namely accrual and cash so as to opine on the appropriate tax treatment of cash proceeds from TCA Airways.

2) In light of the proceeds generated from land sale, the nature of the proceeds needs to be addressed coupled with the appropriate tax treatment.

3) With regards to solicitor and court fees that has occurred due to court case related to expansion of the training facility, the key issue is whether this expense would be deductible for tax purposes.

4) The CGT (Capital Gains Tax) implications in relation to the land sale ought to be indicated.

5) With reference to requisite legislation, the suitable tax treatment of the lease cash and non-cash incentives needs to be outlined that the company has obtained from Chandler Airport Corporation for shifting their base to Chandler Airport.

6) In relation to the special flight simulator that has been obtained from Flight Services, the deductibility for the lease payments paid annually ought to be outlined.

7) A sum of $ 350,000 has been incurred by the company in relation to restrictive covenant and deduction of same for the company needs to be highlighted.

8) The compensation payment obtained from the settlement of the contract with FlyHigh needs to be analysed from tax perspective to determine their underlying nature as revenue or capital.

9) Besides, the above cash receipts and payments, the deduction for the company in relation to the following expenses also needs to be determined.

Ordinary Income

Any income of the taxpayer which has been received from ordinary sources is considered as ordinary income of the taxpayer. This ordinary income would become part of the assessable income which would be taxed under s. 6-5, ITAA 1997. Further, ordinary income includes income resulted from employment, business, personal exertion and from investment (Barkoczy, 2017).

Income Recognition

As per the provisions highlighted in TR98/1, the taxpayer has the legal right to choose the suitable means for the derived income recognition in terms of accrual (as earnings) or cash (as receipts). However, it is essential that the taxpayer must select the income recognition basis in such a way that the income would be true representative of the income derived. Further, TR98/1 outlines that cash (Receipts) is considered to be an appropriate means for income recognition when the derived income is resulted due to the skill of the taxpayer or from the part of his/her work in terms of providing services to others. Further, the income derived from production operation or from trading is considered as accrual (earnings) (Gilders et. al., 2016). In accordance with the judgement announced in Carden v FCT (1938) 63 CLR 108 case, the selection of the base of the income recognition must not be based on the solely rigid rule and has to be made based on the business conditions and scenarios. The size of the business, type of the business is considered to be an imperative factor as when the business expands then the corresponding utilization of the other employees would also increase for the income generation and hence, the income recognition would be termed as accrual basis. The judgment of Henderson v. Federal Commissioner of Taxation (1970) 119 CLR case is the testimony of this aspect (Deutsch et. al., 2016).

Statement of Cash Receipts and Cash Payments for VFA Pty Ltd

Deduction

As per the provisions of s. 8-1, UTAA 1997 the deduction would be available when there is a business expenses. Further, when the outgoing or losses has been incurred in regards to derive the assessable income, then the general deduction would be available for taxpayer as per s. 8(1), ITAA 1997. However, it is essential that there must be significant relationship present between expenses and assessable income generation by the taxpayer.  The three main negative limbs with respect to ss. 8-1(2), ITAA 1997 are listed below (Woellner, 2015).

The expense must not be capital expenditure rather revenue expenses. =.

The expenses must be business expenses because the expenses which are classified as domestic (personal) expenses would not be taken for any tax deduction.

The reason behind the expenses must be for assessable income generation because the expenses which are done for the act of the non-assessable income production would not be tax deductible.

Capital Expenses/ Revenue Expenses

It is essential to segregate the capital and revenue expenses considering the fact that majority of the deductions available are for revenue expenses. Dixon J in Sun Newspapers Ltd and Associated Newspapers Ltd v. Federal Commissioner of Taxation (1938) 61 CLR 33 highlighted that the enduring nature of the advantage derived from expenditure is a proof that the expenditure is capital as the gains are not limited to the current year but would be extended into the future (Coleman, 2015).  This can be applied on restrictive covenant related proceeds which would be termed as capital expenditure. This is because the restrictive covenant is typically for multiple years and hence provides gain of lower competition for multiple years (Gilders et. al., 2016).

For capital expenditure, s. 40-880 related deduction can be claimed if no other deduction is possible. However, it is essential that the underlying expenditure is business related and realised in five equal annual instalments (Krever, 2017).

Capital Gains Tax (CGT)

When the taxpayer has sold any capital asset, then the received income would be termed as capital proceeds and this proceed would not be considered for any tax as per s. 116-5 ITAA 1997. However, if the taxpayer has received any capital gains or losses from the sale of the capital asset, then the CGT implications would be raised on the taxpayer (Barkoczy, 2017). The computation of capital gains for the CGT consequences is based on the aspect when the transaction incurs for asset sale, a CGT event triggers under s. 104 (5), ITAA 1997. The CGT event of category A1 provides the procedure for the capital gains computation for the proceeds derived from the disposal of the capital asset (Reuters, 2017). According to this procedure, the cost base of the asset would be subtracted from the net proceeds from the sale of the asset. The cost base is computed based on the provision highlighted in s. 110(25), ITAA 1997. Further, the cost base is a combination of the five main elements as per s. 110-25 (1), ITAA 1997 which are highlighted below (Sadiq et. al., 2015).

Notes Regarding AFS Pty Ltd

In accordance with ss. 110-25(2), the total amount spent by the taxpayer to purchase the asset.

 In accordance with ss. 110-25(3), the incidental costs that are incurred and paid by the taxpayer in the process of buying and selling of the asset.

In accordance with ss. 110-25(4), cost associated with the ownership of the asset which includes payments of taxes and interest on the loan and so forth.

In accordance with ss. 110-25(5), capital expenses which are paid by taxpayer in order to increase the net worth of the asset.

In accordance with ss. 110-25(6), capital expenses which are incurred in regards to protect the title of the asset.

The capital gains derived would be first taken into account to settle capital losses from current year or from past years. Further, the net capital gains would be discounted for the implication of CGT by using an appropriate method which is either discount method or indexation method. The discount method would provide a flat 50% discount on the derived capital gains which means only 50% of the capital gains would be taken for CGT consequences (Deutsch et. al., 2016). However, this method is applicable only for the case when there the holding period of the asset is more than 1 year which results long term capital gains. Further, the 50% discount method is applicable only for the individual and hence, cannot be applied on the companies. The indexation method has limited usage and is applied on the capital proceeds which are derived from the asset which has been acquired earlier than September 1999. The net capital gains would be taxed as per the CGT rate which is flat 30% (Krever, 2017).

Fringe Benefit Tax (FBT)

Fringe benefits are those non-cash personal interest benefits of the employee which are extended by the employer. These benefits are utilized by the employee and are taxed on the part of employer. A benefit given by the employer to their employee so as to complete the professional duties is not termed as fringe benefit and no FBT liability would be raised on employer. The relevant provisions of fringe benefits are highlighted in Fringe Benefits Tax Assessment Act 1986 (Woellner, 2015). The main aspects of fringe benefits based on the current scenarios are listed below.

Car fringe benefit

When an employer provides car to its employee that the employee can use for his/her own personal work, then it would be classified as car fringe benefit as per s. 7, FBTAA 1986.

The amount of car fringe benefit would be determined based on the statutory formula defined in s. 9, FBTAA 1986 and is shown below (Krever, 2017).

Electronic items

In accordance with s. 58X, FBTAA 1986, the extension of any electronic items such as mobile phone, laptop, tab and so forth would be considered as fringe benefit only when these items are provided to employee for their own personal work. Further, the bill of these items which are paid by the employer would also attract FBT liability on employer (Barkoczy, 2017).

Entertainment fringe benefit

The expenses incurred for the entertainment of the employee would be termed as entertainment fringe benefits. According to s. 8(1), ITAA 1997 the deduction would be claimed by employer when the expenses are incurred in the entertainment of the employee or on their associates (Deutsch et. al., 2016). However, the expenses are not tax deductible when the receipts of the entertainment fringe benefits are the business personnel (clients) of the employer. Moreover, the expenses incurred in Christmas part would also impose FBT liability on employer if there is no exemption of minor benefits clause (Gilders et. al., 2016).

Compensation Receipts

As per TR 95/35, the compensation receipts nature is the similar to the loss that they seek to compensate for. Therefore, if the receipts are given as compensation for loss or ordinary income or assessable income, then even the receipts would be categorised as assessable income on part of taxpayer (Krever, 2017).

Incentives for entering lease

IT 2631 tends to highlight the appropriate tax treatment of lease incentives (cash and non-cash). As per this, incentive received in the form of cash would be assessable income at the end of taxpayer. A relevant case law in this regards is F.C. of T. v. Cooling 90 ATC 4472 in which it is advocated that if the incentives tend to arise during the activities constituting as normal business, then the same would have an income character.  With regards to incentive not in form of cash, an essential aspect to consider if whether the same results in some cash related benefits for the taxpayer or not. If there are cash related benefits, then this would also be treated as assessable income for the taxpayer (Sadiq et. al., 2015).

Application

Nature of Income

The company (VFA) is in the business of acting as the service provider of training services to host of airlines and hence any income received due to these services being extended would be recognised in the form of ordinary income under s. 6-5 ITAA 1997. Hence the amount given by TCA Airways is ordinary income for the company. In view of the business scale and underlying size, it would be correct to assume that accrual basis must be used for deriving income. Hence, during the tax year the complete receipts that are received in the month of October will not be ordinary income but the amount derived on the basis of the services already provided to the clients would be ordinary income.  Also, the amount which is due to be received would also be recognised as ordinary income since the accrual basis is used for deriving income.

Treatment of Compensation Receipts

The company has received a settlement amount of $ 750,000 from FlyHigh Ltd. This compensation has been received with regards to the future loss of ordinary income that the company could have earned if the contract had not been unexpectedly terminated. Since the loss has been of revenue receipts, hence the proceeds of compensation would also have revenue nature and considered as assessable income under s. 6-5 ITAA 1997.

Incentives for entering into lease

It is apparent that for entering into lease with regards to changing the operational base has resulted in both cash and non-cash incentives for the company. It is apparent that the lease has been entered in normal business course as the company can expand operations to a new base or shift the base. Hence the cash incentives would contribute to assessable income under s. 6-5 ITAA 1997. A similar conclusion would be drawn for the rent free premises for a period of 12 months since it would enable the company to save cash related to rent payment which otherwise the company would have to bear.

Sale of Land

As per s. 116-5 ITAA 1997, the proceeds from liquidation of land would be capital and hence tax free. However, the capital gains need to be computed to ascertain if any CGT would be applicable. In relation to the company, it is noteworthy that neither of the discount or indexation method is applicable. Discount method cannot be availed by company business structure and also the underlying land has not been bought before September 1999.

Land related cost = $ 6 million

Treatment of Expenses

The suitable treatment in relation to the host of expenses is mentioned as follows.

• Solicitor and Court Fees (Related to Land conversion) – It is clearly apparent that underlying legal expense would have a capital nature since if the land conversion would have been permitted, the same would have allowed the company to enjoy a higher assessable income in the future years, thereby confirming the enduring nature of benefit. Complete deduction over a five year period is permitted as per s.40-880 ITAA 1997.
• Simulator related lease payment (Flight Services) – The simulator is required to provide training services and hence the underlying nature of the expense is revenue coupled with close nexus with assessable income production making this eligible for deduction as per s. 8-1 ITAA 1997.
• Restrictive Covenant related payment - The underlying benefits that are obtained on making this payment are enduring since there would be lower competition for a period of four years. Thus, the expenditure is capital. Complete deduction over a five year period is permitted as per s.40-880 ITAA 1997.
• Bank charges – These charges have been incurred in normal business course and thereby are referred to as revenue expenses with close nexus with assessable income. Hence, permitted deduction under s. 8-1 ITAA 1997.
• Car expenses – The information provided clearly states that personal usage is permissible and thereby car fringe benefit has been provided. In accordance with the relevant rule, the FBT liability on the car fringe benefit would be computed. Also, to the extent that the operating expenses related to car are used for business (i.e. 77%), s. 8-1 ITAA 1997 deduction is permissible.
• Education Expenses – It is imperative that these expenses are incurred as the instructor needs to have requisite qualification and also administrative training is critical. Deduction under s. 8-1 ITAA 1997 is provided to the company.
• Employee Remuneration – This is a direct expense which contributes to assessable income generation for the company and hence deduction for these expenses under s.8-1 is allowed.
• Lunches and Christmas – It is apparent that fringe benefits have been extended to employee in the form of meal and entertainment related fringe benefits. If the per person taxable FBT is less than $ 300, then exemption is possible or else FBT would have to be paid. Deduction for these employee related expense are permissible under s. 8-1 ITAA 1997.
• Furniture – Furniture is a capital asset and hence the underlying expenditure would be capital thereby non-deductible as per general deduction. But, depreciation would be charged on the furniture and this can be deducted by the taxpayer.
• Fuel and Airplane Maintenance cost -   Consider the pilot training business, these are integral costs which would be incurred in extension of services and thereby earning income. Hence, these expenses are deductible as per s. 8-1.
• Marketing and advertising costs – The objective of this cost is to assist in enhancing the revenue of the company and gain new contracts. Considering that these could potentially lead to higher income generation, hence under s. 8-1. These expenses would be deductible.
• Mobile Device – No FBT would be payable by the company and any depreciation applied on this can lead to deduction for the company.
• Solicitor fees (Simulator Lease) – Since simulator is part of the normal business operations, hence the underlying legal expense also has a revenue character making it deductible under s. 8-1.
• Travel Expenses (Dale Wise) – These expenses would be considered capital as the impact of the learning from the travel and related encounters would be enduring and hence deduction would be available over a five year period under s. 40-880 ITAA 1997.

Conclusion

The above discussion regarding various issues highlights that income realisation for the company should be carried out on accrual basis and not receipts basis. As a result, the contractual amount received from customers would be realisable to the extent of services provided during the year. Further, ordinary income would also contain the payments not yet received but services have been provided. Also, the lease incentives would also contribute to assessable income for the company. Besides, the receipts received as a result of compensation from contract cancellation has revenue nature and would be assessable income.

The land sale proceeds would be capital and hence non-taxable. However, a CGT liability of $217,878 has been derived in relation to the sale of land. Also, the loan charges are reflected in the cost base computed for land. The company has incurred certain capital expenditure in the form of restrictive covenant proceeds, land related legal expenses but the same would attract deduction at the rate of 20% per year for five years.  In regards to furniture along with mobile phone, the expenditure is capital and non-deductible but depreciation can be charged and deducted from taxable income provided use of these is for business.

The company will have to pay FBT on account of fringe benefits being given to client. These include meal and entertainment fringe benefit besides car fringe benefit. Relevant deductions for these benefits would also be available to the company. The other expenses that have been not been highlighted are those on which general deduction as per s. 8-1 is applicable as there exists a close connection between the incurring of these expenses and generation of assessable income

References

Barkoczy, S. (2017) Foundation of Taxation Law 2017 (9^th ed.). North Ryde: CCH Publications.

Coleman, C. (2015) Australian Tax Analysis (4^th ed.). Sydney: Thomson Reuters (Professional) Australia. 

Deutsch, R., Freizer, M., Fullerton, I., Hanley, P., & Snape, T. (2016) Australian tax handbook.  8th ed. Pymont: Thomson Reuters.

Gilders, F., Taylor, J., Walpole, M., Burton, M. & Ciro, T. (2016) Understanding taxation law 2016. 9^th ed.  Sydney: LexisNexis/Butterworths.

Krever, R. (2017) Australian Taxation Law Cases 2017 (2^nd ed.). Brisbane: THOMSON LAWBOOK Company.

Reuters, T. (2017) Australian Tax Legislation 2017 (4^th ed.). Sydney. THOMSON REUTERS.

Sadiq, K., Coleman, C., Hanegbi, R., Jogarajan, S., Krever, R., Obst, W., & Ting, A. (2015) Principles of Taxation Law 2015 (7th ed.). Pymont: Thomson Reuters.

Woellner, R. (2015) Australian taxation law 2015 (8^th ed.). North Ryde: CCH Australia.