LEGT2751 - Case Summary PDF

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LEGT2751 - Case Summary Week 2 Tennant v Smith (1892 Pre CGT): bank officer occupied rent free premises for after-hours business. Held: not taxable as not able to be transferred to money FCT v Cooke & Sherden (1980 Pre CGT): taxpayers awarded holidays for good sales – Commissioner said income. Held: not income Payne v FCT (1996 Post CGT): taxpayer obliged to travel for work. Joined frequent flyer program – non-transferable to cash. Held: not money, not income Sun Newspapers Ltd & Associated Newspaper Ltd v FCT (1938 Pre CGT): agreement with rival to pay £86500 to not publish within 300 miles of Sydney for 3 years – rival went out of business. Payment claimed as deduction. Held: capital outgoing not income, no deduction Californian Copper Syndicate v Harris (1904 Pre CGT): company acquired land to mine copper – insufficient funds to proceed with mining. Sold land and realised a profit. Held: profits income, not capital as it was always business’ intention to make money off land Evans Medical Supplies v Moriarty (1957 Pre CGT): pharmaceutical manufacturer agency closed down by government and paid lump sum in exchange for confidential information. Held: capital amount Rolls-Royce v Jeffery (1962 Pre CGT): Rolls-Royce accumulated technical knowledge and manufactured/exported jet engines. Countries refused to purchase to favour domestic production, but acquired technical data. Held: assessable income Hayes v FCT (1956 Pre CGT): Hayes (reluctantly) sold shares then was given several dispositions of shares meaning he was fully repaid. Held: value of shares was not income Scott v FCT (1966 Pre CGT): solicitor was given a gift of money by a longstanding client. Held: not taxable, not ordinary income Stone v FCT (2005 Post CGT): policewoman makes world rankings in javelin. Held: ‘carrying on a business’ as she had to travel/purchase equipment etc., therefore ordinary income Federal Coke Co Pty Ltd (1977 Pre CGT): subsidiary of coal company Le Nickel cannot meet contract requirements – gives $1m compensation. Held: compensation is capital in nature Californian Oil Products Ltd V FCT (1934 Pre CGT): the company had an exclusive right to provide oil products, which was substantially part of its business. The company providing the oil products wanted to terminate the exclusivity agreement, and it did so for a fee. Held: by terminating the agreement, the company was disposing of a capital asset.

HR Sinclair & Son Pty Ltd v FCT (1966 Pre CGT): alleged that tax payments made on royalty payments had been incorrectly levied. Although they eventually received a reimbursement for overpayment, the tax payments had been deducted. Since the initial tax had been a deduction, it was argued that it was only fair to tax the reimbursement as income. Held: court found the amount was income, it was taxable and the question of whether the deduction was allowed was irrelevant. Liftronic Pty Ltd v FCT (1996 Post CGT): taxpayer dealt in repairs, sales, etc. of lifts. Deficiencies led to loss of profits – compensated. Held: assessable income as given for loss of profits FCT v Rowe (1997 Post CGT): taxpayer tried to claim legal fees of $25,000 as deduction. Held: amount was not assessable, therefore no deduction FCT v Blake (1984 Pre CGT): retired officer received ex gratia payments. Held: payments were income FCT v Dixon (1952 Pre CGT): taxpayer was given money by employer during WWII to make up difference in army and employer salary. Held: amount is assessable due to reliance on payment regularity FCT v Harris (1980 Pre CGT): taxpayer retired from ANZ and received pension under bank scheme. Later bank decided payment was inadequate and increased (unexpectedly) the payments. Held: not assessable Kelly v FCT (1985 – not sure if pre or post CGT: uni student played AFL at local club – paid for each match. Won best and fairest competition. Held: assessable income

Week 3 Ferguson v FCT (1979 Pre CGT): taxpayer intended to breed cattle upon retirement – entered into agreements to lease cattle. Claimed he was carrying on a business and claimed deductions. Held: carrying on a business G P International Pipecoaters Pty Ltd v FCT (1990 Post CGT): ‘establishment costs’ for the construction of plant paid to the taxpayer. Held: income Montgomery v FCT (1999 Post CGT): firm of solicitors undertook renovations in office owned by BHP. Relocate to another premise and receive $29m. Held: on capital account as firm not in business of acquiring leases, premises needed for business FCT v Myer Emporium (1987 Post CGT): taxpayer was a retailer. Exchanges the right to receive future interest payments. Held: (i) extraordinary transaction will be assessable income if taxpayer entered into transaction with intention of making profit (ii) lump-sum amount that replaces future income is income assessable income

Scottish Australian Mining Co Ltd v FCT (1950 Pre CGT): taxpayer mined across 1800 acres then decided to subdivide – payment for rail roads etc. Commissioner deemed it as assessable. Held: not assessable as realising the land to its best use Westfield Ltd v FCT (1991 Post CGT): taxpayer engaged in design, construction, management of shopping outlets and not the purchase and sale of land. Acquired land to prevent rival development project – sold to AMP, taxpayer would carry out design and development work. Held: profit on sale of land not assessable. Overall profit-making purpose not sufficient to cover particular transaction – profit-making must be attached to particular operation FCT v Whitfords Beach Pty Ltd (1982 Pre CGT): fishermen formed a company to hold land, no intention to profit – developers acquired shares to conduct commercial venture. Held: income rather than capital, more than mere realisation of an asset, because significance of change in articles, massive scale, intermediate work McCauley v FCT (1944 Pre CGT): taxpayer made contract for regular payment in exchange for removal of timber in 12 months. Claimed payment was for consideration of capital disposal. Held: to be considered royalty under ordinary concepts, price paid must be in relation to amount taken. Therefore royalty payment Stanton v FCT (1955 Pre CGT): taxpayer owned land where timber stood. Contract to remove timber for quarterly payments. Held: not royalties as didn’t depend on amount of timber removed (to be considered royalty under ordinary concepts, price paid must be in relation to amount taken) FCT v Sherritt Gordon Mines (1977 Pre CGT): taxpayer supplied technical info for payment in percentage of sales. Held: not royalties as entitled to use info once supplied Murray v Imperial Chemical Industries (1967 Pre CGT): three licence categories 1. Ordinary licence 2. Exclusive licence 3. Sole licence

Week 5 Ronpibon Tin NL v FCT: companies mined tin until land taken over by enemy forces – still incurred expenses and wished to claim deductions. Held: mining related expenses are capital Magna Alloys & Research Pty Ltd v FCT: taxpayer employed agents to sell its products – agents offered incentives. Directors criminally charged, legal fees incurred – sought deductions. Held: expenses necessarily incurred in the carrying on of a business

Herald & Weekly Times Ltd v FCT: taxpayer published evening newspaper – incurred legal (defence) fees. Held: deduction allowed as expenditure in newspaper is inevitable (for legal fees) Amalgamated Zinc (de Bavay’s) Ltd v FCT: mining business ceased and machinery, shares, etc. sold. Only income was derived from investments, co liable to workers – claimed deduction. Held: not deductable Steele v DCT: taxpayer seeking new opportunities in the hospitality industry and acquired land for a hotel – used only for horses, pursued unsuccessful ventures. Claimed deductions on interest. Held: interest on capital account FCT v Brand: taxpayer invested in prawn farming – lost all money. Held: assessable income, therefore can claim deduction Softwood Pulp & Paper Ltd: taxpayer sought to deduct costs of investigating setting up a paper mill. Held: not deductable as project hadn’t reached a stage of gaining assessable income AGC (Advances) Ltd v FCT: taxpayer carried on business until operations were suspended due to compromise with creditors. Debts outstanding were written off and claimed deduction. Held: deduction allowed Placer Pacific Management Pty Ltd v FCT: taxpayer carried on a number of business activities. Dispute arose with a customer and conveyor belt division sold – taxpayer still liable and paid damages. Held: deduction allowed...