TAXATION LAW
SUMMARY
PX SOLUTIONS
INCOME TAX
CONCEPTS OF TAXATION AND THE CONCEPT OF INCOME........ ERROR!
BOOKMARK NOT DEFINED.
SELECT HISTORY OF TAX .................................... ERROR! BOOKMARK NOT DEFINED.
CONCEPT OF TAX ............................................. ERROR! BOOKMARK NOT DEFINED.
Why we have a tax system ...................................... Error! Bookmark not defined.
DIRECT AND INDIRECT TAX............................. ERROR! BOOKMARK NOT DEFINED.
Exemptions from GST ............................................ Error! Bookmark not defined.
Tax Expenditure ..................................................... Error! Bookmark not defined.
HOW TO EVALUATE THE TAX SYSTEM ................. ERROR! BOOKMARK NOT DEFINED.
Revenue raising ...................................................... Error! Bookmark not defined.
Tax Expenditure ..................................................... Error! Bookmark not defined.
PROCESS OF TAXING A TAX-PAYER .................... ERROR! BOOKMARK NOT DEFINED.
SOURCES OF TAX LAW ........................................ ERROR! BOOKMARK NOT DEFINED.
COMIS RULINGS AND DETERMINATIONS .............. ERROR! BOOKMARK NOT DEFINED.
STATUTORY INTERPRETATION RULES ................ ERROR! BOOKMARK NOT DEFINED.
1997 ACT ............................................................ ERROR! BOOKMARK NOT DEFINED.
CONCEPTS OF INCOME ........................ERROR! BOOKMARK NOT DEFINED.
ECONOMIC CONCEPT OF INCOME ........................ ERROR! BOOKMARK NOT DEFINED.
JUDICIAL CONCEPT OF INCOME ........................... ERROR! BOOKMARK NOT DEFINED.
Core Provisions ..................................................... Error! Bookmark not defined.
EXEMPT INCOME – S6-20 .................................... ERROR! BOOKMARK NOT DEFINED.
ORDINARY INCOME ............................................. ERROR! BOOKMARK NOT DEFINED.
FCT v Cooke and Sherden ..................................... Error! Bookmark not defined.
Meyers v FCT ......................................................... Error! Bookmark not defined.
Hochstrasser v Mayes ............................................ Error! Bookmark not defined.
Allsop v FCT – lump sum payments ....................... Error! Bookmark not defined.
PERSONAL SERVICES INCOME ..........ERROR! BOOKMARK NOT DEFINED.
EMPLOYMENT INCOME ....................................... ERROR! BOOKMARK NOT DEFINED.
INTERACTION BETWEEN ORDINARY INCOME, STAT INCOME AND FB ................ERROR!
BOOKMARK NOT DEFINED.
Nexus – Voluntary Payments and Gifts ................. Error! Bookmark not defined.
Dixon’s Case .......................................................... Error! Bookmark not defined.
[Personal services cases, employment, but s26(e) not apply] ....Error! Bookmark
not defined.
Taxation of Gifts ................................................ Error! Bookmark not defined.
Hayes v FCT .......................................................... Error! Bookmark not defined.
FCT v Scott ............................................................ Error! Bookmark not defined.
Pension “top up” Payments ........................... Error! Bookmark not defined.
FCT v Harris .......................................................... Error! Bookmark not defined.
Study Incentive Payts by Employerr to Employee .. Error! Bookmark not
defined.
Smith v FCT ........................................................... Error! Bookmark not defined.
Salvage Payments ............................................. Error! Bookmark not defined.
FCT v Holmes ........................................................ Error! Bookmark not defined.
REIMBURSEMENT OF LEGAL EXPENSES .............. ERROR! BOOKMARK NOT DEFINED.
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INCOME TAX
FCT v Rowe............................................................ Error! Bookmark not defined.
TAX SYMMETRY: ................................................ ERROR! BOOKMARK NOT DEFINED.
RESTRICTIVE COVENANTS .................................. ERROR! BOOKMARK NOT DEFINED.
Higgs v Olivier ....................................................... Error! Bookmark not defined.
“SIGN ON” FEES ............................................... ERROR! BOOKMARK NOT DEFINED.
AAT Case 822 ........................................................ Error! Bookmark not defined.
FCT v Woite ........................................................... Error! Bookmark not defined.
AAT Case 7422 ...................................................... Error! Bookmark not defined.
PAYTS FOR ALTERATION OR TERMINATION OF EMPLOYMENT ENTITLEMENTS ..ERROR!
BOOKMARK NOT DEFINED.
Constable’s Case ................................................... Error! Bookmark not defined.
COMPO FOR LOSS OF SALARY .............................. ERROR! BOOKMARK NOT DEFINED.
FCT v Phillips ........................................................ Error! Bookmark not defined.
Dixon’s Case: Substitution principle, Fullagar J: subst for lost income, should
assess – minority view. Disregarded in Hayes. .... Error! Bookmark not defined.
COMPO FOR GIVING UP A CAPITAL ASSET...... ERROR! BOOKMARK NOT DEFINED.
Capital asset = contract of employment ................ Error! Bookmark not defined.
FCT v Bennett ........................................................ Error! Bookmark not defined.
AAT Case 7752 ...................................................... Error! Bookmark not defined.
TAXATION OF AWARDS AND PRIZES .................... ERROR! BOOKMARK NOT DEFINED.
TAXATION OF PRIZES OF PROFESSIONAL SPORTSMEN .......... ERROR! BOOKMARK NOT
DEFINED.
Kelly v FCT ............................................................ Error! Bookmark not defined.
Moore v Griffiths.................................................... Error! Bookmark not defined.
TAXATION OF NON-CONVERTIBLE BENEFITS ....... ERROR! BOOKMARK NOT DEFINED.
FCT v Cooke and Sherden ..................................... Error! Bookmark not defined.
TAXATION OF FREQUENT FLYER POINTS .............. ERROR! BOOKMARK NOT DEFINED.
Payne v FCT .......................................................... Error! Bookmark not defined.
Taxation Ruling TR 1999/6 .................................... Error! Bookmark not defined.
INTELLECTUAL PROPERTY ................................... ERROR! BOOKMARK NOT DEFINED.
Brent v FCT............................................................ Error! Bookmark not defined.
COMPENSATION .................................................. ERROR! BOOKMARK NOT DEFINED.
FCT v Smith ........................................................... Error! Bookmark not defined.
Motor Vehicle Compo ............................................ Error! Bookmark not defined.
Tinkler v FCT ......................................................... Error! Bookmark not defined.
FCT v Slaven .......................................................... Error! Bookmark not defined.
Workers Compo ..................................................... Error! Bookmark not defined.
FCT v Inkster ......................................................... Error! Bookmark not defined.
TAXATION OF FRINGE BENEFITS AND STATUTORY INCOME:
EMPLOYEE BENEFITS ...........................ERROR! BOOKMARK NOT DEFINED.
FRINGE BENEFITS ............................................. ERROR! BOOKMARK NOT DEFINED.
NEED TO TAX FB................................................. ERROR! BOOKMARK NOT DEFINED.
Features ................................................................. Error! Bookmark not defined.
Example.................................................................. Error! Bookmark not defined.
STATUTE ............................................................. ERROR! BOOKMARK NOT DEFINED.
BENEFIT............................................................. ERROR! BOOKMARK NOT DEFINED.
REIMBURSEMET OR ALLOWANCE? ...................... ERROR! BOOKMARK NOT DEFINED.
RTA NSW v FCT .................................................... Error! Bookmark not defined.
IN RESPECT OF EMP .......................................... ERROR! BOOKMARK NOT DEFINED.
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INCOME TAX
Knowles and Assocs ............................................... Error! Bookmark not defined.
EXEMPTIONS - S58X ........................................... ERROR! BOOKMARK NOT DEFINED.
Child Care – s47 .................................................... Error! Bookmark not defined.
Esso Aust v FCT ..................................................... Error! Bookmark not defined.
Minor Benefits < $100 – s58P ............................... Error! Bookmark not defined.
Public Benevolent Institutions PBI – s57A ............ Error! Bookmark not defined.
Mines Rescue Board NSW v FCT .......................... Error! Bookmark not defined.
CALCULATING TAXABLE VALUE ......................... ERROR! BOOKMARK NOT DEFINED.
Car Fringe Benefit ................................................. Error! Bookmark not defined.
Residual FB ............................................................ Error! Bookmark not defined.
Westpac Bank v FCT .............................................. Error! Bookmark not defined.
Other Fringe Benefits ............................................ Error! Bookmark not defined.
Loan Fringe Benefit: Difference between repayts at statutory and mkt interest
rate. ........................................................................ Error! Bookmark not defined.
Expense Payt FB: Eg: School fees, CR card. Repay a liability of another
person. Otherwise deductible rule apply, reduces FB to nil if incurred on behalf
empr. ...................................................................... Error! Bookmark not defined.
Reduction factors ................................................... Error! Bookmark not defined.
NAB v FCT ............................................................. Error! Bookmark not defined.
Calculation of FBT payable ................................... Error! Bookmark not defined.
BUSINESS INCOME .................................ERROR! BOOKMARK NOT DEFINED.
INTRODUCTION ................................................. ERROR! BOOKMARK NOT DEFINED.
CARRYING ON A BUSINESS (QUESTION OF FACT) ........ ERROR! BOOKMARK NOT
DEFINED.
Ferguson v FCT ..................................................... Error! Bookmark not defined.
SIZE AND SCOPE OF ACTIVITIES ...................... ERROR! BOOKMARK NOT DEFINED.
FCT v Walker ......................................................... Error! Bookmark not defined.
BUSINESS OR HOBBY? ..................................... ERROR! BOOKMARK NOT DEFINED.
Trautwein v FCT (No. 2) ........................................ Error! Bookmark not defined.
Evans v FCT ........................................................... Error! Bookmark not defined.
TIMING: COMMENCEMENT AND TERMINATION OF BUSINESS ................ERROR!
BOOKMARK NOT DEFINED.
Commence: Acts give rise to assessable income. . Error! Bookmark not defined.
Softwood Pulp and Paper v FCT ........................... Error! Bookmark not defined.
FCT v Osborne ....................................................... Error! Bookmark not defined.
TERMINATION ................................................... ERROR! BOOKMARK NOT DEFINED.
AGC (Advances) Ltd v FCT ................................... Error! Bookmark not defined.
TYPES OF INCOME – S6-5 ................................. ERROR! BOOKMARK NOT DEFINED.
GP International Pipe Coaters v FCT ................... Error! Bookmark not defined.
FCT v Kwikform ..................................................... Error! Bookmark not defined.
FCT v Hyteco Hiring ............................................. Error! Bookmark not defined.
LEASE INCENTIVE PAYT .................................. ERROR! BOOKMARK NOT DEFINED.
Montgomery v FCT ................................................ Error! Bookmark not defined.
ASSIGNING AN ASSET ...................................... ERROR! BOOKMARK NOT DEFINED.
Transfer right to receive income and ordinary transaction and assessable under
s6-5. If beyond scope of business, not assessable. Error! Bookmark not defined.
Henry Jones IXL v FCT ......................................... Error! Bookmark not defined.
FCT v Myer ............................................................ Error! Bookmark not defined.
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INCOME TAX
Westfield v FCT...................................................... Error! Bookmark not defined.
TR 92/3 ................................................................... Error! Bookmark not defined.
Profits from isolated transactions. Depends on the facts. .. Error! Bookmark not
defined.
Income: intend to make profit. Objective at the time transaction entered.
Outside ord course of business if have profit motive. .......... Error! Bookmark not
defined.
Business: consider nature of entity and activities, money involved, manner
carried out, connection between T and other party. ............ Error! Bookmark not
defined.
Transfer of income stream is ordinary income. ..... Error! Bookmark not defined.
LAND DEVELOPMENT SCHEMES..................... ERROR! BOOKMARK NOT DEFINED.
Scottish Aust Mining v FCT ................................... Error! Bookmark not defined.
Whitford’s Beach – Landmark case ....................... Error! Bookmark not defined.
Californian Oil Products v FCT ............................ Error! Bookmark not defined.
Heavy Minerals v FCT ........................................... Error! Bookmark not defined.
FCT v Merv Brown ................................................ Error! Bookmark not defined.
BANKING AND FINANCE CASES...................... ERROR! BOOKMARK NOT DEFINED.
Colonial Mutual Life v FCT ................................... Error! Bookmark not defined.
Aust Catholic Assurance v FCT ............................. Error! Bookmark not defined.
London Australia Investments v FCT .................... Error! Bookmark not defined.
AGC (Investments) – Realization of long term invests as mkt over valued. . Error!
Bookmark not defined.
NON CONVERTIBLE BUSINESS BENEFITS ...... ERROR! BOOKMARK NOT DEFINED.
TR 99/6 ............................................................. ERROR! BOOKMARK NOT DEFINED.
PROPERTY INCOME ...............................ERROR! BOOKMARK NOT DEFINED.
INTRODUCTION ................................................. ERROR! BOOKMARK NOT DEFINED.
TWO ELEMENTS ............................................... ERROR! BOOKMARK NOT DEFINED.
ROYALTY .......................................................... ERROR! BOOKMARK NOT DEFINED.
McCauley ............................................................... Error! Bookmark not defined.
Stanton v FCT ........................................................ Error! Bookmark not defined.
TAXATION OF KNOW HOW ............................. ERROR! BOOKMARK NOT DEFINED.
FCT v Sherritt and Gordon Mines ......................... Error! Bookmark not defined.
Aktiebolaget Volvo v FCT – Payts for an exclusive supply agreement. ....... Error!
Bookmark not defined.
SP Investments v FCT ............................................ Error! Bookmark not defined.
INTEREST ............................................................ ERROR! BOOKMARK NOT DEFINED.
Federal Wharf v FCT ............................................. Error! Bookmark not defined.
Whitaker v FCT ...................................................... Error! Bookmark not defined.
DISCOUNTS AND PREMIUMS ........................... ERROR! BOOKMARK NOT DEFINED.
Lomax v Peter Dixon ............................................. Error! Bookmark not defined.
NON CONVERTIBLE BENEFITS TO INVESTOR . ERROR! BOOKMARK NOT DEFINED.
Dawson v CIR Comis Inland Rev (NZ) ................. Error! Bookmark not defined.
TAXATION OF ANNUITIES ................................ ERROR! BOOKMARK NOT DEFINED.
Egerton-Wharburton v FCT ................................... Error! Bookmark not defined.
ANZ Savings v FCT ................................................ Error! Bookmark not defined.
STATUTORY INCOME: THE TAXATION OF CAPITAL GAINS ....... ERROR!
BOOKMARK NOT DEFINED.
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INCOME TAX
INTRODUCTION ................................................. ERROR! BOOKMARK NOT DEFINED.
FEATURES ......................................................... ERROR! BOOKMARK NOT DEFINED.
LOSSES .............................................................. ERROR! BOOKMARK NOT DEFINED.
DEATH ............................................................... ERROR! BOOKMARK NOT DEFINED.
INDEX ................................................................ ERROR! BOOKMARK NOT DEFINED.
PROCESS OF APPLYING THE PROVISIONS ....... ERROR! BOOKMARK NOT DEFINED.
1. HAS AN CGT EVENT TAKEN PLACE?...... ERROR! BOOKMARK NOT DEFINED.
11 CGT CATEGORIES – S104-5....................... ERROR! BOOKMARK NOT DEFINED.
FCT v Sara Lee ...................................................... Error! Bookmark not defined.
McDonald v FCT ................................................... Error! Bookmark not defined.
C1 – DESTROY OR LOSE CGT ASSET ............. ERROR! BOOKMARK NOT DEFINED.
AAT Case 9617 – C1 Loss ..................................... Error! Bookmark not defined.
C2 – CANCEL OR SURRENDER ASSET ............. ERROR! BOOKMARK NOT DEFINED.
FCT v Orica ........................................................... Error! Bookmark not defined.
D1 – BRING ASSET INTO EXISTENCE, CREATE CONTRACTUAL OR OTHER
RIGHTS. .............................................................. ERROR! BOOKMARK NOT DEFINED.
EVENT H1 – FORFEITURE OF DEPOSIT ........... ERROR! BOOKMARK NOT DEFINED.
AAT Case 9538 ...................................................... Error! Bookmark not defined.
Brooks v FCT ......................................................... Error! Bookmark not defined.
EVENT I1: LEAVE AUST PERM....................... ERROR! BOOKMARK NOT DEFINED.
CGT ASSETS ....................................................... ERROR! BOOKMARK NOT DEFINED.
Collectible Assets ................................................... Error! Bookmark not defined.
Personal Use .......................................................... Error! Bookmark not defined.
Separate Assets – Subdiv 108-D ............................ Error! Bookmark not defined.
Assets...................................................................... Error! Bookmark not defined.
Personal Injury ...................................................... Error! Bookmark not defined.
Undissected lump sums, Spedley: Capital and income items, Comis unable to
dissent into components. Taxed as a capital gain unless dissected on a reas
basis. ...................................................................... Error! Bookmark not defined.
TR 95/35 ................................................................. Error! Bookmark not defined.
Anti over lap provision........................................... Error! Bookmark not defined.
Main residence exception ...................................... Error! Bookmark not defined.
Residence events .................................................... Error! Bookmark not defined.
Small business capital gains concessions .............. Error! Bookmark not defined.
Small business retirement exemption ..................... Error! Bookmark not defined.
Small business rollover relief................................. Error! Bookmark not defined.
Concession - rollover ............................................. Error! Bookmark not defined.
Calculate capital gain or loss ................................ Error! Bookmark not defined.
Index cost base ....................................................... Error! Bookmark not defined.
Calculating Net CG................................................ Error! Bookmark not defined.
Record keeping reqts.............................................. Error! Bookmark not defined.
GENERAL DEDUCTIONS .......................ERROR! BOOKMARK NOT DEFINED.
GENERAL TESTS .................................................. ERROR! BOOKMARK NOT DEFINED.
POSITIVE TESTS ................................................... ERROR! BOOKMARK NOT DEFINED.
Ronpibun Tin .......................................................... Error! Bookmark not defined.
UNUSUAL EXPS INCURRED IN EARNING INCOME .......... ERROR! BOOKMARK NOT
DEFINED.
W Neville and Co v FCT ........................................ Error! Bookmark not defined.
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INCOME TAX
APPLICATION OF THIS PRINCIPLE ................... ERROR! BOOKMARK NOT DEFINED.
INSURANCE PREMIUMS.................................... ERROR! BOOKMARK NOT DEFINED.
FCT v Smith ........................................................... Error! Bookmark not defined.
FCT v Maddalena .................................................. Error! Bookmark not defined.
TR 2000/5 ......................................................... ERROR! BOOKMARK NOT DEFINED.
EXPS “NEC INCURRED” IN GAINING ASSESSABLE INCOME .. ERROR! BOOKMARK
NOT DEFINED.
Snauden v Wilson ................................................... Error! Bookmark not defined.
FCT v Total Holdings ............................................ Error! Bookmark not defined.
TIMING OF EXPENDITURE ................................ ERROR! BOOKMARK NOT DEFINED.
Steele v FCT ........................................................... Error! Bookmark not defined.
Amalgamated Zinc ................................................. Error! Bookmark not defined.
APPORTIONMENT OF DEDUCTIONS ................. ERROR! BOOKMARK NOT DEFINED.
Magna Alloys v FCT .............................................. Error! Bookmark not defined.
FORM AND SUBSTANCE CASES........................ ERROR! BOOKMARK NOT DEFINED.
Cecil Bros............................................................... Error! Bookmark not defined.
FCT v Phillips  important ................................ Error! Bookmark not defined.
INTERNATIONAL TRANSFER PRICING CASES . ERROR! BOOKMARK NOT DEFINED.
Europa Oil 1, 2 ...................................................... Error! Bookmark not defined.
Ure v FCT .............................................................. Error! Bookmark not defined.
NEGATIVE TESTS .............................................. ERROR! BOOKMARK NOT DEFINED.
Sun Newspapers ..................................................... Error! Bookmark not defined.
Hallstrom’s Case ................................................... Error! Bookmark not defined.
Broken Hill Theatre ............................................... Error! Bookmark not defined.
EXPS INCURRED TO GAIN AN INCOME PRODUCING ASSET ... ERROR! BOOKMARK
NOT DEFINED.
Steele’s Case .......................................................... Error! Bookmark not defined.
Eastern Nitrogen .................................................... Error! Bookmark not defined.
FCT v Cooper ........................................................ Error! Bookmark not defined.
HOME OFFICE ................................................... ERROR! BOOKMARK NOT DEFINED.
Handley’s Case ...................................................... Error! Bookmark not defined.
COMMUTING ..................................................... ERROR! BOOKMARK NOT DEFINED.
FCT v Payne .......................................................... Error! Bookmark not defined.
TR 92/8 ............................................................. ERROR! BOOKMARK NOT DEFINED.
FCT v Collings ....................................................... Error! Bookmark not defined.
CHILD MINDING EXPS ...................................... ERROR! BOOKMARK NOT DEFINED.
Lodge’s Case .......................................................... Error! Bookmark not defined.
SELF EDUCATION.............................................. ERROR! BOOKMARK NOT DEFINED.
Finn’s Case ............................................................ Error! Bookmark not defined.
Hatchett’s Case ...................................................... Error! Bookmark not defined.
Studdert’s Case ...................................................... Error! Bookmark not defined.
TR 98/9 ............................................................. ERROR! BOOKMARK NOT DEFINED.
UNIFORMS ......................................................... ERROR! BOOKMARK NOT DEFINED.
Mallabeu v Drummond .......................................... Error! Bookmark not defined.
EXCEPTION........................................................ ERROR! BOOKMARK NOT DEFINED.
FCT v Edwards ...................................................... Error! Bookmark not defined.
Mansfield’s Case .................................................... Error! Bookmark not defined.
Morris [2002] FCA 616 ......................................... Error! Bookmark not defined.
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INCOME TAX
RESIDENCY, SOURCE AND DOUBLE TAX AGREEMENTS –
INTERNATIONAL TAXATION ..............ERROR! BOOKMARK NOT DEFINED.
OVERVIEW OF INTERNATIONAL TAX SYSTEMERROR! BOOKMARK NOT DEFINED.
RESIDENCE TESTS ............................................... ERROR! BOOKMARK NOT DEFINED.
Individuals.............................................................. Error! Bookmark not defined.
1. COMMON LAW TEST ................................. ERROR! BOOKMARK NOT DEFINED.
TR 98/17 ........................................................... ERROR! BOOKMARK NOT DEFINED.
IT 2681 .............................................................. ERROR! BOOKMARK NOT DEFINED.
2. DOMICILE TEST ........................................ ERROR! BOOKMARK NOT DEFINED.
IT 2650 .............................................................. ERROR! BOOKMARK NOT DEFINED.
COMPANIES ......................................................... ERROR! BOOKMARK NOT DEFINED.
Three tests .............................................................. Error! Bookmark not defined.
Koitaki Rubber Plantations v FCT ........................ Error! Bookmark not defined.
Malayan Shipping .................................................. Error! Bookmark not defined.
TRUSTS .............................................................. ERROR! BOOKMARK NOT DEFINED.
Esquire Nominees .................................................. Error! Bookmark not defined.
SOURCE RULES .................................................... ERROR! BOOKMARK NOT DEFINED.
Nathan’s Case ........................................................ Error! Bookmark not defined.
LOCATION OF ECO ACTIVITY........................... ERROR! BOOKMARK NOT DEFINED.
French’s Case ........................................................ Error! Bookmark not defined.
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INCOME TAX
PROPERTY INCOME
Introduction
Passive income. Eg: Interest, dividends, shares, annuity, rent, royalty.
Payments to use T’s property.
Ordinary income under s6-5 or stat income s6-10.
Two Elements
1. Receipt of income not capital.
2. Flow or derive from property.
Royalty
Agreed portion paid to owner for use of a right. Eg: Licence to copy
book, use mine (value diminishes).
1. Ordinary meaning of royalty (CL, cases):
(a) ordinary income, features: s6-5. Stanton.
(b) Statutory income s15-20. McCauley.
2. Extended defn of royalty, s995-1:
(a) ordinary income, features: s6-5.
(b) Statutory income: not assessable.
McCauley
Facts: Dairy farmer sold right to cut and remove his trees. M argue not
assessable as not carrying on a business, capital.
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INCOME TAX
Held: Royalties, capital, caught by s15-20, s26(f). Term royalty not ltd
to patents and copyrights, does extend to right to come onto land and
remove something like timber.
Used the term ‘royalty’ in the contract.
Stanton v FCT
Facts: Sold timber with right to remove it, quarterly payts. Break link
betw payt and right to use, only sold timber not right to remove it.
Held: Not assess, not related to the use of a right. Not royalty, not
connected to quantity.
CL Royalty: Payment made in consideration of a grant of a right;
calculated by reference to use of or exercise of that right.
EK White v FCT: Same facts as above but held to be assessable.
Taxation of Know How
Ordinary income s6-5 or statutory s15-20.
FCT v Sherritt and Gordon Mines
Facts: Canada co, operations in Aust. Provide tech assistance and
right to use processing system to Western Mining, lump sum based on
agg sales. Comis argued receiving royalty.
Held: Payt was neither a CL or extended s6 defn, not assessable. Use
not a critical factor. Payt was for provision of tech assistance. Western
entitled to use tech knowledge without additional right of grant to use.
Not a royalty, no ref to quantity.
S6(1) extended stat defn changed to include ‘know how’ payments.
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INCOME TAX
Aktiebolaget Volvo v FCT – Payts for an exclusive supply agreement.
Facts: Swedish co received payts from Aust subsid, mkting agreement,
consideration for exclusive supply agreement was 4% of est sale of
Aust co. Comis argued a royalty. T received payments from Volvo Aust
to not supply Aust residents.
Held: Not assessable, not a royalty under general law or extended
defn. Parties did not use the work royalty in the contract. Payt was not
a payt for use, but related to wholesale trade in manufac goods.
Rolls Royce v Jeffrey (UK Comis)
Facts: Sale of know how. Under UK trade rules, RR not allowed to set
up operations in other countries, 1962. RR decided to sell the know
how, not allowed to sell the engines itself. Tried to argue these sales
were capital in nature.
Held: Lump sums were trading receipts assessable as income through
know how. Taxpayer had exploited the foreign mkts in the only way
avail. Capital assets not affected by the sales, capital structure not
diminished. Taught licensees how to use licences. Trading receipt
assessable as business income. Extension of existing trade.
SP Investments v FCT
Facts: Taxpayer entitled to mining royalties. Assign income to another
party in return for a lump sum, $3m. Still owned the mines. Assigned
right to receive income without assigning underlying property. Comis
argued
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INCOME TAX
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