Commissioner of Taxation v McNeil [2005] FCAFC 147

FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation v McNeil [2005] FCAFC 147 INCOME TAX – income according to ordinary concepts – capital gain – CGT event H2 – act, transaction or event occurring in relation to a CGT asset – 'in relation to' – nature of relationship – requirement for asset existing at time of event – taxpayer's asset – announcement by listed public company of 5% of issued share capital – Sell Back Rights issued on 1 for 20 basis – taxpayer shareholder in company – taxpayer giving no direction to acquire or exercise the Sell Back Rights to which she was entitled – Sell back Rights traded on Australian Stock Exchange – absent direction taxpayer entitled to proceeds of sale of Sell Back Rights at conclusion of limited period of trading according to pre-existing formula – whether entitlement created in respect of Sell Back Rights and share of proceeds of sale thereof was income according to ordinary concepts – whether stock market value of taxpayer's unrealised Sell Back Rights subject to capital gains tax – whether proceeds represented a capital gain Corporations Act 2001 (Cth) ss 256A, 256B Income Tax Assessment Act 1915 (Cth) ss 3, 10, 14 Income Tax Assessment Act 1936 (Cth) ss 6(1), 44, 44(1), 47, 108, 108(1) Income Tax Assessment Act 1997 (Cth) ss 3-1, 6-5, 102-5, 102-20, 104-5, 104-10, 104-155, 104-155(1), 104-155(2), 104-155(3), 106-50, 108-5, 112-25, 116-20, 116-20(2), 116-125, 116-20, 118-20 Abbott v Philbin [1961] AC 352 considered Archibald Howie Pty Ltd v Commissioner of Stamp Duties (NSW) (1948) 77 CLR 143 considered Arthur Murray (NSW) Pty Ltd v Federal Commissioner of Taxation (1965) 114 CLR 314 cited Callow v Federal Commissioner of Taxation (1997) 73 FCR 421 cited Commissioner for Internal Revenue v Blott [1921] 1 AC 171 cited Commissioner of Taxation (NSW) v Stevenson (1937) 59 CLR 80 cited Commissioner of Taxation v Brewing Investments Ltd (2000) 100 FCR 437 cited Commissioner of Taxation v Scully (2000) 201 CLR 148 considered Commissioner of Taxation v Slater Holdings Ltd (1984) 156 CLR 447 considered Commissioners of Inland Revenue v Fisher's Executors [1926] AC 395 cited Commissioners of Inland Revenue v Paget (1938) 2 KB 25 followed Dickenson v Federal Commissioner of Taxation (1958) 98 CLR 460 considered Donaldson v Federal Commissioner of Taxation (1974) 3 ALR 516 considered Eisner v Macomber (1920) 252 US 189 cited Federal Commissioner of Taxation v Blakely (1951) 82 CLR 388 referred to Federal Commissioner of Taxation v Comber (1985) 64 ALR 451 cited Federal Commissioner of Taxation v Cook and Sherden (1979) 29 ALR 202 cited Federal Commissioner of Taxation v Cooling (1990) 22 FCR 42 cited Federal Commissioner of Taxation v Miranda (1976) 11 ALR 85 cited Federal Commissioner of Taxation v Montgomery (1999) 198 CLR 639 cited Federal Commissioner of Taxation v Myer Emporium Ltd (1987) 163 CLR 199 approved Federal Commissioner of Taxation v Uther (1965) 112 CLR 630 referred to Federal Commissioner of Taxation v WE Fuller Pty Ltd (1959) 101 CLR 403 cited Gibb v Federal Commissioner of Taxation (1966) 118 CLR 628 cited Hayes v Federal Commissioner of Taxation (1956) 96 CLR 47 cited Hepples v Federal Commissioner of Taxation (1991) 173 CLR 492 cited Macmine Pty Ltd v Federal Commissioner of Taxation (1979) 24 ALR 217 cited Ord Forrest Pty Ltd v Federal Commissioner of Taxation (1973) 130 CLR 124 cited PMT Partners Pty Ltd (In Liquidation) v Australian National Parks & Wildlife Service (1995) 184 CLR 301 considered Read v The Commonwealth (1988) 167 CLR 57 referred to Scott v Commissioner of Taxation (NSW) (1935) 35 SR(NSW) 215 cited Thomson v Federal Commissioner of Taxation (1929) 43 CLR 360 considered Webb v Federal Commissioner of Taxation (1922) 30 CLR 450 cited Stone J, Legal System and Lawyers' Reasonings (Maitland 1968) Parsons RW, Income Taxation in Australia (1985) COMMISSIONER OF TAXATION v HELEN MARY McNEIL N671 OF 2004 FRENCH, EMMETT AND DOWSETT JJ 8 AUGUST 2005 SYDNEY