Commissioner of Taxation v Sharpcan Pty Ltd [2018] FCAFC 163

FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation v Sharpcan Pty Ltd [2018] FCAFC 163 Appeal from: Sharpcan Pty Ltd and Commissioner of Taxation (Taxation) [2017] AATA 2948

File number: VID 22 of 2018

Judges: GREENWOOD ACJ, MCKERRACHER AND THAWLEY JJ

Date of judgment: 27 September 2018

Catchwords: TAXATION – appeal from a decision of the Administrative Appeals Tribunal – were taxpayer incurred expenditure to acquire gaming machine entitlements under Gambling Regulation Act 2003 (Vic) – whether Tribunal erred in finding that expenditure was on revenue account and deductible under s 8-1 of the Income Tax Assessment Act 1997 (Cth) – whether expenditure was "outgoing of capital, or of a capital nature" – whether expenditure was incurred to provide a necessary component of the profit-making structure of the taxpayer's business TAXATION – whether expenditure on gaming machine entitlements was "capital expenditure" deductible over 5 years in accordance with s 40-880(2) of the Income Tax Assessment Act 1997 (Cth) – whether expenditure was "incurred to preserve (but not enhance) the value of goodwill" within the meaning of s 40-880(6)

Legislation: Gambling Regulation Act 2003 (Vic) Ch 3, Divs 5, 8, 9, 10; ss 3.4.1(1)(ab), 3.4.2(d), 3.4A.1(1)(a), 3.4A.2(1), 3.4A.7(1), 3.4A.8(2), 3.4A.16(1), 3.4A.27, 3.6.6, 3.6.6(2)(b), 3.6.6A, 3.6.6A(7) Gambling Regulation Amendment (Licensing) Act 2009 (Vic) Income Tax Assessment Act 1997 (Cth) ss 8-1, 40-880, 40-880(2), 40-880(5), 40-880(5)(f), 40-880(6); Part 3-1, ss 100-25, 108-5, 108-5(2)(b), 100-25, 110-25(5), 110-25(5A) Tax Laws Amendment (2006 Measures No 1) Act 2006 (Cth) Explanatory Memorandum, Tax Laws Amendment (2006 Measures No 1) Bill 2006 (Cth)