Mussalli v Commissioner of Taxation [2021] FCAFC 71

Federal Court of Australia

Mussalli v Commissioner of Taxation [2021] FCAFC 71 Appeal from: Mussalli v Commissioner of Taxation [2020] FCA 544

File number: NSD 555 of 2020

Judgment of: MCKERRACHER, THAWLEY AND STEWART JJ

Date of judgment: 14 May 2021

Catchwords: TAXATION – income tax – deductibility – payments made upon entering into lease and license agreements of franchise restaurants – payments described as prepayments of rent – whether payments were capital in nature or on revenue account – characterisation of advantage sought – where the quantum of the prepayment was calculated without reference to the terms of the lease and license agreements

Legislation: Income Tax Assessment Act 1936 (Cth) ss 95, 97, 82KZMD Income Tax Assessment Act 1997 (Cth) ss 8-1, 8-1(2), 8-1(2)(a) Taxation Administration Act 1953 (Cth) ss 14ZZ

Cases cited: Anglo-Persian Oil Co Ltd v Dale (1932) 1 KB 124; [1931] All ER Rep 725 Associated Newspapers Ltd v Commissioner of Taxation (1938) 61 CLR 337 AusNet Transmission Group Pty Ltd v Federal Commissioner of Taxation (2015) 255 CLR 439; [2015] HCA 25 Colonial Mutual Life Assurance Society Ltd v Commissioner of Taxation (Cth) (1953) 89 CLR 428; [1953] HCA 68 Commissioner of Internal Revenue v. P.G. Lake, Inc. (1958) 356 US 260 Commissioner of Taxation v Creer (1986) 11 FCR 52; [1986] FCA 166 Commissioner of Taxation (Cth) v Ilbery (1981) 12 ATR 563; [1981] FCA 188 Commissioner of Taxation (Cth) v Lau (1984) 6 FCR 202 Commissioner of Taxation v Midland Railway Company of Western Australia Ltd (1952) 85 CLR 306 Commissioner of Taxation v Montgomery (1999) 198 CLR 639 Commissioner of Taxation v Myer Emporium Ltd (1987) 163 CLR 199; [1987] HCA 18 Commissioner of Taxation v Northumberland Developments (1995) 59 FCR 103 Commissioner of Taxation (Cth) v South Australian Battery Makers Pty Ltd (1978) 140 CLR 645; [1978] HCA 32 Commissioner of Taxation v Star City Pty Limited (2009) 175 FCR 39; [2009] FCAFC 19 Commissioner of Taxes (Vic) v Phillips (1936) 55 CLR 144 Federal Commissioner of Taxation v Ashwick (Qld) No 127 Pty Ltd (2011) 192 FCR 325; [2011] FCAFC 49 Federal Commissioner of Taxation v Healius Ltd [2020] FCAFC 173 Federal Commissioner of Taxation v Sharpcan Pty Ltd (2019) 373 ALR 414; [2019] HCA 36 Fletcher v Commissioner of Taxation (1991) 173 CLR 1 Glenboig Union Fireclay Co Ltd v Inland Revenue Commissioners (1921) 12 TC 427 GP International Pipecoaters Pty Ltd v Commissioner of Taxation (Cth) (1990) 170 CLR 124; [1990] HCA 25 Hancock (Surveyor of Taxes) v General Reversionary and Investment Company Limited [1919] 1 KB 25 IRC v Longmans Green & Co Ltd (1932) 17 TC 272 Mount Isa Mines Ltd v Commissioner of Taxation (Cth) (1992) 176 CLR 141; [1992] HCA 62 Magna Alloys & Research Pty Ltd v Commissioner of Taxation (1980) 11 ATR 276 National Australia Bank Ltd v Commissioner of Taxation (Cth) (1997) 80 FCR 352 Spassked Pty Ltd v Commissioner of Taxation (2003) 136 FCR 441 SPI PowerNet Pty Ltd v Federal Commissioner of Taxation (2013) 96 ATR 771; [2013] FCA 924 Spotlight Stores Pty Ltd v Commissioner of Taxation (Cth) (2004) 55 ATR 745; [2004] FCA 650 Texas Co (A/asia) Ltd v Commissioner of Taxation (Cth) (1940) 63 CLR 382; [1940] HCA 9 Tucker v Granada Motorway Services Ltd [1979] 2 All ER 801 Tyco Australia Pty Ltd v Federal Commissioner of Taxation (2007) 67 ATR 63; [2007] FCA 1055 Visy Industries USA Pty Ltd v Federal Commissioner of Taxation (2011) 85 ATR 232; [2011] FCA 1065 W Nevill & Co Ltd v Commissioner of Taxation (Cth) (1937) 56 CLR 290; [1937] HCA 9