Federal Court of Australia
ana
CATCHWORDS
Appeal - Whether decision involved a question of law - Role of appellate court. Income Tax - Assessable income - Whether shares acquired for
purpose of profit-making by sale.
Income Tax Assessment Act, 1936 - s.26(a), s 190(b), s.196(1).
THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA v. REGINALD ERNEST NIXON
G. 42 of 1979 Coram: Brennan, Deane and Lockhart JJ. Sydney
20 June, 1980.
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY
GENERAL DIVISION
No. G42 of 1979
ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES ADMINISTRATIVE LAW DIVISION
BETWEEN:
THE COMMISSIONER OF
AND
O R D E R
JUDGES MAKING ORDER: Brennan, DATE OF ORDER: 20 June, WHERE MADE: Sydney
THE COURT ORDERS THAT:
1. Appeal dismissed with costs.
TAXATION OF THE COMMONWEALTH OF AUSTRALIA
Appellant
REGINALD ERNEST NIXON
Respondent
Deane and Lockhart JJ
IN THE FEDERAL COURT OF AUSTRALIA
NEW SOUTH WALES DISTRICT REGISTRY NO. G42 of 1979
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GENERAL DIVISION
ON APPEAL FROM THE SUPREME COURT OF NEW SOUTH WALES ADMINISTRATIVE LAW DIVISION
BETWEEN: THE COMMISSIONER OF TAXATION OF THF COMMONWEALTH OF AUSTRALIA
Appellant
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REGINALD ERNEST NIXON
Respondent
CORAM: Brennan, Deane and Lockhart JJ.
Friday 20 June, 1980.
REASONS FOR JUDGMENT
On 24 December, 1969, the respondent, Reginald Ernest Nixon ("the taxpayer"), purchased 2,100 shares in Tasminex N.L. The purchase price, including brokerage and
stamp duty, was $7,522. This represented a total cost of
$3.50 per share in respect of 1,900 shares and $3.55 per share in respect of the balance of 200 shares. On 29 January, 1970 the taxpayer sold 1,000 of the shares for a net amount of $30,329.76. The profit arising from the sale of
those shares was $26,747.
The taxpayer was not a share trader. The purchase and sale of the shares did not take place in the course of any business which he carried on. The transactions occurred before the date of operation of s.26AAA of the Income Tax Assessment Act, 1936 ("the Act"). It 1s common = ground between the taxpayer and the respondent Commissioner of Taxation ("the Commissioner") that the profit realized on the sale of the 1000 shares did not, for the purposes of the Act, represent assessable income in the hands of the taxpayer unless the shares were acquired by the taxpayer for the purpose of profit-making by sale. If they were acquired for that purpose, the profit would be included in the taxpayer's assessable income of the year ended 30 June, 1970 ("the tax year") pursuant to the provisions of the first limb of
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