Commissioner of Taxation v. Marshall & Brougham Pty Ltd [1987] FCA 277

CA ORDS

INCOME TAX - deductions - money on short-term loan with failed financial institution written off as a bad debt - whether a loss

on revenue or capital account - whether taxpayer in the business

of the lending of money.

Income Tax Assessment Act 1936 (Cth), ss.51(1), 63(1)(»b)

COMMISSIONER OF TAXATION v MARSHALL AND BROUGHAM PTY LIMITED G. 47 OF 1986

ADELAIDE

4 June 1987

IN_THE COURT OF AUSTRALIA ) )

SOUTH AUS' IA_ DISTR 8 ) No. G47 of 1986 ) )

GENERAL D ON ON APPEAL FROM THE SUPREME COURT OF SOUTH AUSTRALIA

BETWEEN : COMMISSIONER OF TAXATION - and - MARSHALL AND BROUGHAM PTY LIMITED

CORAM: Bowen C.J., Jenkinson and Burchett JJ.

PLACE: Sydney

DATE: 4 June 1987

MINUTE OF ORDERS

THE COURT ORDERS THAT:

The appeal be dismissed with costs.

NOTE: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

FED: UR' US

) Q A DIS ISTR No. G47 of 1986 GENERAL DIVISION ON APPEAL FROM THE SUPREME COURT OF SouTH AUSTRALIA COMMISS OF TION - and - MARSHALL AND BROUGHAM PTY LIMITED

CORAM: Bowen C.J., Jenkinson and Burchett JJ. DATE: 4 June 1987

EASONS FOR JUDGMENT OWEN C.J. =: The dispute between the Commissioner of Taxation (the Commissioner) and Marshall and Brougham Pty Limited (the

taxpayer) is whether the taxpayer is entitled to deduct the sum

of $500,000 from its assessable income for the year of income

ended 30 June 1979.

The Commissioner issued a notice of assessment on 17 April 1980 disallowing the deduction. The taxpayer objected and the Commissioner disallowed the objection. The taxpayer thereupon requested the decision to be referred to the Board of

Review for review. The matter was heard by Taxation Board of No. 1 and a decision given on 31 July 1985 confirming the

Commissioner's assessment. The taxpayer then appealed to the

Supreme Court of South Australia. The appeal came on for hearing before Jacobs J. who gave judgment on 11 August 1986 allowing the appeal upon the ground that the taxpayer was entitled to deduct the sum in question under s.5l(l1) of the income Tax Assessment Act 1936 (Cth) (the Act). His Honour