Brown, John Joseph v Commissioner of Taxation of the Commonwealth of Australia [1998] FCA 746

FEDERAL COURT OF AUSTRALIA INCOME TAX - deductions - interest on borrowed money - money borrowed by husband and wife as partners and applied solely in the purchase of a delicatessen business - loan repayable by 120 equal monthly payments of principal and interest - partners conducted the business for 16 months and then sold it - proceeds of sale insufficient to discharge loan - partners continued paying monthly instalments - whether such subsequent interest payments were allowable deductions. Income Tax Assessment Act 1936 (Cth) s 51(1) A.G.C. (Advances) Ltd v Federal Commissioner of Taxation (1975) 132 CLR 175 considered and applied Ure v Federal Commissioner of Taxation (1981) 81 ATC 4100 referred to Federal Commissioner of Taxation v Riverside Road Pty Ltd (in liq) (1990) 23 FCR 305 referred to Fletcher v Commissioner of Taxation (1991) 173 CLR 1 referred to Kidston Goldmines Ltd v Commissioner of Taxation (1991) 30 FCR 77 referred to Placer Pacific Management Pty Ltd v Federal Commissioner of Taxation (1995) 95 ATC 4459 considered and applied

JOHN JOSEPH BROWN v COMMISSIONER OF TAXATION

OF THE COMMONWEALTH OF AUSTRALIA

No. WAG 9 and 10 of 1997

CARR J

PERTH

30 JUNE 1998

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY wag 9 and 10 of 1997

GENERAL DIVISION (Consolidated)

BETWEEN: JOHN JOSEPH BROWN

Applicant

AND: THE COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

Respondent

JUDGE: CARR J DATE: 30 JUNE 1998 PLACE: PERTH

MINUTE OF ORDERS

THE COURT ORDERS THAT: 1. The appeals be allowed. 2. The respondent's objection decision in each matter be set aside and in lieu thereof the applicant's objections to the disallowance of the deductions claimed be upheld. 3. Each matter be remitted to the respondent for reassessment accordingly. 4. The respondent pay the applicant's costs of the appeals to be taxed (save for any disbursements prior to the consolidation) as one set of costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.