Brooks v Commission of Taxation [2000] FCA 721

FEDERAL COURT OF AUSTRALIA

Brooks v Commissioner of Taxation [2000] FCA 721

INCOME TAX – capital gains – contract for sale and purchase of land – purchaser defaults and vendor rescinds contract and forfeits deposit paid under contract – whether forfeited deposit to be taken into account in calculating a net capital gain to be included in the assessable income of the vendor – whether forfeiture of deposit a disposal of an asset within ss 160M(3), 160M(6) or 160M(7) of the Income Tax Assessment Act 1936 (Cth) – whether purchaser a "prospective purchaser" so that s 160ZZC(12) applied to the forfeiting of the deposit – whether previous decision of a differently constituted Full Court plainly wrong and should not be followed – special case referred by Administrative Appeals Tribunal to Court for determination of questions of law answered. WORDS AND PHRASES: "prospective purchaser" Income Tax Assessment Act 1936 (Cth) ss 160M(3), 160M(6), 160M(7), 160MA(2), 160ZZC(3), 160ZZC(12), 160ZZQ(12) Income Tax Assessment Act 1997 (Cth) s 104-150 Federal Commissioner of Taxation v Guy (1996) 67 FCR 68 not followed Transurban City Link Ltd v Allan (1999) 168 ALR 687 referred to Federal Commissioner of Taxation v Orica Ltd (1998) 194 CLR 500 discussed Commissioner of Taxation v Skully (2000) 74 ALJR 504 referred to Archibald Howie Pty Ltd v Commissioner of Stamp Duties (1948) 77 CLR 143 cited CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 cited Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 cited Sorrell v Finch [1977] AC 728 discussed Chillingworth v Esche [1924] 1 Ch 97 discussed Masters v Cameron (1954) 91 CLR 353 discussed Wright v Newton (1835) 2 Cr M & R 124, 150 ER 53 discussed Henderson v Young (1912) 15 WALR 5 discussed Richards v Hill [1920] NZLR 724 discussed Whinfield v Lovell [1926] VLR 185 discussed