Commissioner of Taxation v Jones [2001] FCA 1153

FEDERAL COURT OF AUSTRALIA

Commissioner of Taxation v Jones [2001] FCA 1153 TAXATION – income tax – allowable deductions – outgoings incurred in gaining or producing assessable income or necessarily incurred in carrying on a business for the purpose of gaining or producing such income - deductibility of interest payment under loan despite cessation of partnership business – occasion of the loss or outgoing – Income Tax Assessment Act 1936 (Cth) s 51(1) Income Tax Assessment Act 1936 (Cth) s 51(1) Income Tax Assessment Act 1997 (Cth) s 8-1 AGC (Advances) Ltd v Federal Commissioner of Taxation (1974-5) 132 CLR 175, applied Placer Pacific Management Pty Ltd v The Federal Commissioner of Taxation (1995) ATC 4459, applied Steele v Deputy Commissioner of Taxation (1999) 197 CLR 459, applied Commissioner of Taxation v Riverside Road Lodge Pty Ltd (in Liquidation) (1990) 23 FCR 305, considered Federal Commissioner of Taxation v Brown (1999) 43 ATR 1, applied COMMISSIONER OF TAXATION v DOROTHY JONES Q 10 OF 2001 DOWSETT J 22 AUGUST 2001 BRISBANE

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY Q 10 OF 2001

ON APPEAL FROM THE ADMINISTRATIVE APPEALS TRIBUNAL

BETWEEN: COMMISSIONER OF TAXATION

APPELLANT

AND: DOROTHY JONES

RESPONDENT

JUDGE: DOWSETT J

DATE: 22 AUGUST 2001

PLACE: BRISBANE

REASONS FOR JUDGMENT

The Appeal 1 This is an appeal from a decision of the Administrative Appeals Tribunal allowing as deductions for tax purposes certain interest payments made by the respondent between 1 July 1992 and 22 May 1996. The respondent cross-appeals from the decision of the Tribunal disallowing as deductions interest payments made by the appellant between 22 May 1996 and 30 June 1998. For the tax years 1992-3 to 1995-6, the respondent claims such deductions pursuant to subs 51(1) of the Income Tax Assessment Act 1936 (Cth). For the 1997-8 year, the claim is made pursuant to s 8-1 of the Income Tax Assessment Act 1997 (Cth). 2 Subsection 51(1) provides that: All losses and outgoings to the extent to which they are incurred in gaining or producing the assessable income, or are necessarily incurred in carrying on a business for the purpose of gaining or producing such income, shall be allowable deductions … . 3 The current provision (s 8-1) is to similar effect. The appeal was conducted upon the basis that the provisions are materially identical.