Cooke v Commissioner of Taxation [2002] FCA 1315

FEDERAL COURT OF AUSTRALIA

Cooke v Commissioner of Taxation [2002] FCA 1315

INCOME TAX – deductions – applicants invested in project for growing and exporting native flowers – project allowed for option of a guaranteed return on payment of relevant fee – whether applicants were carrying on a business for the purpose of gaining or producing assessable income – whether claimed management fees, licence fees and guaranteed return fees were deductible expenses for the purposes of s 51(1) of the Income Tax Assessment Act 1936 (Cth) – whether claimed management fees, licence fees and guaranteed return fees were capital in nature INCOME TAX – tax avoidance agreement – prepaid management fees claimed as deduction – whether deduction not allowable in respect of prepaid management fees pursuant to s 82KJ of the Income Tax Assessment Act 1936 (Cth) – whether management fees were unreasonably high – whether "property" for the purposes of s 82KJ must be property whose acquisition involves an outgoing of a capital nature INCOME TAX – whether "scheme" in which applicants invested fell within Pt IVA of the Income Tax Assessment Act 1936 (Cth) – whether applicants entered into scheme for purpose or dominant purpose of obtaining a tax benefit Income Tax Assessment Act 1936 (Cth) s 51(1), s 82KJ, Pt IVA Sydneywide Distributors Pty Ltd v Red Bull Australia Pty Ltd [2002] FCAFC 157 applied Rhoden v Wingate [2002] NSWCA 165 referred to Steele v Deputy Commissioner of Taxation (1999) 197 CLR 459 referred to Fletcher v Commissioner of Taxation (1991) 173 CLR 1 applied Ronpibon Tin NL and Tongkah Compound NL v Federal Commissioner of Taxation (1949) 78 CLR 47 followed Commissioner of Taxation v Emmakell Pty Ltd (1990) 22 FCR 157 applied Commissioner of Taxation v Lau (1984) 6 FCR 202 discussed Ure v Federal Commissioner of Taxation (1981) 50 FLR 219 distinguished Ferguson v Federal Commissioner of Taxation (1979) 37 FLR 310 referred to Federal Commissioner of Taxation v Brand (1995) 95 ATC 4633 referred to Merchant v Federal Commissioner of Taxation (1999) 99 ATC 4221 referred to Clowes v Federal Commissioner of Taxation (1954) 91 CLR 209 distinguished Commonwealth and the Postmaster-General v Progress Advertising & Press Agency Co Proprietary Limited (1910) 10 CLR 457 referred to Re Griffin; Ex Parte the Board of Trade (1890) 60 LJQB 235 referred to Fairway Estates Pty Ltd v Commissioner of Taxation (1970) 123 CLR 153 referred to Hallstroms Proprietary Limited v Federal Commissioner of Taxation (1946) 72 CLR 634 referred to Sun Newspapers Limited and Associated Newspapers Limited v Federal Commissioner of Taxation (1938) 61 CLR 337 applied Commissioner of Taxation v South Australian Battery Makers Proprietary Limited (1978) 140 CLR 645 referred to Commissioner of Taxation v Osborne (1990) 26 FCR 63 distinguished Commissioner of Inland Revenue v BNZ Investments Limited (2001) 20 NZTC 17,103 applied Hart v Commissioner of Taxation [2002] FCAFC 222 distinguished Commissioner of Taxation (Cth) v Spotless Services Ltd (1996) 186 CLR 404 distinguished Eastern Nitrogen Ltd v Commissioner of Taxation (2001) 108 FCR 27 referred to Peabody v Commissioner of Taxation (1993) 40 FCR 531 referred to Federal Commissioner of Taxation v Consolidated Press Holdings Ltd (2001) 179 ALR 625 distinguished GRAHAM GEORGE COOKE v COMMISSIONER OF TAXATION NG 167 OF 1998 HUGH HUNTER JAMIESON v COMMISSIONER OF TAXATION NG 168 OF 1998 GRAHAM GEORGE COOKE v COMMISSIONER OF TAXATION NG 1106 OF 1998