Sleight v Commissioner of Taxation [2003] FCA 896

FEDERAL COURT OF AUSTRALIA

Sleight v Commissioner of Taxation [2003] FCA 896 INCOME TAX – deductions – taxpayer invested in project for cultivation and maintenance of tea-tree farm and harvesting and sale of oil – investment by way of acquisition of shares in land company – option exercised for management company to manage farm – loan agreement entered into under which the applicant's obligations of principal were to be met from net profit of business – applicant indemnified under further agreement – whether taxpayer's payments for management and administration fees together with interest payment and indemnity fees were deductible in the 1995 year – whether expenses were incurred in the course of a business – whether expenses were outgoings of capital – whether dis-proportionality between outgoings and income INCOME TAX – schemes to reduce income tax – taxpayer invested in project for cultivation and maintenance of tea-tree farm and harvesting and sale of oil – whether taxpayer entered into scheme for the purpose of obtaining a tax benefit – whether in any event determination purporting to cancel tax benefit was validly made Income Tax Assessment Act 1936 (Cth) ss 14ZZ(a), 51(1), 92(2), 177A(1), 177C(1), 177D, 177D(b), 177D(b)(i), 177D(b)(ii), 177D(b)(iii), 177D(vi), 177D(viii), 177F Taxation Administration Act 1953 (Cth) s 8 Federal Commissioner of Taxation v Lau (1984) 6 FCR 202 applied Puzey v Federal Commissioner of Taxation [2002] FCA 1171 considered Commissioner of Taxation v Emmakell Pty Ltd (1988) 22 FCR 157 applied Cooke v Commissioner of Taxation [2002] FCA 1315 applied Vincent v Commissioner of Taxation [2002] FCAFC 291 applied Clowes v Federal Commissioner of Taxation (1954) 91 CLR 209 distinguished Milne v Federal Commissioner of Taxation 76 ATC 4001 distinguished Enviro Systems Renewable Resources Pty Ltd v ASIC (2001) 36 ACSR 762 distinguished Hallstroms Proprietary Limited v Federal Commissioner of Taxation (1946) 72 CLR 634 applied Sun Newspapers Limited & Associated Newspapers Limited v Federal Commissioner of Taxation (1938) 61 CLR 337 applied Fletcher v Commissioner of Taxation (1991) 173 CLR 1 cited Ure v Federal Commissioner of Taxation (1981) 34 ALR 237 cited Commissioner of Taxation (Cth) v Spotless Services Ltd (1996) 186 CLR 404 applied Eastern Nitrogen Ltd v Commissioner of Taxation (2001) 108 FCR 27 applied Peabody v Federal Commissioner of Taxation (1993) 40 FCR 531 applied Hart v Federal Commissioner of Taxation (2002) 121 FCR 206 distinguished Re: The Matter of a Reference Under Section 11 of the Ombudsman Act; ex parte the Director-General of Social Services (1979) 2 ALD 86 cited Commissioner of Taxation v Jackson (1990) 27 FCR 1 cited Deputy Commissioner of Taxation v Richard Walter Pty Ltd (1995) 183 CLR 168 applied Mochkin v Federal Commissioner of Taxation 2002 ATC 4465 cited Vincent v Federal Commissioner of Taxation 2002 ATC 4490 cited R v Hickman (1945) 70 CLR 598 cited Federal Commissioner of Taxation v Brand (1995) 95 ATC 4633 considered Merchant v Commissioner of Taxation (1999) 99 ATC 4221 considered KEVIN SLEIGHT v COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA W242 of 2000 RD NICHOLSON J 26 AUGUST 2003 PERTH