McNally v Commissioner of Taxation [2007] FCA 51

FEDERAL COURT OF AUSTRALIA

McNally v Commissioner of Taxation [2007] FCA 51

Income tax – Assessable income of former member of partnership – Taxpayer a partner for part only of fiscal year – Whether net income of partnership included work-in-progress at start of year or other adjustment items – Whether taxpayer's interest included a share of those items - Income Tax Assessment Act 1936, ss 90, 92 Income tax – Assessable income of former member of partnership – Taxpayer retired from partnership – Taxpayer paid lump sum on retirement – Whether all or part of lump sum constituted taxpayer's interest in net income of partnership – Income Tax Assessment Act 1936, ss 90, 92 Administrative Appeals Tribunal Act 1975 (Cth): s 44 Taxation Administration Act 1953 (Cth): s 14ZZ Income Tax Assessment Act 1936 (Cth): ss 22H, 90, 91, 92(1), 160ZB, 226J Income Tax Assessment Act 1997: s 6-5(1), Pt 3-1 Federal Commissioner of Taxation v Rowe (1997) 187 CLR 266 Henderson v Federal Commissioner of Taxation (1970) 119 CLR 612 Stapleton v Federal Commissioner of Taxation (1989) 89 ATC 4818 WALTER MCNALLY v COMMISSIONER OF TAXATION VID826 OF 2006 COMMISSIONER OF TAXATION V WALTER MCNALLY VID836 OF 2006

JESSUP J

2 FEBRUARY 2007

MELBOURNE IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY VID826 OF 2006

BETWEEN: WALTER MCNALLY

Applicant

AND: COMMISSIONER OF TAXATION

Respondent

JUDGE: JESSUP J

DATE OF ORDER: 2 FEBRUARY 2007

WHERE MADE: MELBOURNE

THE COURT ORDERS THAT:

1. The appeal be allowed with costs. 2. The decision of the Administrative Appeals Tribunal made on 22 June 2006 be set aside. 3. The applicant's application for review made to the Administrative Appeals Tribunal on 11 February 2005 be remitted to the Tribunal to be heard and decided again in accordance with the court's reasons published this day. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.