Watson v Deputy Commissioner of Taxation [2008] FCA 1173

FEDERAL COURT OF AUSTRALIA

Watson v Deputy Commissioner of Taxation [2008] FCA 1173

TAXATION – deferral of losses from non-commercial business activities – appellant runs business as financial planner – appellant became partially disabled but continued to run business although expenses exceeded commission and fee revenue – whether benefits paid under income protection policy in respect of appellant's partial disability are part of the assessable income from the business activity – inclusion of insurance payments would result in assessable income from business activity – held – insurance payments not part of assessable income from business activity, so there were losses from non-commercial business activity properly deferred TAXATION – deferral of losses from non-commercial business activities – whether there is a difference between assessable income from business and assessable income from business activity Income Tax Assessment Act 1997 (Cth) ss 35-10, 35-30, 35-35, 35-55 New Business Tax System (Integrity Measures) Bill 2000 (Cth) Insurance Contracts Act 1984 (Cth) Insurance Contracts Regulations 1985 (Cth) BHP Petroleum (Timor Sea) Pty Ltd v Minister for Resources (1994) 49 FCR 155 followed Watson v Secretary, Department of Family and Community Services (2003) 128 FCR 564 followed Federal Commissioner of Taxation v Murry (1998) 193 CLR 604 cited Ferguson v Federal Commissioner of Taxation (1979) 26 ALR 307 cited Commissioner of Taxation v Eskandari (2004) 134 FCR 569 followed Hope v The Council of The City of Bathurst (1980) 144 CLR 1 cited Federal Commissioner of Taxation v Smith (1981) 147 CLR 578 cited Carapark Holdings Ltd v Commissioner of Taxation (1966) 115 CLR 653 followed Federal Commissioner of Taxation v Myer Emporium Ltd (1987) 163 CLR 199 cited Kidston Goldmines Ltd v Federal Commissioner of Taxation (1991) 30 FCR 77 cited Lees & Leech Pty Ltd v Commissioner of Taxation (1997) 73 FCR 136 cited Warner Music Pty Ltd v Commissioner of Taxation (1996) 70 FCR 197 cited Federal Commissioner of Taxation v Dixon (1952) 86 CLR 540 cited G.P. International Pipecoaters Pty Ltd v Federal Commissioner of Taxation (1989) 170 CLR 124 considered Dufty v City Mutual General Insurance Ltd [1977]Qld R 94 cited Fidelity and Casualty Co of New York v Mitchell [1917] AC 592 cited Pocock v Century Insurance Co Ltd [1960] 2 Ll Rep 150 cited