Romanin v The Commissioner of Taxation [2008] FCA 1532

FEDERAL COURT OF AUSTRALIA

Romanin v The Commissioner of Taxation [2008] FCA 1532

INCOME TAXATION – deductions – legal expenses incurred in proceedings instituted to recover income contractually due – whether outgoings allowable deductions under s 8-1 of the Income Tax Assessment Act 1997 (Cth) – whether outgoings incurred in gaining or producing assessable income – whether outgoings capital in nature – application of penalty tax

Held: The appeal be allowed. Income Tax Assessment Act 1936 (Cth) s 226G Income Tax Assessment Act 1997 (Cth) ss 8-1, 8-1(1), 8-1(1)(a), 8-1(1)(b), 8-1(2), 8-1(2)(a), 20-20, 20-35 Taxation Administration Act 1953 (Cth) s 14ZZ(a) Amalgamated Zinc (De Bavay's) Ltd v Federal Commissioner of Taxation [1935] 54 CLR 295 Commissioner of Taxation v Day [2007] 164 FCR 250 Commissioner of Taxation v Payne (2001)202 CLR 93 Fletcher v Commissioner of Taxation (1991) 173 CLR 1 Le Grand v Commissioner of Taxation (2002) 124 FCR 53 Ronpibon Tin NL and Tongkah Compound NL v Federal Commissioner of Taxation (1949) 78 CLR 47 Sun Newspapers Limited v Federal Commissioner of Taxation (1938) 61 CLR 337 FRANK ROMANIN v COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

WAD 19 of 2008

MCKERRACHER J

16 October 2008

PERTH

IN THE FEDERAL COURT OF AUSTRALIA

WESTERN AUSTRALIA DISTRICT REGISTRY WAD 19 of 2008

BETWEEN: FRANK ROMANIN

Applicant

AND: COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

Respondent

JUDGE: MCKERRACHER J DATE OF ORDER: 16 OCTOBER 2008

WHERE MADE: PERTH

THE COURT ORDERS THAT:

1. The objection decision in relation to the year of income ended 30 June 2000 be set aside and the matter be remitted to the respondent with the direction that the objection in relation to the year of income ended 30 June 2000 be allowed so as to allow the applicant a deduction to the extent of legal expenses of $8399 and to excise the tax shortfall penalty of $1,038.90. 2. The objection decision in relation to the year of income ended 30 June 2001 be set aside and the matter be remitted to the respondent with the direction that the objection in relation to the year of income ended 30 June 2001 be allowed so as to allow the applicant a deduction to the extent of legal expenses of $23,021 and to excise the tax shortfall penalty of $2,791.30. 3. The objection decision in relation to the year of income ended 30 June 2002 be set aside and the matter be remitted to the respondent with the direction that the objection in relation to the year of income ended 30 June 2002 be allowed so as to allow the applicant a deduction to the extent of legal expenses of $29,044 and to excise the tax shortfall penalty of $3,521.55. 4. The objection decision in relation to the year of income ended 30 June 2003 be set aside and the matter be remitted to the respondent with the direction that the objection in relation to the year of income ended 30 June 2003 be allowed so as to allow the applicant a deduction to the extent of legal expenses of $32,905 and to excise the tax shortfall penalty of $4,232.35. 5. The objection decision in relation to the year of income ended 30 June 2004 be set aside and the matter be remitted to the respondent with the direction that the objection in relation to the year of income ended 30 June 2004 be allowed so as to allow the applicant a deduction to the extent of legal expenses of $192,393 and to excise the tax shortfall penalty of $18,189.05. 6. The respondent pay the applicant's costs of the appeal. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. IN THE FEDERAL COURT OF AUSTRALIA