White v Commissioner of Taxation [2009] FCA 880

FEDERAL COURT OF AUSTRALIA

White v Commissioner of Taxation [2009] FCA 880

INCOME TAX – capital gains – small business entity concession – limit on net value of assets of business and related entities – whether partnership a related entity of "individual" small business taxpayer Income Tax Assessment Act 1997 (Cth) ss 106, 152‑5, 152‑10, 152‑15, 152‑20, 152‑30, 960‑100, 995 Income Tax Assessment Act 1936 (Cth) Div 17A Acts Interpretation Act 1901 (Cth) s 15AB Deputy Commissioner of Taxation v Mutton (1988) 79 ALR 509 cited

DIANE WHITE v COMMISSIONER OF TAXATION

VID 192 of 2009

SUNDBERG J

18 AUGUST 2009

MELBOURNE

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY VID 192 of 2009

GENERAL DIVISION

BETWEEN: DIANE WHITE

Applicant

AND: COMMISSIONER OF TAXATION

Respondent

JUDGE: SUNDBERG J

DATE OF ORDER: 18 AUGUST 2009

WHERE MADE: MELBOURNE

THE COURT ORDERS THAT:

1. The preliminary question – "Is a partnership an 'entity' within the meaning of that term as used in s 152‑15(a)(ii) of the Income Tax Assessment Act 1997 (Cth)?" – be answered No. 2. The respondent pay the applicant's costs of the determination of the preliminary question. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules. The text of entered orders can be located using eSearch on the Court's website.

IN THE FEDERAL COURT OF AUSTRALIA

VICTORIA DISTRICT REGISTRY VID 192 of 2009

GENERAL DIVISION

BETWEEN: DIANE WHITE

Applicant

AND: COMMISSIONER OF TAXATION

Respondent

JUDGE: SUNDBERG J

DATE: 18 AUGUST 2009

PLACE: MELBOURNE

REASONS FOR JUDGMENT

AGREED FACTS 1 The applicant is and was at all material times a pharmacist. In 1999 she purchased a pharmacy business known as Karingal Hub Pharmacy in the Karingal Hub Shopping Centre in Frankston, Victoria (the Pharmacy Business). She carried on the Pharmacy Business until sometime during the year ended 30 June 2003 (the 2003 Year). 2 During the 2003 Year the applicant sold the Pharmacy Business to Flavia Andrieri. Just before the sale the applicant held the following CGT assets in the 2003 Year: (a) the goodwill and other assets of the Pharmacy Business; (b) the goodwill and other assets of a pharmacy business carried on under the name Wheelers Pharmore Pharmacy in the Bayswater Village Shopping Centre in Bayswater, Victoria; (c) a 75% interest, as a partner in partnership (within the meaning of that term in s 995‑1(1) of the Income Tax Assessment Act 1997 (Cth) (the Act)) with Terry Murphy (White/Murphy Partnership) in: (i) the goodwill and other assets of the pharmacy business carried on under the name Stud Park Pharmore Pharmacy and the Stud Park Shopping Centre in Rowville, Victoria; and (ii) the White/Murphy partnership; (d) a 50% interest, as a partner in partnership (within the meaning of that term in s 995‑1(1) of the Act) with John White (the White/White Partnership) in: (i) each asset of the White/White Partnership; and (ii) in the White/White Partnership; (e) the property at 11 Jago Street, Richmond, Victoria of which the applicant was the sole registered proprietor; (f) the property at 27 Durham Street, Richmond, Victoria of which the applicant and John White were joint registered proprietors; and (g) an investment in Timbercorp forestry. 3 Just before the sale of the Pharmacy Business to Flavia Andrieri: (a) the aggregate of the net values of the CGT assets listed in [2] for the purposes of s 152‑15 of the Act was no less than $3,862,201; (b) the aggregate of the net values of the CGT assets listed in [2] and the CGT assets of the White/Murphy and White/White Partnership for the purposes of s 152‑15 of the Act exceeded $5,000,000.