Commissioner of Taxation v Sharpcan Pty Ltd [2019] HCA 36

HIGH COURT OF AUSTRALIA

KIEFEL CJ, BELL, GAGELER, NETTLE AND GORDON JJ

COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA APPELLANT

AND

SHARPCAN PTY LTD RESPONDENT

Commissioner of Taxation v Sharpcan Pty Ltd [2019] HCA 36 Date of Hearing: 9 August 2019 Date of Judgment: 16 October 2019 M52/2019

ORDER

1. Appeal allowed.

2. Set aside order 1 of the Full Court of the Federal Court of Australia made on 27 September 2018 and in lieu thereof order that:

(a) the appeal to that Court be allowed;

(b) the decision of the Administrative Appeals Tribunal dated 14 December 2017 be set aside; and

(c) the appellant's objection decision be affirmed.

On appeal from the Federal Court of Australia

Representation

G J Davies QC with J E Jaques and L J S Molesworth for the appellant (instructed by Australian Government Solicitor)

D H Bloom QC and T P Murphy QC with D J McInerney and C M Horan for the respondent (instructed by Rigby Cooke Lawyers)

Notice: This copy of the Court's Reasons for Judgment is subject to formal revision prior to publication in the Commonwealth Law Reports.

CATCHWORDS

Commissioner of Taxation v Sharpcan Pty Ltd

Income tax (Cth) – Allowable deductions – Where taxpayer had received percentage of income derived from 18 gaming machines operated by authorised gaming operator under Gambling Regulation Act 2003 (Vic) at its hotel premises – Where Gambling Regulation Act amended to provide for gaming machine entitlements ("GMEs") to be allocated directly to gaming venue operators – Where taxpayer bid for and was allocated 18 GMEs permitting it to operate gaming machines at its premises for ten years – Where taxpayer paid purchase price by instalments – Whether purchase price was outgoing on revenue account deductible under s 8-1 of Income Tax Assessment Act 1997 (Cth) ("1997 Act") – Whether purchase price was expenditure incurred to preserve (but not enhance) value of goodwill in relation to legal or equitable right with value to taxpayer solely attributable to effect on goodwill deductible under s 40-880 of 1997 Act.