Lister Blackstone Pty Ltd v Commissioner of Taxation (Cth) [1976] HCA 46

High Court of Australia Barwick C.J. Gibbs and Jacobs JJ. Lister Blackstone Pty Ltd v Commissioner of Taxation (Cth) [1976] HCA 46

ORDER Appeal allowed with costs. Order of the Supreme Court of New South Wales (Administrative Law Division) set aside with costs, and in lieu thereof order that the appeal to that Court be dismissed with costs. Matter remitted to the Commissioner to re-assess in accordance with the reasons for judgment of this Court.

Cur. adv. vult.

The following written judgments were delivered:—

Sept. 9 Barwick C.J.

I have had the advantage of reading the reasons for judgment prepared by my brothers Gibbs and Jacobs. I agree with their conclusions and the reasons they each give for them.

I would allow the appeal.

Gibbs J.

I have had the advantage of reading the reasons for judgment prepared by Jacobs J. and am in agreement with them. The principles governing the appeal are explained in the judgment of Dixon J. in Sun Newspapers Ltd. v. Federal Commissioner of Taxation [8] . A consideration, in relation to the circumstances of the present case, of the three matters mentioned in that judgment [1] confirms the view that the expenditure was not of a capital nature. The advantage sought by the expenditure incurred in moving the stock to the new business at Revesby was to have the stock conveniently available, so that the business operations of the taxpayer could be carried on in a normal way and without interruption. This was an advantage which enured to the taxpayer in the continuous process of carrying on its business by using the stock for the purpose of making profits, but it was not an advantage of a lasting character because the stock was turned over in the ordinary course of the business and the advantage of moving that particular stock to Revesby lasted only as long as the stock remained unused. The manner in which the advantage was to be enjoyed was by having ready access to the stock from time to time in the course of trade—there was recurrent access to the stock so long as it remained in use. Both these matters indicate that the expenditure was of a revenue nature. The third matter—the means adopted to obtain the advantage—provides a rather less definite indication one way or the other. On the one hand the expenditure was not made periodically, but no doubt was met more or less at the time of the movement of the stock. On the other hand it took the form of the payment of wages to the employees of the taxpayer and the payment of freight, hire and travelling expenses; that is, it was expenditure of a kind that normally, or at least frequently, is of an income character. When all the circumstances of the case are considered it should be concluded that the expenditure was made in the process of operating the business for the purpose of earning profits rather than in establishing or strengthening the structure of the business itself and should properly be referred to revenue account.