Ranson v Commissioner of Taxation (Cth) [1973] HCA 18

High Court of Australia Mason J. Ranson v Commissioner of Taxation (Cth) [1973] HCA 18

ORDER Appeal dismissed. Confirm that the amended assessment dated 12th October 1970 be further amended as directed by the Board of Review. Appellant to pay the respondent's costs of the appeal. Usual order as to exhibits.

Cur. adv. vult.

Mason J delivered the following written judgment:—

May 30 Mason J

This appeal by the taxpayer from a decision of a Board of Review raises a question as to the application of s. 82 (4) of the Income Tax Assessment Act 1936-1969 in circumstances in which the taxpayer in the year of income ended 30th June 1969 acquired and sold shares on which in the same year he paid moneys which were allowable deductions under ss. 77A and 77C.

The taxpayer earned a net income of $4,586, a figure which is arrived at after deducting from his assessable income all allowable deductions (including the sum of $8,373 in respect of amounts paid on shares under ss. 77A and 77C and a loss on the sale of shares, but excluding any adjustment provided for by s. 82 (4)). Of the amount of $8,373 the sum of $4,373 was expended in paying application moneys and calls on shares acquired for the purpose of profit-making by sale within the meaning of s. 26 (a).

In the year of income these shares were acquired at a total cost of $6,998 and sold for the total sum of $6,001, thereby giving rise to a loss of $997. The taxpayer in his return in calculating the loss on sale which he claimed as an additional deduction took into account the expenditure of $4,373, notwithstanding that it formed part of the deductions allowable under ss. 77A and 77C. In assessing the taxpayer to tax, the Commissioner did not give him the benefit of the whole of the expenditure of $4,373 in calculating the loss made on the sale of the shares, relying on the provisions of s. 82 (4). The basis of calculation then adopted by the Commissioner need not be explained because it was disapproved by the Board of Review and it is not now urged that it should be followed. The Board of Review directed that the taxpayer's taxable income should be reduced by an amount of $204 and the assessment amended accordingly. Although the Board found the Commissioner's method of calculation of the deduction permitted by s. 82 (4) to be erroneous, it did not accept the method of calculation proposed on behalf of the taxpayer. The question is whether the taxpayer's approach or that accepted by the Board to the application of s. 82 (4) is to be preferred.