Federal Commissioner of Taxation v Wade [1951] HCA 66

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Chief Comr of Gua 3

State. Revenue

2003) 5

TR 527

[HIGH COURT OF AUSTRALIA] FEDERAL COMMISSIONER OF TAXATION AppELLANT; AND

WADE 4 z ; . 2 5 é REsPpONDENT.

Income Tax (Cth.)—-Assessment—Assessable income—Capital receipt deemed income H. C. or A. —Trading stock—Livestock—Compensation moneys received on compulsory 1951. destruction of cattle—* Received by way of indemnity" in respect of —§ ~~ loss of trading stock—' Disposal" of trading stock—Income Tax Assessment PERI, Act 1936-1947 (No. 27 of 1936—No. 63 of 1947), ss. 26 (j), 28, 32, 36 (1) (8) (a) Sept. 105

MELBouRNE, Upon the compulsory destruction under the Milt Act 1946-1947 (W.A.) of certain diseased dairy cattle, W., a dairy farmer, received the sum of £2,016 by way of compensation. He subsequently expended the sum of £1,886 in kee, replacing the cattle destroyed. In making his assessment for the relevant | and,

year of income, the Commissioner of Taxation added the sum of £2,016 to the amount shown in the livestock schedule in W.'s return under sales and the sum of £1,886 to the amount shown under purchases, thus increasing the net amount received from the livestock account in respect of the excess of £2,016 over £1,886.

Held that the sum of £2,016 was properly taken into account in assessing W.'s assessable income; by Dizon and Fullagar JJ. (Kitto J., contra), on the ground that, even apart from s. 26 (j) of the Income Tax Assessment Act 1936-1947, inasmuch as by virtue of ss. 28 and 32 of the Act dairy cattle must be taken into account as trading stock, the receipt of £2,016 must be treated as receipt of an item on account of revenue; and, by Kitto J., on the ground that the sum of £2,016 was "received by way of . . . . in respect of any loss of trading stock which would * within the