Federal Commissioner of Taxation v Becker [1952] HCA 77

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HIGH COURT [1951-1952.

[HIGH COURT OF AUSTRALIA.]

FEDERAL COMMISSIONER OF TAXATION APPELLANT ;

AND

BECKER . , A 3 " 5 ResPonpDeENT.

H.C. or A. Income Tax (Cth.)—Assessable income—* Profit arising from the sale by the taxpayer

1951-1952. — ADELAIDE, Sept. 24, 25; MELBourNE, Oct. 8.

Fullagar J.

1952. ADELAIDE, Sept. 17; SyDNry, Nov. 19.

Dixon ©.J., Webb and Kitto JJ.

of any property acquired by him for the purpose of profit-making by sale, or from the carrying on or carrying out of any profit-making undertaking or scheme "—Land sold by taxpayer to company in consideration of issue of shares at par—Shares sold at premium—Whether amount of premium assessable income—Income Taa Assessment Act 1936-1948 (No. 27 of 1936—No. 44 of 1948), s. 26 (a).

In order to sell certain land, which he had not acquired for the purpose of profit-making by sale, at £12,000 without contravening land sales control legislation, B. formed a private company with a nominal capital of £10,000 divided into 10,000 shares of £1 each. He then entered into a contract with the company which provided for (1) the sale of the land by B. to the company for the sum of £8,000 or such lesser sum as the appropriate authority might approve and (2) that the consideration should be satisfied by the issue by the company to B. of 8,000 £1 shares in the company or such lesser number as should equal in face value the purchase price approved. B, then contracted (subject to the transfer of the land by the company to him) to sell to T. 8,000 £1 shares in the company for a price of £1 10s. per share. 'The consent of the appropriate authority to the sale of the land by B. to the company for £8,000 was duly obtained. 'The land was transferred by B. to the company, and the company allotted 7,998 £1 shares to B. which, with one share already held by him and one share held in trust for him, made up 8,000 shares. These 8,000 shares were then transferred to 'T. and his nominee, who paid £12,000 to B. for them. The Commissioner of Taxation assessed B.'s income for the relevant year on the basis that it included the difference between the sum of £12,000 and the sum of £8,000, i.e., £4,000.