Burnside v Commissioner of Taxation (Cth) [1977] HCA 66

High Court of Australia Barwick C.J. Stephen, Mason, Jacobs and Aickin JJ. Burnside v Commissioner of Taxation (Cth) [1977] HCA 66

ORDER Appeal allowed with costs. Orders of the Supreme Court of South Australia set aside and in lieu thereof order that the appeals to that Court be allowed with costs. Remit matters to the Commissioner to reassess in accordance with the reasons for judgment of the Court.

Cur. adv. vult.

The following written judgments were delivered:—

1977, Dec. 22 Barwick C.J.

In an appeal by the appellant against the disallowance by the respondent of his objections to his assessment to tax upon the proceeds of sales of shares in a public company, the Supreme Court of South Australia (Hogarth J.) held that the shares had not been acquired by the appellant for profit-making by resale [15] . The circumstances of the acquisition and disposal of the shares are set out in the reasons for judgment prepared in this matter by my brother Mason. Having considered those circumstances, I am of opinion that the learned primary judge was not in error so to find. I agree with the reasons which my brother Mason gives for his opinion in the same sense.

1. (1976) 10 A.L.R. 109; 6 A.T.R. 406; 76 A.T.C. 4214.

However, the primary judge found that, notwithstanding his finding as to the absence of the purpose of profit-making by sale of the shares, the gain arising from their disposal was a profit arising from the carrying on or carrying out of a profit-making undertaking or scheme. In my opinion, his Honour was in error in so finding. I agree generally with the reasons given by my brother Mason for so concluding.

Where nothing more appears than that an asset acquired, but not for the purposes of profit-making by sale, has been sold at a price in excess of the price at which it was acquired, there can in my opinion be no basis for holding that that gain is a profit arising from a profit-making undertaking or scheme. The circumstances lack not only the elements of an undertaking or scheme but the profit-making purpose of any undertaking or scheme which is essential to satisfy what is generally referred to as the second limb of s. 26(a).