Jacob v Commissioner of Taxation (Cth)

High Court of Australia Gibbs, J. Jacob v Commissioner of Taxation (Cth)

ORDER Order Appeal dismissed with costs. Usual order as to exhibits. Gibbs, J

The question for decision in this case is whether a profit of $37,209 made by the appellant on the sale of 9000 shares in Endurance Mining Corporation No Liability, known as Endurance Tin, was rightly included in his assessable income. That question itself depends on whether the shares were acquired by the appellant for the purpose of profit-making by sale within s 26(a) of the Income Tax Assessment Act 1936, as amended (Com.).

The appellant is a bookmaker and derives a substantial income from that occupation. For some years—since 1959—it has been his custom to invest a portion of his savings in shares and by 1968 he had acquired a substantial holding of shares in a number of companies of different kinds. He did not trade in shares; since 1959, the only shares he has sold, except for those in Endurance Tin, were in a company whose take-over rendered the sale necessary. On or about 9 December 1968 the appellant's brokers bought on his behalf 5100 fully paid shares and 3900 contributing shares in Endurance Tin for a total purchase price of $13,286. The appellant paid for these shares by cheque on 16 December 1968. On 6 January 1969 he instructed his brokers to sell the shares and they were sold for a total consideration of $50,495. The proceeds of sale were credited to the appellant's account with the brokers and on 24 February 1969 he was paid an amount of $45,399 which represented the balance due to him after deducting $5095 in respect of purchases made on his behalf on 7 February and 13 February 1969 of some shares in another company, Tennant Creek Metals.

Endurance Tin had been formed in 1922 and had carried on the business of sluicing for tin in Tasmania. In December 1968 it acquired from Attunga Mining Corporation Pty Ltd an option over a scheelite deposit in New South Wales and in February 1969 it took over Attunga Mining Corporation Pty Ltd It subsequently appeared (in November 1969) that the scheelite deposit contained no major economic ore body but it was no doubt the expectation or hope that this deposit would prove valuable that caused the shares to rise between 9 December 1968 and 6 January 1969.