Commissioner of Taxation (Western Australia) v Newman
29 CLR 484(Judgment by: Higgins J)
Commissioner of Taxation (Western Australia)
v Newman
Judges:
Knox CJ
Higgins JStarke J
Subject References:
Taxation and revenue
Income tax
Sale of business as going concern
Income of vendor
Assessment as to live-stock
Legislative References:
Land and Income Tax Assessment Act 1907 (WA) No 15 - ss 2, 16(1)(a)
Judgment date: 9 September 1921
Perth
Judgment by:
Higgins J
I concur with the view of the Chief Justice. Any profits made on realization of the estate, on conversion of the estate, including stock and plant, into money, is not income "arising or accruing to any person wheresoever residing, from any profession, trade, employment, or vocation carried on" within s. 16 (1) (a) of the Land and Income Tax Assessment Act 1907.
The business carried on by the taxpayer was not that of station jobbing or speculating: it was the business of a pastoralist. The profit made, if any, was not made in carrying on that business, but in parting with it. But I doubt whether any profit has been disclosed, even on realization. As put by the Commissioner, the figures are:Sale price Mount Sandiman Station walk in walk out PD16,000; Adjustments-Deduct value of leases and fixed improvements as per transfer PD9,000, rolling-stock and plant PD170, and furniture PD60-PD9,230: Balance, being value of live-stock, PD6,770. Shown in return-8,000 sheep at 7s. PD2,800 and 25 horses at PD10 PD250-PD3,050: Total deductions as per return (profit live-stock) PD3,720. The sum of PD3,720, which is treated as profit, is due, not to any appreciation in the value or quality of the live-stock or to the sale price being greater than the proper price or other cost, but to the fact that the arbitrary value put on the stock by the parties turned out to be less than the sum actually realized on sale. We do not know the cost of these stock, and cannot say what profit (if any) was realized.