Blockey v. Federal Commissioner of Taxation

31 CLR 503

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(Judgment by: Starke J)

Blockey v. Federal Commissioner of Taxation

Court:

Judges: Knox CJ
Isaacs J
Higgins J
Rich J

Starke J

Subject References:
Taxation and revenue
Income tax
Profits on speculation in wheat scrip
Income from personal exertion

Legislative References:
Income Tax Assessment Act 1915 (Cth) - Section 3

Hearing date: 27 February 1923; 28 February 1923;
Judgment date: 12 March 1923;

MELBOURNE

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Judgment by:
Starke J

STARKE J. The Income Tax Assessment Act 1915-1921 imposes a tax upon income derived from sources within Australia and remaining after all deductions allowed by the Act have been made. Income, as was said by Lord Selborne in Jones v Ogle ^[F10] , at p. 336, signifies what comes in. But it is not everything that comes in that is income within the meaning of the Income Tax Acts. Proceeds from a mere realization or a mere change of investment, or from an enhancement of capital, are not income for the purposes of these Acts (cf. Stevens v Hudson's Bay Co ^[F11] ; Commissioner of Taxation (W.A.) v Newman ^[F12] ; Tebrau (Johore) Rubber Syndicate Ltd v Farmer ^[F13] ). On the other hand, receipts which result from a scheme of profit making by trading or dealing in some commodity are income for the purposes of the Acts (Californian Copper Syndicate v Harris ^[F14] ; Commissioner of Taxes (Vict.) v Melbourne Trust Ltd ^[F15] ; T. Beynon & Co v Ogg ^[F16] ). Now, the facts stated in the present case make it clear that the taxpayers entered upon a joint venture to purchase a considerable amount of wheat scrip for the purpose of selling it at a profit. The venture was a scheme for profit making by buying and selling wheat scrip. Any profits so made were clearly, in my opinion, taxable income within the meaning of the Income Tax Assessment Act 1915-1921. The Commissioner has assessed these profits as "income from personal exertion," that is to say, income "the proceeds of a business carried on by the taxpayers." The learned counsel for the appellant insisted that profits from the sale of the wheat scrip were not "the proceeds of a business carried on by the taxpayer"; but, even if the argument were sound, the result must, in my opinion, be that the proceeds should be assessed as "income from property."

The carrying on of a business, said the learned counsel, involved a series of acts or transactions of a similar kind, and not an isolated act or transaction; a man who buys a horse and sells it at a profit does not carry on a business his may be admitted; but, as was said by Fry L.J. in Werle & Co v Colquhoun ^[F17] , at p. 761, the question is one of fact, not of law, depending upon a variety of circumstances. In my opinion, the Commissioner was right in his assessment of the profits of the venture in this case as income from personal exertion. The taxpayers contributed a fund of about PD5,000 for the purchase of wheat scrip which might be bought and sold in lots as opportunity offered, and as a matter of fact the scrip was sold in several lots at different times. The venture was intended to, and did in fact, involve a series of acts or transactions.