Federal Commissioner of Taxation v. N.F. Williams.

Members: Barwick CJ

McTiernan J
Menzies J
Gibbs J

Tribunal:
High Court (Full Court)

Decision date: Judgment handed down 1 November 1972.

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McTiernan J.: I have come to the conclusion that the evidence in this case brings the proceeds of sale of the respondent's interest in the land in question within the second limb of sec. 26(a) of the Income Tax Assessment Act 1936-1971 (Cth).

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ATC 4191

In my opinion, it is a reasonable inference from the evidence that upon receiving the gift of a third interest in land at Dianella, a suburb of Perth, the respondent, as co-owner, formed in her mind the ``scheme'' of holding the land because the value of the market price appeared likely to rise greatly. The holding of that interest involves a speculative element and it was not a mere holding of the land and a realisation of it.

The sale of the land, which appears to have been at or very near the height of the boom, was, in my opinion, the fruition of that scheme. I think, therefore that the sale was not a mere realisation of the respondent's interest, but rather ``profit arising from carrying out a profit-making scheme''.

I would allow the appeal and restore the amended assessment.