Federal Commissioner of Taxation v. Cooling

Judges:
Lockhart J
Gummow J
Hill J

Court:
Full Federal Court

Judgment date: Judgment handed down 28 June 1990.

---

Lockhart J.

I have had the advantage of reading the reasons for judgment of my brother Hill . I agree that the payment with which this case is concerned is assessable income of the respondent within the meaning of sec. 25 of the Income Tax Assessment Act 1936 (``the Act'') for the reasons given by his Honour.

Reliance was also placed by the Commissioner upon Pt IIIA of the Act, in particular sec. 160M(6) and (7).

The appeal in
Hepples v. F.C. of T. [reported at 90 ATC 4497 ] was heard by the same Full Court immediately after the hearing of this appeal concluded. In my reasons for judgment in Hepples I considered Pt IIIA and in particular sec. 160M(6) and (7). Although it is strictly unnecessary to deal with the question whether Pt IIIA applies to the facts of this case, as the question is important I shall deal with it, though briefly because I have dealt fully with the question in Hepples . My briefly expressed reasons here must be read together with my reasons in Hepples .

Section 160M(6) can be disposed of briefly. For the reasons which I expressed in Hepples sec. 160M(6) applies to the disposal of assets created from pre-existing larger assets by the disposal. Section 160M(6) therefore cannot apply in this case.

I am of the view, however, that sec. 160M(7) applies to include in the assessable income of the respondent the moneys in question in this case. The relevant asset mentioned in sec. 160M(7)(a) was not an asset of the respondent or of the firm of solicitors of which he was a member; it was the premises being the eighth floor of the ``Blue Tower'' at 4 Creek Street, Brisbane. In my opinion the ``asset'' first mentioned in sec. 160M(7) is not confined to an asset of the taxpayer. There was an act or transaction which took place in relation to the eighth floor of the Blue Tower building or the occurrence of an event that affected that asset, namely, the entry into the lease and the giving of the guarantee by the respondent and his partners. I am also satisfied that the respondent received an amount of money ``by reason of'' those acts or transactions. In the result the deemed disposal and creation of an asset to which sec. 160M(7) is directed occurred, with the consequence that the Commissioner succeeds in this case in his argument as to the operation of sec. 160M(7).

I would allow the appeal with costs and set aside the order for costs made at first instance.