Federal Commissioner of Taxation v. Forsyth.
Members: Stephen JMason J
Murphy J
Aickin J
Wilson J
Tribunal:
Full High Court
Mason J.
Again I am in general agreement with what Wilson J. has written in this case. My agreement with his judgment is to be read in the light of my reasons for judgment in Handley v. F.C. of T.
There are some differences between this case and Handley v. F.C. of T. Here the outgoing sought to be deducted is a fee paid for the licence to use the study in the family home. The right which the taxpayer acquires under the licence is a right to occupy the study and use it for professional purposes. The outgoing is incurred in consideration of the acquisition of that right. It is not an outgoing incurred in connection with the acquisition of the home which happens to include the study.
Nevertheless, it seems to me that the different factors present in this case do not enable us to distinguish the two cases in point of principle or to conclude that the present case falls outside the exception in sec. 51(1). The artificial arrangements, apparently brought into existence for reasons of taxation and owing little, if anything, to commercial reality, do no more than legally secure to the taxpayer the use and enjoyment of a room as a study in the family home (jointly owned with his wife as trustees of a family trust) which he would have in any event.
I would therefore allow the appeals.
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