Capital Gain Tax

Essay text:

of Statutory income: p196 Sale of certain property – ss26(a), 25A and 26AAA & S15-15 Retirement payments – s26(d) Employee benefits- S26(e) Royalties- s26(f) & S15-20 Gain on Securities- S26BB Convertibility ($) Tennant v Smith (rent free accommodation) & Commr of Taxation & Cooke & Sherden (free holiday for successful operator) - Income is what comes in, NOT what is saved from going out. - A non-pecuniary (non-monetary) receipt can be converted into $ => income - If non-pecuniary (non-monetary) receipt fail to converted into $ => not income S26(e): If cannot convert into money, look at how much the taxpayer value it (overcome Tennant v Smith)( employment relationship) s26(e): does not apply to Cooke & Sherden because the taxpayers being contractor, NOT EMPLOYEES (no employment relationship & no service rendered) The parties in position = manufacturer and seller (seller + buyer) S21A: non cash business benefit that is not convertible to cash => will be treated as convertible => INCOME (overcome Cooke & Sherden ) (self-employed NOT business) ~ S23L: non cast business benefit < $300 = exempt income Payne v FCT- Qantas Air ticket non transferable, fail to convert into money => NOT INCOME (fall under s26(e): no employment relationship with Qantas) Failed FBT (no employment r/ship) Capital Receipt is NOT Ordinary Income (s6-5) Compensation for loss of income-producing base, right or ability to earn income = capital Sale of CAPITAL ASSET that was not bought for profit making by sale or relevant used in a business = capital California Copper Syndicate Ltd v Harris California Copper Syndicate Ltd v Harris & ATO v Myer Emporium Ltd - Mere realization of capital asset = X income - Ordinary operation of business = Revenue a/c Isolated transaction entered with profit making intention = revenue a/c ATO v Myer Emporium Ltd ATO v Whitfords Beach Pty Ltd Heavy Minerals Pty Ltd v FCT - loss of profit making structure = capital , X income - But payment for non performance of a contract or loss of profit = revenue a/c