Taxation and Income Statutory Income

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Assessable income=ordinary income + statutory income. Ordinary income: income deriving from the courts (s6-5)
Negative propositions: items that are not income by ordinary concepts:
1.Amounts not convertible into money :In Tennant v Smith (1892) free accommodation provided to a bank manager was held not to be ordinary income because building could not be sub-let and the benefit thereby converted to money. In FCT v Cooke & Sherden (1980) an incentive prize offered by a manufacturer was not income of the winning retailers because it was not transferable and so not convertible into money. 2.Capital does not have the character of income: For tax law purposes we need to distinguishing income and capital for several reasons: a) ordinary
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But: -- just because regularity is a common feature of income, do not conclude that an isolated or one-off receipt cannot be income: see Cooling’s case. [Principle upheld by a majority of HCA in Montgomery (1999).] Isolated transactions may generate income when they are entered into with the intention of making a profit - Myer Emporium (1987); California Copper (1904). 9. Amount derived from carrying on a business The old view was that this provision captured only what was already income by ordinary concepts other than its non-convertibility to money [hence ‘value to the taxpayer’ - Scott’s case] but in Smith’s case (1987) Brennan J considered the provision captured capital amounts too. The application of s26(e)/15-2 has been largely overtaken by Fringe Benefits Tax (for employees) and s21A (for business benefits) 10. Amount derived from employment or the provision of service. • Isolated transactions See Myer Emporium [California Copper].~ Isolated or unusual transactions involving the sale of capital assets [structure] may yet produce revenue amounts when entered into with the intention of making profit. ordinary business transactions generate income by ordinary concepts because the nature of business is profit making; 11. Amount derived from property. Property yields rent, interest, dividends and royalties. Interest is not defined in the Act. Its ordinary meaning is the amount

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