Mcdermott, Beth --- "Commissioner of Taxation v Stone (2005) 215 ALR 61: It's Implications for the Role of Intention in Assessing Business Receipts, and the Treatment of Gains Made by Athletes" [2006] SydLawRw 18; (2006) 28(2) Sydney Law Review 373
* Law Student, University of Sydney. I am indebted to Linda Greenleaf for her suggestions in
relation to subjective intention and the significance of Hill J’s judgment.
[1] Commissioner of Taxation v Stone (2005) 215 ALR 61 (hereafter Stone HC) (26 April 2005).
[2] Annamaria Carey, ‘Athlete’s Income all Taxable – Commissioner Wins Again in High Court’ (2005) 34 AT Rev 118 at 118. See Australian Taxation Office, Annual Report 2002–3 (2003): <http://www.ato.gov.au/corporate/content.asp?doc=/content/ 39007.htm & page=223 & H10_2_5_1_2> (14 Sept 2005).
[3] Stone v Commissioner of Taxation [2002] FCA 1492; (2002) 196 ALR 221 (hereafter Stone FC).
[4] Id at 238.
[5] Id at 242.
[6] Ibid.
[7] Stone v Commissioner of Taxation [2003] FCAFC 145; [2003] 130 FCR 299 (hereafter Stone FFC).
[8] Id at 312.
[9] Id at 314.
[10] Id at 315.
[11] Outlined in Stone HC, above n1 at 70.
[12] Id at 71.
[13] Id at 74.
[14] Ibid.
[15] Id at 71.
[16] Ibid.
[17] Id at 72.
[18] Id at 71–72: ‘Perhaps there was an express contract to that effect; perhaps the principles in Carlill v Carbolic Smoke Ball Company [1983] 1 QB 256 applied; it matters not for present purposes’.
[19] Stone HC, above n1 at 74.
[20] Id at 72.
[21] Ibid.
[22] Ibid.
[23] Graham v Commissioner of Inland Revenue [1961] NZLR 994.
[24] Stone HC, above n1 at 72.
[25] Id at 80 (Kirby J).
[26] Id at 76.
[27] Id at 81.
[28] Id at 85.
[29] Id at 84.
[30] Ibid.
[31] Ibid.
[32] Mark Burton, ‘Stone’s Left Unturned in Stone’s Case’ (2005) 19 CCH Tax Week 293 at 295.
[33] Stone FC, above n3 at 237.
[34] Richard Vann quoted in Fiona Buffini, ‘Tax Titan Was No Heir but Had all the Grace’
Australian Financial Review (26 August 2005) at 29.
[35] David Evans, ‘Profile of Hill J’ (1995) 30 Taxation in Australia 19 at 19.
[36] Graeme Cooper, Richard Krever, Richard Vann & Cameron Rider, Income Taxation: Commentary and Materials (5th ed, 2005) at 45.
[37] Ferguson v FCT [1979] FCA 29; (1979) 37 FLR 310 at 314 (Bowen CJ & Franki J).
[38] Evans v FCT (1989) ATC 4540 at 4554–4555 (Hill J).
[39] Ferguson, above n37; Martin v FCT [1953] HCA 100; (1953) 90 CLR 470.
[40] Brajkovich v FCT (1989) ATC 5227 at 5234; Ferguson, above n37.
[41] IRC v Livingston and Ors (1927) 11 TC 538 at 542.
[42] FCT v Walker (1985) 16 ATR 331.
[43] Thomas v FCT (1972) 3 ATR 165.
[44] Martin, above n39.
[45] Inland Revenue Commissioners v Westleigh Co Ltd, South Behar Railway Co and Eccentric Club Ltd (1923) 12 TC 657.
[46] Stone FC, above n3 at 234–235.
[47] I am indebted to Geoffrey Hart for his contributions in relation to the meaning and role of
intention in taxation law.
[48] Jeffrey Waincymer, Australian Income Tax Principles and Policy (2nd ed, 1993) at 187.
[49] Magna Alloys & Research Pty Ltd v FCT [1980] FCA 150; (1980) 11 ATR 276 at 279
[50] Henry Jones (IXL) Ltd v FCT [1991] FCA 488; (1991) 31 FCR 64.
[51] FCT v Myer Emporium Ltd [1987] HCA 18; (1987) 163 CLR 199.
52 Geoffrey Hart & Cynthia Coleman, ‘Intention, Purpose and Motive in Income Tax Law’, paper
presented at ATTA Conference in Wellington, January 2005 at 6.
[53] Id at 6.
[54] In the context of profit making schemes: Myer Emporium; Westfield Ltd v FCT (1991) 21 ATR
[1398] . The Commissioner stated in Ruling TR 92/3 that a profit from an isolated transaction was generally assessable income if certain criteria were fulfilled. One criterion was that the objective intention or purpose of the taxpayer in entering into the transaction was to make a profit. This was rejected by Hill J in Westfield, id at 3–4.
[55] Ruhumah Property Co Ltd v FCT [1928] HCA 22; (1928) 41 CLR 148 at 160.
[56] J & R O’Kane & Co v Commissioner of Inland Revenue (1922) 12 TC 303 at 347; citation in id at 161 (Isaacs J); cited in Hart & Coleman, above n52 at 2.
[57] Hart & Coleman, id at 3.
[58] Raymor Contractors Ptd Ltd v Commissioner of Taxation (Cth) (1991) 91 ATC 4259 at 4270; cited in Henry Jones (IXL) Ltd, above n50 at 71.
[59] Smith v Anderson [1880] UKLawRpCh 211; (1880) 15 Ch D 247 at 258; FCT v Pepper (1985) 85 ATC 4518 at 4531; Babka v FCT (1989) 89 ATC 4963 at 4969; FCT v Radnor Pty Ltd (1991) 91 ATC 4689 at 4700; Case 47/96 (1996) 96 ATC 463 at 468; Case 75/96 (1996) ATC 677 at 682; Daff v FCT (1998) 98 ATC 2129 at 2134. Also see above discussion on indicia of business.
[60] Hart & Coleman, above n52 at 2.
[61] Walker, above n42.
[62] Julie Cassidy, Concise Income Tax (3rd ed, 2004) at 201. See also Tweddle v FCT [1942] HCA 40; (1942) 7 ATD 186; Thomas above n43; Case H11 (1976) 76 ATC 59; Case M67 (1980) 80 ATC 479; Daff v FCT (1998) 98 ATC 2129 at 2135; Glennan v FCT (1999) ATC 4467 at 4481; Vincent v FCT (2002) ATC 4490 at 4513.
[63] Babka v FCT, above n59 at 4969.
[64] Ferguson v FCT [1979] FCA 29; (1979) 9 ATR 873 at 876.
[65] Brajkovich, above n40 at 5233-4.
[66] Investment and Merchant Finance Corporation Limited v FCT [1971] HCA 35; (1971) 125 CLR 249.
[67] See discussion in Hart & Coleman, above n52 at 13.
[68] Incorporated Council of Law Reporting for England and Wales (1888) XXIL QBD 279.
[69] Royal Agricultural Society of England v Wilson 9 TC 62 at 67–68.
[70] See discussion in Hart & Coleman, above n52 at 13.
[71] Graham v Commissioner of Inland Revenue, above n23.
[72] John Gunn in collabaration with Otto Berger, James Greenwood & Richard O’Neil, Gunn’sCommonwealth Income Tax Law and Practice (6th ed, 1951) at para 69.
[73] Also referred to by Waincymer, above n48 at 177; Commissioner of Taxation v Stone [2004]
HCATrans 368 at [3925] (Mr Pagone QC).
[74] Waincymer, above n48 at 117.
[75] Id at 113.
[76] Myer Emporium, above n51 at 209-210. Also of interest is the argument made Mr Pagone, QC in Stone HC. Using the words of Myer (Mason ACJ, Wilson, Brennan, Deane & Dawson JJ) he contended that what ‘stamped’ her receipts with the character of income was the commercial exploitation of talent: see HCA Transcript, above n73 at [255]–[270].
[77] Waincymer, above n48 at 113.
[78] Hart & Coleman, above n52 at 1.
[79] Myer Emporium, above n51 at 211.
[80] Waincymer, above n48 at 174.
[81] Id at 186.
[82] Cooper, et al, above n36 at 250.
[83] Stone FC, above n3 at 235.
[84] Waincymer, above n48 at 205.
[85] Above under ‘Profit Making Purpose’ of this paper.
[86] Waincymer, above n48 at 188.
[87] Id at 85.
[88] Ibid.
[89] See Stone FC, above n3 at 234–235 and the ‘Analysis of Stone against the other Business Indicia’ of this paper.
[90] See Karen Barlow, ‘Athletes Confused by Tax Ruling on Sponsorship’ (Radio report) PM (26 April, 2005); Burton, above n32 at 295 (Gleeson CJ, Gummow, Hayne & Heydon JJ).
[91] Stone HC, above n1 at 63.
[92] See Barlow, above n90.
[93] Ibid.
[94] Waincymer, above n48 at 188. See Case 41 (1983) 27 CTBR (NS); Case 23 (1983) 27 CTBR (NS).
[95] Waincymer, id at 85.
[96] Id at 186–187.
97 Henry Simons, Personal Income Taxation: The Definition of Income as a Problem of Fiscal
Policy (1983) at 49–57 in Cooper et al, above n36 at 19.
[98] FCT v Whitfords Beach Pty Ltd [1982] HCA 8; (1982) 150 CLR 355.
[99] Robin Woellner, Stephen Barkoczy, Shirley Murphy & Chris Evans, Australian Taxation Law (14th ed, 2004); Justin Dabner, ‘Lease Incentives and the Gain Theory of Income’ (1998) 1 Journal of Australian Taxation 136.
[100] Dabner, id at 141.
[101] Warner Music Australia Pty Ltd v FCT (1996) 70 FCR 197 at 205.
[102] Woellner, et al, above n99 at 272–73.
[103] FCT v Montgomery [1999] HCA 34; (1999) 198 CLR 639.
[104] John Prebble, ‘Income Taxation: A Structure Built on Sand’ (2002) 24 Syd LR 301 at 305–309.
[105] Id at 318.
[106] Taxation Board Report, Evaluation of the Tax Method (2002) at 16.