Leighton v Commissioner of Taxation

[2011] FCAFC 96

Full Court of the Federal Court10 August 2011

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Interrogate

Catchwords

1. Taxation
2. › Income tax
3. › Trust income
4. › Assessment of trustee
5. › Non-resident beneficiary presently entitled to share of income of trust estate
6. › Whether non-resident individual assessable as trustee of net income of trust estate
7. › Whether money held was income of trust estate or realisation of income already derived
8. › Income Tax Assessment Act 1936 (Cth), ss 6(1), 95(1), 98(3)
1. Taxation
2. › Income tax
3. › Derivation of income
4. › Accruals basis
5. › Share trading business
6. › Trading stock
7. › Whether income derived when recoverable debt arose
8. › Whether subsequent receipt of sale proceeds constituted further derivation of income
9. › Income Tax Assessment Act 1997 (Cth), ss 6-5, 70-5

Quick Take

Where a company derives income from share trading on an accruals basis, the subsequent receipt of sale proceeds by a third party holding those proceeds on trust does not constitute 'income of a trust estate' for the purposes of Division 6 of Part III of the ITAA 1936. The proceeds are the realisation of income already derived and form part of the corpus of the trust estate, not its income. Only income subsequently derived from the investment of those proceeds (e.g., bank interest) would constitute income of the trust estate.

Case Details

Citation[2011] FCAFC 96

CourtFCAFC

JurisdictionCommonwealth

Decision Date10 August 2011

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Relies on6

2007Australian Competition and Consumer Commission v Visy Industries Holdings Pty Limited (No 3)FCA 1617
1971J Rowe & Son Pty Ltd v Federal Commissioner of TaxationHCA 80
1932Richardson v Federal Commissioner of TaxationHCA 67
Federal Commissioner of Taxation v EverettHCA 6
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