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(no subject)
Share sale proceeds lent to another subsidiary
• Interest is the return for the use of one’s money. Sec 6(1) ITAA ’36 defines interest income to include interest, or a payment in the nature of interest.
• Under sec 6-5 ITAA ‘97 interest is usually income regardless of source or form of payment. [Lecture 3 - Slide 22].
• Refer to [Lecture 3 - Slide 24]:
 Riches v Westminster Bank Ltd.
 Lomax v Peter Dixon & Sons Ltd.
• The interest income stream would be assessable income.

Assignment of future interest income stream for $8 million lump sum
The following categories of transactions could be within the scope of the business [Lecture 3 - Slide 41]:
 Transactions done in the course of carrying on a business.
 Isolated transactions [Whitfords Beach case]
 Extraordinary transactions [Myer Emporium Case]

Assignment of future interest income stream for $8 million lump sum
• Section 102CA - Statutory Income
• Compensation Principle
• Isolated business or commercial transaction will be ordinary income if the taxpayer's purpose or intention in entering into the transaction was to make a profit, notwithstanding that the transaction was not part of the taxpayer's daily business activities (Myer case). [Lecture 3 - Slide 44].
• Profit making principle:
– Is their a profit motive? Unclear!!!
– For the Myer principle to apply, profit-making must be a significant (but not necessarily the sole or dominant) purpose or intention (Taxation Ruling TR 92/3).
• The $8 million lump sum proceeds will be treated as assessable income under the compensation principle or section 102CA but unclear as to whether the profit making principle applies.


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