In this case, it was to be considered whether or not the profit from a property sale for minerals exploitation was to be termed as capital in nature or ordinary income. The court held that the determination whether the profit from the property sale was assessable as an ordinary income or capital was to be based on the purpose of the company to be speculating the land sale. The court held the company liable for the gain from the property sale as taxable since the company constitution had included trading as one part of business and profit making.
This case considered the business income issue and the determination of the act of subdividing the land and using it for mining to be assessable as capital in nature or an ordinary income. The mining company operated a mine for several years’. They ceased its operations later, and when they sold the property for a profit the question arose about the income or gain to be considered as assessable as capital or ordinary income. The court held that the company was not engaged in the trading business of land for making profits, and it was solely a mining company which had been operational since years, hence the profits from the sale of land is not assessable as an income or profits.
This case deals with the determination of the income to be assessable as ordinary or capital and the profits from the sale of subdivided lands are to be taxed or not. A profit made from the sale of an asset is always considered to be taxable under the Income Tax Assessment Act 1936 (Cth). The profit from the sale of subdivided lands is under question since the first owner who transferred their ownership to another through shares had not intended to purchase the land for making a profit but for gaining access to the shack on the beach. The court held that the sale of proceeds of the subdivided land has ultimately gained profit and the profit is considered as income within ordinary concepts and is liable for taxation.
This case again relates to the determination of the income from sale of subdivided land, originally purchased for farming, to be taxable as ordinary income or as capital gains, especially when the owner of the land died and the process was carried out by his executor. The owner had sold part land to his sister with whom he started a beef raising contract on the same land, and kept part for himself. Under dire circumstances they had to sell the subdivided land and the original owner dies before the first subdivision. The court held that the income is considered as ordinary since the sale was low key and had few of the attributes of an enterprise business which is solely for profit making, hence the income is not considered as capital gains but only ordinary income.