BALDRY & BALDRY

The parties to this proceeding were the applicants, Mr. and Mrs. Baldry, and the respondent, the Commissioner of Taxation. The dispute concerned the Commissioner's assessment of income tax against the Baldrys for the 2015 and 2016 income years. The Baldrys sought to object to these assessments, but their objections were disallowed by the Commissioner. Consequently, the Baldrys appealed to the Federal Court of Australia.

The primary legal issue before Altobelli J was whether the Baldrys were entitled to a deduction for the cost of certain services provided by a company called "The Wealth Effect" (TWE) under section 8-1 of the *Income Tax Assessment Act 1997* (Cth). Specifically, the court had to determine if the expenditure incurred by the Baldrys on financial advice and investment structuring services provided by TWE was incurred in gaining or producing their assessable income, or was necessarily incurred in carrying on a business for the purpose of gaining or producing their assessable income.

Altobelli J reasoned that the onus was on the Baldrys to establish that the expenditure met the requirements of section 8-1. The court found that the services provided by TWE were primarily aimed at facilitating the Baldrys' acquisition of shares in a company called "Elysium," which was intended to generate capital gains rather than assessable income. The evidence did not demonstrate a sufficient nexus between the expenditure and the production of assessable income. Therefore, the expenditure was not deductible under section 8-1. The court concluded that the Baldrys had failed to discharge their onus of proof.