Berghofer and Commissioner of Taxation

[2008] AATA 1138

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2008] AATA 1138

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No 2008/2012

TAXATION APPEALS DIVISION		)
Re		JACOB BERGHOFER

Applicant

And COMMISSIONER OF TAXATION  

Respondent

DECISION

Tribunal Deputy President P E Hack SC

Date19 December 2008

PlaceBrisbane

Decision The Tribunal affirms the decision under review.  

.............Signed..................

Deputy President

CATCHWORDS

TAXATION – income tax – assistance received by the applicant under the Vegetation Management (Enterprise Assistance) Scheme – question of whether the assistance was part of assessable income – whether it is a grant or subsidy – whether it is income according to ordinary concepts – payment not in the category of a bounty or subsidy – payments received had the character of ordinary income – decision under review affirmed

WORDS & PHRASES – “bounty” – “subsidy”

Income Tax Assessment Act 1997 (Cth) – ss 6-5(1), 15-10

Rural and Regional Adjustment Regulation 2000 (Qld) – Schedule 1, ss 137, 139, 140, 141

Vegetation Management Act 1999 (Qld)

Vegetation Management and Other Legislation Amendment Act 2004 (Qld)

Brisbane Amateur Turf Club v Federal Commissioner of Taxation (1968) 118 CLR 300

Federal Commissioner of Taxation v Dixon (1952) 86 CLR 540

First Provincial Building Society Ltd v Commissioner of Taxation (1995) 56 FCR 320

GP International Pipecoaters Pty Ltd v Commissioner of Taxation (Cth) (1990) 170 CLR 12

Reckitt & Colman Pty Ltd v Federal Commissioner of Taxation (1974) 3 ALR 381

Scott v Commissioner of Taxation (Cth) (1966) 117 CLR 514

The Squatting Investment Company Ltd v Federal Commissioner of Taxation (1953) 86 CLR 570

REASONS FOR DECISION

19 December 2008	Deputy President P E Hack SC
Introduction

1.In 2004 the Queensland Parliament enacted legislation that had the effect of restricting the ability of landholders to engage in broadscale clearing of remnant vegetation. Subsequently, regulations were promulgated to create a scheme – the Vegetation Management (Enterprise Assistance) Scheme (the Scheme) – to provide financial assistance from the Queensland Government to those who were adversely affected by the legislation.

2.The applicant, Mr Jacob Berghofer, received assistance totalling $100,000 (approximately) between November 2005 and January 2007. The respondent, the Commissioner of Taxation, says that the sums received form part of Mr Berghofer’s assessable income. Initially, the Commissioner contended only that the receipt was “a bounty or subsidy” within the meaning given to that expression in s 15-10 of the Income Tax Assessment Act 1997 (Cth) (the 1997 Act). Subsequently, the Commissioner had a change of heart and now says that part of the receipt is income according to ordinary concepts and thus ordinary income. The Commissioner maintains the contention that the balance of the sum received is a bounty or subsidy.

3.Mr Berghofer contends to the contrary by contending, generally, that he ought not be required to pay income tax on the amounts received.

Background

4.The facts are not in dispute. Mr Berghofer runs “Springvale”, a grazing property of about 17,000 hectares at Eulo in south-western Queensland. He owns 6,245 hectares of the property and the…