Bowerman and Commissioner of Taxation (Taxation)

The Administrative Appeals Tribunal considered an appeal by Mrs Jenifer Ethel Bowerman against a decision of the Commissioner of Taxation regarding her 2020 income tax return. The dispute centred on whether a loss incurred on the sale of a residential property was an allowable deduction under section 8-1 of the *Income Tax Assessment Act 1997* (Cth). Mrs Bowerman had purchased the property with the intention of selling it for a profit, but due to the onset of COVID-19 lockdowns, she ultimately sold it at a loss.

The Tribunal was required to determine several legal issues. These included whether the loss was of a private or domestic nature, thereby falling within the negative limb of section 8-1(2)(b) of the ITAA 1997. Further, the Tribunal had to consider whether the loss was incurred in the relevant income year, particularly in light of the Commissioner's public ruling on the meaning of "incurred". Crucially, the Tribunal also had to assess whether Mrs Bowerman had discharged her onus of proof under the principles established in *Commissioner of Taxation v Myer Emporium Ltd*, specifically concerning her intention to make a profit at the time of acquisition and whether the transaction constituted a commercial activity.

The Tribunal found in favour of Mrs Bowerman on all three issues. It reasoned that the property was acquired with the dominant purpose of making a profit, aligning with the principles in *Myer Emporium*. The Tribunal also concluded that the loss was not of a private or domestic nature, given the profit-making intention. Furthermore, the Tribunal accepted Mrs Bowerman's submission regarding the timing of when the loss was incurred, finding it occurred in the 2020 income year as claimed, and noted the Commissioner's public ruling supported this interpretation.

Consequently, the Tribunal set aside the Commissioner's objection decision and substituted it with a decision allowing Mrs Bowerman's objection in full, meaning the loss was deductible.