Charles Moore & Co (WA) Pty Ltd v Federal Commissioner of Taxation

Charles Moore & Co (WA) Pty Ltd appealed to the High Court of Australia against a decision of a board of review that upheld the Commissioner of Taxation's disallowance of a deduction. The company, which operated a departmental store, claimed a deduction of £3,031, representing trading receipts from the previous day that were stolen by armed robbers while being transported from the store to the bank. The company's practice was to deposit daily takings, and on the day in question, two employees were robbed of the cash portion of these receipts. The company was not insured against such a loss.

The primary legal issue before the High Court was whether the sum of £3,031 constituted an allowable deduction under section 51(1) of the Income Tax and Social Services Contribution Assessment Act 1936-1952. Specifically, the court had to determine if the loss was incurred in gaining or producing the assessable income of the company and whether it was a loss or outgoing of a capital nature. The Commissioner had disallowed the deduction, a decision initially upheld by a majority of the board of review.

The High Court, in allowing the appeal, reasoned that the loss was incurred in the course of gaining or producing the assessable income. The court emphasised that banking daily takings is a necessary operation for the conduct of a large departmental store, essential for replenishing stock and meeting other outgoings, and therefore directly connected to the process of earning income. The court found that the loss was not of a capital nature, distinguishing it from a loss of the "profit yielding subject" of the business. The robbery was considered an incident of the business operations, a recognised hazard of the procedure of transporting money, and thus incidental and relevant to the gaining of assessable income.

Consequently, the High Court answered both questions in the case stated in the affirmative, finding that the sum of £3,031 constituted an allowable deduction. The costs of the case stated were reserved for the judge who would dispose of the appeal.