Commissioner of Taxation v Desalination Technology Pty Limited

In the case of Commissioner of Taxation v Desalination Technology Pty Limited, the central issue revolved around the eligibility of the taxpayer for a tax offset under the repealed Division 3 of Part III of the Income Tax Assessment Act 1936 (Cth). The primary legal question was whether the relevant expenditure incurred by the taxpayer qualified as "incurred" for the purposes of section 73B(14)(a). The Commissioner argued that the expenditure was not definitively committed to, given the conditions tied to the payment. The taxpayer contested this, arguing that the balance sheet accurately reflected the inter-company loan.

The appeal raised several questions of law, notably whether the payment was definitively committed under the contract's conditions, and whether the contingencies involved only the timing of the payment or the existence of the obligation itself. The court needed to determine if the taxpayer was definitively committed to the obligation. The Commissioner's appeal from the Tribunal's decision was considered competent as it involved mixed questions of fact and law, particularly under the principles articulated in Vetter v Lake Macquarie City Council. The court examined the nature of the contingencies and whether they rendered the payment definitively committed at the time of contracting.

The court found that the Commissioner's appeal was competent and engaged questions of law. It concluded that the conditions in the contract did not prevent the payment from being definitively committed at the time of contracting, thus qualifying as "incurred" expenditure for tax offset purposes. The court allowed the appeal, setting aside the previous decisions of the Administrative Appeals Tribunal and the Federal Circuit Court.