Dazzle and Shine Pty Ltd as Trustee for Agnes and Charlene Trust

The parties to this proceeding were Dazzle and Shine Pty Ltd as Trustee for Agnes and Charlene Trust (the applicant) and the Commissioner of Taxation (the respondent). The dispute concerned the deductibility of certain expenses incurred by the applicant. The matter was heard in the Federal Court of Australia.

The primary legal issue before the Court was whether the expenses incurred by the applicant, which were related to the acquisition of shares in a company, were deductible under section 8-1 of the *Income Tax Assessment Act 1997* (Cth). Specifically, the Court had to determine if these expenses constituted outgoings incurred in gaining or producing assessable income, or outgoings necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income.

The Court reasoned that the expenses were not deductible as they were capital in nature. Applying established principles, the Court found that the expenditure was incurred once and for all, and was for the purpose of acquiring an asset that would produce income in the future, rather than being an expense incurred in the process of earning income. The Court distinguished between expenditure that is part of the profit-earning process and expenditure that is for the acquisition of the profit-earning structure.

The application was dismissed.