Dorn and Commissioner of Taxation

[2007] AATA 1919

Administrative Appeals Tribunal

DECISION AND REASONS FOR DECISION [2007] AATA 1919

ADMINISTRATIVE APPEALS TRIBUNAL      )

)          No WT200700003

TAXATION APPEALS DIVISION		)
Re		KEVIN DORN

Applicant

And COMMISSIONER OF TAXATION

Respondent

DECISION

Tribunal Mr B.H. Pascoe, Senior Member

Date31 October 2007

PlacePerth

Decision The Tribunal affirms the decision under review.

………(Sgd) B.H. Pascoe…….

Senior Member

INCOME TAX – tea tree oil farming project – allowable deductions – participation in prior years subject to earlier Tribunal decision

LEGISLATION
Administrative Appeals Tribunal Act 1975

Income Tax Assessment Act 1936

CASES

Commissioner of Taxation v Sleight (2004)136 FCR 211

Princi and Ors and Commissioner of Taxation [2007] AATA 1119

REASONS FOR DECISION

31 October 2007 Mr B.H. Pascoe, Senior Member

1.      This is an application to review a decision of the respondent in relation to an objection against an income tax assessment for the year ended 30 June 1998.  The issue in this matter is the deductibility of amounts claimed in respect of a project described as the Northern Rivers Tea Tree Oil Project No 2 (the Project).

2.      The applicant, Mr Kevin Dorn, had claimed deductions for his participation in the Project in each of the years ended 30 June 1995, 1996, 1997 and 1998.  These claims for the first three years were the subject of an earlier application to this Tribunal and determined by decision dated 9 March 2007 and reported as Re Princi and Ors and Commissioner of Taxation [2007] AATA 1119. As the issues, evidence and arguments in relation to the year ended 30 June 1998 are identical to those dealt with by the Tribunal in the three prior years, the parties consented under section 34J of the Administrative Appeals Tribunal Act 1975 to the review of this decision being determined without a hearing but by consideration of the documents lodged with the Tribunal.

3.      The facts surrounding the involvement of Mr Dorn in the Project were fully set out in the decision in Princi (supra) and in the decision of the Federal Court of Australia in Commissioner of Taxation v Sleight (2004) 136 FCR 211. It is unnecessary to repeat them here. The claim by Mr Dorn in the year ended 30 June 1998 related to his execution of the various documents to become a participant in the Project in June 1997.

4.      The result of the decision in Princi (supra) was that the deductions claimed by Mr Dorn in each of the three prior years were to be allowed to the extent that they were represented by cash outlays which were not of a capital nature.  In the year ended 30 June 1998 the amount actually expended by Mr Dorn in relation to his participation in the Project was $4,025.  Of this amount, $500 related to the purchase of shares in Northern Rivers Land Company Ltd which was clearly of a capital nature.  The balance of $3,525 represents the allowable deduction for the year.  The objection decision under review allowed that amount as a deduction in the year ended 30 June 1998 and, consequently, that decision should be affirmed.

I certify that the four (4) preceding paragraphs are a true copy of the reasons for the decision herein of Mr B.H. Pascoe, Senior Member

Signed:      . . . . . . . . . .(Sgd. R Riberi). . . . . . . . . . . . . . . . . . . . . . . .

Associate

Type of hearing:  Hearing on the papers
Date of Hearing:  10 October 2007
Date of Decision:  31 October 2007