Glennan v Commissioner of Taxation

Glennan v Commissioner of Taxation concerned a dispute between the taxpayer, Mr. Glennan, and the Commissioner of Taxation regarding the deductibility of certain expenses. The case was heard by McHugh and Hayne JJ of the High Court of Australia.

The central legal issue before the High Court was whether the expenses incurred by Mr. Glennan in relation to a property development project 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.

McHugh and Hayne JJ reasoned that the expenses were not deductible. Their Honours applied the principles established in cases such as *Sun Newspapers Ltd v Federal Commissioner of Taxation* and *FCT v Ilbery*, emphasizing that for an outgoing to be deductible as a business expense, there must be a business being carried on. In this instance, the court found that Mr. Glennan was not carrying on a business of property development at the time the expenses were incurred. Instead, the expenses were considered capital outgoings related to the acquisition of an asset, and therefore not deductible under section 8-1.

The High Court dismissed the taxpayer's appeal.