HUNTER & BRUCE

Hunter & Bruce Pty Ltd (the applicant) sought judicial review of a decision made by the respondent, the Commissioner of Taxation, to disallow its objection to an assessment of income tax for the 2017 income year. The dispute concerned the deductibility of certain expenses incurred by the applicant.

The primary legal issue before Myers J was whether the expenses claimed by the applicant were incurred in gaining or producing assessable income, or were necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income, pursuant to section 8-1 of the *Income Tax Assessment Act 1997* (Cth). The Commissioner had disallowed the deductions on the basis that the expenses were not sufficiently connected to the applicant's assessable income.

Myers J reasoned that the deductibility of an expense under section 8-1 hinges on the character of the expenditure. His Honour considered the nature of the applicant's business activities and the purpose for which the expenses were incurred. Applying established principles, the court determined that the expenses were indeed incurred in the course of carrying on the applicant's business and were therefore deductible.

The application for judicial review was allowed, and the Commissioner's decision disallowing the objection was set aside. The matter was remitted to the Commissioner to allow the deductions claimed by the applicant.