ILIJEVSKI v Commonwealth of Australia (As Represented BY the Commissioner of the Australian Taxation Office)

This matter concerned an appeal by the applicant, Mr. Ilijevski, against a decision of the Commissioner of Taxation (the respondent) to disallow his objection to an assessment of income tax for the 2017 income year. The dispute centred on whether certain payments received by Mr. Ilijevski constituted assessable income. The appeal was heard in the Federal Court of Australia.

The primary legal issue before the Court was whether the payments received by the applicant were in the nature of income, and therefore assessable under section 6-5 of the *Income Tax Assessment Act 1997* (Cth), or whether they were capital in nature and thus not assessable. Specifically, the Court had to determine the character of the payments in light of the circumstances in which they were made and the applicant's entitlement to them.

Judge Jones found that the payments were made in substitution for income that the applicant would have otherwise earned. The Court applied the established principles for distinguishing between income and capital, considering factors such as the periodicity of payments, the source of the payments, and the intention of the parties. Her Honour concluded that the payments were not a once-and-for-all payment for the loss of an asset, but rather a substitute for future earnings, and therefore were of an income nature.

The appeal was dismissed.