NARANG & NARANG

In *Narang & Narang*, the parties were the applicants, Mr. and Mrs. Narang, and the respondent, the Commissioner of Taxation. The dispute concerned the Commissioner's assessment of income tax against the applicants for the 2015, 2016, and 2017 income years. The applicants sought to object to these assessments, but their objections were disallowed by the Commissioner. Consequently, the applicants appealed to the Federal Court of Australia.

The primary legal issue before Hannam J was whether the Commissioner had correctly determined that the applicants were carrying on a business of providing accommodation services, and therefore liable for income tax on the profits derived from that activity. This involved a consideration of the Commissioner's amended assessment, which treated the applicants' rental income as assessable income rather than passive investment income. The applicants contended that their activities did not constitute a business.

Hannam J applied the established principles for determining whether an activity constitutes a business, particularly in the context of property investment and rental income. His Honour considered factors such as the scale of operations, the repetition of activities, the intention to profit, and the degree of organisation and commercial character. After reviewing the evidence, including the applicants' engagement with real estate agents, the provision of services to tenants, and the financial arrangements, Hannam J concluded that the applicants' activities exhibited sufficient characteristics of a business. The court found that the Commissioner's amended assessment was justified.