NAUGHTON & NAUGHTON

The parties in this matter were Naughton & Naughton (the applicants) and the Commissioner of Taxation (the respondent). The dispute concerned the Commissioner's assessment of income tax against the applicants for the 2017 and 2018 income years. The applicants sought to have these assessments set aside. The case was heard in the Administrative Appeals Tribunal.

The Tribunal was required to determine whether the Commissioner had correctly assessed the applicants' taxable income, specifically in relation to the Commissioner's disallowance of certain deductions claimed by the applicants. The central legal issue was whether the expenditure incurred by the applicants constituted a loss or outgoing of a capital, private or domestic nature, and therefore was not deductible under section 8-1 of the *Income Tax Assessment Act 1997* (Cth).

Judge Burchardt reasoned that the applicants had failed to discharge their onus of proving that the expenditure was not of a capital, private, or domestic nature. The Tribunal found that the nature of the expenditure was inherently capital, relating to the acquisition of an asset rather than a revenue-producing activity. Consequently, the Commissioner's disallowance of the deductions was upheld. The Tribunal affirmed the Commissioner's assessments for the 2017 and 2018 income years.