On & On (No. 8)

The parties to this proceeding were On & On (No. 8) Pty Ltd (the applicant) and the Commissioner of Taxation (the respondent). The applicant sought judicial review of the respondent's decision to disallow its objection to an assessment of income tax for the 2017 income year. The matter came before Guest J of the Federal Court of Australia.

The central legal issue before the Court was whether the applicant, a company that operated a business involving the sale of goods, was entitled to a deduction under section 8-1 of the *Income Tax Assessment Act 1997* (Cth) for certain expenses incurred in relation to the acquisition and disposal of shares in another company. 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.

Guest J reasoned that the expenses in question were not deductible under section 8-1. His Honour applied the principles established in cases such as *Sun Newspapers Ltd v Federal Commissioner of Taxation* and *Charles Moore & Co (W.A.) Pty Ltd v Federal Commissioner of Taxation*, which distinguish between capital and revenue outgoings. The Court found that the applicant's activities in relation to the shares were of a capital nature, being concerned with the structure and organisation of its business rather than its day-to-day operations. Consequently, the expenses incurred in acquiring and disposing of these shares were not deductible as revenue outgoings.

The application for judicial review was dismissed.