Selen & Selen & Anor

The parties in this matter were the applicants, Selen & Selen, and the respondent, the Commissioner of Taxation. The dispute concerned the Commissioner's assessment of income tax against the applicants for the 2007, 2008, and 2009 income years. The applicants sought to have these assessments set aside. The case was heard in the Federal Court of Australia before McClelland J.

The primary legal issue before the court was whether the Commissioner had correctly determined the assessable income of the applicants, specifically in relation to certain amounts received by them. The applicants contended that these amounts were not assessable income, while the Commissioner argued they were. This involved a consideration of the nature of the receipts and their characterisation under the *Income Tax Assessment Act 1997* (Cth).

McClelland J's reasoning focused on the characterisation of the payments received by the applicants. His Honour considered the terms of the agreements under which the payments were made, the intention of the parties to those agreements, and the overall circumstances surrounding the transactions. The court applied established principles of income tax law regarding the distinction between capital receipts and assessable income, including the "profit-making undertaking or scheme" test and the "business operations" test. His Honour found that the payments were in the nature of revenue and therefore assessable income.

Consequently, McClelland J dismissed the applicants' application and affirmed the Commissioner's assessments for the relevant income years.