Single v Federal Commissioner of Taxation

Single (the taxpayer) appealed to the Full Federal Court against a decision of the Commissioner of Taxation concerning the deductibility of certain expenses. The dispute centred on whether the taxpayer was entitled to deduct expenditure incurred in acquiring a licence to operate a taxi. The Commissioner had disallowed the deduction, and the taxpayer sought to have this decision overturned.

The primary legal issue before the Full Federal Court was whether the expenditure incurred by the taxpayer in acquiring the taxi licence constituted a capital expense or a revenue expense. This distinction was crucial for determining whether the expense was deductible under section 51 of the *Income Tax and Social Services Contributions Assessment Act 1936* (Cth), which allows for the deduction of expenses incurred in gaining or producing assessable income, provided they are not of a capital nature.

The Court held that the expenditure was of a capital nature. Applying established principles, the Court reasoned that the taxi licence represented an enduring asset or advantage that was part of the taxpayer's profit-making structure. The acquisition of the licence was not an ordinary incident of the day-to-day operation of the taxi business but rather an investment in the business itself, providing the right to operate for an indefinite period. Therefore, the expense was not deductible.

The appeal was dismissed.