Sleight v Commissioner of Taxation

Sleight v Commissioner of Taxation concerned a dispute between the taxpayer, Mr. Sleight, and the Commissioner of Taxation regarding the deductibility of certain expenses. The case was heard by the High Court of Australia.

The central legal issue before the High Court was whether the expenses incurred by Mr. Sleight in relation to a property development project were deductible under section 8-1 of the *Income Tax Assessment Act 1997* (Cth). Specifically, the court had to determine if these expenses were incurred in gaining or producing assessable income, or if they were necessarily incurred in carrying on a business for the purpose of gaining or producing assessable income.

The High Court, in its joint judgment, affirmed the principles established in *Sun Newspapers Ltd v Federal Commissioner of Taxation* and *Federal Commissioner of Taxation v Roberts*. The court held that the expenses were not deductible. It reasoned that the taxpayer's activities did not constitute the carrying on of a business. Instead, the expenses were considered capital outgoings, incurred in the process of establishing a business or undertaking, rather than in the course of carrying on an existing business. The court emphasised that the distinction between a capital outlay and a revenue expense is crucial, and that expenses incurred in the acquisition of an asset or the establishment of a business are generally of a capital nature.

The appeal was dismissed.