Turner, B.M. and Turner, J.C.

The Full Federal Court heard an appeal in *Turner, B.M. and Turner, J.C.* concerning a dispute over the deductibility of certain expenses. The applicants, Mr. and Mrs. Turner, sought to deduct expenditure incurred in relation to a property development project. The Commissioner of Taxation disallowed these deductions, leading to the present appeal.

The primary legal issue before the Full Federal Court was whether the expenditure incurred by the applicants was of a capital nature, and therefore not deductible under section 8-1 of the *Income Tax Assessment Act 1997* (Cth), or whether it constituted a loss or outgoing incurred in gaining or producing assessable income. The court was required to consider the character of the expenditure in light of the applicants' overall scheme and purpose.

The court applied established principles for distinguishing between capital and revenue outgoings, including the "profit-making structure" test and the "once and for all" nature of capital expenditure. It considered the applicants' intention and the stage at which the expenditure was incurred. The court found that the expenditure was incurred in the course of establishing or enhancing the profit-making structure, rather than in the carrying on of the business itself. Consequently, the expenditure was held to be of a capital nature and not deductible.

The appeal was dismissed, with the Full Federal Court affirming the decision of the primary judge.