Casimaty V. FCT 97 ATC 5135: Case Study

In the case of Casimaty v FCT 97 ATC 5135, the taxpayer was doing fencing and farming business, which his father inherited an amount of 998 acres land that was known as “Acton View” (Australian Tax Casebook p.162). He then purchased another 40 acres of land, which he built a homestead. As time goes by, he suffered some sort of difficulties as there were drought, severe financial debts, and as well as poor health condition. As he had no alternatives, so he decided to sell-off portions of the land from time to time as to reduce the burden of his debt. There was a series of eight subdivisions and a large portion of property was sold. So the issue was whether the sale of various subdivisions and a portion of the taxpayer’s farming property were undertaken as a part of the conduct of the business with the result that the profits are assessable under s 25(1) of ITAA 1936 of the Income Assessment Act or whether the proceeds are assessable under the second limb of s 25A of ITAA 1936 of the Act. The Commissioner held that the taxpayer’s profit on selling the property is assessable under the Income Tax Assessment. It can be assessed under either s 25(1) as income gained from carrying on a business of selling the …show more content…
Still and all, it only applies to assets purchased before 20 September 1985, and where the profit of reselling that asset that existed at the time of purchase was at the sole purpose of the taxpayer, Eisner v FCT. Back to the above case, under the first limb, the taxpayer did not bought the property but was given to him by his father without costing him any amount of money. Nor in the second limb, the taxpayer did not have an intention on carrying on a business by selling his property and he did not make any advertisement but relied to his agent to sell his