MENZIES J. delivered the following written judgment:-

The taxpayers have appealed from a decision of the Board of Review upholding taxpayers have each made a profit from the sale of property acquired by them for the purpose of profit making by sale. The appellants seek to have their objection upheld fully. (at p168)

2. One of the members of the Board of Review has in his reasons for his decision set out the facts of the case fully and clearly. This statement was agreed with by the other members of the Board. The relevant facts as so found are uncomplicated. (at p168)

3. The taxpayers, who are husband and wife, had lived in Hobart, but, when their home had been spoilt for them by the erection of a block of flats nearby, they were minded to move further out and to build a house upon a sufficient area of land, outside the suburban area, to secure them some seclusion. They found a piece of land that took their fancy at Howrah where the trustees of an estate had an area of forty-four acres which they had failed to sell by auction in January 1955. Part of this land was bushland and part was cleared and suitable for grazing. The taxpayers tried, in vain, to buy the five acres of bushland as a home site; they then tried, again in vain, to buy seventeen acres including the bushland as a home site and a small farm. At this point they turned their minds to buying the whole area, and employed a surveyor to do a rough sketch of the subdivision of the area outside the seventeen acres that, by this time, I do not doubt, they wanted for themselves. Having regard to the conclusion that a subdivision was feasible they bought the whole forty-four acres for 6,250 pounds, a price in excess of the value of the property merely as grazing land. This was in July 1955. It was found as follows: "The price asked for the property was 6,500 pounds, a sum which Mr. and Mrs. Chapman felt to be beyond their financial resources if they were to build on the land the home which they desired. Still the property was not entirely unsuitable. They appreciated that if, by resale of part, they could recoup some of their expenditure, they would obtain a property which, in addition to providing an ideal home site, would have an area on which they might indulge in a small way their interest in pastoral pursuits: an area on which they might keep a few cows and some horses or ponies for the children to ride. With these factors in mind Mr. Chapman approached the surveyor who had prepared the plan subdividing off from the property the lots along the northern boundary (this is a reference to an earlier sub-division). . . . With this sketch in hand, the taxpayer and his wife felt they could sell part of the land and so recoup some of their outlay. They formed the intention of doing so. . . . Had they had the finance to do so they might have considered retaining the whole area. But to acquire the forty-four acres Mr. and Mrs. Chapman had to borrow from their bank, a transaction which they would have avoided had they purchased only the five acres or the seventeen acres which they first sought. And not relishing this liability, they intended, when they acquired the land, to resell so much of it as was necessary to enable them to pay back the money borrowed and to develop a small farm. . . . They had in mind that they would resell part of the land, just so much as was necessary to enable them to achieve the sort of property they wanted, and they had in mind that from the land sold they would derive a profit in the sense that they would receive more for the land sold than they had proportionately paid for the part of the property." (at p169)

4. Having completed the purchase the taxpayers developed their property as follows: "Mr. and Mrs. Chapman spent some 12,000 pounds on the construction of their home, worksheds and haybarn, 400 pounds on an underground concrete tank used to provide water for the home, 615 pounds on the main fowl pen, 250 pounds on a subsidiary fowl pen, an unspecified amount on the original construction of the dam, 130 pounds on its enlargement and an amount said to be 100 pounds, but I suspect to be more, on the construction and enlargement of the dairy. In addition, an amount of more than 1,000 pounds had been spent on plant. . . ." (at p169)

5. Soon after the purchase the taxpayers followed up their intention to subdivide part of the land, and had a plan of subdivision prepared for the whole forty-four acres. This was submitted to the local council in September 1955, but no approval was sought for the subdivision of the area of seventeen acres which the taxpayers intended to retain for their home. Indeed it is apparent from a letter of 2nd November 1955 written by Mr. Chapman to the council, that what was then sought was approval for a division of the forty-four acres into three sections 'A', 'B' and 'C' each with a separate title. This was to obviate borrowing money. Area 'C' was the seventeen acres already referred to and it was shown upon the plan as "Not for subdivision". Approval was subsequently given to a subdivision and between 1st September 1955 and 19th September 1956 eight blocks were sold for 525 pounds each, a total of 4,200 pounds. And the sales continued. By August 1957 sales had totalled 11,250 pounds, expenses 2,687 pounds, leaving a net receipt of 8,563 pounds. This net sum was obtained from the sale of eighteen blocks and the site for a church out of the subdivision - excluding the seventeen acres - of some 100 lots. It was found as follows: "It is clear enough that the taxpayer and his wife contemplated making a profit out of the land they were to sell. I do not mean by this that they intended to enter into subdividing as a commercial enterprise. They wished to recover 3,000 pounds, the amount borrowed, which amount was only a little less than one-half of the total purchase price. In addition to this, they wished to recover something to be used for development purposes. Yet they contemplated and succeeded in recovering this amount from the sale of only a relatively small part of the land. In this sense, therefore, they had in view recovering from the land to be sold a profit over and above its proportionate cost." (at p170)

6. The actual decision of the Board of Review can be gathered from the following statements. The Chairman and one member said: "That part of the property from which the disputed profits arose was not intended by the taxpayer and his wife as a site for their home or for a farm. It was intended that it be sold and the evidence supports an inference that it was intended to be sold at a figure in excess of its cost price. This, in our view, is sufficient to bring the profit within the provision of s. 26 (a)." The other member said: "Where the motivating factor for an acquisition is the use to which land is to be put after purchase, I think it is not necessary in every case to find one dominant purpose applicable to the whole of the area acquired. I think there will often be cases where one may look separately at an area which a taxpayer intends to resell and separately at the area which he intends to retain." Then after referring to the facts: "These being the facts and the motive for or purpose of the acquisition lying in the use to which they intended to put the property after acquisition, it cannot be said that Mr. and Mrs. Chapman had a single dominant purpose in relation to the whole property. They did not simply acquire the property for their home and farm. They acquired the property because they wished to establish their home and a small farm on part of it and wished to subdivide, develop and resell another part of it. That latter part was, in my opinion, acquired for the purpose of resale." (at p170)

7. I have no doubt that the Board of Review was correct in its conclusion that the purpose of the taxpayers, in acquiring that part of the land which they did not intend to keep, was to sell it at a profit. This is so notwithstanding that they would not have acquired that land otherwise than as a means of getting the seventeen acres which they wanted as a home and small farm. Looked at by itself, the land other than the seventeen acres was acquired for the purpose of sale at a profit. The problem which has troubled me is whether this can be done, and whether it is possible to treat what was one acquisition, as having been made with one purpose as to part, and another purpose as to the remainder. I have reached the conclusion that it is, and that to do so, is in accordance with common experience. I do not rely particularly on instances such as the purchase of shares to sell some and keep the rest; or, the purchase of a herd of cattle to keep some and sell the rest; because, in such cases it is comparatively easy to treat the purchase of say 1,000 shares or 1,000 cattle as the case may be as the purchase of 1,000 separate units. There is no doubt, however, that where the purchase is of an entirety it often happens that the purchaser in making the purchase has the purpose of breaking up the entirety and of using part in one way and part in another. The simplest instance of this no doubt is the sort of purchase which I am now considering. In such a case it is in vain I think to search for a dominant purpose for the purchase. There are in truth two purposes, and it cannot be said that one is dominant and the other servient. In a case where one purpose for acquisition is to sell part of what is bought at a profit to meet or reduce the cost of the part to be retained, perhaps the only fair course is to attribute to what is proposed, two independent purposes; otherwise it could be that the part to be retained would have to be treated as property acquired for the purpose of profit making by sale, e.g., if it were to be found that the dominant purpose for the purchase was to obtain a profit by selling part. (at p171)

8. Upon the evidence here I think the Board of Review was correct in finding that of the forty-four acres purchased by the taxpayers, part was purchased for development as a home and small farm, and the balance was purchased for resale at a profit. For my own part I have no doubt that seventeen acres were purchased for a home and domestic farm and that the remainder was purchased to sell at a profit. (at p171)

9. Where an entirety is purchased and part only is sold there is always the problem of determining what profit has been made. Sometimes this may prove insuperable. Some cost must be attributed to what has been sold for the purpose of ascertaining the profit upon resale, and it could be that no basis can be found for so doing. In this case what was done - perhaps arbitrarily - was to divide the price of the farm, by the acreage, to determine the initial cost of each acre and so to calculate the cost of the area which has already been sold, and then to allow a proportionate part of the expenses of subdivision and sale. No objection was taken to this and in the circumstances I think that the Commissioner and the Board were not in error in calculating the profit in this manner. (at p172)

10. In my opinion therefore the appeal must be dismissed with costs. (at p172)