5. In substance, this case is an evidential case. The issue is whether the Applicant has met his burden of proof to satisfy the Tribunal on the balance of probabilities that:

(a) The profits or gains from the sale of the Properties are not ordinary income - specifically, the profits are not business income, nor profits from an isolated transaction where the Applicant had an intention or purpose to make a profit or gain; and > > (b) The Properties were not trading stock; and > > (c) This is because > > > (i) The Applicant held the Properties for long term rental, not as part of a business, or that any business carried on by the Applicant did not include sale of properties; and > > > > (ii) The sale of the Properties was motivated by personal matters, and was not an isolated transaction entered into with the intention or purpose of making a profit or gain; > > > > (iii) The Properties were sold only in order to settle a property division with the Applicant's former wife; and > > (d) This means that the Properties were not sold in the course of carrying on a business, nor was the sale of the Properties an isolated transaction where the taxpayer has an intention or purpose to make a profit or gain, nor for GST purposes was it in furtherance of an enterprise carried on by the Applicant. The sale of the Properties was "the mere realisation of a capital asset"[3] not part of any enterprise or business.

6. I record that this case is not entirely clear cut, and via Mr Spierings the Applicant put forward persuasive arguments. However, on balance, I am not satisfied that the Applicant has met his burden of proof to demonstrate the above matters. I have concluded that:

(a) The profits from the sale of the Properties are ordinary income pursuant to section 6-5. This is because, on balance, the weight of the evidence supports the conclusion that the Applicant carried on a business, and that the sale of properties was in the course of that business, . I also conclude that the Properties comprise trading stock as defined in section 70-10. > > (b) It is not necessary to reach conclusions on the other ground the Commissioner raised - whether the profits from the sale of the Properties is ordinary income because it is an isolated transaction entered into with the intention or purpose of making a profit or gain. Comments are made in this decision as guidance on that matter. > > (c) In principle, the sale of the Properties was in furtherance of the Applicant's enterprise and are subject to GST. However: > > > (i) The Commissioner's GST assessment is excessive as the sale of 1E D Court is not appropriately assessed in the September 2016 BAS period, and the Commissioner accepts it is time-barred from assessing that transaction. > > > > (ii) The Commissioner must determine the date of settlement of the sale of 1D D Court. The evidence before the Tribunal is insufficient to determine whether the sale of 1D D Court was appropriately assessed in the September 2016 BAS period. For the reasons set out in this decision,[4] this issue is remitted to the Commissioner for determination, particularly to determine whether the Commissioner is time-barred from assessing that transaction as well. The Tribunal expects that the Applicant will be given an opportunity to put submissions to the Commissioner on that issue if he wishes to do so. > > > > (iii) The sale of 1C D Court was appropriately assessed for GST in the September 2016 BAS period.

1. The Applicant worked as a fruiterer for over 20 years at the Footscray market and the Richmond market in Melbourne.[5]
2. There was some dispute as to whether he continued to work as a fruiterer in the Relevant Period.[6] The Applicant says he is still a fruiterer. The Applicant said in evidence at the Tribunal that while his work at the Footscray market ceased in around 2015, he still worked on Saturdays at the Richmond market as a fruiterer.[7]
3. Ms Paull cross-examined him on the issue of his occupation as a fruiterer. This included asking him about the income he returned from that activity in tax returns or BAS for the Relevant Period for example, and highlighting the level of income from his residential property activities. The fruiterer role is not at issue in these proceedings.
4. However, Ms Paull's point was to challenge evidence such as that at [22] of the Applicant's Witness Statement where the Applicant said he serviced mortgage repayments from rental and his wages from the market, when there is no evidence of such wages. This is relevant, and is considered further below.

The Applicant's residential property activities - property development?

1. The Applicant was also engaged in renovating and constructing residential property. It is these activities that are at issue in this case, and not the extent of his activities as a fruiterer nor his income from being a fruiterer. He described his residential property activities as "renovation projects"[8] which started around 2002, and acknowledged that he also sometimes constructed units on land he acquired.[9] He said he did a lot of the work himself alongside a retired builder, but used tradesmen where needed.[10]
2. In cross-examination by Ms Paull, the Applicant described his residential property activities as "investing in property" and refused to accept references to him being a "property developer." It seemed to the Tribunal that the Applicant thought that using the words "property development" or "property developer" might be kryptonite for his case. He continually denied he was in the "business of property development" in his evidence on cross-examination. This was strange and unnecessary contortionism.
3. It was strange in the light of material on the Tribunal Book from the Applicant where he acknowledged he was engaged in "an enterprise of constructing and selling residential property"[11], where he said he was engaged in "property development activities"[12] and that he had a "purpose of investment and profit-making" in relation to land.[13] There is also file note material on the Tribunal Book where the Applicant's Tax Agent advised the Commissioner that the Applicant accepted he carried on a business of building residential premises.[14] The Applicant's Tax Agent says these positions were adopted with the Commissioner in order to finish the audit quickly with minimum cost, and this position was taken recognising the lack of records available to the Applicant because of a flood.[15] This position was taken despite the Applicant's Tax Agent still having the view that the Applicant was not carrying on a business of property development.[16]
4. The Tribunal's view is that the Applicant's concern about the use of the term "property developer" was unnecessary. The term "property development" in ordinary meaning does no more than capture both the Applicant's renovation activities as well as his construction/subdivision activities. In this decision, the Tribunal uses the term "property development" to encompass all of the Applicant's activities and no more than that.

Is the Applicant trying to pursue a wider argument?

1. The Applicant may be trying to change the approach of his case to not merely suggest the Properties are different to other properties he renovated and/or developed and potentially sold. He may be saying all of the properties were not part of a property development business but rather an investment business and that all sale proceeds are capital gains.[17] That was the Applicant's initial position as set out by his Tax Agent to the Commissioner and was given as the reason for the manner in which the Applicant's tax filings were made.[18] That might explain the aversion to the words "property development" as opposed to merely focusing on the reason for the sale of the Properties. This is not particularly clear.[19] At some points in the Applicant's filings at the Tribunal he appeared to suggest he was not carrying on any type of business at all.[20]
2. The Applicant's Tax Agent accepted that the Applicant was engaged in a property development business in calls with the Commissioner on 16 April 2019[21] and 17 May 2019.[22] The Tax Agent's Witness Statement and evidence now seeks to pump the brakes on those earlier comments, explaining that those comments were made for strategic and practical reasons, despite a belief in the position being otherwise.[23] The Applicant's Tax Agent also said in cross-examination before the Tribunal that there were some properties that were part of a business operation (on the Commissioner's interpretation) but he wanted to argue that all properties were not part of a business.[24] None of this is particularly helpful. The Applicant needs to adopt a consistent position and if he does not agree with the Commissioner to challenge the wider matter and periods beyond the Relevant Periods. It seems to the Tribunal that if the Applicant wanted to test this issue, he would have done so properly. Other periods that have been assessed by the Commissioner on the basis that the Applicant was in the property development business in respect of other properties are not before the Tribunal and have been accepted by the Applicant.
3. The Tax Agent's Witness Statement and evidence on cross-examination suggests a wider argument might be proceeded with,[25] but whatever the position on that point, the only properties at issue in this case are the Properties, and the only periods at issue are the Relevant Periods. The Tax Agent's Witness Statement confirms that the Applicant's case is only focussed on the Properties[26] as did Mr Spierings' Opening Submissions for the Applicant at the Tribunal.

1. The Tribunal is not considering any wider case.
2. This case is about the Properties and the Applicant is limited to his grounds of objection.[27] In the income tax objection the grounds are fairly broadly expressed.[28] However, the grounds of objection focus on the Relevant Periods, and the reason for transfer being the marital dissolution. There is no reference to the specific properties at issue in the income tax objection, but it is focused only on the 2017 income year. 1C, 1D and 1E D Court are the Properties at issue in the 2017 income year. The GST objection focuses on the Properties. The GST objection also refers to 1B D Court, but it is understood that this property is not at issue in these proceedings, as its sale occurred in a different income year and a different BAS period, and only the Relevant Periods are at issue in this case.[29]
3. It is also clear from Mr Spierings' Opening Submissions at the Tribunal that the Applicant's focus is only on the Properties, as he noted what he described as two key facts - that the Properties were intended for rental and not for sale, and the marital split being the reason that the Properties were sold.

1. The Applicant was registered for GST effective from 1 January 2008. He was registered for an ABN as a sole trader from 21 March 2007.[30] The Commissioner noted that the Industry type" for the ABN was "carpentry services" and the Applicant's Tax Agent confirmed the Applicant did some work himself but generally used subcontractors on his property development activities.[31] The Applicant said he only registered for GST because his broker told him he needed to in order to obtain funding to acquire properties, although he did not remember why that was so.[32] It is not clear to the Tribunal why this should be so.

1. The Commissioner's Outline lists approximately 11 sales of properties by the Applicant[33] which took place before the Properties were sold.[34] The Commissioner lists 10 further property sales which took place after the Properties were sold.[35] The Commissioner is seeking to demonstrate a pattern of sales.[36]
   1. In the Appendix to this decision, the Tribunal has set out the properties owned or part-owned by the Applicant, and cross-referenced the related evidence from the Tribunal Book. It is fair to say that the evidence on the Tribunal Book is not as comprehensive as it might be. The Tribunal notes that the Applicant says a flooding event from a faulty pump at 13 S Street (the family home) means some records were lost[37] which might explain that.
2. The Appendix to this decision identifies a large number of properties that were owned or part-owned by the Applicant (approximately 33 and potentially more, as some properties have confusing addresses and may comprise the same property or may be separate properties).
3. There are some omissions or errors in the Commissioner's Outline.

(a) When considering the property sales prior to the sale of the Properties at [19] of the Commissioner's Outline, while [24] of the Commissioner's Outline says properties at 1A Acacia Court, 3 Acacia Court and 9 Acacia Court were "listed for rental", the Commissioner does not record that the following properties were all rented prior to sale: 19 Hampton Parade, 1A D Court, 1A Acacia Court, 1B Acacia Court, 3 Acacia Court, 7 Acacia Court, 9 Acacia Court, 1/9 Bishop Street, 2/9 Bishop Street. The Appendix to these reasons identifies the material on the Tribunal Book that demonstrates that. So, of the 11 properties the Commissioner identifies at [19] of the Commissioner's Outline, at least 9 were rented prior to sale. The full facts should have been set out. > > (b) Three properties[38] of the total of 20 properties[39] the Commissioner identified at [19] and [27] of the Commissioner's Outline as sold by the Applicant do not appear to have been rented prior to sale. That is, the vast majority of the properties listed in the Commissioner's Outline (approximately 85%) were rented prior to sale. > > (c) The Commissioner includes 13 S Street in the list of properties sold after the Properties at issue in this case. From the evidence before the Tribunal, this remains the Applicant's family home, and the document in the Tribunal Book referred to by the Commissioner as evidence of its sale does not show that property was sold as asserted in the Commissioner's Outline.[40] It may be that the Commissioner is focussing on the transfer of 13 S Street to the Applicant's name following the marital dissolution.[41] It is not clear. Certainly, this should have been noted by the Commissioner. > > (d) As is demonstrated by the Appendix to this decision, the Commissioner's Outline does not include all of the properties sold by the Applicant.[42] From the list of 33[43] properties in the Appendix, 21 were sold (63%). More may have been sold, there is just a lack of material on the Tribunal Book. The Appendix also shows that some of the properties that were sold were held for many years prior to sale.[44] The Appendix also demonstrates that some properties were not rented prior to sale.[45] > > (e) When considering all of the properties in the Appendix and the evidence on the Tribunal Book, they can be divided into the following categories: > > > (i) Rented prior to being sold - 15 of 33 properties (approximately 45.5% of properties); > > > > (ii) Sold but no evidence of rental - 6 of 33 properties (approximately 18%); > > > > (iii) Rented but no evidence of sale - 10 of 33 properties (approximately 30%); > > > > (iv) Unclear or potentially not owned - 2 of 33 properties (approximately 6%). > > (f) In summary, the Appendix also identifies that, if sold, the majority of the sold properties were rented prior to sale. However, the Appendix further demonstrates that the majority of the properties owned or part-owned by the Applicant have been sold.

4. In cross-examination by Ms Paull, the Applicant acknowledged each property she put to him was sold (including some sales after 30 June 2017). Other than in debating whether his activities comprised "property investment" as opposed to "property development", the Applicant acknowledged that he engaged in the activities referred to by the Commissioner for periods from 1 July 2003 to 30 June 2017,[46] sometimes solo and sometimes with his brother.[47] As is identified in the Appendix, there are or were a number of properties held by the Applicant and his former wife jointly,[48] or the Applicant and other people jointly, [49] not only the Applicant or the Applicant and his brother.
5. In terms of the Properties at issue in this case, land at D Court was acquired by the Applicant on 13 March 2012.[50] The Applicant subdivided the land and alongside other construction activity, constructed the Properties between 2015 and 2016.[51] The Applicant's evidence was that the Properties were completed around May 2016.[52] The Properties were sold by the Applicant by way of Agreements for Sale entered into on 11 June 2016 (1C, 1E) and 7 July 2016 (1D).[53] The dates of sale for tax purposes is considered further below.[54]

Other properties > > 1. The Commissioner also says that the Applicant has developed and retained "other properties" as rental investments, but unhelpfully neither party lists these properties.[55] Rental summary statements (which stem from a Trust Ledger at the Applicant's property manager) are on the Tribunal Book, and they identify the properties that may be in this category.[56] > 2. The "other properties" potentially include, for instance, 1A Adeney Street, 20 Clarendon Street/Parade,[57] 1/25 Clarendon Parade, 2/25 Clarendon Parade, and 35A Finlay Street.[58] Occasionally the address of those properties cannot be easily identified from the material before the Tribunal and the Tribunal has noted the properties it has concluded those references relate to.[59] > 3. As is noted above, the Tribunal Book is not as comprehensive as it might be[60] and it may be that some of these properties have in fact been sold, and/or it may be that there are more properties in the "other properties" category. I note that the Applicant's draft evidence was that he ceased "property development activities" since the separation from his former wife. [61] The Tribunal assumes that does not mean that the "other properties" have also been sold, rather that the Applicant may not have acquired new properties.

The Applicant's purpose in carrying out residential property activities

1. The Applicant said that he sold properties only when he had to as he could not get funding for further properties due to being so highly geared[62] or otherwise only when he had no choice (such as if he needed to fund a private purchase). For example, he said he had no choice but to sell a property at 1A Acacia Court in order to acquire the family home at 13 S Street in or around late 2013.[63]
2. The Applicant said that he always tried to hold onto the properties in order to derive rental. He said he needed the rental funds to support his financing for the acquisition of other properties and to meet existing mortgage obligations.[64]
3. He said his purpose in investing in property was to have something to leave to his children and to generate income.[65] In relation to the Properties at issue in this decision, he said that his plan was to transfer them to his elder children.[66] There were two other properties at 1 D Court (1A and 1B), which the Applicant said were for investment purposes (although, as can be seen from the Appendix to this decision at least 1B D Court was eventually sold).[67]
4. Ms Paull cross-examined the Applicant on this point, seeking to challenge him on whether he transferred any properties at all to his children and analysing their ages and the like. This was of marginal value. The Applicant denied everything, Ms Paull pressed the point that this cannot have been his purpose because he did not at any point transfer any properties to his children, and the Applicant said the Properties at issue were sold due to a marital split and this is why they were never transferred to any of his children.
5. In cross-examination, Ms Paull also put to the Applicant that when he purchased a property, he knew he might need to sell that property in future at a profit. The Applicant denied this. [68] He also denied the suggestion that he intended to rent out properties for a period and then sell them for a profit. As Ms Paull pointed out to the Applicant, the Applicant's denials were not always consistent with his filings in the Tribunal noted above.[69]
6. The Applicant's evidence included that he did not prepare a business plan nor financial statements.[70] He says he did not register a business name, although he had an ABN.[71] That might be to signal that what he thinks are the hallmarks of being in business are not present. Business plans, business names, and financial statements are not required to be in a business for tax purposes however.[72] In addition, it is noted that the Applicant refers to not having a "property developer licence" [73] - a matter that is not relevant in Victoria where the Applicant operated - and suggests that it matters that he did not carry out his property development activities through a company.[74] This is also not determinative of anything. Businesses can be carried on by an array of different entities as well as by individual taxpayers,[75] not just companies. Further, not meeting State-based registration requirements does not exempt the Applicant from federal taxation consequences. Finally, the Applicant makes submissions about what he did and did not claim for tax purposes.[76] Again, this is not determinative.

The circumstances at the time of the sale of the Properties

1. The Applicant's evidence was that the sale of the Properties was caused by a sudden marital split from his former wife in February or March 2014.[77] It was said by the Applicant to have been an acrimonious split which the Applicant said was caused by the Applicant's former wife entering into a new relationship.[78]
2. The marital split affected the Applicant greatly, and his evidence included describing the damage to his mental health from the sudden breakdown of his marriage.[79] He said he was not functioning properly. There is material on the Tribunal Book or before the Tribunal that is consistent with that evidence.[80]
3. The Applicant said that his former wife did not have an income and was both not working and at times studying. There were a number of minor children from the marriage that remained with the Applicant in the family home at 13 S Street. The Applicant provided his former wife with his credit card for her costs and paid the rent on her new property.[81]
4. The family home was originally at 21 A Street, and, as noted above, the Applicant described acquiring a new family home at 13 S Street around late 2013.[82] In his evidence at the Tribunal, the Applicant said he had tried to sell 21 A Street unsuccessfully and ended up renting it out in or around 2014.[83] The Applicant also said he refinanced 21 A Street in order to acquire 75 Roberts Street, his first investment.[84]
5. Construction commenced on the Properties in 2015.[85] At the end of 2015 the Applicant sought a rental appraisal of 1B, 1C, 1D and 1E D Court from Hocking Stuart a real estate company. He obtained that rental appraisal of the Properties from Hocking Stuart on 7 March 2016 prior to the completion of construction.[86]
6. When his marriage broke down in 2014, the Applicant's former wife sought a property settlement involving the transfer of 21 A Street and the family car to her - this the Applicant said was in late 2015 or early 2016.[87] 21 A Street had been rented out, and the lease came to an end in late 2015 or early 2016.[88] The Applicant said he accepted his former wife's terms, avoided lawyers to save costs, and had to find a way to repay the mortgage on 21 A Street, which he said was around $600,000.[89] He entered into sale agreements for the Properties in order to raise funds to discharge the 21 A Street mortgage.[90] He wagered that the sale of the Properties would generate sufficient return to repay the mortgages on the Properties as well as sufficient funds to discharge the 21 A Street mortgage.[91] That is what happened and sales were settled in or around September to October 2016.[92]
7. The Applicant's evidence was that 21 A Street had been in his name, while 13 S Street was in the Applicant's former wife's name. The property settlement between the Applicant and his former wife involved 13 S Street being transferred to the Applicant and 21 A Street being transferred to the Applicant's former wife. 13 S Street needed to be refinanced by the Applicant in order for it to be transferred to his name. It took until February 2017 for that to occur due to the Applicant's difficulty in refinancing 13 S Street.[93] It is understood that capital gains tax rollover provisions in section 126-5 of the ITAA 1997 may not apply to 13 S Street or 21 A Street because no legal advice was taken by the Applicant and his former wife to ensure that the agreement they reached was documented and fell within the provisions of the Family Law Act 1975 (Cth)[94] specified in section 126-5. In any event, the Tribunal Book does not contain any such agreement, and 13 S Street and 21 A Street are not properties at issue in this case.
8. The Applicant's former wife sought a divorce in or around 2020, and it was finalised on 22 April 2021.[95]

The engagement between the Applicant and the Commissioner

1. The Applicant's BAS for the September BAS Period declared no GST payable on the transfer of the Properties.[96] The Applicant filed his income tax return for the 2017 year late[97] as discussed further below.
2. The Commissioner first contacted the Applicant on 3 November 2017[98] informing him that his BAS and income tax returns had been selected for review. That correspondence requested details of all properties sold, properties rented, all development applications, and capital gains tax calculations for the 2013 to 2017 years. The Applicant responded to that letter on 28 November 2017 enclosing materials in relation to three properties.[99] The Commissioner followed that up on 4 December 2017[100] and 13 December 2017.[101]
3. In a file note dated 9 January 2018, the Commissioner records a call with the Applicant's Tax Agent.[102] That note records that the Applicant's Tax Agent acknowledged that the Applicant's property activities comprised his main source of income, but it also records that from the outset of the engagement between the Commissioner and the Applicant, the Applicant's Tax Agent's position was that he had mentioned to the Applicant that it was "borderline [on the Applicant being in] business". The Commissioner took the view that it was clear that the Applicant was in business and advised the Applicant's Tax Agent as much.
4. The Commissioner's inquiries culminated in an audit, and the Applicant was advised by letter dated 12 January 2018.[103] The 12 January 2018 letter simply reiterated the questions originally asked on 3 November 2017. The Applicant provided further information on 6 February 2018[104] and 23 April 2018.[105]
5. The Applicant also made a voluntary disclosure to the Commissioner on 30 April 2018,[106] declaring, amongst other matters, the GST payable on the Properties in the September BAS period.[107] That voluntary disclosure also recorded the Applicant's view that the circumstances surrounding the sale of the Properties (an agreement was reached following a matrimonial split) needed to be considered.[108] The Commissioner's phone note of 7 May 2018[109] records a conversation with the Applicant's Tax Agent where the Commissioner confirmed that input tax credits were allowable in respect of the Properties, and that the Applicant's Tax Agent confirmed that input tax credits were not claimed due to a lack of available substantiation including because of a flood at the Applicant's property.[110] The Commissioner later allowed some input tax credits from third party information.[111]
6. A further voluntary disclosure was made by letter dated 22 May 2018.[112] This was in relation to income tax for 2014-2016, and not for 2017 which is the year in dispute in this case, so that voluntary disclosure does not deal with the Properties. The voluntary disclosure and accompanying returns record gains made on the sale of property as capital gains but also record business income and that an amendment is made "to include the disposal of rental property not subject to capital gains tax but to be treated as profitable proceeds".[113] This suggests that the Applicant remains only focused on the Properties being treated differently from the other properties dealt with in the voluntary disclosure and is not seeking to make a wider case as considered above.[114]

Objection decisions and Applications for Review - some confusion arises

1. In relation to GST, the Commissioner finalised its audit on 11 July 2018[115] increasing the GST payable and also allowing increased GST input tax credits from the original BAS.[116] An amended assessment which included the GST amendments for the September 2016 BAS period was issued on 11 July 2018.[117] The Applicant objected on 27 October 2018 ("GST objection").[118] The Commissioner disallowed the GST objection on 29 May 2019.[119]
2. In relation to income tax, the Commissioner's audit finalisation on 11 July 2018[120] also concluded that the sale of the Properties was not on capital account. The Applicant had not filed his income tax return for the 2017 year on time.[121] The 2017 tax return was eventually filed by the Applicant on 23 December 2020.[122] In that return, the sale of the Properties was recorded at Box 24 'Other Income'.[123] Capital gains were also returned at Box 18.[124]
3. A notice of assessment for the 2017 year was issued by the Commissioner on 7 January 2021.[125] The Applicant objected to the assessment issued on 7 January 2021 on 21 April 2022.[126] That objection was accepted as in time. It was then disallowed (oddly) twice on 8 July 2022[127] and 2 May 2023[128] and two objection decisions were issued. An amended assessment was foreshadowed in a call between the Commissioner and the Applicant's Tax Agent on 25 July 2022,[129] and, following obtaining some further information, was issued by the Commissioner on 9 May 2023 following its 2 May 2023 objection decision.[130]
4. The Commissioner refers to the 8 July 2022 decision as "Draft Reasons for Decision" at [26] of the Commissioner's SFIC. This seems disingenuous to the Tribunal. Nowhere in the 8 July 2022 correspondence is it stated that the reasons for decision are in "draft" nor that the decision had not been finalised. In fact, that correspondence specifically says that the Commissioner had finished looking at the Applicant's objection and gives the Applicant detail of the 60 days he had available from that date to apply to the Tribunal. Instead, there is an email from the Commissioner to the Applicant's Tax Agent dated 11 April 2023 stating that a new notice of decision would be "reissued".[131] That does not turn the first objection decision into a "draft".
5. Having two income tax objection decisions is an unusual set of circumstances. From what the Tribunal can discern, the distinction between the two objection decisions is:

(a) The inclusion of numbered paragraphs for all paragraphs in the 2 May 2023 objection decision, as opposed to some paragraphs being numbered and some not in the 8 July 2022 objection decision. > > (b) The addition of trading stock as an issue and new paragraphs 6 to 11 in the 2 May 2023 objection decision when that issue was not in the 8 July 2022 objection decision. > > (c) New paragraphs 28 to 40 in the 2 May 2023 objection decision which set out the Commissioner's decision as to the impact on the Applicant's 2017 tax return. > > (d) Changes to the "We used these laws, cases and ATO views" part of the 2 May 2023 objection decision to: > > > (i) Add Taxation Determination TD 92/124 Income Tax: property development: in what circumstances is land treated as trading stock? > > > > (ii) Remove a reference to Taxation Determination TD 92/126 Income Tax: property development - if in an isolated transaction land is acquired for the purpose of development, subdivision and sale, but the development and subdivision do not proceed, how is a profit on a sale of the land treated for income tax purposes? > > > > (iii) Remove a reference to Taxation Determination TD 92/127 Income Tax: property development - if in an isolated transaction land is acquired for the purpose of development, subdivision and sale, but the development is abandoned and the land is sold in a partly developed state, how is a profit on a sale of the land treated for income tax purposes?

6. Ms Paull and Mr Spierings made nothing of there being two objection decisions from the Commissioner. In substance, I agree with them as there seems little harm done, and this is undoubtedly why nothing has been made of this. The main distinction between the objection decisions is the Commissioner's addition of the trading stock argument and the identification of the taxation consequences of the Commissioner's decision on the Applicant. The Applicant has had the opportunity to respond to those matters and has done so before the Tribunal. Accordingly, the Tribunal takes the 2 May 2023 objection decision as the correct and relevant decision.
7. However, alongside the wrong periods being assessed which is discussed below, [132] it is fair to say this sort of administration from the Commissioner dismays the Tribunal. It can confuse taxpayers, and can cause problems for the Tribunal with Applications for Review, as will be seen below.[133]
8. The Applicant filed Applications for Review in this Tribunal[134] on 15 April 2024[135] and 18 June 2024.[136] Both were late by a considerable period.[137] The time period for filing was extended by the Tribunal by direction dated 28 August 2024 and both Applications for Review were accepted as in time.[138]
9. There are issues with each of the Applications for Review filed by the Applicant:

(a) The Application for Review in relation to the income tax issues in part contends that the Applicant was assessed as a company by the Commissioner, when he was not one. This is obviously complete nonsense. It is assumed this is part of the arguments identified above at paragraph ‎36, and is assumed to merely be poorly expressed. > > (b) The Application for Review in relation to the income tax issues seeks to review the first of the Commissioner's objection decisions. That is, the decision dated 8 July 2022. This is part of the inevitable confusion caused by the Commissioner issuing two objection decisions. For the avoidance of doubt, as part of its discretion under sections 49 and 53 of the Administrative Review Tribunal Act 2024 (Cth) to control its proceedings and determine the scope of the review, the Tribunal has treated this Application for Review as being of the 2 May 2023 objection decision as well. > > (c) The Application for Review in relation to the GST issues seeks to review the 11 July 2018 audit decision as opposed to the objection decision of 29 May 2019. Pursuant to paragraph 14ZZ(a) and paragraph 14ZZA(1)(a) of the TAA, the decision over which the Tribunal has jurisdiction is the 29 May 2019 objection decision. The Tribunal has no jurisdiction to review audit decisions. For the avoidance of doubt, as part of its discretion under sections 49 and 53 of the Administrative Review Tribunal Act 2024 (Cth) to control its proceedings and determine the scope of the review, the Tribunal treats this Application for Review as being in relation to the objection decision of 29 May 2019 and the decision referenced in the Application for Review as being an error. If the Tribunal did not treat this Application for Review in this manner, it would not have any jurisdiction to hear the GST issues. Neither party raised this issue with the Tribunal, and this also supports the conclusion that the reference to the audit decision must have been an error. > > Assessments of the wrong periods (?)

10. There are also some issues with the GST assessments issued by the Commissioner after completing the audit:[139]

(a) The sale of one of the Properties - 1E D Court - was assessed in the wrong BAS period as the sale did not settle in the September 2016 BAS period.[140] The Commissioner has accepted that it is out of time to include the GST payable on that property. That means that the Commissioner says that only 1C and 1D D Court are at issue in this case for GST purposes.[141] The GST assessment is accordingly excessive to this extent. > > (b) While the Commissioner has not noted this, there is evidence on the Tribunal Book refers to the settlement of the sale of 1D D Court as potentially 11 November 2016[142] or 12 October 2016,[143] which means it too could have been assessed in the wrong BAS period, and it too could be out of time. The Tribunal has treated the relevant settlement date for GST purposes as being 12 September 2016. This is because the LANDATA (the Victorian land agency) ("Landata") report says 12 September 2016 was the "date lodged for registration". It is assumed this is when the property was available to the purchasers, for instance when specific performance could be called for. But it is fair to say this is not clear and the Tribunal has no submissions from the parties on this point. > > (c) It is not clear that the "date lodged for registration" was the date the transfer was lodged or whether it might be the date that 1D D Court obtained a title as a separate registered property. The Applicant's evidence was that the subdivision process did not complete until 24 August 2016 is a very adjacent date.[144] Each report relating to the Properties needs to be carefully reviewed. > > (d) Even if the suggestion in paragraph ‎60(c) is not correct, there is an added concern. The "transfer of land by endorsement" for 1D D Court is stated as being 11 November 2016 on the Landata report. Settlement is when the transfer of land occurs for GS[145]urposes,145 and it is noted that GSTR 2000/28 defines 'settlement' as not merely the registration of a transfer but the actual transfer of the land to the purchaser by way of a registrable instrument o[146]ransfer.146 The "transfer of land by endorsement" referred to on the Landata report as 11 November 2016 suggests endorsement did not occur until 11 November 2016. Unlike the relevant Landata report for [147]D Court,147 the dates of lodgment for registration, the date recorded on the register, and the transfer of land by endorsement are not the same. The CoreLogic report for 1D D Court refers to the legal description of the property (its title) not being issued until Nov[148]er 2016.148 If that is correct, the Tribunal is not certain whether settlement could have occurred at law (such as via rights to claim specific performance) prior to that date. > > (e) It seems to the Tribunal to be possible that 1D D Court is also out of time for GST purposes as 11 November 2016 might be the relevant settlement date for GST purposes. However, there is nothing available in the material on the Tribunal Book that clarifies this issue, nor were any submissions made which clarified the meaning of each of the terms on the Landata report as against the GST Act requirements. The 12 October 2016 date from the CoreLogic report in relation to 1D D Court also needs consideration. It is unclear as to the source of that date.[149] If it is correct, the Commissioner is also out of time in relation to 1D D Court. > > (f) In the circumstances, as the material on the Tribunal Book is not clear, the Tribunal remits this matter to the Commissioner for further investigation in order to determine which is the relevant date for GST purposes for 1D D Court. For the avoidance of doubt, the Tribunal also expects that the Applicant will be given the opportunity to make submissions to the Commissioner on this issue if he wishes to do so. > > (g) The Tribunal proceeds as if both 1C and 1D D Court are at issue for GST purposes. But, as noted above, the Tribunal's decision is subject to the Commissioner resolving the above issue in relation to 1D D Court.

11. For income tax, the Applicant has submitted that if it is accepted by the Tribunal that the Properties were sold on capital account, the date the sale agreements were entered into is the relevant date in accordance with subsection 104-10(3) of the ITAA 1997.[150] That would mean that 1D and 1E D Court were assessed in the wrong income year as those sale agreements were entered into prior to 30 June 2016. This submission is clearly correct.

REASONS FOR DECISION > > Income tax - Ordinary income

12. The first issue is whether the gains on the sale of the Properties are taxable as ordinary income pursuant to subsection 6-5(2) of the ITAA 1997. Ordinary income is defined in subsection 6-5(1) as income according to ordinary concepts. The concept of income according to ordinary concepts includes business income[151] and profits from an isolated transaction where the taxpayer has an intention or purpose to make a profit or gain.[152]
13. Those two options of ordinary income were set out in the High Court's decision in Federal Commissioner of Taxation v Myer Emporium Ltd [1987] HCA 18; (1987) 163 CLR 199 ("Myer Emporium") at 209-210:

Although it is well settled that a profit or gain made in the ordinary course of carrying on a business constitutes income, it does not follow that a profit or gain made in a transaction entered into otherwise than in the ordinary course of carrying on the taxpayer's business is not income. Because a business is carried on with a view to profit, a gain made in the ordinary course of carrying on the business is invested with the profit-making purpose, thereby stamping the profit with the character of income. But a gain made otherwise than in the ordinary course of carrying on the business which nevertheless arises from a transaction entered into by the taxpayer with the intention or purpose of making a profit or gain may well constitute income. Whether it does depends very much on the circumstances of the case. Generally speaking, however, it may be said that if the circumstances are such as to give rise to the inference that the taxpayer's intention or purpose in entering into the transaction was to make a profit or gain, the profit or gain will be income, notwithstanding that the transaction was extraordinary judged by reference to the ordinary course of the taxpayer's business. Nor does the fact that a profit or gain is made as the result of an isolated venture or a 'one-off' transaction preclude it from being properly characterized as income: Federal Commissioner of Taxation v. Whitfords Beach Pty. Ltd. The authorities establish that a profit or gain so made will constitute income if the property generating the profit or gain was acquired in a business operation or commercial transaction for the purpose of profit-making by the means giving rise to the profit. [Emphasis added and footnotes omitted]

Was the Applicant carrying on a business, and if he was, did the Applicant's business involve the sale of properties?

1. The difference between the parties is as to the nature of the Applicant's residential property activities.

(a) The Applicant[153] says he was an investor, and obtained properties for the purpose of generating rental income. There is evidence in favour of that set out in the Appendix to this decision. The vast majority of properties he owned or part-owned were rented out. The Applicant also obtained a rental appraisal for the Properties, suggesting he was seeking to rent them out as well. The Applicant says the Properties were not rented out solely because of the Applicant's marital split, which is outside the ordinary course of his operations, he has none of the hallmarks of being in the property development business, and the features pointed to by the Commissioner are equally applicable to a rental investment operation.[154] The Applicant says he only sold properties in order to invest in more, or where there were financing issues. The Appendix also demonstrates that sometimes property was held for a considerable period prior to sale.[155] Finally, the Applicant says the focus must be on the Properties and not "some general view of [the Applicant's] activities over a long period of time."[156] > > (b) The Commissioner[157] points to a pattern of property sales and to the Applicant's activities in subdividing and constructing property. The Appendix to this decision demonstrates that the Applicant is engaged in (sometimes) subdivision and construction and (sometimes) only renovation, as well as (sometimes) rental and (sometimes) sale. The majority of properties identified in the Appendix were sold. The Commissioner also points to features which it says are hallmarks of being in business.

2. I record that there are good arguments in favour of the Applicant which were well put by Mr Spierings, and this case is not entirely clear cut. This is particularly because there is clear evidence that the Applicant did rent out properties including, sometimes, for long periods of time, and including renting properties that were later sold, occasionally after a long period of time in rental. However, I have concluded that, on balance, I am not persuaded by the Applicant's case. This is for the reasons which follow.
3. Firstly, I find there is sufficient evidence that the Applicant carried on a business. I reject suggestions that the Applicant is not carrying on a business because he did not establish a company, register a trade name, prepare a business plan, keep business-like accounts or meet state-based regulatory requirements for example.[158] None of that is determinative.[159] I am satisfied that he carried on a business that involved acquiring properties, sometimes subdivision and construction of properties (with all the associated activities, property design, seeking approvals, permits and the like), sometimes basic renovation, and rental (for most but not all properties). This happened more than 30 times (per the Appendix to this decision). I am satisfied that the Applicant did these activities with an intention or purpose to profit.[160]
4. The Applicant's evidence was that he was actively involved in looking for properties, building his portfolio, directly engaged in renovating/constructing properties, in obtaining approvals and permits, in hiring trades, planners, and real estate agencies, and in obtaining finance and advice.[161] I have concluded the Applicant was not a passive investor. The case law tells us that it matters what the Applicant did himself as part of these activities, and I have taken that into account.[162] Of course, those facts alone do not mean that the Applicant was in business as a property developer, but those facts do, in my assessment, reflect he is carrying on a business.[163] In particular, I do not accept the Applicant's submission in Closing that investment in residential property of itself means that the Applicant is not carrying on a business or enterprise.[164] The Applicant is more than a passive investor, and investment can be a business in any event.[165]
5. I record that I accept the Applicant's submission that a number of the features focussed upon by the Commissioner as hallmarks of being in the property development business could equally apply to an investment business.[166] The real issue is the scope of the Applicant's business[167] and whether sale forms part of the Applicant's business, not whether there is a business at all. I note that I have no bank or financing evidence before me as to what the Applicant said to financiers or his mortgage broker when seeking finance to acquire the properties in his portfolio. That may have been helpful evidence to the Tribunal.[168] I have reached conclusions from the material before me.
6. Secondly, I do not agree with the Applicant that considering the facts of all of his activities over a period of time is of limited assistance[169] when assessing whether sale is part of his residential property business. The question of whether there is a business is a question of fact.[170] That requires me to consider the overall facts to identify factors (such as regularity or repetition) which might be considered a feature of a business operation.[171] I am required when considering this issue of fact to make a "wide survey and exact scrutiny of the taxpayer's activities"[172] It is not necessary to examine each individual transaction to determine whether a business is carried on; it is an overall assessment of the Applicant's activities.[173] As I have noted above, the real question in this case is whether the sale of properties was part of the Applicant's business operation or an ordinary incident of it, and to determine that I must consider the business as a whole.[174]
7. When taking an overall view of the taxpayer's business the frequency or pattern of sales is a factor, although it is not conclusive. As was noted by the High Court in London Australia at [21]:

Therefore, once profits on sale are found not to fall within the first limb of s. 26 (a),the determinant is the carrying on of a business, not any associated business in a general sense, but the specific business of acquisition with a purpose or intention or expectation of resale and subsequent resale with consequent profit. Though frequent activity of acquisition and resale does not necessarily signify a business, it is evidence from which it may be inferred that there is a business. First, the frequency of the activity may itself tend to show that it is not of a private or of a casual nature, but that rather the person is carrying on the activity as a business operation. Secondly, the frequency of the activity may enable the inference to be drawn, if the fact be in dispute, that there was a purpose or intention or expectation, at the time of acquisition, of dealing at a profit if and when a suitable occasion should arise. Nevertheless, it must be made quite clear that frequency of an activity is not synonymous with business. There may be no business despite frequency and on the other hand there may be a business where the activity is an isolated one. Every business must begin with an initial transaction.

1. I conclude that when considering the Applicant's residential property business and whether sale is a part of that business, it is relevant for me to consider the fact that approximately 63% of the properties owned or part-owned by the Applicant (as set out in the Appendix to this decision) have been sold.[175] Of course, I do not ignore the fact that some sales were of properties held for many years which is a factor in the Applicant's favour, I merely note that was not always the case.[176]
2. I refer to the Applicant's Tax Agent's evidence before the Tribunal which was to the effect that the Commissioner applied a five year rule, and if the sale was of a property that had been held for five years or more than it must be a capital transaction, although that might have changed subsequently.[177] It is not clear as to the source of that suggestion but it may be related to the GST provisions relating to new residential premises.[178] I leave that issue there.
3. Thirdly, even if sale is not the main focus of the business, the case law is to the effect that where property is rented and then sold, sale can be concluded to form part of the business operations.[179] Sale can be part and parcel of business operations without needing to be a dominant purpose.[180] Of itself, renting out property may not be enough to conclude that a property is held on capital account where there is a sale of that property.[181] Rental is not a shield. Of course, it must be acknowledged that there is case law that goes the other way, and which suggests that even where there is a pattern of sale, sale can still merely comprise the realisation of capital assets.[182] It all depends upon the facts.
4. While on an entirely different scale to the Applicant in this case,[183] the Full Federal Court in CMI Services Pty Ltd v Federal Commissioner of Taxation [1990] FCA 188 ("CMI Services") provides some guidance. The Full Federal Court considered a question of whether the profits of sales of properties was income of a taxpayer that was carrying on the business of investing in real estate for the purpose of producing income from rental. The Court held at [54]-[55]:

54. The taxpayer was carrying on the business of investing for the purpose of producing income; but the facts disclose that the buying and selling of real estate was done as part of that business of the taxpayer of investing for the purpose of producing income. The profits which were realised on the sale of the Belmont properties were profits of the business and income within ordinary usages and concepts and so fell within s. 25.

55. Although property speculation was not present in the minds of the board of the taxpayer or the board of C.M.I., the taxpayer was plainly aware of the desirability of selling properties which were performing distinctly below expectations and were not likely to improve. The taxpayer recognised that as its portfolio grew there would be cases where the expectations were not recognised and it would be necessary to sell the properties. The taxpayer's activities involved the quite frequent sale of properties, mostly at a substantial profit, for the purpose of protecting the rental yield of its portfolio of real estate investment. The sale of the properties was a normal operation in the course of carrying on the business of investing for profit.[184] I respectfully agree with the primary Judge's conclusion that the purchases and sales of the Belmont properties were part of a pattern which involved "the expectation and intention at the time of purchase that the properties in question would be resold, in the ordinary course of (the taxpayer's) business, if their prospective yields, in relation to current market values, made it prudent to do so." (Emphasis added)

1. I have concluded that the evidence before the Tribunal supports the conclusion that the Applicant had sale of properties in mind as a purpose when he acquired them. This was not his main purpose, but this formed part of his business operation. This is because, as the Applicant noted in his evidence, he would sell where he needed to finance other properties (including private purchases) or where his debt gearing became problematic.[185] When selling to finance other properties, the Applicant was making a judgment that those new properties would be better for their yield or long term growth in value. That is analogous with CMI Services. He also used funds from selling properties for other reasons - e.g., to buy his family home.
2. The Applicant knew that sale was possible at the outset, and his actions demonstrated that he was prepared to sell. While he said he did not plan to sell properties[186] when he acquired them, he knew it might be prudent to sell those properties in future. He also knew he needed to profit from any such sales in order to repay debt and/or to finance other properties. I further note that there is evidence of sales of properties occurring without there being evidence that those properties were rented first.[187]
3. I have taken into account the Applicant's denial when cross-examined by Ms Paull on this point.[188] However, the Applicant's evidence stands for itself. He speaks of trying to hold properties for rental,[189] knowing there was the possibility he could not do so. I also comment that rental and sale are not necessarily inconsistent objectives and they work together in business operations as is noted in CMI Services and other cases.[190]
4. I also accept the broad thrust of the Commissioner's submission[191] that an inference can be drawn from the evidence before the Tribunal that, at least to some extent, the Applicant relied upon gains from the sale of properties.
5. It seems clear from the Applicant's evidence that the Applicant must, to some degree, have relied upon the profits of sale to maintain his lifestyle. The sale of 1A Acacia Court to fund the acquisition of 13 S Street is evidence of this.
6. In addition, there is no other income returned by the Applicant in his tax returns other than income from his residential properties, and the Applicant's Tax Agent gave evidence before the Tribunal that he was not aware of the Applicant making any income from any activity as a fruiterer and that this was not included in the Applicant's tax return.[192] The Applicant's evidence is that in relation to his rental properties he was "just covering [his] costs" and "did not make much money out of the properties".[193] If this is correct, he needed another source of funds. He also said he relied upon his "wages at the market"[194] as well as rent from other properties to meet costs from acquiring and holding properties. Yet there is no evidence before the Tribunal of any income from his work as a fruiterer which he could rely upon, and he suggests he was just covering his costs with rental income. It can be inferred from the evidence before the Tribunal that the occasional sale of the properties was important to the Applicant for that reason.
7. That inference leads to a further inevitable inference. The Applicant knew he may need to sell properties when he acquired them. Even if the Applicant was not desirous of sale, if it could be said that sale was an intended option, that does not remove sale from being part of the Applicant's business.[195]
8. However, I record that I do not draw other inferences which the Commissioner may have been inviting when cross-examining the Applicant on some matters. Facts such as that tax losses were made from rental operations, or that greater profit is made from selling property than holding it for rental are not facts in favour of sale being part of the Applicant's business.[196] I accept the Applicant's submissions[197] that are to the effect that matters such as that are merely common sense.
9. Nevertheless, the evidence I have highlighted above puts the Applicant in a different category to the mere realisation of assets cases. This is because of the Applicant's pattern of sale activity in the course of his business, because some properties have also been sold without evidence of rental activity first, his active involvement in his business, and because of the Applicant's acknowledged need to sell and to profit in order to invest in other properties and/or repay debt and the number of times he did that.
10. Fourthly, where the purpose for holding land changes and sale is undertaken, that can mean that profits from that sale are on revenue account and form part of the business operation. This was the position in Federal Commissioner of Taxation v Whitfords Beach Pty Ltd [1982] HCA 8; (1982) 150 CLR 355 ("Whitfords Beach"). The High Court held that profits from the sale of land initially acquired for a private purposes and then subsequent put toward a business of land development were income from carrying on a business. The purpose for the land changed over time.[198] Of course, I have found above that sale was contemplated at the outset for the properties as part of the Applicant's business in any event.

Should the sale of the Properties be treated as part of the Applicant's business?

1. In the case of the Properties, the timing of events is important:

(a) The Applicant and his former wife separated in 2014.[199] > > (b) He says that construction on the Properties commenced in early 2015.[200] > > (c) The Applicant says his former wife requested ownership of 21 A Street after their separation in 2014. He says that was in late 2015 or early 2016 and there was pressure about that.[201] The Applicant's memory of dates was vague at times (which is not criticised given these events were at least a decade ago), and it seems possible that this request was made in late 2014 or in early 2015. I proceed on the basis that it was late 2015. > > (d) In late 2015 or early 2016, the Applicant said he sought the rental appraisal of the Properties, which was obtained in March 2016.[202] At that time the Properties were not complete. > > (e) The Applicant acknowledged that he knew in February 2016 that he needed to ensure that 21 A Street was mortgage free and needed to find a way to achieve that.[203] In my assessment, the Applicant must have known this as soon as his former wife raised ownership of 21 A Street with him. In my assessment, he knew that one of the options to achieve that was the sale of the Properties. > > (f) He says he made the decision to sell the Properties in April 2016 after thinking about how he could repay the 21 A Street mortgage.[204] > > (g) He also says the Properties were completed in May 2016 and agreements for sale were entered into in June 2016 and July 2016 with settlement in August or September 2016,[205] although one of the Properties (at least) was settled later in October 2016.[206] > > (h) The Applicant says that the subdivision of the Properties was not complete until 24 August 2016.[207] The CoreLogic material supports this, as dates after August 2016 are recorded as the issue date for the Legal Description of each property.[208] The Landata reports also support this.[209]

2. It is reasonable to conclude that the Applicant knew of the possibility of sale of the Properties at the latest in late 2015, and potentially earlier, because he knew then of the need to repay the 21 A Street mortgage. At that point the Properties did not exist, there were no titles. The Applicant knew that selling the Properties was at least a real possibility prior to the rental appraisal being obtained. While the rental appraisal can be maintained to suggest a purpose of rental, in my view, merely obtaining a rental appraisal is not a significant and compelling piece of evidence in the Applicant's favour. It merely demonstrates the Applicant kept his options for the Properties alive. In my assessment, this was no different to what he did with other properties.
3. The Applicant's evidence is that the subdivision to complete the Properties did not occur until after the agreements for sale had been entered into. That is to say, rental could not have been the purpose when the Properties were formally established, and titles were issued as a result of the Applicant's activities; sale was. Of course, the case law is to the effect that I must consider the acquisition of the overall land at 1 D Court not each individual parcel subsequent to subdivision. But, these facts give rise to a Whitfords Beach analysis. In any event, I have concluded that sale was part and parcel of the Applicant's overall business operations when he acquired 1 D Court (which he later subdivided to form the Properties and 1B D Court).
4. Further, the fact that the marital split was a reason for the sale of the Properties does not immunise the Applicant from the profits of sale being taxable as profits made in the ordinary course of business. It is true that where the sale of properties is motivated by factors outside those in the context of the overall business that sale is less likely to be part of the business context.[210] However, in this case, the Applicant acknowledged that the sale of the Properties was motivated by the desire to make a profit[211] in order to repay debt and in order to transfer 21 A Street to his former wife. Sale in order to profit and repay debt is exactly what the Applicant had done a number of times in the past in the course of his business. That puts the sale of the Properties in no different context than the sales of other properties the Applicant owned, or part owned.[212] The fact that the debt repayment was needed because of a marital split does not, in my assessment, remove the sale of the Properties from being a sale in the ordinary course of business.

Were the profits from the sale of the Properties ordinary income as profits from an isolated transaction entered into with an intention or purpose to make a profit or gain?

1. As was noted by Gordon J in Visy Industries USA Pty Ltd v Commissioner of Taxation [2011] FCA 1065 ("Visy USA") at [78]-[79]:
   1. It is well established that a gain from a transaction will be assessable as ordinary income under s 6-5 of the 1997 Act if it was realised in an isolated business operation or commercial transaction in circumstances in which the taxpayer, at the time it engaged in the transaction, had the intention or purpose of making the gain: Westfield Ltd v Federal Commissioner of Taxation [1991] FCA 97; (1991) 28 FCR 333; Commissioner of Taxation v Cooling [1990] FCA 297; (1990) 22 FCR 42; Federal Commissioner of Taxation v Myer Emporium Ltd [1987] HCA 18; (1987) 163 CLR 199 and Federal Commissioner of Taxation v Whitford's Beach Pty Ltd [1982] HCA 8; (1982) 150 CLR 355.
   2. In order for an isolated transaction to constitute ordinary income, two criteria must be satisfied:
      1. the transaction must be a commercial transaction or an adventure in the nature of trade; and
      2. the transaction must be entered into for the purpose of making a profit.

Federal Commissioner of Taxation v Montgomery [1999] HCA 34; (1999) 198 CLR 639 at 672-677; Westfield at 342; Myer Emporium at 21.

1. I do not need to decide this point, due to my findings above. But I record that had I found that the sale of the Properties was otherwise than in the ordinary course of the Applicant's business or that sale was not part and parcel of the Applicant's business, I would have been required to determine whether the sale of the Properties was "a commercial transaction or an adventure in the nature of trade". While, in my view, the timing of the events relating to the Properties compels the conclusion that their sale was for the intention or purpose of making a profit,[213] the marital split motivating the transaction, and the evidence from and produced by the Applicant that the sales were undertaken quickly and potentially imprudently[214] would have led to careful consideration of the case law on this point.
2. For example, in Greig v Commissioner of Taxation [2020] FCAFC 25 the Full Federal Court found that a commercial transaction refers to the sort of thing a person in business does.[215]. Of course, the case law on this point does not suggest that I assess the commerciality of any particular transaction. The mere fact that a standard agreement for sale was entered into may be said to be enough. However, there is more to this issue in my view, and I would have particularly considered the marital split having a causal link to the sale of the Properties.
3. There is some case law that supports the view that a transaction being outside of the ordinary course of a business and having an overall private purpose may not shield that transaction from giving rise to ordinary income.[216] As Gordon J also noted in Visy USA at [81] a one-off transaction may still be a commercial transaction or adventure in the nature of trade, and it is not necessary that the sole purpose of an isolated transaction be to obtain a profit. That echoed Hill J's judgment in Westfield Ltd v Federal Commissioner of Taxation 91 ATC 4234, 4242 where it was noted that where a transaction is an ordinary incident of the taxpayer's business, albeit not its main business activity, that stamps the activity as having a profit-making purpose.
4. I also would have been required to balance other guidance from the case law. For instance, I agree with the comments made by Hill J in Westfield Ltd v Federal Commissioner of Taxation 91 ATC 4234, 4241-4242:

What was said in Myer has been applied in a number of cases in this court since Among them are Moana Sand Pty Limited v FC of T 88 ATC 4897, and FC of T v Cooling 90 ATC 4472; [1990] FCA 297; (1990) 22 FCR 42. It does not, however, follow from the judgment in Myer, or for that matter, from the judgments in any later cases, that every profit made by a taxpayer in the course of his business activity will be of an income nature. To so express the proposition is to express it too widely, and to eliminate the distinction between an income and a capital profit. [Emphasis added]

1. I do not reach a conclusion on this point because I do not need to do so, due to my findings above.

Income tax - Were the Properties trading stock?

2. Subsection 70-10(1) of the ITAA 1997 provides that:

(1) Trading stock includes:

(a) Anything produced, manufactured or acquired that is held for purposes of manufacture, sale or exchange in the ordinary course of a business; and

(b) Live stock.

1. It is clear that land can comprise trading stock.[217] As I have found that property sale was part of the Applicant's ordinary business, in principle, the Properties must form part of the Applicant's trading stock.
2. The Tribunal notes that the Commissioner says in its objection decision that the timing for assessing whether the Properties are trading stock is "upon the transfer of [the] title[s]" of the Properties to the Applicant and relies upon Transaction Determination TD 92/124 Income tax: property development: in what circumstances is land treated as 'trading stock'? ("TD 92/124") as support of that proposition.[218] The Tribunal cannot see how TD 92/124 provides that guidance. The Tribunal understands from the context of the objection decision that the Commissioner has raised the trading stock issue as an alternative due to the potential for the Tribunal to find that while the Applicant's business involved sale, the sale of the Properties was outside of the ordinary course of the Applicant's business. This might explain the comment in the objection decision. If I had determined that the sale of the Properties was outside of the ordinary course of the Applicant's business, section 70-90 of the ITAA would mean that the market value of the Properties on the day of disposal comprises assessable income. Obviously, due to my holdings above that is not the case, and section 70-90 does not apply, as I have found above that the sale of the Properties was in the ordinary course of the Applicant's business.
3. There is a question about what weight is required for a purpose to meet the words "that is held for purposes of ... sale .... in the ordinary course of a business" in the definition of trading stock. In R&D Holdings Ltd v Deputy Federal Commissioner of Taxation [2006] FCA 981, the Federal Court noted that there is no requirement that sale be the sole or dominant purpose in order for the trading stock definition to be satisfied.[219]
4. There is also a case ARM Constructions Pty Ltd v Federal Commissioner of Taxation (1987) 19 ATR 337 ("ARM Constructions") which has some similarities to the present case. There it was held (at 355) that a substantial purpose was required before units constructed on subdivided land could be trading stock. It was held that property sales to reduce bank indebtedness in the context of a rental operation was not of sufficient significance for those properties to be held for the purposes of sale and for those properties to meet the definition of trading stock. This case provides potential support to the Applicant's case. However, in my view, ARM Constructions revolves around the agreements entered into by the taxpayer, the witness evidence, and the view that the taxpayer at issue was merely a vehicle for holding the land and building the units in question, and not for any disposal of those properties. There was also no overall business history that could be considered in ARM Constructions while there is in the case of the Applicant. In any event, while sale does not appear to be the dominant purpose in the Applicant's case, sale was, in my view, a substantial purpose held at the time the properties were acquired.

GST - were the sale of the Properties in the course or furtherance of the Applicant's enterprise?

1. As a consequence of my holdings above, the sale of the Properties is in the course of the Applicant's business, and in the course of the Applicant's enterprise for GST purposes.[220]
2. However, as is noted above, the Commissioner's GST assessment is excessive as it ought not have included profits from the sale of 1E D Court, and the Commissioner is time-barred from including those profits in the correct BAS period.
3. The sale of 1D D Court and whether it was appropriately assessed in the 30 September 2016 BAS period is remitted to the Commissioner for further consideration. This is for the reasons specified at paragraphs ‎60(b) to ‎60(f) above. The evidence before the Tribunal is insufficient for it to determine whether the Commissioner is time-barred from assessing that transaction as well. The Tribunal expects that the Applicant will be given an opportunity to put submissions to the Commissioner on that issue if he wishes to do so.
4. The Commissioner's objection decision in relation to the GST assessment at issue is otherwise affirmed.

...............[sgd]...........................................

Australian Taxation Office, Litigation and Legal Services

List of the Applicant's properties[221]

10 February 2017[227] (may be when the Applicant transferred the property to his former wife)

24 July 2013[229] or 31 May 2013[230]

Rental summary 5 April 2013 - 8 July 2013 - T62-280

18 December 2013[232] or 12 March 2014[233] or 24 March 2014[234]

Agreement for sale - T62-296; the sale is referred to in the tax return at T68-371.

Rental summary 28 April 2013-28 February 2014 T62-238

4 October 2014[236] or 17 November 2014[237] or 26 November 2014[238]

Rental summary 15 March 2013- 8 January 2015 T62-241

23 December 2010[240] or 17 May 2011[241] or 8 June 2011[242]

22 October 2014[244] or 17 December 2014[245] or 8 January 2015[246]

Rental summary 24 January 2011- 12 January 2015 - T62-275 to T62-278

30 October 2014[248] or 11 December 2014[249]

Rental summary 3 February 2012 - 8 December 2014 T62-244

24 April 2007[251] or 11 October 2007[252]

Rental summary 7 January 2011- 20 December 2017 - T62-249 to T62-267

25 June 2009[254] or 11 December 2009[255]

Rental summary 7 January 2011 and following T62-249

25 September 2011[258] or 27 January 2012[259]

31 March 2017[260] or 19 February 2017[261]

Rental summary 3 February 2012 - 30 June 2015 T62-282 to T62-286

2015 Depreciation Worksheet[262] - T68-386

1/9 Bishop Street[263] / Unit 9A Bishop Street[264]

18 November 2009[265] or 20 June 2013[266]

17 September 2014[267] or 25 November 2014[268] or 8 December 2014[269]

Rental summary 15 December 2011 - 12 January 2015 T62-271 to T62-273

2014 Rental Property Schedule- T68-354; T68-358[270]

20 Clarendon Street / 20 Clarendon Parade[274]

2014 Rental Property Summary[276] - T68-366

Capital gains tax worksheet for 2014 - T62-223, T68-369

Rental summary 21 March 2011, 27 May 2011 and 3 June 2011 - T62-249, T62-250

2012[279] or 13 March 2012[280] or 22 June 2012 [281]

Subdivided to become four properties 1B, 1C, 1D and 1E D Court (so not considered further)

3 February 2018[283] or April 2018[284] or 1 June 2018[285]

Rental summary June 2016-October 2016 T62-236, 8 December 2017 - 25 January 2018 T62-237

Construction completed "around May 2016"[287]

7 July 2016/ 8 September 2016[288] or 15 September 2016[289]

8 September 2016[291] or 12 October 2016[292]

11 June 2016[295] or 8 September 2016[296] or 21 October 2016[297]

6 September 2013[299] or 14 January 2014[300]

Rental summary 30 January 2015 - 4 October 2016 T62-269

19 June 2004[301] or 15 October 2004[302]

17 February 2014[309] or 15 April 2014[310] or 2 June 2014[311]

Capital gains worksheet for 2014 - T62-228; T68-369, T33-148

Rental summary 1 February 2011 to 4 March 2014 T62-249 to T69-258

14 August 2008[317] or 15 October 2008[318] or 17 November 2008[319]

75 Roberts Street[323]/1/75 Roberts Street

[1] Respondent's Outline of Submissions dated 16 October 2025 ("Commissioner's Outline") [3.1] - [3.2]. Applicant's Outline [2]-[3], [30].

[2] Commissioner's Outline [3.3]; Applicant's Outline [2]-[3].

[4] See paragraph ‎60 below.

[5] Applicant's Witness Statement dated 29 September 2025 ("Applicant's Witness Statement") [4]-[5].

[6] Applicant's Witness Statement [4] suggests that his day to day activities as a fruiterer may have ceased in 2015.

[7] This might be part of the Applicant's aversion to saying he was a property developer (described below), with the perceived need to suggest his main occupation was as a fruiterer.

[8] Applicant's Witness Statement [8], [10], [11].

[9] Applicant's Witness Statement [8].

[10] Applicant's Witness Statement [8], [29].

[11] Applicant's Draft Witness Statement dated 19 May 2025 ("Applicant's Draft Statement") [1]. It is noted that the Applicant sought that the Tribunal determine it would not rely upon the Applicant's Draft Statement nor a draft Statement of Facts, Issues and Contentions, but the Commissioner wished them both to be considered. The Applicant's Draft Statement is on the Tribunal Book, was filed by the Applicant with the Tribunal separately, and so it has been considered by the Tribunal. It being in draft and it being unsigned has been taken into account when assessing its weight.

[12] Applicant's Draft Statement [7].

[13] Applicant's Statement of Facts, Issues and Contentions dated 19 May 2025 ("Applicant's SFIC") [20].

[14] T81-582, referred to in the Commissioner's Outline [26].

[15] The flood is referred to in the Applicant's Witness Statement [58]-[59].

[16] Witness Statement of the Applicant's Tax Agent dated 29 September 2025 ("Tax Agent's Witness Statement") [18].

[17] As might be inferred from the Applicant's Outline [24]-[25], [28]-[29].

[19] Paragraph ‎15 above.

[20] Applicant's Draft Statement [10].

[23] Tax Agent's Witness Statement [18].

[24] Microsoft Teams Transcript 6 November 2025 51.37-52.01.

[25] Tax Agent's Witness Statement [12], [13], [14], [15], [18].

[26] Tax Agent's Witness Statement [20].

[27] T85. Paragraph 14ZZK(a) of the TAA.

[28] Objection dated 22 April 2022 (income tax), and accompanying letter dated 21 April 2022 - T85-591 "The audit conducted by the Australian Taxation Office centred around the sale of a number of units and homes to determine whether the sales would be treated on revenue account or capital account. Once the audit was completed the verdict was that of revenue which in turn resulted in a significant GST and income tax bill. We wish these sales to be treated as capital and as such not liable to GST." Also see the accompanying letter at T84 which also refers to "a number of units and homes" without specification although it focuses on the reason for sale relating to the Applicant's marital dissolution and encloses T83 the income tax assessment for the 2017 year so can only relate to the Properties. Objection dated 27 October 2018 (GST) T77-508 "There were four properties sold in the 2017 year which were disposed of as a result of a property settlement due to the breakdown of the marriage between our client and his wife. Our client wished to settle a sum of money on his wife without going through a lengthy and costly court procedure. To this end, he disposed of the four properties. The four properties are 1 C, 1 D, 1 E and 1 B [D Court]. Under these circumstances our client does not believe that these properties were sold with the intention of carrying on a commercial transaction."

[29] See the Appendix to this decision.

[30] ABN Lookup https://abr.business.gov.au/ABN/View?abn=93620638928.

[32] Applicant's Witness Statement [14]-[15]. Applicant's Outline [5]. Tax Agent's Witness Statement [11], [12].

[33] Where relevant, this obviously also includes sale by any co-owners.

[36] As highlighted in Ms Paull's Opening Submissions before the Tribunal: Microsoft Teams Transcript 5 November 2025, 35.32.

[37] Applicant's Witness Statement [58]-[59].

[38] 5 Acacia Court, 75 Roberts Street and 27 Freame Street.

[39] Leaving out 13 S Street as there is no evidence on the Tribunal Book of its sale and it is the family home as noted below.

[40] Commissioner's Outline [27.4] which refers to ST7-797. Applicant's Witness Statement [18]. See paragraph ‎31 below.

[41] See paragraphs ‎41 and ‎43 below.

[42] For instance, 22 Margot Street is not noted by the Commissioner.

[43] Ignoring 1 D Court as it ceased to exist when subdivided.

[44] For instance, 3/1C Angliss Street. This is a factor in favour of the Applicant's case.

[46] That is, for the periods up to and including the Relevant Periods.

[47] Applicant's Witness Statement [7]. Applicant's Draft Statement [1]. It is noted that Applicant's Draft Statement [1] contains a typographical error referring to "1 July 2023" as the commencement date for his property activities, and the Tribunal has corrected it in its reference above, on the basis that it was intended to read "1 July 2003".

[48] For instance, T64-303, 7 Acacia Court Agreement for sale is signed by the Applicant and his former wife.

[49] For instance, T38-163, 5 Acacia Court was owned by the Applicant and his former wife as well as the Applicant's brother and his wife.

[50] Applicant's Witness Statement [20]-[33].

[51] TB565. Applicant's Outline [7]-[9].

[52] Applicant's Witness Statement [32].

[54] See paragraphs ‎60 to ‎61 below.

[55] Respondent's Statement of Facts, Issues and Contentions dated 10 June 2025 ("Commissioner's SFIC") (TB12) [7]. Given to some extent the nature of the business the Applicant is engaged in is relevant when considering his property activities, it would have been expected that the Commissioner would have assisted the Tribunal by setting out the full facts surrounding the Applicant's property activities. Of course, the Applicant could also have provided assistance. Instead, it has been left to the Tribunal to use its scarce resources to do this work.

[56] There is no obvious evidence of sale of these properties on the Tribunal Book.

[57] See footnote 228 below for an explanation of why this reference is to "Street/Parade".

[58] T62-237, T62-269; T62-282. It is noted that some of these properties may be in the name of the Applicant's brother rather than the Applicant (for instance, T62-244 shows rental paid to the Applicant's brother only).

[59] For instance, ANGL1C/2, ANGL1C/3 (assumed to relate to properties in Angliss Street), FINL35A noted at T62-250 (assumed to relate to Finlay Street) and ROBE39 and ROB39A (assumed to relate to properties in Roberts Street) noted at T62-263 to T62-264.

[60] See paragraph ‎23 above, this may be due to a lack of records due to a flooding event.

[61] Applicant's Draft Statement [17].

[62] Applicant's Witness Statement [16]. Applicant's Outline [27].

[63] Applicant's Witness Statement [18], [35]. Applicant's Outline [5].

[64] Applicant's Witness Statement [16].

[65] Applicant's SFIC [16], [20], [28]. Applicant's Draft Statement [4]-[5], [7]. Applicant's Outline [56].

[66] Applicant's Draft Statement [5]. Applicant's Witness Statement [25]. Applicant's SFIC [24], [28].

[68] Microsoft Teams Transcript 5 November 2025, 1.27.52 - 1.28.02. Also see 59.21, 1.25.27 - 1.25.46, 1.45.41-1.45.55.

[69] See paragraph ‎12.

[70] Applicant's Witness Statement [17]. Applicant's Outline [5], [24]. Applicant's Draft Statement [5], [7].

[71] Applicant's Draft Statement [11].

[72] Puzey v Commissioner of Taxation [2003] FCAFC 197 [48]. Skourmallas v Federal Commissioner of Taxation [2019] AATA 5535 [55] and at [58] "It would be a mistake to give significant weight to the absence of features of traditional businesses ... that are not necessary or appropriate for an entirely different business model or stage in the development of an alleged business."

[73] Applicant's SFIC [11]. This is only (currently) relevant in the Australian Capital Territory. The Applicant may have intended to refer to a builder's licence or Building Practitioner Registration https://www.vba.vic.gov.au/registration-and-licensing/building-practitioner-registration.

[74] Applicant's SFIC [12]. Tax Agent's Witness Statement [15].

[75] For example, Commissioner of Taxation v Stone [2005] HCA 21.

[76] Applicant's SFIC [13]. Letter dated 6 December 2024 from Hocking Stuart which is annexed to the Applicant's Witness Statement as JD3 (although unhelpfully it is not on the Tribunal Book, as was noted by Mr Spierings) and which describes the Applicant as in "a frantic and distraught state of mind" when he listed the Properties for sale.

[77] Applicant's Witness Statement [36]. I note I prefer the Applicant's Witness Statement to what on the Tribunal Book is indexed as the Applicant's Outline of Submissions dated 6 December 2024 ("Applicant's 2024 Outline") on the Tribunal Book at TB 3. The dates on which various events happen are inconsistent at times - for example, the Applicant's 2024 Outline refers to the marital separation as being 2016 [4]. The Applicant's Witness Statement is consistent with other matters before the Tribunal including the Applicant's Outline and Mr Spierings' submissions.

[78] Applicant's Outline [10]. Applicant's Witness Statement [36].

[79] Applicant's Witness Statement [40], [43].

[80] Undated document entitled "ATO v [Applicant]" TB3 ("TB3") [9], T84-587.

[81] Applicant's Witness Statement [37], [40]. Applicant's Outline [10]-[15].

[82] See paragraph ‎31 above.

[83] Applicant's Witness Statement [119].

[84] Applicant's Witness Statement [8]-[9].

[85] Applicant's Witness Statement [28].

[86] Applicant's Witness Statement [30]. The Hocking Stuart document is not on the Tribunal Book and is annexed to the Applicant's Witness Statement as was noted by Mr Spierings at the hearing. It is accepted in evidence.

[87] Applicant's Witness Statement [41]-[42].

[88] Applicant's Witness Statement [41].

[89] Applicant's Witness Statement [43]-[44].

[90] Applicant's SFIC [14], [25]. Applicant's Witness Statement [45]-[47]. This is also evidenced by JD4 which was attached to the Applicant's Witness Statement, but which is not included (and should have been) on the Tribunal Book.

[91] Applicant's Witness Statement [45].

[92] Applicant's Witness Statement [53]-[54].

[93] Applicant's Witness Statement [55].

[94] Part VIIIA, Part VIIIAB and sections 90G and 90UJ of the Family Law Act 1975 (Cth). Agreements reached need to be expressed to be made under provisions in the Family Law Act 1975 (Cth) - see, for instance, paragraph 90C(1)(b) and paragraph 90D(1)(b) of that Act.

[95] Applicant's Witness Statement [56]-[57]. ST2.

[102] The Tribunal accepts this note and the Commissioner's other file notes comprise business records.

[107] This is not correct as for 1E D Court the September 2016 BAS period is the wrong BAS period (and this may also be true for 1D D Court). This is for the reasons outlined below at paragraph ‎60.

[110] T78-513 and Applicant's Witness Statement [58]-[59].

[112] T67. Emailed on 23 May 2018. T68 contains the amended income tax returns for 2014-2016.

[113] For example, T68-333, T68,335, T68-336.

[114] See paragraph ‎15 above.

[116] Original BAS for the September 2016 BAS period is at T7.

[128] T92. It is noted that the document at T2 is indexed on the T Documents as being dated 8 July 2022, but it is the 2 May 2023 document.

[132] See paragraph ‎60 and paragraph ‎61 below.

[133] See paragraph ‎59(b) below.

[134] On 14 October 2024, the Administrative Appeals Tribunal became the Administrative Review Tribunal. Under the transitional provisions in the Administrative Review Tribunal (Consequential and Transitional Provisions No. 1) Act 2024 (Cth) proceedings that were not finalised before 14 October 2024 are continued and finalised by the Administrative Review Tribunal. Anything done in relation to any such proceeding before 14 October 2024 is taken to have been done by the Administrative Review Tribunal.

[137] An Application for Review is required within 60 days of the objection decision: subsection 14ZZC(1) of the TAA.

[138] Section 19 of the Administrative Review Tribunal Act 2024 (Cth) enables the Tribunal to grant further time.

[139] T75-482, T76-492. The page references are to the numbered references on the base of the document on the Tribunal Book which will be the T document page numbers. The Tribunal Book is not page numbered and the T documents are simply dumped in a group on the Tribunal Book, This means the referenced page numbers have no correlation with the actual page on the Tribunal Book_._

[140] Commissioner's SFIC [64]-[65].

[141] Broadly, in accordance with Division 99 of A New Tax System (Goods and Services Tax) Act 1999 (Cth) ("GST Act") the settlement date in a contract for the sale of property is the time of supply and GST Ruling GSTR 2000/28 GST: Attributing GST payable or an input tax credit arising from a sale of land under a standard land contract ("GSTR 2000/28") [25]. The Applicant entered into agreements for sale of the residential units on 11 June 2016 (1C, 1E) and 7 July 2016 (1D), with relevant settlement dates outlined in those agreements as 11 August 2016 for 1D D Court, and 8 September 2016 (1C and 1E D Court). 1E D Court was actually settled on 21 October 2016 and not on 8 September 2016 as outlined in the agreement for sale, so the wrong BAS period was assessed. See T79-515, T79-518, T79-521 and T52 -196. The Commissioner is now well out of time to assess the correct BAS period. It is noted that the Core Logic material T26-114 refers to 1E D Court as having a settlement date of 8 September 2016 (the agreement date) but the Landata material gives a registration date of 21 October 2016.

[143] T25 -111 is CoreLogic material which refers to the sale date as 12 October 2016. Those dates would mean that the Commissioner is out of time in relation to 1D D Court. An email from Commissioner to the Applicant's Tax Agent dated 2 March 2018 T63 -289 refers to 11 November as the relevant date.

[144] Applicant's Witness Statement [33]. Footnotes 208 and 209 below for document references which should be referred to in order to check this point.

[145] See footnote 141 above.

[149] The CoreLogic date for 1E D Court is also different to the Landata report but it is the settlement date in the agreement for sale (see footnote 141 above). The 12 October 2026 date is an entirely different date.

[150] Applicant's Outline of Submissions dated 29 September 2025 ("Applicant's Outline") [36].

[151] California Copper Syndicate Ltd v Harris (1904) 5 TC 159, 166 The question is whether "what is done is not merely a realisation or change of investment, but an act done in what is truly the carrying on, or carrying out, of a business". ... "What is the line which separates the two classes of cases may be difficult to define, and each case must be considered according to its facts; the question to be determined being - Is the sum of gain that has been made a mere enhancement of value by realising a security, or is it a gain made in an operation of business in carrying out a scheme for profit-making?". An individual can be seen to be carrying on a business: Commissioner of Taxation v Stone [2005] HCA 21 [16].

[152] Federal Commissioner of Taxation v Myer Emporium Ltd [1987] HCA 18; (1987) 163 CLR 199, 209-210.

[153] Applicant's Outline [3], [5], [20]-[30].

[154] Those features are regularity and repetition (such as buying and selling houses, refinancing), intention to profit (from rental investment), involvement in development or renovation (to enhance potential rental), obtaining finance, and operating a business-like operation. FFYS and Commissioner of Taxation [2021] AATA 4844 sets out some of the indicia of a business at [39] and following.

[155] See for instance 3/1C Angliss Street, which appears to have been held for 11 years prior to sale (although of course the construction period may be a part of that).

[157] Commissioner's Outline [3], [15]-[36].

[158] Applicant's Outline [24]. Microsoft Teams Transcript 6 November 2025 44.42 - 45.17.

[159] Puzey v Commissioner of Taxation [2003] FCAFC 197 [48]; Skourmallas v Federal Commissioner of Taxation [2019] AATA 5535 [55]. Were any of those factors determinative, it would be rather easy to demonstrate there was no business carried on.

[160] John v Federal Commissioner of Taxation (1989) 166 CLR 417, [24]-[25]. Hope v Bathurst City Council [1980] HCA 16, [8]-[9]. Taxation Ruling TR 97/11 Income tax: Am I carrying on a business of primary production? [47] and following; Glennan v Federal Commissioner of Taxation [1999] FCA 297, [69] "This was not, for example, a leisure activity or hobby, undertaken with little or no thought of financial gain."

[161] Of course, any one of these matters is not determinative: Statham v Federal Commissioner of Taxation [1988] FCA 463 [40].

[162] Statham v Federal Commissioner of Taxation [1988] FCA 463 [40], Stevenson v Commissioner of Taxation [1991] FCA 284 [5]; Morton v Federal Commissioner of Taxation [2025] FCA 336, [153].

[163]Inglis v Federal Commissioner of Taxation [1979] FCA 106 [13]; Spassked v Commissioner of Taxation [2003] FCAFC 282 [64]; Federal Commissioner of Taxation v St Hubert's Island Pty Ltd (in liq) [1978] HCA 10; (1978) 138 CLR 210, 230.

[164] Microsoft Teams Transcript 6 November 2025, 10.44 "I accept that the words in the form of a business encompasses something more than a business ordinarily understood, but they cannot in my submission go so far as meaning investment in residential property on capital account."

[165] London Australia Investment Co Ltd v Federal Commissioner of Taxation [1977] HCA 50 ("London Australia"); Unitraders Investments Pty Ltd v Federal Commissioner of Taxation; GRE Insurance v Federal Commissioner of Taxation 91 ATC 4454, 4468-4471.

[166] Applicant's Outline [28], [29]. Microsoft Teams Transcript 6 November 2025 26.44, 40.46, 41.00 - 44.25.

[167] Spriggs v Commissioner of Taxation [2009] HCA 22, [60].

[168] In McCurry v Federal Commissioner of Taxation 98 ATC 4487 financing properties and the need to repay that financing was a factor taken into account by the Federal Court.

[170] Hope v Bathurst City Council [1980] HCA 16 [9]-[18]. Commissioner of Taxation v Stone [2005] HCA 21.

[171] Ferguson v Federal Commissioner of Taxation [1979] FCA 29 [15]-[16].

[172] Western Gold Mines NL v Commissioner of Taxation (WA) (1938) CLR 729, 740.

[173] Crow v Federal Commissioner of Taxation [1988] FCA 290, [29].

[174] Memorex Pty Ltd v Federal Commissioner of Taxation [1987] FCA 440 [21]-[24]. Investment Merchant Finance Corporation Ltd v Federal Commissioner of Taxation [1971] HCA 35; (1971) 125 CLR 249, 255.

[175] See paragraph ‎25(e) above.

[176] Compare for instance 3/1C Angliss Street to 22 Margot Street or to the Properties at issue in this case.

[177] Microsoft Teams Transcript 6 November 2025, 51.23, 56.47, 57.12 for example.

[178] Subsection 40-75(2) and section 40-35 of the GST Act.

[179] Memorex Pty Ltd v Federal Commissioner of Taxation [1987] FCA 440 [7], [12], [15]. Westfield Ltd v Federal Commissioner of Taxation 91 ATC 4234, at 4242

[180] In Moana Sand Pty Ltd v Federal Commissioner of Taxation (1988) 19 ATR 1853, 1857 and 1861 the Full Federal Court held that the profits from the sale of land were ordinary income despite the taxpayer's dominant purpose being to work and sell surplus sand on the land, as sale was contemplated at the outset.

[181] Gloucester Railway Carriage Co Ltd v Commissioners of Inland Revenue [1925] UKHL TC_12_720; (1925) AC 469, 748 per Lord Dunedin "The Commissioners have found - and I think it is the fact - that there was here one business. A wagon is none the less sold as an incident of the business of buying and selling because in the meantime before sold it has been utilised by being hired out. There is no similarity whatever between these wagons and plant in the proper sense, e.g., machinery, or between them and investments, the sale of which plant or investments at a price greater than that at which they had been acquired would be a capital increment and not an item of income." Also see Ducker v Rees Roturbo Development Syndicate Ltd [1928] AC 132.

[182] For instance, The Hudson's Bay Co Ltd v Stevens (1909) 5 TC 424 at 436 per Cozens-Hardy MR "The real question is whether this money can be regarded as profits or gains derived by the Company from carrying on a trade or business. In my opinion it cannot. The Company are doing no more than an ordinary landowner does who is minded to sell from time to time, as purchasers offer, portions suitable for building of an estate which has devolved upon him from his ancestors. I am unable to attach any weight to the circumstance that large sales are made every year. This is not a case where land is from time to time purchased with a view to resale; the Company are only getting rid by sale as fast as they reasonably can of land which they acquired as part of a consideration for the surrender of their Charter." Also see the comments from London Australia cited at paragraph ‎70 above.

[183] Small scale operations can still comprise a business or an enterprise: Thomas v Federal Commissioner of Taxation (1972) 3 ATR 165; Skourmallas v Federal Commissioner of Taxation [2019] AATA 5535; Miscellaneous Taxation Ruling MT 2006/1 The New Tax System: the meaning of entity carrying on an enterprise for the purposes of entitlement to an Australian Business Number [180]-[186].

[184] There is some criticism of this holding in Westfield Ltd v Federal Commissioner of Taxation 91 ATC 4234, at 4242-4243.

[185] Applicant's Witness Statement [16], [18].

[186] Applicant's Witness Statement [22].

[188] See paragraph ‎35 above.

[189] Applicant's Witness Statement [16].

[190] McCurry v Federal Commissioner of Taxation 98 ATC 4487, 4493. It should be noted that the taxpayers in McCurry were not found to be carrying on a business but rather to have a purpose of sale. I have found otherwise for the Applicant in this case. R&D Holdings Ltd v Deputy Federal Commissioner of Taxation [2006] FCA 981 [50].

[192] Microsoft Teams Transcript 6 November 2025, 37.43 - 43.01.

[193] Applicant's Witness Statement [16].

[194] Applicant's Witness Statement [22].

[195] McCurry v Federal Commissioner of Taxation 98 ATC 4487, 4493. Ducker v Rees Roturbo Development Syndicate Ltd [1928] AC 132, 398.

[196] Microsoft Teams Transcript 5 November 2025 43.54 - 48.06.

[197] Microsoft Teams Transcript 6 November 2025, 30.43 - 31.17.

[198] Whitfords Beach per Gibbs CJ [12], [14], per Mason J [37]-[38], [40], per Murphy J [8], [20], [25].

[199] Applicant's Witness Statement [36].

[200] Applicant's Witness Statement [28].

[201] Applicant's Witness Statement [41]-[42].

[202] Applicant's Witness Statement [30]-[31].

[203] Applicant's Witness Statement [43]-[44]

[204] Applicant's Witness Statement [44] -[47].

[205] Applicant's Witness Statement [32], [53].

[206] See paragraph ‎60 above.

[207] Applicant's Witness Statement [33].

[208] 1C D Court T24-107; 1D D Court T25-112, 1E D Court T26-115.

[210] Crow v Federal Commissioner of Taxation [1988] FCA 290, [28].

[211] Applicant's Witness Statement [45], [47], [54].

[212] Crow v Federal Commissioner of Taxation [1988] FCA 290, [28].

[213] See paragraph ‎88 above. Also see Visy Packaging Holdings Pty Ltd v Commissioner of Taxation [2012] FCA 1195; (2012) 91 ATR 810 at [185]- [186] where it is confirmed that it is not necessary for there to be a sole or dominant purpose of profit. Also noting that the time period at issue is when the transactions to sell the Properties were entered into: Westfield Ltd v Federal Commissioner of Taxation 91 ATC 4234, at 4241.

[214] Applicant's Witness Statement [47], Letter dated 6 December 2024 from Hocking Stuart which is annexed to the Applicant's Witness Statement as JD3 (although unhelpfully it is not on the Tribunal Book). These issues are canvassed in Bowerman v Commissioner of Taxation [2023] AATA 3547 at [76] and following.

[215] This might merely mean that the type of agreement for sale is an ordinary transaction.

[216] Commissioner of Taxation v Haass [1999] FCA 1088, [13]-[17].

[217] Federal Commissioner of Taxation v St Hubert's Island Pty Ltd (in liq) [1978] HCA 10; (1978) 138 CLR 210, 216-217. Taxation Determination TD 92/124 Income tax: property development: in what circumstances is land treated as 'trading stock'?

[219] R&D Holdings Ltd v Deputy Federal Commissioner of Taxation [2006] FCA 981 [50] was not challenged on appeal in Federal Commissioner of Taxation v R&D Holdings Pty Ltd [2007] FCAFC 107, [75].

[220] Pursuant to section 9-5 of the GST Act. In any event, the concept of an enterprise in section 9-20 of the GST Act is wider than that of a business: VZFC and Commissioner of Taxation [2025] ARTA 2013 [10]; Nerang Subdivision Pty Ltd v Hudson [2023] QSC 268 [31], [34]; Federal Commissioner of Taxation v Swansea Services Pty Ltd [2009] FCA 402 [64]-[65].

[221] (a) Any row on this table that is in italics and shaded is a property in which the Applicant does not appear to have an ownership interest on the face of the material on the Tribunal Book, and so this property has been disregarded by the Tribunal. (b) Where a property has "- " before its address in this table, it is understood to have resulted from a subdivision of another property, which if known, is noted in a footnote. (c) Where a cell is unfilled there is nothing obvious on the Tribunal Book that identifies a date or relevant material.