he majority of the Full Federal Court (FFC) focused on several factors in their reasoning, which the High Court (HC) disagreed with.
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Source of Funds: The FFC saw significance in the fact that the Trust planned to use gaming income to buy the gaming machines (GMEs). However, the HC disagreed, stating that what matters is the purpose of the purchase, not where the money comes from.
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Value of Income Stream: The FFC thought it mattered that the Trust calculated the maximum bid for the GMEs based on projected returns. But the HC said this was a common-sense approach and didn't determine whether the purchase was capital or revenue.
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Integrated Business: The FFC emphasized that the purchase was linked to the hotel business. However, the HC said what's important is whether the purchase gives the business a lasting advantage, which the GMEs did.
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Lack of Choice: The FFC stressed that the impending changes in the law left the Trust with no option but to buy the GMEs. The HC disagreed, saying whether an asset is capital or revenue isn't decided by whether there's a need to buy it, but by whether it's part of the business's long-term structure.
In summary, the HC concluded that the purchase of the GMEs was a capital asset, providing enduring value to the Trust's business.
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