The Federal Court (FC) acknowledged that understanding legislative provisions isn't always straightforward because words can have different meanings depending on the context. They mentioned that phrases like these are often open to interpretation and can take their meaning from the situation they're used in.
They agreed that when interpreting laws, it's important to consider things like the history of the law and any other relevant information outside of the law itself. However, they found that these extra materials didn't give much help in understanding the definition of "active asset."
The FC then focused on whether the land in question was used in the course of carrying out specific types of businesses, like building, bricklaying, and paving. They broke this down into two questions:
- Was the land actually used?
- If it was used, was it used as part of the business activities?
Regarding the first question, the FC referred to a previous case called the 'Rus' case, where it was decided that land couldn't be considered "used" for business if less than 10% of it was used for business-related purposes.
In the 'Rus' case, a large portion of the land was vacant, and only a small part was used for business storage. Even though the business activities were similar to those in the current case (construction work), the court decided that using only a small part of the land didn't qualify it as an active asset.
The FC also looked back at a decision from the 1956 High Court, which stated that if land is meant for a specific purpose, it's enough if the entire land is devoted to that purpose, even if not every part of it is actively used.
Based on this, the FC concluded that to claim a CGT concession for selling an asset, the whole or most of the asset should have been used for business purposes. So, even though all of Mr. Eichmann's land was used for the connected trust's business, because only a small part of it was actively used, it couldn't qualify for the concession. This aligns with the decision made in the 'Rus' case.
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