Understanding Business Use of Assets and Active Asset Status
The Federal Court (FC) examined whether land used by the Eichmann Family Trust was "in the course of" carrying on their building, bricklaying, and paving business. Here's a simplified breakdown of the key points:
Meaning of "In the Course of":
- Merely being related to the business or having some connection isn't enough.
- The use of the asset must directly contribute to the day-to-day activities aimed at generating income.
FC's Conclusion:
- The use of the land for storage didn't directly contribute to the main business activities of providing construction services.
- While the land was used for storing materials, this wasn't an integral part of the construction business itself.
Active Asset Status:
- The FC ruled that the land wasn't actively used in the business, meaning the owners weren't eligible for certain tax benefits related to capital gains.
In essence, the court emphasized that for an asset to be considered "in the course of" a business, its use must directly support the day-to-day income-generating activities of that business.
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