The Business School BULAW 5916 TAXATION – Law & Practice Assignment Semester XXXXXXXXXX INSTRUCTIONS See the Instructions and Assessment Criteria in the Course Description and make sure you follow...

The Business School
BULAW 5916 TAXATION – Law &
Practice
Assignment
Semester 2 - 2013
PART A
FCT v Dixon (1952) 86 CLR 540
Facts of the Case:
The case stated is between the military pay of an employee and the pay that he would have
eceived in his civilian occupation forms . In this case the taxpayer worked as a clerk in
Macdonald Hamilton & co. at a remuneration of 245 pounds and 14s. , he enrolled himself in
the services with Australian imperial force from 12
th
July 1940 to 13 dec. 1945. AY being
30
th
June 1943, during this period he earned a remuneration of 104 pounds.
Macdonald hemilton & co. sent a cicular to its staff that included the following paragraph:
"In regard to those members of our staff who may enlist for home defence or service outside
Australia, for the duration of the War, we shall also endeavour to make up the difference
etween their present rate of wages and the amounts they will receive from the Naval or
Military Authorities, but of course circumstances may compel us to review this decision at
some later stage". Further before resigning , the taxpayer made it ceratin that he would be
able to resume his duties again not if he dint want to, and resigned on 13
th
December, 1945
only to rejoin on 2
nd
January 1946.
Now the Commissioner is of the view that the remuneration of 104 pounds earned by him
during his active employment shall be included in his taxable income and also the contentions
of the commissioner are supported by the basic principles of income relying upon the
terminology contained in the IT Assessment Act 1936-1943, "income from personal exertion"
and "income derived from personal exertion". words being "bonuses, pensions,
superannuation allowances, retiring allowances and retiring gratuities, allowances and
gratuities received in the capacity of employee or in relation to any services rendered". The
critical words here are "allowances and gratuities received in the capacity of employee or in
elation to any services rendered".
The employers of the taxpayer after looking in the matter noticed and proposed a patriotic
way that they were willing to help him if he decides to join the fighting forces of the military
which would supplement his pays and allowances that would lead to no financial loss.
In the present case we think the total situation of the taxpayer must be looked at to see
whether the receipts of the taxpayer from Macdonald, Hamilton & Co. are of an income
character. He was employed at a salary. The war placed him, in common with many others, in
a position in which he felt it was incumbent upon him to enlist.
So here income word is advisedly used that the contribution from his employers (not
necessarily cu
ent or former or future) would entitle him to an amount necessary for survival
of himself and his dependents would remained at same level that his civil employment would
have given .
Relevant Legislation in the Context of ITAA97:
In FCT v Dixon (1952) Income must come in; Income must be convertible into money or
money‟s worth; Income must generally comprise a periodic or recu
ent flow; Income must
e a reward for effort or the produce of property. In this case payment was periodic and was
also a means of support supplementing their army wages which clearly showed payment were
elated to income earning process, so the court considered many elements in the given case
like periodicity of payments etc. while making decisions So in general periodicity is an
indicator of gross income but is not an key or even a strong element. In Dixon, the donees
eceived payments with a profit-making purpose or intent, in anticipation that they will be the
means to support them and their dependents. It was this anticipation that gave the receipts the
character of income....