As we previously reported here, in the decision of Thawley J in Greig v Commissioner of Taxation [2018] FCA 1084 the taxpayer was unsuccessful in arguing the loss on selling shares was deductible on the basis he was in the business of dealing in shares. The taxpayer appealed this decision.

A majority of the Full Federal Court (Steward Kenny JJ, Derrington J dissenting) in Greig v Commissioner of Taxation [2020] FCAFC 25 has now allowed the taxpayer’s appeal allowing for the taxpayer’s claim that both his loss and expenditure in acquiring shares was incurred in a “business operation or commercial transaction” entered into for the making of a profit within the principle in FCT v Myer Emporium Ltd (1987) 163 CLR 199.

In his decision, Steward J (with Kenny J agreeing) stated:

"The shares were acquired with a view that they be sold at a profit in the short term; whilst no profit in fact was made, if the taxpayer had realised a gain, in my view, that gain would not have been characterised as windfall in nature or as the product of a game of chance or the pursuit of a hobby. Nor would the gain have been characterised as merely a realisation of a capital asset".

We await with interest whether the Commissioner of Taxation in light of Greig may seek to apply the Myer Emporium principles more widely in income tax cases, such as the capital and revenue characterisation of proceeds arising from isolated property development transactions.

For further information in relation to Full Federal Court’s decision in Greig or any other assistance please contact:

Sam Campbell
Senior Associate | Business Law
M +61 423 515 454 | T +61 3 9611 0135
E: scampbell@sladen.com.au

Neil Brydges
Principal Lawyer | Accredited Specialist in Tax Law
M +61 407 821 157 | T +61 3 9611 0176
E: nbrydges@sladen.com.au