The AAT has dismissed a taxpayer’s appeal and upheld amended assessments that had disallowed deductions claimed concerning a property.
In 2000, the taxpayer’s husband and his brother inherited a property, which had been in their family since the 1950s. In 2006, the taxpayer purchased her brother-in-law’s interest. She and her husband’s plans were to subdivide and develop the property. Part of the property would then be sold and part of it retained. The taxpayer borrowed monies to acquire her brother-in-law’s share in the property and she made interest payments on the loan and there were other outgoings relating to the property. The property was eventually sold. By amended assessments covering the 2007, 2008 and 2009 years, the Commissioner disallowed most of the deductions claimed by the taxpayer relating to her interest in the property. The taxpayer sought review of those objection decisions.
The taxpayer contended she was carrying on a business of property development in respect of the property, falling within s 8-1(1)(b) of the ITAA 1997. The Tribunal said it accepted the Commissioner’s submissions that the transaction was driven by the desire of the taxpayer’s husband, supported by the taxpayer, to retain the property in the family. While the AAT acknowledged there were commercial aspects to the taxpayer’s actions, it did not consider this was a business operation or commercial transaction.
(AAT Case [2013] AATA 936, Re XTJT and FCT, AAT, Molloy DP, AAT Ref: 2013/2806; 2013/2807; 2013/2808, 23 December 2013.)
[LTN 1, 3/1/14]