Explain why the payment to the taxpayer in FCT v Dixon XXXXXXXXXXCLR 540 was assessable income but the payment in Scott v FCT XXXXXXXXXXCLR 514 was not. In your answer you should include (but not...

350769_1_BULAW-3731
Assignment-Sem-2-2013
Ans A)
Scott vs FCT (1966)
Discussion:
In the given case Mrs. Freestone gave an amount of 10000 pounds to Mr. Scott(taxpayer) which was
included in his taxable income by the commissioner.
Mr. Scott , after demise of Mr. Freestone helped Mrs. Freestone in lifting restrictions from her land
received by her under her husband’s will and also further selling the land at 170023 pounds in his
professional capacity. So Mrs. Freestone just as a jesture of kindness gave Mr. Scott an amount of 10000
pounds.
The commissioner pleaded that the amount received by Mr. Scott as a gift was actually received by him
because of his services to Mrs. Freestone in the capacity of a solicitor, whereas Mr. Scott contended that
10000 pounds received by him was a mere jesture of kindness by Mrs. Freestone because along with
Mr. Scott, Mrs. Free stone had also given money in the form of gifts to various other people i.e. john
stoner, 500 pounds, P Newling, 820 pounds 18s 5d and again P Newling 2000 pounds, sister 1000
pounds, brother 500 pounds, 100 pounds each to 4 cousins
FCT vs Dixon (1952)
Discussion:
The case stated is between the military pay of an employee and the pay that he would have received 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. , and he engaged himself in the services with Australian imperial
force from 12th July 1940 to 13 dec. 1945. AY being 30th June 1943, during this period he earned a
remuneration of 104 pounds.
Macdonald hemilton & co. sent a circular 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 between 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".The taxpayer resigned on 13TH
December, but before resigning he made it certain that he shall resume his services as and when he
wished to do it, so he resumed his services on 2nd January of the following year.
Now the commissioner contended that the remuneration of 104 pounds earned by him shall be included
in his taxable income that was earned by him during his active service supporting his contentions by the
basic principals 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 relation to any
services rendered".
The employers of the taxpayer looked deeply in the matter and proposed a way which was more of
patriotic in its own way, and they asked the taxpayer to join military fighting forces that would
supplement is pay which will result in no financial losses.
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 current
or former or future) would entitle him to an amount necessary for survival of himself and his
dependants would remained at same level that his civil employment would have given .
Ans B)
Scott v FCT (1966)
Issue:
It is case where commissioner disallowed many expenditures of the tax payer being 150 pounds, 250
pounds twice and included an amount of 10000 pounds received as a gift from Mrs. Freestone in his
taxable income, where it was further clarified that taxation on 10000 pounds received from Mrs.
Freestone was entirely a different case and should be treated as such.
FCT vs Dixon(1952)
Issue:
In this case the taxpayer claims that an amount of 104 pounds received...