Nexus: Brent v FCT (1971) 125 CLR 418; 71 ATC 4195 at ATC 4200-4201

  • The case:
    • The taxpayer sold the exclusive rights to publication of her life story with Ronald Biggs
      • She was to received $65,250, consisting of:
        1. $10,000 on execution of the agreement (only this amount was paid)
        2. $40,000 on her signing of the manuscript
        3. $15,250 thirty days after the date of the agreement
      • The taxpayer only received the initial $10,000 net of legal fees and duties.
    • The Commissioner treated the whole amount as assessable.
    • The taxpayer appealed.
      • The issue before the Court were:
        1. whether the amount of $65,250 was income, and
        2. if so, whether the whole of it was derived in the year in which the agreement was made and the sum became payable
  • The decisions:
    • Appeal allowed. Commisioner to re-assess in accordance with reasons.
      1. The question whether the amount payable under the agreement was income depends on whether it is properly to be regarded as a sum earned by taxpayer in relation to services rendered by her for the newspaper company. If so, it is not only income within ordinary usages but also falls within the scope of s 26( e)
        • In substance, the taxpayer was entitled to payment for services rendered to the newspaper company in devoting her time to the interviews.
        • Not related to copyrights (because the story was not her property and the journalists wrote the story on their own)
      1. The taxpayer was not assessable in the year in question on the $55,250 receivable but no received in that year. She did not carry on a business or profession (only a reward for personal services). In all circumstances, the income derived by taxpayer was the amount she actually received in the year in question.
      2. Furthermore, s 19 does not aid the Commissioner.
        1. Firstly, because there is no evidence that the taxpayer requested the company to hold the payment.
        2. Secondly, s 19 is related to “borrowing money” not to income.

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