Question

Explain in details with reference the respective outcomes reached by the courts in the following case involving sales of land: Californian Copper Syndicate Ltd v Harris

Answer 1

In this case, the objective of the company was to extract copper from the land acquired and to carry on a mercantile, trading, financial and commercial business.But the company never extracted copper instead sold the land to another company and received shares of that company as consideration. The company subdivided the land and sold it at a profit. The Commissioner held that the profits were assesable income of the company on the basis that they were proceeds of a business carried by the company.It was held that the company has realised a capital asset and the profits were not included in the assessable income as ordinary income. The company did not have any business regarding sale of land.It was decide that the activities of the taxpayer were no more than a mere realisation of capital asset.