BBAL501 Taxation Law: Analysis of McDonald v FC of T 98 ATC Case

This report provides a comprehensive analysis of the case McDonald v FC of T 98 ATC, focusing on the determination of capital gains tax consequences for the taxpayers. The case revolves around the interpretation of Section 160 U (3) of the ITAA 1936, which addresses the timing of property acquisition. The report details the facts of the case, including an oral offer and subsequent written agreement, and the taxpayer's contention regarding the acquisition date. It examines the Federal Court's dismissal of the appeal, emphasizing that the tribunal correctly sought an enforceable contract. The analysis includes references to relevant case law and legal principles, providing a clear understanding of the court's decision and its implications for taxation law. The report concludes with a summary of the court's findings and the dismissal of the appeal, highlighting the significance of the tribunal's judgement and the principles of natural justice.

Running head: ADVANCE TAXATION
Advance Taxation
Name of the Student
Name of the University
Authors Note
Course ID

1ADVANCE TAXATION
Table of Contents
McDonald v FC of T 98 ATC....................................................................................................2
Issue:..........................................................................................................................................2
Rule:...........................................................................................................................................2
Facts:..........................................................................................................................................2
Conclusion:................................................................................................................................3
Reference List:...........................................................................................................................5

2ADVANCE TAXATION
McDonald v FC of T 98 ATC
Issue:
The current issue is based on the determination of the consequences of the capital
gains tax for the taxpayers Mr and Mrs McDonald. Under the current issue the applicants
were held for assessment during the year 1989 and 1990 income years based on the outcomes
of the capital gains tax resulting from the disposition of the previously obtained property that
were subjected to capital gains tax (Long, Campbell and Kelshaw 2016).
Rule:
Section 160 U (3) of the ITAA 1936 explains that at time of acquiring the property the
time of making the contract is necessary. In the current case of McDonald v FC of T 98 ATC
4306 the court of law considered the appeal from the decision of the tribunal in which the
identical question originated.
Facts:
The facts surrounding the case suggested that the applicants and his wife on 13
September 1985 made the oral offer of purchasing the property while the vendor accepted the
offer. The written agreement associated to sale was delivered to the taxpayer during that day
but the exchange did not take place till 31st October 1985 (Barkoczy 2016). Subsequently the
property was sold and lead to capital tax liability. With reference to the rule of the “Section
160 U (3) of the ITAA 1936” the time of acquiring the property represents the time of
making the contract (Robin and Barkoczy 2018). It was contended by the taxpayer the
acquisition of the property that was obtained was under the oral contract made on 13
September 1985 before the introduction of the capital gains tax (Law.ato.gov.au 2018). The
tribunal noticed that there was no such contract was made before the exchange of the written
agreement on the 31st September 1985.

3ADVANCE TAXATION
An appeal was bought by the taxpayer in the federal court of law by submitting that
the tribunals findings relating to the fact lead to an error in the judgement of the law which
the tribunal had looked only associated to the enforceable contract and not the simply the
contract (Blakelock and King 2017). Alternatively, the taxpayer stated that the findings of the
tribunal was entirely irrationally and perverse. Along with this, the taxpayer also contended
that the situations that was surrounding provided the evidence through the video conference
link that resulted in the denial of the procedural fairness. The current appeal to the federal
court under “section 44 of the AATA 1975” constituted a challenge to the conclusion of the
tribunals based on the ground that findings of the fact provided an incorrect error in the
judgement of the law (Woellner et al. 2016). The respondents of the taxation of
commissioner held a contrast point of view.
The administrative appeal tribunal authority noticed that there was not such contract
that was made for the acquisition of the property before the exchange of the written contract
on the 31st October 1985 (Robin 2017). Although, the dates were backdated to 13th September
1985. The court of law referring to “Federal Commissioner of Taxation v Kiwi Brands Pty
Ltd (1998)” stated that based on the common ground it was immaterial that the contract at the
time may had the unenforceable or were subjected to the precedent conditions. Under the
common ground amid the parties the time in which the McDonald acquired the property in
question relating to the purpose of “Part IIIA of the ITAA 1936” in which the property was
acquired.
Conclusion:
The Federal Court of Law dismissed the appeal. The taxation commissioner dismissed
that there was no such basis for the claim that was made by the taxpayer and the tribunal only
looked for the enforceable contract. The judgements that was made by the tribunal were free
from any error. The tribunal further contented that the unreasonableness may only be

4ADVANCE TAXATION
described as the desperate. The taxpayer’s break in transmission was of no practical
consequences. There was no such proper basis for saying that the rules of natural justice were
breached. More importantly for the present purpose the principles did not allowed for any
doubtful fact relating to the findings to characterise the law as the error.

5ADVANCE TAXATION
Reference List:
Barkoczy, S., 2016. Foundations of taxation law 2016. OUP Catalogue.
Blakelock, S. and King, P., 2017. Taxation law: The advance of ATO data
matching. Proctor, The, 37(6), p.18.
Law.ato.gov.au. (2018). Federal Commissioner of Taxation v. McDonald - (17 June 1987)
(Judgment handed down 17 June 1987.) - Judgment by Beaumont J.:. [online] Available at:
http://law.ato.gov.au/atolaw/view.htm?dbwidetocone=05%3ACases%3AFederal%20Court
%3A1987%3AFederal%20Commissioner%20of%20Taxation%20v.%20McDonald%20-
%20(17%20June%201987)%3A%230101%23Judgment%20by%20Beaumont%20J.%26c
%3B&DOCID=JUD%2F87ATC4541%2F00001 [Accessed 5 Jul. 2018].
Long, B., Campbell, J. and Kelshaw, C., 2016. The justice lens on taxation policy in
Australia. St Mark's Review, (235), p.94.
Robin and Barkoczy Woellner (stephen & murphy, shirley et al.), 2018. Australian taxation
law 2018. Oxford University Press.
Robin, H., 2017. Australian taxation law 2017. Oxford University Press.
Woellner, R., Barkoczy, S., Murphy, S., Evans, C. and Pinto, D., 2016. Australian Taxation
Law 2016. OUP Catalogue.