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Key decisions

  • Blank v Commissioner of Taxation [2016] HCA 42
  • Comcare v Martin [2016] HCA 43
  • Timbercorp Finance Pty Ltd (in liquidation) v Collins; Timbercorp Finance Pty Ltd (in liquidation) v Tomes [2016] HCA 44
  • Bywater Investments Limited v Commissioner of Taxation; Hua Wang Bank Berhad v Commissioner of Taxation [2016] HCA 45
  • Castle v The Queen; Bucca v The Queen [2016] HCA 46


Income tax – assessable income

In Blank v Commissioner of Taxation [2016] HCA 42 (9 November 2016) the High Court considered whether amounts received by the appellant on the termination of his employment as part of an employee incentive profit participation plan were ordinary income and assessable for income tax. The appellant was involved in the plan through various agreements with companies in the corporate group of
his employer.

Ultimately, the appellant had an entitlement to ‘deferred compensation’. Pursuant to that entitlement, after the termination of his employment the appellant relinquished his claims under a profit sharing agreement and assigned shares he held in one of the companies. He thereby became entitled to a lump sum paid in instalments.

The High Court noted that reward for services in the form of remuneration or compensation is obviously income, and that is so even if the payment is in a lump sum or deferred until after retirement. In this case, the Court held that the instalments paid to the appellant were deferred compensation for the services performed and were therefore income according to ordinary concepts.

French CJ, Kiefel, Gageler, Keane and Gordon JJ jointly. Appeal from the Full Federal Court dismissed.

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