Problem
The recent decision of Whiddon and Commissioner of Taxation (Taxation) [2022] AATA 197., examined the assessability of gains arising from the disposal of shares. The principle established in California Copper Syndicate v Harris (1904) 5 TC 159 was that proceeds from the sale of an asset purchased for the purpose of resale would be taxable as ordinary income.
Conversely, proceeds from the sale of an asset purchased for the purpose of holding it (or using it in the course of carrying on a business) would be on capital account and would not be taxable (see Scottish Australian Mining Co Ltd v FCT (1950) 81 CLR 188).
The case of Whitfords Beach Pty Ltd v FCT 83 ATC 4277 cast some doubt on this general principle, but the introduction of the Capital Gains Tax Regime largely silenced debate on the issue.
Task
Explain the relevance of the decision Whiddon and Commissioner of Taxation (Taxation) [2022] AATA 197 to sales of assets purchased as an investment.