Case: John v Federal Commissioner of Taxation [1989] HCA 5 ; (1989) 166 CLR 417
Outcome: discussed
Despite St Hubert's Island , R &amp; D Holdings seeks to draw comfort from the following observations made in the five judge joint judgment in John v Federal Commissioner of Taxation [1989] HCA 5 ; (1989) 166 CLR 417 at 429: "The Act defines 'trading stock' in s 6(1) as including 'anything produced, manufactured, acquired or purchased for purposes of manufacture, sale or exchange, and also includes live stock'. The definition looks to the nature of goods that may constitute trading stock and posits that they will constitute trading stock if acquired for any of the specified purposes, including sale. It presupposes that the person by whom they are produced, manufactured, acquired or purchased is or will be engaged in trade in those goods. But it does not render an inquiry into whether or not the person is or will be engaged in that trade irrelevant. A single transaction does not render a person a trader, although, of course, a single transaction may constitute an adventure in the nature of trade. Nor, we think, is a single item acquired for the purpose of manufacture, sale or exchange an item of trading stock, unless the purchaser is or will be engaged in trading goods of that nature. Thus it is relevant to inquire whether the person who acquires an item claimed to be trading stock is a trader in the sense that he is engaged or will be engaged in trading goods of the nature of the item acquired." 48 The issue in John , insofar as presently relevant, was whether shares acquired by a partnership which carried on the business of trading in shares were trading stock within s 6(1) of the 1936 Act . They were found to be such. This context is important in considering whether their Honours were intending in any way to cast doubt upon the majority judgments in St Hubert's Island . In my respectful view, the above should not be taken as intended to address the quite particular and distinctive issues raised in cases of single venture land development and subdivision for purposes of sale by lots. The judgments of Mason J (who participated in the joint judgment in John ) and of Jacobs J in St Hubert contain a particular and detailed course of reasoning to bring what I will call single venture land subdivision cases within the scope of s 6(1). The observations in John as generalisations are, with respect, uncontroversial, but as generalisations suited to the general context exemplified in John . If they were intended to undermine St Hubert's Island in any way, I am of the view this would have been done explicitly, given the particular attention given to land in that case. In saying this I would draw particular attention to the comments of Jacobs J in St Hubert's Island quoted earlier rejecting the alleged need for repeated acts of buying and selling to establish "trading". 50 While I do not consider the quoted observations from John as being of relevance in this proceeding, there is one aspect of John which is of present assistance. It was indicated in the joint judgment (at 430) that the s 6(1) definition of "trading stock was predicated on the prescribed purpose (i.e. of manufacture, sale or exchange) attending the acquisition of the item in question". However, it was indicated that the definition did not require that the relevant purpose be the sole or dominant purpose". I can see no reason why a like view should not be taken to the like purpose requirement for which the relevant property is held in the s 70-10 definition of the 1997 Act . The significance of this for present purposes is that I have found below that R &amp; D Holdings held the Bulletin Place property at the relevant time for the dual profit making purposes of sale or lease of subdivided lots. These two purposes clearly are not "contrary or inconsistent": John at 430.