Ferguson Vs Frp Case Summary
Summary of the Case The case Ferguson v FCT (1979) 9 ATR 873 is an appeal case. Ferguson (tax payer) was a member of the Royal Australian Navy and before he was about to retire, he had formed is retirement plans of establishing a business of primary production. In order to start his business he entered into an arrangement with Cattle Leasing Ltd who specialized in the leasing of cattle, made available to Ferguson five Charolais half-cross cows for a period of four years. He also entered in another separate arrangement with Gunn Rural Management Pty Ltd for them to manage the cattle- looking after the heifers, their progeny and the descendants for a period of ten years. The cattle were to be artificially inseminated to produce pure-bred
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The court says that although it is not significant for the purpose of proving whether it is business, however it is significant in testing if the operations are a hobby or not. Personally I do not agree to the general rule. It is because even if you make a profit of $1, it is still profit, it is money and is business. What if a person opens a convenient store far out west where there isn¡¦t a lot of customers, but he does make an annual income of $500? So we do not regard this money as income from business? Apart from this I believe this element is significant and should be looked at in all cases.
In Ferguson¡¦s case the size of his activities are small, he only makes a few sales and unfortunate they were of a net loss nature. This is similar as in normal business as not all business make profits each year. Also because that he has a small business, it is expected that he will make little profit or some losses.
Further more his operations enforce the fact that the operations is not of a hobby, it has a ¡¥commercial flavour¡¦ as discussed earlier where Walsh J gave consideration to this aspect in Thomas v
The court says that although it is not significant for the purpose of proving whether it is business, however it is significant in testing if the operations are a hobby or not. Personally I do not agree to the general rule. It is because even if you make a profit of $1, it is still profit, it is money and is business. What if a person opens a convenient store far out west where there isn¡¦t a lot of customers, but he does make an annual income of $500? So we do not regard this money as income from business? Apart from this I believe this element is significant and should be looked at in all cases.
In Ferguson¡¦s case the size of his activities are small, he only makes a few sales and unfortunate they were of a net loss nature. This is similar as in normal business as not all business make profits each year. Also because that he has a small business, it is expected that he will make little profit or some losses.
Further more his operations enforce the fact that the operations is not of a hobby, it has a ¡¥commercial flavour¡¦ as discussed earlier where Walsh J gave consideration to this aspect in Thomas v