Commissioner of Taxation v McNeil

Income tax – Derivation of income – Respondent acquired shares which were later the subject of a buy-back arrangement that gave the respondent "sell-back rights" – The sell-back rights were held on trust and sold for the absolute benefit of the respondent – The increase in value of the sell-back rights was subject to capital gains tax upon sale – Whether the remaining income from the sale was subject to either income tax or capital gains tax – Whether the remaining proceeds of sale amounted to a derivation of income according to ordinary concepts – Whether character of receipt as income to be determined according to its quality in the hands of the recipient or the character of the expenditure by the other party – Whether sell-back rights can be treated as being "severed" or "detached" from the respondent's shares for taxation purposes.

Income tax – Statutory interpretation – Whether subdiv D of Div 2 of Pt III of the Income Tax Assessment Act 1936 (Cth) formed a "code" regarding taxation of receipts by shareholders from companies.

Words and phrases – "for the absolute benefit of", "income", "in satisfaction", "code", "sell-back right".

Corporations Law – Ch 2J, ss 257A-257J.

Income Tax Assessment Act 1936 (Cth) – Pt III, Div 2, subdiv D.

Income Tax Assessment Act 1997 (Cth) – s 6-5.