The ATO has issued a Decision Impact Statement in relation to the Full Federal Court decision in FCT v Malouf  FCFCA 44; 2009 ATC 20-099; 174 FCR 581. The case concerned the issue of whether the taxpayer's obligation to pay, upon settlement, the balance of his share of the amount payable under a contract for the purchase of land and development of a retirement village was incurred at the time of entering into the contract. The Full Federal Court held that the pecuniary liability for the balance of the purchase price was not incurred at the time of entering into the contract. The taxpayer's application for special leave to appeal to the High Court was refused on 4 September 2009.
The ATO says that no new principle emerges from this decision. The contract in this case was found to be distinguishable from the contracts considered in Raymor 24 FCR 90 and Woolcombers 47 FCR 561. Retirement village investors will be entitled to a deduction for the balance of purchase price when paid at settlement. At the same time, the vendor would provide delivery of a transfer and title of the land.
For a copy of the Decision Impact Statement, go here