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The AAT has held that a taxpayer was carrying on the business of chartering a boat in the Whitsundays, and was therefore entitled to deduct his losses under s 8-1 ITAA 1997. The Commissioner's argument that the deductions were denied by reason of the operation of s 26-50 ITAA 1997 was rejected. The AAT said: "While the facts are quite different, the proper result of this case is the same as that arrived at in Re Peerless Marine Pty Ltd and FCT (2006) AATA 765."

The Commissioner had assessed the taxpayer on all the income received from the chartering operation but had denied all the expenses. Without deciding the matter, the AAT described the Commissioner's potential ability to do this as an "apparent anomaly in the application of s 20-50".

VCK and FCT [2006] AATA 1073 (AAT, Pascoe SM, 12 December 2006)

For a copy of the decision, go here

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