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The Federal Court (Nicholas J) has held that a taxpayer derived income when land was transferred to him (in the 2006 income year), and not at an earlier point in time (in the 1999 income year) when he entered into a Deed for the transfer of the land (or payment of money representing its market value) subject to the satisfaction of a number of conditions. His entitlements under the Deed were given in return for him agreeing to make his services available to the transferor.

His Honour said, at para [67]:

"In my opinion Mr Tagget did not derive income merely by entering into the Deed. Moreover, nothing in the nature of income could come in to Mr Tagget under cl 3.1 or cl 3.3 of the Deed until proposed Lot 157 was transferred to him under cl 3.1 or a sum of money became due to him as a result of an agreement reached or a valuation struck under cl 3.3. Even then, if Mr Tagget’s income was computed on a cash basis (as would seem to be appropriate in his circumstances) such sum would not be derived by him for tax purposes until it was received."

Tagget v FCT [2010] FCA 25 (Federal Court, Nicholas J, 2 February 2010).


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