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Abstract

There has been considerable speculation as to whether inducement payments by landlords to tenants are taxable, either as income according to normal principles, or as assessable capital gains under Part IIIA of the ITAA. This issue has now been partially clarified by the Full Court of the Federal Court in Cooling's case. In that case the court held that one such payment was assessable as income on the principles enunciated in Myer's case. The court went on to express the view that, even if it had not been assessable as income, it would still have been assessable under s160M(7) ITAA as a capital gain. In arriving at this latter proposition, the court has raised some ominous questions as to the scope of that section.

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