Eichmann decision lifts the bar on active asset test

Article

Eichmann decision lifts the bar on active asset test - 2 March 2020

Tax Insights

A recent decision of the Federal Court addressed the question of whether an asset (a block of land) was sufficiently connected to business operations so as to qualify as an active asset. The decision of Derrington J in Commissioner v Eichmann was handed down in December 2019 in favour of the Commissioner.

The relevant question was whether the land was used in the course of carrying on a business. The approach adopted by the Court has posed the active asset test as an extremely onerous one requiring that the asset and its use have a “direct functional relevance to the carrying on of the normal day-to-day activities of the business”.

The matter arose in the context of the small business concessions in Division 152 of the Income Tax Assessment Act 1997 (ITAA 97), but the same issue is also relevant to the CGT participation exemption in Subdivision 768-G, ITAA 97.

Eichmann decision lifts the bar on active asset test
  • Contact us
  • Submit RFP
  • Our solutions

    Progress your business growth and development

    Take a look at the products and services we offer.

    Tax services

    As a global tax leader today, your reality is a fast-changing landscape, from which new ideas, demands, and operating models emerge. Leading through this change and complexity is your priority. And supporting you with this is ours.

    Indirect tax

    Indirect tax is becoming many governments' preferred method of revenue raising. It’s more critical than ever to manage indirect tcompliance and cash flows. Deloitte’s indirect tax experts understand the nuances of regulations, the importance of industry knowledge and the growing role of technology.

    Tax management consulting

    With consulting, technology and outsourcing experience, Deloitte TMC helps businesses meet the challenges of multi-jurisdictional tax operations, including compliance, reporting and risk management for direct and indirect taxes. 

  • Our latest reports and thought leadership
Did you find this useful?