In the recent case of Commissioner of Taxation v Sharpcan Pty Ltd, the High Court determined whether there was any tax relief available for expenditure incurred by the taxpayer in relation to gaming machine entitlements.  The defendant, Sharpcan was a corporate beneficiary of a trust.  The trustee of this trust purchased 18 gaming machines at an auction and the entitlements of owning these machines meant that the trustee was able to operate poker machine gambling facilities.

These entitlements lasted for ten years and were available for transfer or sale to other venue operators.  The problem here was that the Trustee claimed the purchase price of the gaming machines as an allowable deduction under tax legislation.  While this was affirmed by two courts who heard this case, the Commissioner of Taxation appealed it to the High Court whose determination, by a unanimous joint decision, led to a ruling that there was no tax relief available.  The reason for this was that the expenditure on the gaming machines was a loss of capital or of a capital nature; therefore, being ineligible for tax relief.


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