Ferguson V Fct Case Analysis

Summary of the Case

The case Ferguson v FCT (1979) 9 ATR 873 is an appeal case. Ferguson (tax payer) was a member of the Royal Australian Navy and before he was about to retire, he had formed is retirement plans of establishing a business of primary production. In order to start his business he entered into an arrangement with Cattle Leasing Ltd who specialized in the leasing of cattle, made available to Ferguson five Charolais half-cross cows for a period of four years. He also entered in another separate arrangement with Gunn Rural Management Pty Ltd for them to manage the cattle- looking after the heifers, their progeny and the descendants for a period of ten years. The cattle were to be artificially inseminated to produce pure-bred Charolais and selling the male progeny. Ferguson also expressed intention into entering the agreements to buy the stock at cheap prices, starting with approximately 200 breeders on his own property. In doing this he had incurred expenses totaling $2370 and $1258 in the income year ending 30 June 1973 and 1974 respectively and so he sought for deduction for these expenses.

During the following years there was natural increase to his stock and he sold some, however the consideration received