The case concerned the deductibility under s 8-1 of the Income Tax Assessment Act 1997 (Cth) of expenses incurred by the trustee of the Murrindindi Bushfire Class Action Settlement Fund in administering the Fund, including in assessing group members’ respective claims for injury, dependence, economic loss and property damage from the Murrindindi Bushfire.

The Full Court of the Federal Court held that the expenses were not deductible because they were not necessarily incurred by the trustee in the course of carrying on a business for the purposes of gaining or producing assessable income, or incurred by the trustee in gaining or producing assessable income. There was an insufficient nexus between the expenses and the assessable income derived by the trustee in the relevant income year (comprised of interest on the investment of the Fund’s settlement sum). Further, the expenses were capital in nature because they were incurred in the course of effecting the distribution of the Fund’s settlement sum amongst group members.

Special leave to appeal to the High Court of Australia was refused on 14 October 2020.