Commentary

A1.123 Income distinguished from capital profits

Administration and compliance

A1.123 Income distinguished from capital profits

A1.123 Income distinguished from capital profits

As well as being derived from a designated source, in order to be taxable a profit must have the quality of income1. This principle is illustrated by a large number of judicial decisions, which will be considered in their proper context; a general account of the distinction is given in Division A1.2. One analogy of which much use has been made is to distinguish the tree (the source) from the fruit (the income); reference may, however, more usefully be made to the line of cases in which the distinction between fixed and circulating capital

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