Lease incentives and the gain theory of income

[Extract] The failure by Parliament to define the meaning of income in our income tax laws left the task to the judiciary. Traditionally, legalistic trust law distinctions between income and capital have prevailed, requiring an analysis in terms of the source of the flow of the benefit. An alternative view, based on the economic concept of gain, has not gone unnoticed by an increasingly active judiciary. Gradually the gain view has infiltrated the more traditional principles. No more evident in this development than the recent decisions dealing with the assessibility of lease incentives. Whilst these decisions demonstrate an amalgam of the two approaches to the meaning of income, inherent conceptual issues presented by the gain view are evident. In particular, in determining the existence of a gain to what degree is it necessary or permissible to trace the application of the benefit received? It is suggested that a theoretical foundation for reconciling these decisions and resloving the conceptual issues can be drawn from propositions previously expounded by Professor Parsons. This foundation provides an opportunity for the judiciary to resore some integrity to the principles dealing with the identificatin of "ordinary income"