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S.51AAA has no apportionment instructions. Government policy is to allow negative gearing for resident individuals. Hence the very vague and dubious wording of TR 95/33 paragraph 16 & 46 as the Commissioner tries to legally rationalise this practice to avoid conflict with such policy...

Its actually a very important legal distinction for "purpose". Where an expense has a sole purpose of producing a capital gain, it is not an allowable deduction under s.8-1, notwithstanding that net capital gains are assessable income under s.102-5. That is why the 3rd element of the cost...

The case was regarding preparation of an IP. The Commissioner was trying to sever the link between the future assessable income from rent by arguing the expenses were preliminary to any actual income activity, or alternativley that the purpose was to realise the property by sale - which is on...