PAYMENT WAS ASSESSABLE AS "DEFERRED COMPENSATION"

The High Court has unanimously dismissed a taxpayer’s appeal and held that payments of
US$160 million made to him pursuant to an incentive “profit participation plan” after termination of
his employment was income according to ordinary concepts. In particular, the Court found that the
payments were “deferred compensation” for the services the taxpayer performed in his
employment. At the same time, the Court dismissed the taxpayer’s claim that the amount was
assessable as a capital gain on the basis that it did not represent the proceeds for the future right
to receive a proportion of company profits he was entitled to.

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