Section 260: Mutual business
940.This section makes it clear that the concept of “mutuality” does not apply in the property income context. It is based on section 21C of ICTA. The corresponding rule for income tax is in section 321 of ITTOIA.
941.Mutuality is a concept that has been developed by the courts over a long period. It derives from the principle that one cannot make a profit by dealing with oneself. It may arise in the trading context where a class of contributors to a common fund are entitled, as a class, to share in the surpluses of that fund.
942.The approach in this section differs from that of the source and is simpler. The approach in section 21C of ICTA is to apply the normal profit calculation rules to any “mutual business” and add the result to the profits of the rest of the Schedule A business. This section on the other hand prevents, from the outset, the concept of mutuality operating on amounts within this Part of this Act.