Thomson v Deputy Federal Commissioner of Land Tax for Tasmania [1915] HCA 4; (1915) 19 CLR 351 (16 February 1915)

HIGH COURT OF AUSTRALIA

Thomson and Others Appellants; and The Deputy Federal Commissioner of Land Tax for Tasmania Respondent.

H C of A

16 February 1915

Griffith C.J., Isaacs and Gavan Duffy JJ.

Waterhouse, for the appellants.

L. L. Dobson, for the respondent,

Griffith C.J.

The appellants are the seven sons of John Thomson, who died on 30th August 1899, having by his will devised the land in question to trustees for such of his sons as should attain the age of twenty-five, or their issue. The testator directed his trustees as each of his sons should attain twenty-five to offer the land to him at a valuation, and in case none of them should accept the offer he empowered the trustees to apportion the land amongst the persons entitled thereto as they should in their uncontrolled discretion think fair and reasonable. All the sons attained twenty-five, but none of them accepted the offer to purchase at a valuation, and the trustees did not make any apportionment. Subsequently the trustees, by a deed dated 24th April 1906, reciting amongst other things that the appellants had requested them to do so, conveyed the land to the appellants as tenants in common in fee. It will be seen that all this took place before the passing of the Land Tax Act of 1910. The appellants now claim that they are entitled to the benefit of sec. 38 (7) of the Land Tax Assessment Act 1910-1911, which provides, by way of exception to the general rule that joint owners are liable to be assessed as a single person and are therefore only entitled to one deduction of £5,000 from the total unimproved value, that when under the will of a testator who died before 1st July 1910 the beneficial interest in land or in the income therefrom is for the time being shared among a number of persons, all of whom are relatives of the testator, in such a way that they are taxable as joint owners, then a deduction of £5,000, or a lesser amount proportional to the total value, may be made in respect of each original share so taken. The only question in the present case is whether in the circumstances it can be said of these appellants, after the execution of the deed of 24th April 1906, that the beneficial interest in the land is shared among them under the will, or whether, as I apprehend the respondent contends, it is shared among them under the deed.

In Archer v. Federal Commissioner of Land Tax[1] and Neill v. Federal Commissioner of Land Tax[2] this Court expressed the opinion—though that opinion is not quite so clearly stated in the judgments as reported as I thought it was—that in the original Act the provision corresponding to sec. 38 (7) is only applicable when at the date as of which the assessment is made the persons claiming the benefit of it hold their interests in the land directly under the will or settlement, without the aid or intervention of any subsequent or intermediate transaction. That was certainly in the mind of all the members of this Court, and it was expressed by my brother Isaacs with sufficient clearness in Neill's Case[3]. There is one exception only to that rule, which was made by the Act of 1912, passed subsequently to these decisions. By that Act a new clause, sec. 38A, was inserted which allowed a subsidiary settlement or will to be taken into consideration in some cases. With that exception the only instrument of title to be considered is, in general, the original settlement or will. I express no opinion on the question whether a mere appointment under a power contained in a settlement or will to designate some of a larger class as the beneficiaries would fall within the rule.

In the present case it is clear that the appellants no longer hold directly under the will. Under it each son on attaining twenty-five acquired a vested interest in the estate, subject, however, to an overriding power of the trustees by the exercise of which he might have been deprived of the whole or part of his share by an apportionment. The appellants, not being satisfied with that state of things, procured the trustees to execute the deed of 24th April 1906, under which each of them became absolutely entitled to a one-seventh share. In my opinion there is a difference not only in form, but in substance, between their interests under the will and those under the deed. The rights which they now enjoy are not those created by the will, but different rights which they were enabled to acquire under it. I do not think, therefore, that it can be affirmed of the appellants that the beneficial interest in the land is shared by them "under the will." They are therefore not entitled to more than one deduction.

Isaacs J.

I agree.

Gavan Duffy J.

I agree.

Question answered accordingly.

Solicitors, for the appellants, Ritchie & Parker.

Solicitor, for the respondent, Gordon H. Castle, Crown Solicitor for the Commonwealth, by Dobson, Mitchell & Allport.

[1] [1912] HCA 5; 13 C.L.R., 557.

[2] [1912] HCA 19; 14 C.L.R., 207.

[3] [1912] HCA 19; 14 C.L.R., 207, at p. 215.