Flemmich v Federal Commissioner of Land Tax [1916] HCA 17; (1916) 21 CLR 167 (28 March 1916)

HIGH COURT OF AUSTRALIA

Flemmich Appellant; and The Federal Commissioner of Land Tax Respondent.

H C of A

28 March 1916

Griffith C.J., Barton, Gavan Duffy and Rich JJ.

Loxton K.C. (with him Milner Stephen), for the appellant.

Pike, for the respondent.

Griffith C.J.

The appellant is a joint owner of land. Her share or interest is one-third, which is valued at £49,544. She is also the owner in severalty of land of the total value of £19,796 which is subject to a lease granted by her before the commencement of the Land Tax Assessment Act 1910. By virtue of sec. 28 of the Land Tax Assessment Act 1910-1912 she is entitled to have the value of that lease deducted from the total value of the land leased. The value of the lease has been assessed at £5,300. The value of the land which she holds in severalty—i.e., her value of the reversion—is therefore for the purposes of taxation £14,496 only. The trustees of the land of which she is a joint owner have been assessed on the basis of the land being held by a single person, and the result is that her one-third share of the total tax paid in respect of that land is very much greater than the tax she would have been liable to pay if she were taxed as the owner in severalty of land of one-third of the total value. Besides. being liable to pay her share of the tax upon the jointly owned land she is liable under sec. 38 to be separately assessed as a secondary taxpayer on the value of her individual interest in the joint estate, namely, £49,544, together with the value of the land which she holds in severalty, namely, £14,496, making altogether the sum of £64,040. The tax payable upon that value is £730 2s. 5d., which sum is apportionable between the value of her share of the land of which she is a joint owner and the value of the land of which she is the owner in severalty. If that sum is divided proportionately, the proportion attributable to the land of which she is a joint owner is £564 17s., and that attributable to the land of which she is the owner in severalty is £165 5s. 5d. The trustees have already paid for her a sum of money much larger than the sum attributable to the land of which she is a joint owner. Therefore the whole of that sum of £564 17s. must under sec. 43 be deducted, and what is left, namely, £165 5s. 5d. is the amount of the tax which is attributable to the land which she holds in severalty, which is valued at £14,496. That is the contention of the appellant, and that is what sec. 43 of the Act says in plain terms. It provides that the amount of the deduction in such a case as this is "the amount of tax payable in respect of the land or interest by the secondary taxpayer." The amount to be deducted is the whole of that amount, because more than the whole of it has already been paid by the trustees. The object, as the Act says, is to avoid double taxation in respect of the same land.

The Commissioner contends that sec. 43A has some application to the case. It provides that "Where in this Act reference is made to the tax payable by a person in respect of any land or interest, the reference is to so much of the whole tax payable by him as bears to the whole tax payable by him the proportion which the unimproved value of the land or interest referred to bears to the unimproved value of all the land owned by him." Applying that section to the present case, it provides for estimating the proportion of the total tax which the appellant is entitled to deduct, and the proportion is to be that which the value of her share in the joint estate bears to the value of the whole of the land of which she is owner. Mr. Pike contends that those are not the true elements of the proportion. He says that the proportion should be that which the value of her share in the joint estate bears to the total value of the land held in severalty without deducting the value of the lease. There is no ground for such a contention. The taxable value of the land held in severalty is assessed once for all. The effect of the deduction would not be to prevent double taxation. The only effect would be that both the appellant and the leaseholder would be taxed on the value of the leasehold estate.

I am of opinion that the appellant's contention is right, and that the question submitted should be answered accordingly.

Barton, J.

I agree.

Gavan Duffy J.

I agree.

Rich J.

I agree.

Question answered accordingly. Costs to be costs of appeal.

Solicitors for the appellant, Stephen, Jaques & Stephen.

Solicitor for the respondent, Gordon H. Castle, Crown Solicitor for the Commonwealth.