Incorporated Council of Law Reporting (Qld) v Federal Commissioner of Taxation [1924] HCA 23; (1924) 34 CLR 580 (23 June 1924)

HIGH COURT OF AUSTRALIA

The Incorporated Council of Law Reporting for the State of Queensland Appellant; and The Federal Commissioner of Taxation Respondent.

H C of A

On appeal from the Supreme Court of Queensland.

23 June 1924

Isaacs A.C.J., Rich and Starke JJ.

Stumm K.C. (with him Douglas), for the appellant.

Hart, for the respondent,

The Court delivered the following judgment:—

Isaacs A.C.J.,

Rich and Starke JJ.

This case may be dealt with very shortly. The appellant is an association incorporated and registered under the Companies Act Amendment Act of 1889 Q.. The Income Tax Assessment Act 1915-1918 contains provisions for assessment of income tax on the taxable income of companies. A company includes all bodies or associations corporate or unincorporate, but does not include partnerships (sec. 3). By sec. 10 of that Act income tax is, subject to the provisions of the Act, payable upon the taxable income derived by every taxpayer, that is, "any person chargeable with income tax" (sec. 3), and "person" includes a company (sec. 3). There is no doubt that this association is a taxpayer within sec. 10 of the Act. In sec. 11 (1) the Legislature has directed its attention to a determination of what incomes should be exempt from income tax, and has declared that the revenue of a public authority (sub-sec. (a)) and the income of a public educational institution (sub-sec. (d)) are amongst those which are to be exempt. Sec. 14 contains a list of dividends, interest, profits, and receipts, &c., which are statutorily defined as income of any person. The income of this company is income within that definition. Sec. 16 enables certain deductions to be made for the purpose of ascertaining the taxable income of a company from the total assessable income of a company in addition to any other deduction allowed by the Act, under the circumstances stated in that section. Those circumstances, however, do not, and, perhaps, cannot, exist with respect to the appellant company, and that is the only reason for not applying the section. These considerations, in our opinion, indicate that, unless this company falls within any of the exemptions specified in sec. 11, it cannot be exempt as a company at all. The only two provisions of that section upon which counsel place reliance are sub-secs. (a) and (d), to which I have referred. But this company clearly is not a public body and, in our opinion, it is not a public educational institution.

The answers to the question must be, first, that the company is liable to assessment to income tax as a company on the income which was not distributed; and to the second question, the company is not exempt from assessment to income tax.

The third question is "By whom should the costs of this special case be paid?" We have given our answers to the substantial questions submitted to us; and we remit the case to the Supreme Court to be determined in accordance with the judgment, with the opinion that the costs of this special case be costs in the appeal.

Question 1 answered: Appellant is liable to assessment to income tax as a company on the income which was not distributed. Question 2 answered in the negative. Question 3: Costs of special case to be costs in the appeal. Special case remitted to Lukin J.

Solicitors for the appellant, Tully & Wilson.

Solicitors for the respondent, Chambers, McNab & McNab, for Gordon H. Castle, Crown Solicitor for the Commonwealth.