G E Stuart Ltd v Federal Commissioner of Taxation [1927] HCA 19; (1927) 39 CLR 327 (29 April 1927)

HIGH COURT OF AUSTRALIA

G E Stuart Limited Appellant; and The Federal Commissioner of Taxation Respondent.

H C of A

29 April 1927

Isaacs, Rich and Starke JJ.

E. M. Mitchell K.C. (with him Bowie Wilson), for the appellant.

Brissenden K.C. (with him K. W. Street), for the respondent.

Isaacs, Rich and Starke JJ.

Per Curiam. The decision of this case lies in a very small compass. We need not recapitulate the facts, they are assented to and undisputed, and the reason we think the appeal ought to be allowed is this: that in order to give full operation to sec. 21 of the Act, that is, in order to ascertain whether the company could reasonably have distributed up to two-thirds of its taxable income, it was necessary for the Commissioner to take into consideration a bona fide business undertaking of the company, whereby it had agreed that it should not distribute that money, but should pay it to a creditor. That being so, the agreement could not possibly fall within the only portion of sec. 93 under which it is suggested it did fall namely, par. (d), "preventing the operation of this Act in any respect." That portion of sec. 93 is the only reason why it was suggested that the additional tax was properly assessed. That failing, the appeal should be allowed with costs.

Appeal allowed with costs.

Solicitors for the appellant, Biddulph & Salenger.

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