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High Court of Australia |
FEDERAL COMMISSIONER OF TAXATION v. ELLERS MOTOR SALES PTY. LTD. ;
FEDERAL COMMISSIONER OF TAXATION v. JOHN HENRY ELLERS ;
FEDERAL COMMISSIONER OF TAXATION v. JUNELLE HOLDINGS PTY. LTD. ;
FEDERAL COMMISSIONER OF TAXATION v. JUNE HARCOURT ELLERS. [1972] HCA 17; (1972) 128 CLR 602
Income Tax (Cth)
High Court of Australia.
McTiernan(1), Windeyer(2), Walsh(3) and Gibbs(4) JJ.
CATCHWORDS
Income Tax (Cth) - Arrangement for the avoidance of taxation - Formation of public company - Sale of shares in private company to public company - Financing of sale of shares through declaration of dividend - Whether share transfers or other steps avoided - Whether public company to be regarded as private company - Partial avoidance of arrangement - Income Tax Assessment Act 1936-1966 (Cth), ss. 46, 260* - Income Tax and Social Services Contribution Assessment Act (No. 3) 1964 (Cth), s.10
* Section 260 of the Income Tax Assessment Act 1936-1966 (Cth) provides:...
"Every contract, agreement, or arrangement made or entered into, orally or
as it has or purports to have the purpose or effect
of in any way, directly or
indirectly -
(a) altering the incidence of any income tax;return;
(b) relieving any person from liability to pay any income tax or make any
HEARING
Adelaide, 1971, September 27, 28;DECISION
1972, February 29.The following written judgments were delivered:-this Court [1969] HCA 60; (1969) 121 CLR 665 . All relate to the same group of transactions which must be set out in some detail. (at p607)
McTIERNAN J. These five appeals are brought from a decision of a Justice of
2. The company return for Ellers Motors Sales Pty. Ltd. ("Motor Sales") for
the year ended 30th June 1965 stated the company's net
profit and also its
taxable income for that year to be the same sum, viz. 4,160 pounds. An
adjustment sheet forwarded to the taxpayer
by the Commissioner increased the
taxpayer's taxable income by 176,683 pounds 6s. 8d., describing that sum as
its proportion of a
distribution of 358,923 pounds by a company named Harcourt
Holdings Pty. Ltd. ("Harcourt"). Similar adjustment sheets were received
by
the respondent Junelle Holdings Pty. Ltd. ("Junelle"), increasing its taxable
income by the same amount, and by the respondents
John Ellers and June Ellers,
increasing their taxable income by 1,776 pounds 16s. 8d. each. (at p608)
3. In the case of Junelle the sum was wholly rebatable under s. 46 of the
Income Tax and Social Services Contribution Assessment
Act 1936-1963 (Cth)
("the Act") and, in the case of Motor Sales, rebatable except to the extent of
approximately 400 pounds. Motor
Sales and Junelle also received however, at a
later date, notices of assessment of additional tax under Div. 7 of the Income
Tax
and Social Services Contribution Assessment Act 1936-1964 (Cth) ("The
Principal Act"). The notices were stated to be based on income
derived during
the year of income ended 30th June 1965 in the case of Junelle and on income
derived during the years of income ended
30th June 1965 and 30th June 1967 in
the case of Motor Sales. (at p608)
4. The facts were that the sum of 358,923 pounds had been declared as a
dividend and paid on 28th June 1965 by Harcourt to a company
named John H.E.
Holdings Pty. Ltd. ("Holdings"), which had been incorporated on 24th June
1965. Holdings had acquired the whole of
the issued capital of Harcourt on
25th June 1965 at a purchase price of 356,900 pounds 6s. 8d. The acquisition
was resolved upon
by the sole directors of Holdings, John Ellers and June
Ellers, who were also sole directors of Harcourt, and also of the two major
shareholders in Harcourt, Junelle and Motor Sales. The remaining two shares
in Harcourt were owned personally by the Ellers. Holdings
purchased the
capital of Harcourt by means of a loan of 357,000 pounds obtained from John
Ellers, which it repaid to him on 2nd July
1965. Ellers had obtained the
money as a personal loan from his bank. On 28th June 1965, Holdings, the only
issued capital of which
up to that date was two ordinary shares (one owned by
John Ellers and one by June Ellers), allotted twenty-one redeemable preference
shares, one to each of twenty-one individuals, for 1 pound per share.
According to s. 105 of the Act, Holdings, for the purposes
of Div. 7 of that
Act, would not therefore have been a private company on the last day of the
year of income ended 30th June 1965
and so not subject to Div. 7 tax upon a
failure to distribute the amount which its balance sheet showed it as having
received as
a dividend from Harcourt. It should be noted that although that
sum would be liable to tax if ever distributed to its shareholders
by
Holdings, the balance sheet of that company for 30th June 1965 reveals it as
possessed of two main assets, one being 359,045 pounds
5s. 10d. in cash, which
must be set against a liability of 357,000 pounds then owed to John Ellers and
later paid, and the second
being 356,900 pounds 6s. 8d., listed as shares in
the now relatively barren Harcourt at cost. There would seem therefore to be
no
funds of any substance which might be distributed and so be liable to tax
at any time in the near future. (at p609)
5. Act No. 110 of 1964 altered the definition of a private company in a
fashion which would have excluded Holdings, as it was composed
on 30th June
1965, by adding s. 103A to the Principal Act. Section 45 of Act No. 110
provided, however, that s. 103A was not to apply
in relation to assessments in
respect of income of a year of income before the year of income that commences
on 1st July 1965. The
final complementary advantage was that Harcourt was not
liable to tax on the sums which it had distributed to Holdings for those
dividends were, in effect, wholly rebatable under s. 46 of the Act. On 2nd
July 1965 Holdings repaid 1 pound to each of the holders
of the twenty-one
redeemable preference shares, together with a two-shilling dividend, and
redeemed the shares. (at p609)
6. The Commissioner's adjustment sheet presupposed that s. 260 avoided, as
against him, the transfer of the issued capital in Harcourt
to Holdings, with
the result that liability for tax arose as if that transaction had not
occurred and Harcourt had made a distribution
of dividends to its own
shareholders and not to Holdings. Counsel for the Commissioner submitted that
s. 260 annihilated the transactions
interposed between the transfer of 358,923
pounds from Harcourt and the receipt of 356,900 pounds 6s. 8d. by Harcourt's
former shareholders.
The difference in the two sums is basically accounted for
by the cost of the operation. It was argued that as it is the tax-altering
part of the scheme which is avoided it is here the transfers of shares in
Harcourt to Holdings which are defeated by s. 260. It
was further contended
that there was substantial identity between the moneys in the hands of the
respondents at the end of the series
of transactions and the funds in
Harcourt's hands at the beginning of the series even though these transactions
were designed to
ensure that the funds did not pass from Harcourt to the
respondents, its shareholders, under the nomenclature of dividends. (at p609)
7. It was also submitted that the fact that one element of the scheme
entailed the conversion of Holdings into a non-private company
which is not
liable to Div. 7 tax does not put this case into the same category as that of
W.P. Keighery Pty. Ltd. v. Federal Commissioner
of Taxation [1957] HCA 2; (1957) 100 CLR 66
or Federal Commissioner of Taxation v. Casuarina Pty. Ltd. [1971] HCA 78; (1971) 127
CLR 62
where that exercise was
the chief end of the scheme. For it was argued that
those cases are not authority for
the proposition
that any scheme which
includes
in its steps the conversion of a private company into a non-private
company is for
that reason beyond
the operation of s. 260. Had
Holdings
already been a non-private company when the scheme was conceived s. 260
would
have been equally
applicable on this submission.
The scheme was one, it was
contended, which had as its end the transformation
of what were potential
dividends of a company, and
therefore inevitably income, into capital in the
hands of the company's shareholders.
(at p610)
8. Counsel for the respondents conceded that if it were found that there was
a scheme which attracted the operation of s. 260, the
1,776 pounds 16s. 8d.
each received by John and June Ellers for their two individual shares in
Harcourt must be considered as income.
However, it was argued that even on
such a finding Motor Sales and Junelle remained non-private companies as at
30th June 1965 and
therefore not liable to Div. 7 tax in respect of the sums
received from Harcourt which must, in the light of the attraction of s.
260,
be considered as dividends in the hands of Motor Sales and Junelle. Such a
contention can only succeed if the annihilating
effect of s. 260 is applied
separately to each transfer of shares from the shareholders in Harcourt to
Holdings while leaving, for
the purposes of the particular transfer under
examination, the other transfers intact. For example, if the case of Junelle
is considered
and the transfer of its 100 shares in Harcourt to Holdings
avoided, Junelle may only acquire the status of a non-private company
under
the Principal Act if the transfers of 100 shares in Motor Sales and of the two
shares of John and June Ellers to Holdings by
Harcourt stand, with the result
that the non-private company Holdings owns 102 out of Harcourt's 202 issued
shares, thereby making
Harcourt its subsidiary. Junelle would then emerge as a
non-private company, being the subsidiary of the non-private company
subsidiary,
Harcourt. (at p610)
9. Counsel for the Commissioner submitted, however, that all the transfers
were part of the one arrangement by a number of parties
and had benefits for
them all, that the steps were interdependent in so far as the scheme would not
have achieved its end had only
one transfer taken place but not others, and
that any step in the scheme is avoided if it affects the tax liability of the
individual
taxpayer under consideration. In the above example, therefore, on
this reasoning, the transfers by Motor Sales and John and June
Ellers would
also be avoided, with the result that Harcourt would be neither a subsidiary
of Holdings nor, consequently, a non-private
company and Junelle would be
neither a subsidiary of Harcourt nor, consequently, a non-private company. (at
p611)
10. To deal now with each of the appeals individually: As regards the two
sums of 1,766 pounds 16s. 8d. each received by John and
June Ellers, s. 260 in
my opinion avoids, as against the Commissioner, the transfer of their two
shares in Harcourt to Holdings.
Those sums must therefore be considered a
distribution of funds by Harcourt to them as shareholders and as such
assessable income
in their hands. The effect of such an arrangement as was
made in this case was well described in the judgment of this Court in Bell
v.
Federal Commissioner of Taxation when it was said (1953) 87 CLR 548, at p 573
:
"This arrangement, both in purpose and in effect, represented
nothing but a method of impressing upon the moneys which
came to the hands of Bell and his colleagues the character of a
capital receipt and of depriving it of the character of a distribution
by a company out of profits. It was therefore a
means for avoiding the income tax which would have become
payable had the 77,000 pounds been distributed by the company
in the normal way." (at p611)
11. As regards the sums of 176,683 pounds 6s. 8d. each received by Motor
Sales and Junelle, s. 260 has a similar operation and avoids
the transfer of
Motor Sales' 100 shares and Junelle's 100 shares in Harcourt to Holdings.
These sums also therefore fall within the
category of a distribution to
shareholders and so assessable income, although wholly rebatable under s. 46
of the Act in the latter
case and almost wholly rebatable in the former. (at
p611)
12. In my opinion, however, Motor Sales and Junelle are not liable to Div. 7
tax in respect of these amounts for the year of income
ending 30th June 1965.
Federal Commissioner of Taxation v. Casuarina Pty. Ltd. [1971] HCA 78; (1971) 127 CLR 62
requires the decision,
in my judgment,
that Motor Sales and Junelle were
entitled to transform their status from
that of a private to a non-private
company
without attracting
the operation of s. 260 although tax liability was
avoided in the process.
Section 260 may not therefore be considered
to
annihilate
any transactions with respect to Motor Sales or Junelle except
their own
transfer of shares in each case. Both must
be deemed, on
this
rationale, non-private companies for the year of income ending 30th
June 1965
and so not liable to the Div. 7
tax levied. (at
p611)
13. With respect to Motor Sales, assessment for additional tax under Div. 7
for the year of income ending 30th June 1967, at which
time it was no longer a
non-private company within the meaning of the Division, it has not been
demonstrated, either in argument
or in the evidence, in my judgment, that this
assessment was in error. It should not, therefore, in my opinion, be
disturbed. (at
p612)
14. In my opinion the conclusions at which I have arrived result in the
orders proposed by Walsh J. and I consider that orders should
be made in those
terms. (at p612)
WINDEYER J. I have had the great advantage of reading the judgment prepared
by my brother Walsh in these difficult and involved
appeals. I agree in his
Honour's reasons, his conclusions and the order that he proposes. (at p612)
WALSH J. These are appeals against orders which allowed appeals brought to
this Court by the present respondents against assessments
of income tax. In
form there were five such appeals, but one of them (No. 24 of 1969) related to
separate objections to two assessments,
so that in all there are six
assessments which are challenged. All were set aside by Menzies J. who heard
the appeals in the original
jurisdiction of this Court [1969] HCA 60; (1969) 121 CLR 665 .
Three of them were assessments of tax payable by Ellers Motor Sales
Pty. Ltd.
(herein
called Sales). One of
these was an assessment of primary tax in
respect of income for the year ended 30th June
1965 (No. 24 of 1969),
one was
an assessment
of tax upon undistributed profits, under Div. 7 of Pt III of the
Act, in respect of
income of the same year
(No. 24 of 1969), and
the third was
an assessment under Div. 7 of tax payable in respect of income of the
year
which ended 30th June
1967 (No. 28 of 1969).
The appeal of John Henry Ellers
(No. 25 of 1969) and the appeal of June Harcourt
Ellers (No. 27 of 1969)
related to assessments
of tax upon income of the year ended 30th June 1965.
The appeal (No. 26 of 1969) of
Junelle Holdings Pty.
Ltd. (Junelle) related
to
an assessment of tax under Div. 7, with respect to the income of that same
year.
(at p612)
2. The transactions which require consideration occurred in April, May and
June 1965. An account of them and of the previous history
of the companies
and the practices adopted in declaring dividends is given in the judgment of
Menzies J. [1969] HCA 60; (1969) 121
CLR 665 . The
following account of the facts is based
mainly upon his reasons for judgment and upon an agreed statement
of facts
which the parties
supplied to him. (at p612)
3. In April 1965 and before that time, the Ellers group of companies included
six operating companies, one of which was Sales.
In Sales there were five
issued 1 pound shares, of which Junelle held four and Harcourt Holdings Pty.
Ltd. (Harcourt) held one.
Junelle and Harcourt were holding companies. The
issued capital of Junelle was 102 pounds of which Mr. and Mrs. Ellers each had
one 'A' ordinary share and Harcourt had one hundred 'E' ordinary shares. The
issued capital of Harcourt was 202 pounds. Mr. and
Mrs. Ellers each had one
'A' share, Sales had one hundred 'E' shares and Junelle had one hundred 'B'
shares. (at p613)
4. In the years which ended on 30th April 1962, 1963 and 1964, the companies
had declared dividends which were a sufficient distribution
of income within
the meaning of s. 105A of the Income Tax and Social Services Contribution
Assessment Act 1936, (Cth), as amended
(the Act). On 29th April 1965 the
operating companies and the holding companies declared dividends which
constituted a sufficient
distribution of their respective incomes for the year
which ended on 30th June 1964. From dividends then declared Junelle received
(net) 114,413 pounds and Harcourt received (net) 75,491 pounds. On 7th May
the operating companies declared further dividends aggregating
169,018 pounds
of which Junelle received 143,765 pounds and Harcourt 25,253 pounds. The
result was that Junelle had received income
for the year ended 30th June 1965,
by way of those dividends, amounting to 258,178 pounds and Harcourt had
received 100,744 pounds.
On 28th May 1965 Junelle declared a dividend
amounting to 258,178 pounds on the one hundred 'E' shares held by Harcourt.
By so doing
Junelle made a sufficient distribution of its 1965 taxable income,
consisting of the said dividends received by it. Harcourt had
now received in
that year dividends totalling 358,923 pounds. (at p613)
5. During this period Mr. Ellers had discussions with financial advisers.
Various courses of action were considered. The steps
which were discussed
included the incorporation of a new company, so constructed that it would not
be a private company. At this
point it is necessary to mention that an Act
(No. 110 of 1964) had been passed by which certain amendments were made to the
Act which,
as the learned primary judge said, confronted Mr. and Mrs. Ellers
and their business advisers with real problems. Section 46 of
the Act had
provided that a shareholder being a resident company should be entitled to a
rebate in its assessment of the amount obtained
by applying to that part of
the dividends included in its taxable income the average rate of taxes payable
by the company. The practical
effect of this had been that the companies in
the Ellers group had been able to obtain "full" rebates in respect of
dividends received
from other companies in the group. It was by means of
declaring and paying such dividends that the companies had been able to make
distributions of profits so as to avoid Div. 7 tax. The Act No. 110 of 1964,
which was assented to on 23rd November 1964, repealed
the existing s. 46 and
inserted in its place a new section, the effect of which, in relation to
dividends paid and received within
the Ellers group in accordance with the
practices that had been previously adopted, would probably be that a full
rebate of tax would
no longer be obtained and that tax would be payable on
one-half of such dividends. By the same amending Act, changes were made in
the definition of a "private company", for the purposes of liability under
Div. 7. As to these changes, it is sufficient to say
that the company called
John H.E. Holdings Pty. Ltd. (Holdings), which was incorporated in June 1965,
was not a "private company"
as defined in the Act as it stood before the 1964
amendments and, therefore, it was not a company which, as the law then stood,
would
be liable to Div. 7 tax if it received income of which it did not make a
sufficient distribution. It should be added that there
was another provision
in the Act No. 110 of 1964 which Menzies J. regarded as "the key provision"
for the purposes of the cases before
him. Section 45 of that Act provided
that the amendments made by specified sections thereof "apply to assessments
in respect of
the year of income that commences on the first day of July One
thousand nine hundred and sixty-five and in respect of all subsequent
years of
income". The specified amendments included those by which the new s. 46 was
enacted and by which relevant changes were
made in Div. 7 of the Act. (at
p614)
6. I have said that in the discussions with financial advisers of the
problems confronting Mr. and Mrs. Ellers and their companies,
one proposal was
that a new non-private company should be formed. That proposal was carried
into effect. But its formation was but
one step in a more comprehensive plan
which was adopted. The bringing up of the profits of the other companies into
Harcourt, which
has already been described, was itself a constituent element
in the plan. What happened thereafter must now be described. Holdings
was
incorporated on 24th June 1965. Mr. and Mrs. Ellers were the subscribers to
its memorandum of association, each taking one 'A'
class ordinary share. Its
authorized capital included ordinary shares, fixed preference shares and
redeemable preference shares.
At first its only issued capital consisted of
the two subscribers' shares. On the following day Mr. and Mrs. Ellers, as
directors
of Holdings, accepted an offer by Mr. Ellers of a temporary advance
to the company of 357,000 pounds, repayable at call. The purpose
of this
borrowing was to enable a purchase to be completed of all the shares in
Harcourt, to whose shareholders (so the minutes of
the meeting of the Holdings
directors recorded) an offer had been made to buy their shares at the price of
1,766 pounds 16s. 8d.
per share. It was reported that the "negotiations had
been successfully concluded". The directors resolved to purchase the shares
in Harcourt and that the transfers of them be executed. What was purchased
was one share from Mr. Ellers and one share from Mrs.
Ellers, each for 1,766
pounds 16s. 8d. one hundred 'E' ordinary shares from Sales for 176,683 pounds
6s. 8d. and one hundred 'B'
ordinary shares from Junelle for the same sum.
Meetings were then held successively on the same morning of the directors of
Sales,
of Junelle and of Harcourt. In each case Mr. and Mrs. Ellers were the
only directors. At the meetings of the directors of Sales
and of the
directors of Junelle it was resolved to accept the offer of Holdings for the
shares in Harcourt and to execute the appropriate
transfers. At the meeting of
the Harcourt directors transfers of all the shares were "tabled" and it was
resolved that they be accepted
and that new scrip be issued to give effect to
them. (at p615)
7. On the same day Holdings opened a bank account. The personal cheque of
Mr. Ellers for 357,000 pounds was credited to that account.
Arrangements that
had been made with the bank enabled that to be done. It had been decided that
it was better that the bank should
make a loan to Ellers rather than to
Holdings, in order to enable the purchase by Holdings of the Harcourt shares
to be financed.
Four separate cheques were drawn by Holdings in favour of the
vendors of the shares. These cheques totalled 356,900 pounds 6s.
8d. The
cheques in favour of Junelle and of Sales were debited to the Holdings account
on that same day. Those in favour of Mr.
and Mrs. Ellers were debited three
days later. On 25th June the share transfers were entered in Harcourt's share
register. They
were not then stamped and the registration of them before they
were stamped was a breach of a South Australian law. They were stamped
later,
on 5th July 1965, the amount of the duty being then paid. (at p615)
8. On 28th June 1965 Holdings allotted one redeemable preference share to
each of twenty-one persons. These were taken up for cash.
On the same day
Harcourt declared and paid to Holdings a dividend of 358,923 pounds, which was
credited that day to its account.
On 2nd July 1965 a cheque for 357,000 pounds
drawn by Holdings in favour of Mr. Ellers was debited against that company's
account
and credited to his account. Thus the loan from Ellers to Holdings
was discharged and Ellers repaid the sum which he had borrowed
from the bank.
(at p615)
9. As at 30th June 1965 the balance sheet of Holdings showed under the
heading "Revenue Reserves" an item of "unappropriated profits"
amounting to
358,922 pounds 12s. 6d. This, together with paid up capital of 23 pounds,
brought the total shareholders' funds to
358,945 pounds 12s. 6d. The balance
sheet contained a statement of how the funds were used. In this statement the
principal asset
items were cash at bank 359,045 pounds 5s. 10d., and the
Harcourt shares at cost (356,900 pounds 6s. 8d.) and the principal liability
was the loan from Ellers of 357,000 pounds. That position was, of course,
changed a few days later when almost the whole of the
cash at bank was used to
repay the loan from Ellers. Thereafter the only significant asset of Holdings
was the Harcourt shares,
which had been bought when that company still held
the funds from which it paid the large dividend to Holdings. (at p616)
10. The statements in the reasons for judgment of Menzies J. that Harcourt
"was left as an empty shell" and that Holdings had "overnight
gained assets of
717,365 pounds; liabilities of 358,419 pounds and reserves of 358,923 pounds"
have been criticized. It has been
said that the position of those companies
as disclosed by their balance sheets as at 30th June 1965 does not reflect the
"real" position.
The respondents say that Harcourt was not really an "empty
shell" and that its shares in other companies in the group were valuable
assets. On the other hand, it is said on behalf of the appellant that it
cannot be correct to regard Harcourt as a pauper and at
the same time to
regard Holdings as richly endowed. These points of dispute do not appear to
me to be of importance in the decision
of these appeals. My reason for saying
that will appear, I think, from my later discussion of the questions which
seem to me to
require consideration. (at p616)
11. I have set out the steps that were taken and it is necessary now to
consider what was their effect. In his reasons his Honour
stated that there
was -
"...an arrangement between the Ellers and Harcourt, John677
Holdings, Junelle and Sales, if not with the other companies
as well, to do, upon the advice of their tax advisers, what was
done between 24th June 1965 and 2nd July 1965..." (1969) 121 CLR, at p
12. I have said that the formation of a company, which would not be a private company as defined in the provisions which were applicable and which, notwithstanding the Act No. 110 of 1964 would remain applicable, to assessments in respect of the 1965 income, was but one of the steps in the plan devised by the respondents' advisers. It was, of course, an important step. There were other methods which might have been adopted to avoid the subsequent need for the companies to make substantial distributions of profits by way of dividends, which would probably attract taxation, or alternatively to be liable for Div. 7 tax. But in the plan that was adopted, it was the non-private character of Holdings and the distribution to it before the end of June 1965 of profits of the group that were the means chosen to enable those profits to be channelled to a company which would not be liable for Div. 7 tax. (at p618)
13. If the only parts of the plan adopted which required consideration in
these appeals had been the formation of Holdings, the
issue by it of
redeemable preference shares so as to bring about the result that the issued
shares were held by more than twenty
persons and the receipt by it of the
dividend, and if the Court were concerned only with the basis upon which
Holdings should be
taxed, the case would present no difficulty. The tax
liability of Holdings in relation to the dividend would have to be determined
on the footing that it was not, on 30th June 1965, a private company. Section
260 could not be applied so as to bring about the result
that it should be
treated as a private company. That is established by the decisions in W.P.
Keighery Pty. Ltd. v. Federal Commissioner
of Taxation [1957] HCA 2; (1957) 100 CLR 66 and
Federal Commissioner of Taxation v. Casuarina Pty. Ltd. [1971] HCA 78; (1971)
127 CLR 62 .
Furthermore, in determining
questions as to the tax liability of Holdings, or
indeed of any other taxpayer,
in respect
of income of the year which ended
30th
June 1965, the law to be applied would be unaffected by any of those
amendments
made by the
Act No. 110 of 1964 which were expressed
in s. 45
thereof to apply to assessments in respect of income of later years.
That
would
simply be the result of the express provisions
of s. 45. It is true that
if the amendments had come into force immediately
and had
applied to the
taxation of income of the year
which ended 30th June 1965, the plan adopted in
this case would have been ineffective,
both because the dividends declared and
paid
in April and May 1965 would have been at risk as to the obtaining of
rebates and because
Holdings would not have fulfilled the conditions
required
to give to it a non-private character. It is therefore correct to say,
as his
Honour said, that what was done was done
in order to obtain the advantage of
the circumstance that the Act No. 110 of 1964
provided that the relevant
amendments should apply
in respect of income of the year commencing on 1st
July 1965. But his Honour
went on to say that it could not be said that
taxpayers
who acted simply in order to take advantage of Parliament's
indulgence (in
enacting the amendments with a time lag) could properly
be
treated as making or carrying out arrangements with any of the purposes
enumerated in s. 260. He thought that s. 260 could not
be regarded as denying
to s. 45 of the Act No. 110 of 1964 its full operation.
Then, after quoting a
passage from Keighery's Case
(1957) 100 CLR, at pp 92-93 , his Honour said
(1969) 121 CLR, at p 678 :
"For the reasons which I have already given, I think that
to treat s. 260 as applying here would be to render ineffectual
attempts to give to the taxpayers concerned an advantage
which s. 45 of No. 110 of 1964 was designed to give them." (at p618)
14. With respect, I do not think that these appeals can be decided upon the
ground thus indicated in his Honour's reasons. No doubt,
the persons
concerned made use of the provisions relating to rebates and to private
companies which remained applicable to income
of the year ended 30th June
1965. Whether the availability of those provisions ought to be described as
an "advantage" which s.
45 of the 1964 Act was designed to give or as an
"indulgence" was questioned in the arguments submitted to us, but the matter
does
not depend upon verbal criticisms of that kind. I find myself in
respectful disagreement with his Honour, because I do not think
that the
application of s. 260 to the facts of this case in the manner for which the
appellant contends would operate, except to
the extent which will be indicated
later, to render ineffectual an attempt to give any of the persons or the
companies concerned
any advantage which the legislation, and in particular s.
45 of the 1964 Act, was designed to give them. The appellant does not seek
to
deny to any company the benefit of a "full" rebate in accordance with the
provisions of the unamended s. 46. The appellant does
not now contend
(although before his Honour the right was reserved to challenge the
correctness of Keighery's Case ) that Holdings
was a private company on 30th
June 1965 or that s. 260 requires that it must be taken to have been a private
company. The appellant
relies upon a different aspect of the transaction. He
contends that, upon the question whether s. 260 applies so as to prevent the
Harcourt shareholders from asserting against him that the moneys which came
into their hands were capital receipts and not income,
the principle upon
which Keighery's Case [1957] HCA 2; (1957) 100 CLR 66 was decided has no bearing, and that
that question falls
to be determined
upon considerations which make the
formation of a "Keighery company", although that was one step in the scheme,
an irrelevant factor.
(at p619)
15. Before the transactions in question took place, profits were held by the
companies and they were ultimately concentrated in
Harcourt, which then had a
large sum available for distribution. At the end of the transaction, Harcourt
had distributed that money
and its former shareholders had received amounts,
proportionate to their respective shareholdings, the total of which
corresponded
closely to the amount distributed by Harcourt. It seems to me
upon the facts that a dominant purpose of the transactions was to
arrange
matters in such a way that money would be received as capital and not as
income. At the same time the tax problems were
resolved which would
afterwards have confronted Harcourt, or alternatively its shareholders, if
nothing had been done and if the
money had simply been retained by Harcourt,
namely the prospect that it would become liable for Div. 7 tax if it did not
make a distribution;
and if it did distribute subsequently to its shareholders
by way of dividend the money that it held, Mr. and Mrs. Ellers would have
been
taxable on the dividends received by them and the shareholders who were
companies might not have obtained a full rebate. (at
p619)
16. Subject to certain arguments to the contrary which have yet to be
considered, this appears to me to be an arrangement of the
kind to which s.
260 should be applied, so as to enable the Commissioner to assess tax on the
former shareholders in Harcourt as
if they had remained its shareholders, in
accordance with the principles as to the operation of s. 260 established in
such cases
as Bell v. Federal Commissioner of Taxation (1953) 87 CLR 548 ,
Federal Commissioner of Taxation v. Newton [1956]
HCA 39; (1957)
96 CLR 577 , and
on appeal
to the Privy Council [1958] UKPCHCA 1; (1958) AC 450; (1958) 98 CLR 1 , and Hancock v. Federal
Commissioner of Taxation [1961] HCA 90; (1961) 108 CLR 258
. According to those authorities
it is appropriate to look at the end
result of the transaction from the point
of view of Harcourt
and from the point of view of those who were its
shareholders before
the transfer of the shares to Holdings.
The end result
was
that the profits had gone out from Harcourt and that an equivalent amount
had come into the hands of its shareholders.
To adopt
the phrase used by
Fullagar J. in Newton's Case (1957) 96 CLR, at p 656 ,
it may be said in my
opinion that "the only real
money"
which figured in the transactions was
Harcourt's money. The loan from the
bank to Ellers, the loan from Ellers to
Holdings,
the
use by Holdings of the credit so obtained to pay for the shares,
the use of
the dividend received by Holdings to pay back the
loan
obtained
from Ellers and the use by him of that money to repay the bank were
all steps
in the transaction which, although they
were
"genuine" and although on the
face of them they effected transfers of assets
(the Harcourt shares) in
exchange for a price,
did not
prevent the end result from being, as it was
intended to be, that the Harcourt
profits found their way into the hands of
those who
had been its shareholders. It does not matter that the payment for
the shares
was made (by means of borrowed money) before
the dividend
was
actually received by Holdings. As was said by Menzies J. in Mayfield
v.
Federal Commissioner of Taxation (No. 2)
(1961) 108 CLR
323, at p 334 , "a
substantial identity between what the
company distributed and what the assumed
members received is sufficient".
(at
p620)
17. If the arrangement made between the parties was an arrangement which, so
far as it effected the result of transferring the profits
held by Harcourt to
the hands of its former shareholders, was essentially the same as the
arrangements which in the cases cited were
held to be affected by s. 260, I am
of opinion that the application of that provision is not precluded by the fact
that it was part
of the arrangement that what has been called a "Keighery
company" should be formed. In a practical sense it was a necessary element
in
the scheme that the recipient of the Harcourt dividend should be one which
would enjoy some particular advantage in relation to
the impact upon that
recipient of taxation. In this case the advantage lay in the circumstance
that there was a rebate entitlement
under s. 46 and that Holdings was not a
private company for the purposes of Div. 7. In Hancock's Case [1961] HCA 90; (1961) 108
CLR
258 , the recipient
of the dividends was in a position of advantage for a
different reason, namely, that being a
company which
traded in shares it
expected
to set off a loss upon a resale of the shares against what would
otherwise have been its
taxable income.
In my opinion the inclusion
in the
scheme of the formation of a Keighery company did not operate automatically to
make s. 260 inapplicable
to the assessment
of the former shareholders, in
respect of the moneys received by them. Its application
in that way would not
operate
in my opinion
"to deny to taxpayers any right of choice between
alternatives which the Act itself lays
open to them" (see Keighery's
Case
(1957)
100 CLR, at p 92 ). (at p621)
18. In Hancock's Case (1961) 108 CLR at p 283 , Kitto J. said that the acts
done will enable an arrangement to be characterized
as a means for the
avoidance of tax -
"... if they have included a transfer of property from theIf a taxpayer makes a decision to arrange matters so that income from his property follows one of the courses so described and reaches him with the character of capital, in my opinion he is not thereby exercising a "right of choice between alternatives which the Act lays open to him", whether or not the intermediary which he has chosen to interpose between himself and the source of the money happens to be a "Keighery company". At this point it is important, in my opinion, to distinguish between the tax liability of a company which has been formed or reconstructed in such a manner that its character is, for the purposes of the Act, that of a non-private company and the liabilities for tax assessed upon their own incomes of others who have been concerned in that formation or reconstruction. In my opinion it is possible that the circumstances may be such that s. 260 may be used in assessing the latter liabilities, notwithstanding that it cannot be applied in assessing the tax liability of a company so as to treat the company as having a character different from that which it bears according to the terms of the Act as applied to the facts which exist at the relevant date. In Federal Commissioner of Taxation v. Casuarina Pty. Ltd. [1971] HCA 78; (1971) 127 CLR 62, at p 97 , in referring to the fact that the taxation liabilities of the Sternberg companies or the Sternbergs were not in question, I recognized that possibility; so also did Gibbs J. (1971) 127 CLR, at p 104 . (at p622)
taxpayer in consequence of which income from the property,
instead of being received as such by the taxpayer, has followed
either of two courses: (i) a course which has carried it
through the hands of other persons to the taxpayer, but so
as to reach him with the character of capital; or (ii) a
course which has amounted in effect to an application of the
moneys by the taxpayer, and so has been a practical equivalent
of a receipt by him followed by an expenditure by him."
19. It is necessary now to refer to some submissions on behalf of the
respondents. One was that s. 260 is not applicable, for the
reason that the
profit did not get out to the pockets of the shareholders, but remained in the
company group; and will be liable
when distributed by Holdings to taxation as
dividends received by the shareholders therein. In relation to that
submission, there
has been a contest upon the question whether or not it is
inevitable that a tax liability of that kind will be incurred in the future.
In my opinion, this is not inevitable, but I do not think that the result of
these appeals depends in any way upon deciding what
tax, if any, will be
imposed in the future in consequence of an assumed distribution of profits by
Holdings, whether by way of dividends
or by way of a distribution in a
winding-up. There is no doubt that "the real money" came to the hands of the
respondents. It came
in such a form that it is not taxable unless s. 260
operates. The question whether s. 260 operates or does not operate to enable
the appellant for the purposes of the assessment of tax upon the recipients to
treat the money as if it had been received by them
as income cannot depend, in
my opinion, upon what will ultimately happen to the profits shown in the
balance sheet of Holdings as
at 30th June 1965 as "unappropriated profits".
If the scheme enabled the respondents to avoid or alter or defer liabilities
which
might otherwise have fallen upon them, the arrangement was in my opinion
within the descriptions contained in s. 260, regardless
of whether it was
effective to solve completely the problems of the group of companies,
including any which might subsequently arise
in relation to the consequences
of the carrying out of the scheme. In this connection it may be observed that
the shareholders of
Holdings, upon whom if they remained shareholders a tax
liability in respect of future dividends declared by it would fall, do not
include Sales or Junelle, but are two only of the former shareholders in
Harcourt. But even if the shareholders were identical,
the question whether
they were liable to tax as if they had remained shareholders in Harcourt and
had received the money which came
from it as income would not depend in my
opinion upon determining whether or not they might come under a tax liability
at some time
in the future, as shareholders in Holdings, as a consequence of
its having received the dividend from Harcourt. (at p623)
20. Associated with the submission now being considered was an argument that
because the profits remained (so it was said) within
"the company cell", the
transaction could not be described as "a dividend-stripping operation" and
therefore such cases as Hancock's
Case [1961] HCA 90; (1961) 108 CLR 258 and Newton's Case
(1957) 96 CLR 577 had no application. It was said that
the principles laid
down in those
cases as to the operation of s. 260 do not apply unless it is a
stranger to the company group that
is interposed between a company
the profits
of which are distributed and the persons to whom in the end result the money
comes.
In my opinion the judgments in the
leading cases concerning s. 260 do
not require the placing of such a qualification or gloss upon
the principle
upon which they were
decided. If one finds the principle applied in cases in
which in fact the purchaser of shares
was a "stranger", as in Hancock's Case
[1961] HCA 90; (1961) 108 CLR 258 and Newton's Case (1957) 96 CLR 577 , it
is an error to
conclude that the principle is limited to cases in which
that fact exists,
unless it appears from the judgments
that
this was held to be an essential
fact. In my opinion, that does not
appear from any of the judgments. (at
p623)
21. The circumstances that in this case it was not part of the plan that the
shares in Harcourt should revert to their former owners
after it had paid a
large dividend does not preclude a finding that there was an arrangement to
which s. 260 applied. A bargain
for a resale of shares may be in some cases a
fact to be taken into account in deciding whether an arrangement had a
tax-avoidance
purpose and was not a mere agreement for the sale of shares by
their owners, to which the section could not apply. The absence of
an
agreement for resale of the shares does not require a finding that the
arrangement was nothing more than the ordinary sale of
an asset. The
operation of s. 260 is not precluded either by the fact that the sale of the
shares was a "genuine" sale nor by the
fact that there were other purposes, as
well as a tax-avoiding purpose, which the arrangement was intended to serve.
In my opinion
it cannot be said of the respondents that all that they did was
to sell their shares cum dividend. It was of the essence of the
arrangement
that the money which they were to receive upon the sale should come from the
profits held by Harcourt and from no other
source. In this respect, their
position may be contrasted with that of the Lefroys in Hancock's Case (1961)
108 CLR, at p 269 .
(at p624)
22. For the reasons stated I conclude that there was an arrangement to which
s. 260 applied, so that in assessing the tax of each
of the respondents the
transfers of shares in Harcourt to Holdings may be disregarded in so far as
the transfers, if treated as valid,
would have the effect that the money
received by the shareholders was received as capital and not as income. But
it is necessary
now to consider what is the effect of applying the provision.
(at p624)
23. It was submitted on behalf of Sales and of Junelle that in considering
the tax liability of each company the only transfer that
could be regarded as
void was its transfer of its own shares. The transfers made by the other
shareholders in Harcourt could not
be so regarded. It was said that if you
examine separately the position of Sales and you treat it as having remained a
shareholder
in Harcourt, the result is that Holdings became the owner (by
transfer from the other shareholders) of 102 shares in Harcourt out
of an
issued capital of 202 shares. Thus Harcourt became a subsidiary of Holdings.
As Junelle was a subsidiary of Harcourt and as
Sales was owned by Junelle and
Harcourt, the result is said to be that even on the assumption that the
transfer by Sales of its shares
is treated as void, nevertheless Sales was not
for the purposes of Div. 7 a private company and for this reason the
assessment of
Div. 7 tax cannot be sustained. The same arguments are
applicable in the case of Junelle. In my opinion the proposition on which
this line of argument depends cannot be accepted. It is not correct to say
that in considering the position of Sales the only transfer
that can be
disregarded is its own transfer. If you find an arrangement which, if valid,
would have one of the effects described
in s. 260, then (subject to what is
stated later in these reasons) any step which has been taken pursuant to that
arrangement may
be disregarded to the extent to which it would play a part, if
valid, in bringing about that effect. (at p624)
24. I have stated the conclusion that the appellant was entitled to assess
the respondents on the footing that the sums which they
received from the sale
of the shares in Harcourt were received by them as dividends, by means of
which the profits of Harcourt were
distributed to them. A question that still
remains to be considered is a question as to the manner in which the tax that
was properly
payable in respect of the income derived respectively by each of
the respondents is to be ascertained. As to Mr. and Mrs. Ellers
this presents
no problem. But as to each of the companies, a problem arises at this point
concerning the application, for the purpose
of determining its status for tax
purposes, of the principles accepted in the cases of Keighery [1957] HCA 2; (1957) 100 CLR
66
and of Casuarina
[1971] HCA 78; (1971) 127 CLR 62 . For reasons which I have stated, I
am of opinion that those principles do
not operate to make inapplicable
such
authorities as Hancock's Case [1961] HCA 90; (1961) 108 CLR 258 and Newton's Case [1956]
HCA 39; (1957) 96
CLR 577 . Section 260 may be applied to render ineffective
the
attempt to
prevent the receipt by the shareholders
in Harcourt of a distribution of its
profits from being taxable, by arranging
that the money should be received in
the form of capital.
But it is another question whether s. 260, as
interpreted in the cases
of Keighery [1957] HCA 2; (1957) 100 CLR 66 and Casuarina
[1971] HCA 78; (1971)
127 CLR 62 , can be applied so as to treat Sales and Junelle as retaining the
character of private companies,
doing this
by disregarding the effect of the
transfers of the shares in Harcourt to Holdings upon
the character of those
companies.
One of
the objections raised to the assessments of each of those
companies was that in relation
to the year of income ended 30th
June 1965,
it
was not a private company for the purposes of Div. 7. On the hearing of these
appeals
it was submitted that the consequence
of
the transfer by Sales and by
Junelle of the shares in Harcourt to Holdings was that Sales
and Junelle
became companies which were
not private companies as defined by the Act. It
was submitted that it was open to them to
do the acts which brought about that
result
and that the resulting change in their character was a change which
cannot be disregarded
when assessing tax in respect of income
received by them
in the relevant year. In my opinion, these submissions should be upheld.
(at
p625)
25. The transfers of shares to Holdings were genuine transactions. The result
of them was that Holdings, which at the relevant date
was not a private
company, held all the shares in Harcourt. The Act, in the form in which it
continued to be operative up to the
relevant date, provided that for the
purposes of Div. 7 a company is a private company if "it is not a subsidiary
of a public company"
(s. 105 (1) ) and that "a company is a subsidiary of a
public company if, by reason of the beneficial ownership of the shares, the
control of the company is in the hands of one or more companies none of which
is a private company" (s. 105 (4) (b)). According
to these provisions,
Harcourt was at the relevant date a subsidiary of a public company, because
its control was in the hands of
Holdings which was not a private company.
Therefore Harcourt was not a private company. For similar reasons, Junelle, in
which Harcourt
held most of the shares, was not a private company and Sales,
in which the shares were held by Harcourt and Junelle, was not a private
company. (at p626)
26. It does not appear that the advisers who formulated the plan which was
adopted gave attention to the consequential changes in
the character of
Harcourt, of Sales and of Junelle, which the formation of a company which was
not a private company and the transfer
to it of the Harcourt shares would
combine to bring about. Those changes may have been by-products of what was
done rather than
changes which were directly contemplated and intended. But,
in my opinion, that does not preclude the respondent companies from
asserting
that the appellant was not authorized by the Act to tax them as if they had a
character for the purposes of the Act which,
in truth, according to its
provisions and to the facts, they did not have. It may be urged that the
changes in the character of
these companies were not effected in the exercise
of a "choice" presented to them, because they were changes which were not
consciously
sought. But, in my opinion, the alteration of the relevant facts
which the carrying out of the scheme in fact produced was an alteration
that
could not be ignored, consistently with Keighery's Case [1957] HCA 2; (1957) 100 CLR 66 , in
determining what was the character
at the relevant
date of the companies which
were being assessed to tax.
I am of opinion that the respondent companies are
not precluded
by the circumstance
that they described themselves as private
companies
in their tax returns or by the fact that Sales at least may
have
obtained an
advantage in relation to the primary tax imposed upon
it by being
treated as a private company from asserting now
that they were
not private
companies at the relevant date in 1965. On
this question I accept with
respect the view expressed by
Menzies J. in Federal
Commissioner of Taxation
v. Cappid Pty. Ltd. (1970)
127 CLR 140 , which has not been affected
by the
judgments in the appeal in that
case (1971) 127 CLR at p 149 which do not
deal
with that question. (at p626)
27. In my opinion, it is legitimate in the circumstances of this case to hold
that s. 260 operates to entitle the appellant to disregard
the transfers of
the shares, in so far as they would serve the purpose of altering the
character of the receipt of money by the former
shareholders from an income
receipt to a capital receipt and at the same time to hold that s. 260 cannot
be applied so as to obliterate
the change brought about by the transfers of
the shares in the character, for taxation purposes, of the respondent
companies. In
so far as the transfers effected the latter change they must be
treated as having taken effect, in relation to the status for taxation
purposes of the respondent companies. That was an effect which, according to
the principle of Keighery's Case [1957] HCA 2; (1957)
100 CLR 66
, lay outside the scope of
the operation of s. 260. But in so far as the transfers effected the former
change,
they were
within
the scope of that provision and may be disregarded.
The application of s. 260 does not require that if a step in
an arrangement
is
treated as void for some purposes it must necessarily be treated as void for
all purposes. That is illustrated
by the case of
Rowdell
Pty. Ltd. v. Federal
Commissioner of Taxation (1963) 111 CLR 106 . (at p627)
28. In answer to the submissions now being considered, learned counsel for
the appellant argued that in so far as a "choice" was
available as to what the
status of Harcourt should be at the end of the tax year, that was a choice
given to Harcourt and not to
anyone else. But the question in issue is a
question concerning the status of Sales and of Junelle and, in my opinion, it
was open
to them to bring about a state of facts which, upon the application
of the relevant provisions of the Act, would make them non-private
companies.
It was said also that there is a difficulty in considering the status of Sales
and of Junelle, for the reason that Sales
was a shareholder in Harcourt and
was also a subsidiary of Harcourt and this was in breach of s. 17 (1) of the
Companies Act, 1962-1966
(S.A.). But in my opinion, this can have no bearing
upon the question of the status which Sales had after it had transferred its
shares in Harcourt and was no longer a shareholder in that company. (at p627)
29. It is necessary now to apply the foregoing conclusions to the assessments
which are in dispute. The assessment of Junelle for
Div. 7 tax in respect of
income of the year ended 30th June 1965 cannot stand, because it was not at
the end of that year a private
company. Therefore the order setting aside
that assessment was correct and the appeal against that order should fail. In
my opinion
the assessments of Mr. and Mrs. Ellers should not have been set
aside and the appeals against the orders setting them aside should
be allowed.
As to Sales, the assessment of primary tax has not been shown to have been
excessive. Although upon the view that I have
taken it was wrong to assess tax
on the footing that it was a private company, it does not appear that if it
had been assessed on
the footing that it was not a private company the amount
of primary tax would have been smaller. But the assessment of Div. 7 tax
in
respect of the year ended 30th June 1965 was not warranted and the appeal
against the order setting aside that assessment should
fail. (at p628)
30. That leaves for consideration the appeal which relates to an assessment
against Sales of Div. 7 tax in respect of the year of
income which ended on
30th June 1967. In respect of that year Sales made an income tax return in
which it described itself as a
private company. That was correct. It was a
private company on 30th June 1967, under the legislation which was then in
force, as
it was not a subsidiary of a public company as defined by that
legislation. Its return showed a taxable income of $12,528. In arriving
at
that figure a deduction had been made of losses in previous years amounting to
$15,184. The company was assessed for ordinary
tax on its taxable income.
The tax was $3,698. Later, there was a Div. 7 assessment levied on an
undistributed amount of $4,415.
It seems plain that that figure was obtained
by deducting an allowance (s. 105B) of fifty per cent from the balance
remaining after
deducting the amount of the primary tax from the taxable
income. Very little argument was addressed to the Court in relation to
this
appeal. From the grounds of objection, it appears that it was there claimed
that there was a large sum which ought to be treated
as an "excess
distribution" and deemed to be a dividend paid during the prescribed period of
1st May 1967 to 30th April 1968, in
accordance with the provisions of s. 106
(2) of the Act. The notice of objection set out that objections were being
lodged against
the assessments in respect of the income of the year ended 30th
June 1965 and a copy of those objections was incorporated in the
objection to
the Div. 7 assessment with respect to the income of the year ended 30th June
1967. Alternative claims were then made.
The first was that if the company
was a private company in relation to the 1965 year of income and if the amount
received on the
sale of the Harcourt shares should be excluded from the
assessable income and the taxable income of that year, then the company was
entitled by s. 106 (2) to have an excess distribution deemed to be a dividend.
The second claim was to the effect that if the company
was not a private
company in relation to the 1965 year and if the amount derived from the sales
of the shares should be excluded
from the assessable income and the taxable
income of that year, then the Commissioner was not empowered to correct what
was said
to have been a mistake of law made by him in treating the company as
a private company in relation to that year and he could not
now treat it as a
non-private company. The consequence was said to be that the company was
entitled under s. 106 (2) to have an
excess distribution deemed to be a
dividend. It was an essential element in each of those alternative claims
that the money received
upon the sale of the shares should not have been
included in the assessable income or the taxable income of the 1965 year. It
follows
from my conclusion that that money was properly included in the income
of that year, that neither of those claims, as stated in the
notice of
objection, has been made out. The grounds of objection referred to an
appendix setting out the basis upon which was calculated
an amount claimed to
have been an excess distribution in respect of the year of income ended 30th
June 1965. It seems that this appendix
was not included in the appeal books
but I have seen a copy of it. It is not self-explanatory. It has not been
explained or discussed
in argument. In my opinion it has not been established
that there was, within the meaning of s. 106 of the Act, an excess
distribution
for the year of income ended 30th June 1965. (at p629)
31. In my opinion, the following orders should be made:
No. 24 of 1969
(1) Orders made on 8th December 1969 set aside.
(2) Order -
(a) that the appeal of Ellers Motor Sales Pty. Ltd.
against the disallowance of its objections to the
amended assessment No. 936070 issued on 21st
February 1969 be dismissed and that that
assessment be confirmed.
(b) that that company's appeal against the disallowance
of its objections to the assessment
issued on 21st February 1969 under Div. 7 of
Pt III of the Act be allowed and that assessment
be set aside.
(c) no order as to the costs at first instance of those
appeals.
(3) Order that the appellant the Commissioner of Taxation
pay one-half of the costs of the respondent of the appeal
to the Full Court.
No. 25 of 1969
(1) Appeal allowed with costs.
(2) Orders of 8th December 1969 set aside.
(3) In lieu thereof order that the appeal against the disallowance
of objections to the amended assessment
No. 619738 be dismissed with costs and that assessment
be confirmed.
No. 26 of 1969 Appeal dismissed with costs. No. 27 of 1969
(1) Appeal allowed with costs.
(2) Orders of 8th December 1969 set aside.
(3) In lieu thereof order that the appeal against the disallowance
of objection to the assessment No. 1081113 be
dismissed with costs and that assessment be confirmed.
No. 28 of 1969
(1) Appeal allowed with costs.
(2) Orders of 8th December 1969 set aside.
(3) In lieu thereof order that the appeal against the disallowance
of objections to the assessment of Div. 7 tax
in relation to the year of income ended 30th June 1967
be dismissed with costs and that assessment be confirmed. (at p630)
GIBBS J. I have had the advantage of reading the reasons for judgment
prepared by my brother Walsh. I am in agreement with his
reasons and further
agree with the orders that he proposes. (at p630)
ORDER
No. 24 of 1969
(1) Orders made on 8th December 1969 set aside.
(2) Order -
(a) that the appeal of Ellers Motor Sales Pty.
Ltd. against the disallowance of its
objections to the amended assessment No.
936070 issued on 21st February 1969 be
dismissed and that that assessment be
confirmed.
(b) that the company's appeal against the disallowance
of its objections to the assessment
issued on 21st February 1969 under Div. 7
of Pt III of the Act be allowed and that
assessment be set aside.
(c) no order as to the costs at first instance of
those appeals.
(3) Order that the appellant the Commissioner of
Taxation pay one-half of the costs of the
respondent of the appeal to the Full Court.
No. 25 of 1969
(1) Appeal allowed with costs.
(2) Orders of 8th December 1969 set aside.
(3) In lieu thereof order that the appeal against the
disallowance of objections to the amended assessment
No. 619738 be dismissed with costs and
that assessment be confirmed.
No. 26 of 1969 Appeal dismissed with costs.
No. 27 of 1969
(1) Appeal allowed with costs.
(2) Orders of 8th December 1969 set aside.
(3) In lieu thereof order that the appeal against the
disallowance of objections to the assessment No.
1081113 be dismissed with costs and that assessment
be confirmed.
No. 28 of 1969
(1) Appeal allowed with costs.
(2) Orders of 8th December 1969 set aside.
(3) In lieu thereof order that the appeal against the
disallowance of objections to the assessment of
Div. 7 tax in relation to the year of income ended
30th June 1967 be dismissed with costs and that
assessment be confirmed.
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URL: http://www.austlii.edu.au/au/cases/cth/HCA/1972/17.html