Colgate Palmolive Pty Ltd v Commissioner of Taxation [1999] FCA 248

FEDERAL COURT OF AUSTRALIA

Colgate-Palmolive Pty Ltd v Commissioner of Taxation [1999] FCA 248

SALES TAX - Sales Tax Assessment Act 1992 – Schedule 1 Item AD1a – whether a co-operative allowance reduced the price for which goods were sold

Queensland Independent Wholesalers Limited v Commissioner of Taxation (1991) 29 FCR 312 applied

General Motors Corporation, Frigidaire Division v United States (1960) 277 F2d 929 cited

COLGATE-PALMOLIVE PTY LIMITED v COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA NG 751 OF 1998

HILL, LEHANE and HELY JJ

19 MARCH 1999

SYDNEY

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 751 OF 1998

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: COLGATE-PALMOLIVE PTY LIMITED

ACN 002 792 163

Appellant

AND: COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

Respondent

JUDGES: HILL, LEHANE and HELY JJ

DATE OF ORDER: 19 MARCH 1999

WHERE MADE: SYDNEY

THE COURT ORDERS THAT: 1. The appeal is dismissed with costs. Note: Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.

IN THE FEDERAL COURT OF AUSTRALIA

NEW SOUTH WALES DISTRICT REGISTRY NG 751 OF 1998

ON APPEAL FROM A JUDGE OF THE FEDERAL COURT OF AUSTRALIA

BETWEEN: COLGATE-PALMOLIVE PTY LIMITED

ACN 002 792 163

Appellant

AND: COMMISSIONER OF TAXATION OF THE COMMONWEALTH OF AUSTRALIA

Respondent

JUDGES: HILL, LEHANE and HELY JJ

DATE: 19 MARCH 1999

PLACE: SYDNEY

REASONS FOR JUDGMENT

THE COURT: 1 During the period 1 August 1996-31 January 1997 ("relevant period") the appellant ("Colgate") paid Woolworths Ltd ("Woolworths") a number of allowances, one of which was styled a co-operative allowance, in relation to goods purchased by Woolworths from Colgate. The sole issue which arises for determination on this appeal, is whether the trial judge erred in rejecting Colgate's claim that payments which it made to Woolworths in the relevant period by way of the co-operative allowance reduced "the price ... for which the goods were sold" for the purposes of the Sales Tax Assessment Act 1992 ("STAA"), in particular Schedule 1 Item AD1a. 2 In Queensland Independent Wholesalers Limited v Commissioner of Taxation (1991) 29 FCR 312 ("QIW") a Full Court of the Federal Court considered whether volume discounts which were passed on to customers by way of rebate operated, in the circumstances of that case, to reduce "the amount for which the goods are sold" in terms of s 18(1)(a) of the Sales Tax Assessment Act (No 1) 1930. It was there held that: · The amount for which goods are sold is a question of fact; · It will usually, but not invariably, be the contractual purchase price arrived at between buyer and seller; · The fact that rebates are deferred and are discretionary would not prevent them being taken into account in determining the amount for which goods were sold, provided that the nature and manner of the rebate remained sufficiently proximate to, and connected with, the sale transaction to enable them to be accounted for in that way; · For a rebate to reduce the amount at which goods are sold, it must appear that the rebate does effect a reduction in the sale price as a matter of commercial reality, and that it is not directed at some other end. 3 Neither party contended that the substitution of price for amount in the statutory language produced any substantive change. Both parties accepted that the principles enunciated in QIW were applicable to the resolution of the question for decision in the present case. The substantial issue between the parties is whether, to adopt the language of QIW, the co-operative allowance is directed at another end than providing a discount to Woolworths.